Social Science

The Fight Against Childhood Obesity: Why Recent Advances in Science Show the “Let’s Move” Initiative May be Overly Ambitious, Eileen Engelberg

            The newest generation of children is the first not predicted to outlive their parents (Oliver, 2008).   This shocking finding is due to something completely within our control: what we eat.  Between sixteen and thirty-three percent of American children are obese today (Barnes, 2011), and type 2 diabetes, which used to be known as “adult onset diabetes”, has now become a common childhood disease (Martin-Gronert & Ozanne, 2005).    But why is this situation so grave?  Unhealthy diets contributing to this are the cause of an estimated 300,000 deaths a year (Barnes, 2011).  On top of that, complications due to obesity and obesity-related diseases cost the United States $100 billion per year and an obese individual can have up to $1,429 more in medical expenses each year than a healthy person (Barnes, 2011).  This epidemic is inflating Medicare expenses and taking money from more than just the obese population.  As grave as this situation is, there is some hope.  The obesity epidemic is a main focus of the Obama administration and, with particular efforts made by Michelle Obama, they have released a set of voluntary initiatives through the Let’s Move program that aims to greatly reduce childhood obesity.

            The Let’s Move program’s slogan: “To solve the problem of obesity within a generation” (Barnes, 2011).  Let’s Move has a specific and measureable goal: to reduce the rate of childhood obesity from 30% to 5% by 2030 (Barnes, 2011).  The initiative calls for educating both children and adults about ways to lead healthier lives, both around food intake and leading more active lives.  The initiative aims to improve nutrition in schools and makes the latest nutritional information more accessible to the public.  To this end, officials are designing a uniform, front-of-the-item label that makes finding nutritional information easier.  These labels will be based on a new set of nutritional guidelines drawn from recent scientific data as opposed to the outdated food pyramid.  Officials will also give health education a larger role in elementary school, improve lunch menus, and implement educational tools like school gardens (Barnes, 2011).  

            While the Let’s Move initiative is a step in the right direction, especially considering its social implication, its goal of decreasing childhood obesity to 5% in one generation is overly ambitious for a variety of reasons grounded in biology and cognitive science.  The policy goals will be impeded by epigenetic changes passed from parent to child, cognitive and physical development of the embryo in the womb and cognitive factors relative to eating habits children develop from infancy to early childhood, all of which the Let’s Move program fails to address.

Biological Mechanisms Affecting Obesity

            It is common knowledge that genes are the mechanism by which parents’ traits are passed on to their children.   What many may not know is that in order for a trait to be expressed, chemicals have to turn on the gene.  Every cell has the same DNA, which contains the information to encode all of our physical traits.  However, the cells do not code for every trait because not all of the genes they contain are turned on.  For example, all of our blood cells have the genetic information to be any other type of cell in the body.  They could be a skin cell, a stomach cell or a cell in the eye.  But in a blood cell, all of the information to express the traits of the other cells has been turned off.  Essentially, if a gene is not turned on it is silenced and will not cause the trait that it codes for to be expressed.  The process that silences the correct genes is known as epigenetic changes - chemicals that cause the genes to be shut off.

Epigenetic changes to a genome do not make any physical changes to DNA; they only change which genes are going to be expressed and which are not (Bird, 2007).  Even though epigenetic changes may seem abnormal, they regularly occur in the human genome.  Consider the lung of an organism in which cells are constantly dying and being re-made to keep the lungs functioning properly.  If the undifferentiated cells started to become skin cells instead of lung cells, because the wrong genes were turned off by epigenetics, then the lungs would start to malfunction.  Another example is when embryos are developing in the womb all of the cells of the child begin as blank cells: they have no specialized functions.  These are so called “stem cells” that have the potential to become any type of cell (Bird, 2007).  The way the cells differentiate or specialize and become a lung cell, skin cell or brain cell is, in large measure, dependent on epigenetics.

            For epigenetic changes to be made in genes, a molecule, called a methyl group, attaches itself to a site on DNA, and, as a result, the enzymes that would create new cells out of this material can no longer copy the gene.  The gene is effectively shut off (Riek, 2007).  This process of shutting off genes is known as methylation.  Methylation works by attracting other molecules that make the DNA more tightly wrapped so that it is too tight to copy.  It is easiest to think of methylation as guidelines for our genes; without it genes would have too many options and wouldn’t know what to do in order to make cells express their specific function.

            These epigenetic changes in DNA can be inherited. In reproduction an egg and a sperm will come together from each parent.  The sperm cell and the egg cell each have half of a set of genetic material from each parent.  This way, when fertilization occurs, the result is a cell with a whole set of genetic material.  In order for a gene that has been changed epigenetically to be passed on from parent to offspring it has to be included in the DNA that is in either the egg or the sperm cell.  Once these cells come together to make a complete unit, this cell will start dividing.  During cell division, genetic material is repeatedly copied, causing any epigenetic changes to be in the replicating cells used to make the fetus. 

 

Inheriting a Predisposition for Obesity: Why Epigenetics has placed the Current Child Generation Already Behind

            When most people consider the development of obesity, they think of largely external, environmental factors.  Things like over-eating, eating foods high in saturated fat, and lack of exercise.  However, studies show that a large contributing factor to obesity is programmed into our genes through epigenetic changes.  Because of these genetic factors, children have an increased occurrence of obesity due to the amount of food their parents and grandparents grew up eating.  These heritable predispositions will make a drastic decrease in obesity prevalence more difficult.  A study led by Marcus Pembrey, a clinical geneticist at the Institute of Childhood Health in London, involved inheritance patterns in children born to parents who experienced famine that cause obesity to be “passed on” to their children.  Dr. Pembrey found meticulous records of the yearly food supply for a Swedish village that had experienced periods of famine.  This study was unique because the village had kept exceptionally good health records for generations.  They had also experienced periods of both famine and abundance.  Therefore, it was the perfect place to look at trends in obesity through generations.  They found that if a grandfather grew up undernourished, then his grandson would live much longer (Pembrey, et al., 2006).  However, if a son’s father was over-nourished, then that child was four times more likely to die of diabetes related illness (Pembrey, et al., 2006).  These complications due to diabetes, Pembrey reasoned, are most likely due to issues with obesity.  Men are constantly making sperm once they reach puberty.  This means that epigenetic changes prompted by the environment could be incorporated into newly made sperm cells and then passed onto their sons.  It is highly plausible that a man’s diet will cause epigenetic changes that can lead to obesity.  

There have been a few genes whose silencing has been linked to obesity.  A study done by Wang et al. concluded that there were two genes dealing with immunity in our blood cells that can be linked to obese individuals  (Wang, et al., 2010).  However, because these studies are so new and have not had time to be re-verified, there is some skepticism  as to the true correlation  (Franks & Ling, 2010).  There is strong evidence that there is an epigenetic mechanism that is a contributing factor to the increased prevalence of childhood obesity.  However, because these studies are only a few years old they have not been able to be completely explored or verified by the scientific community.     

These findings indicate that the proposal by the Let’s Move initiative to change the obesity epidemic by the end of this generation is not likely to succeed because of the paternal inheritance pattern of obesity.  In accordance with Pembrey’s findings, it is very likely, due to the prevalence of childhood obesity, that the current population of elementary school boys has a genetic pre-disposition to diabetes-related illness and obesity.  These children have been over nourished and, especially with the amount Americans eat, they may need extra help to return to a healthy weight.  Therefore, theLet’s Move suggestions need to be much more aggressive.      

            More recent studies that have tested the heritability of metabolic properties in twins have shown that genes can be more influential on weight gain tendencies than postnatal environment; changes to our genome have a large impact on tendencies for obesity.  Dr. O’Rahilly, the head of department and professor of clinical biochemistry and medicine at Cambridge University did a study on twins that showed that genetic mechanisms for obesity had a larger effect than the environment.  Dr. O’Rahilly used twins to test this phenomenon, he gave twins that had been reared together and twins that had been reared apart very high calorie diets.  The important finding is that the weight gain of twins who were reared apart was the same.  This means that the separate environment they were raised in had less of an effect than their similar genome.  Studies like this have been replicated many times and it is estimated that metabolism tendencies are between 64% and 84% heritable (Stunkard, Foch, & Hrubec, 1986).  This suggests that, if caloric intake is constant, metabolism and weight gain are more affected by our genes than the environment that we grow up in.  This means that epigenetic changes to our genome with regards to weight gain will have an effect on body composition of children.  The Let’s Move program has a purely environmental focus.  Their ideas are helpful, however they may be less effective than anticipated because of the increased significance that genes have on weight gain.     

            Twin studies are known to be controversial because of their limited sample size.  For example, the O’Rahilly study only had 12 sets of twins who were reared apart.  In terms of a sample size needed for accuracy of a study, this is very small; however, it is also important to keep in mind that twin studies are the best way the scientific community has to study the differences in genes and environment.  Although these studies were not testing epigenetic changes specifically, they do prove that genes have an influential effect on a person’s metabolic tendencies.  Without this information scientists would be able to see epigenetic changes but would not be able to prove that they have an effect.  With the combination of the strength our genes have on our weight gain, and the way that epigenetic changes can further increase predispositions to be overweight, it is clear that a generational fix for obesity is nearly impossible.  If Let’s Movewants to bring childhood obesity down to 5% by 2030 they are going to have to acknowledge the new scientific data surrounding epigenetics and they may have to create a much more aggressive program.     

   

Children Can Be Predisposed to Obesity in the Womb                       

In addition to epigenetics, the Let’s Move program should consider new evidence that shows that predispositions to obesity can develop in the womb.  Because the Let’s Moveprogram begins its fight with obesity after the child is born there is a mismatch between where the issue of obesity starts, and where the program starts its advice.  However, to begin this section we must first consider basic embryology.  Women are born with all of the eggs that they are going to have in their life (Campbell & Reece, 2008, p. 1009).  Therefore, unless epigenetic changes are able to affect the genes in the eggs the only physical changes a woman can make to her baby are through the environment of the womb.

Cognitive Developments that Lead to Increased Risk for Obesity

One example of physical changes made to the fetus due to the prenatal environment is hormones that flood the womb for proper development.  A familiar phenomenon is the flooding of the womb with testosterone to help create appropriate cognitive and physical developments in the fetus regarding gender.  Similarly, a child can also be predisposed to appetite control issues through the introduction of the hormone leptin in the womb (Pinto, et al., 2004).  When leptin floods the brain it stimulates neuronal growth in the hippocampus.  The neurons that grow create millions of connections between three sections of the hypothalamus (Pinto, et al., 2004).  The hypothalamus is the part of the brain that influences the amount and timing of hormone release in the body.  These hormones include those that control appetite and metabolism, two key factors in the development of obesity.  The specific mechanisms leptin uses in the brain are still relatively unstudied; however, there is convincing data that leptin deficiencies are a key factor in obesity (Pinto, et al., 2004).

Leptin regulates hypothalamic activity in regards to appetite control and can lead to obesity later in life.  The decreased neural connections caused by a leptin deficiency in the womb cause the brain to improperly indicate to the body when it should stop eating. What’s even more detrimental about leptin deficiencies is that once they are allowed to persist through the development of an adult brain they are permanent (Pinto, et al., 2004).  In Pinto’s research both juvenile and adult rat brain tissue was flooded with leptin and only the juvenile brain cells showed increased neuronal growth around the hypothalamus.  This type of deficiency will lead to appetite issues and increased fat storage that persist through adulthood that, in turn, will more than likely lead to obesity.  Again, this means that children are born already behind in the race against obesity and sets the goals of Let’s Move further back. 

            In essence, when we are developing our brains are largely un-programmed.  As children have experiences and start learning about the world the brain starts to make countless neural connections.  These connections are associations between things we interact with.  We make associations like: my mother feeds me so I will trust her, my father holds me when I cry so I will trust him; even something as simple as food tastes good so I like food.  More recent studies have started to show that this learning starts in the womb.  The Let’s Move initiative mentions nothing about pre-natal care or a healthy diet for mothers who are with child.  This means they have not yet started fighting the issue where it actually begins, so this current generation is already suffering from a predisposition that could have potentially been avoided by a healthy prenatal environment.

  Physical Developments that Lead to Increased Risk for Obesity

Studies have been done associating the environment in the womb with predispositions to health problems later in life.  This is another factor that makes a single generation fix very difficult.  There have been associations made with the birth weight of a child, the amount of food the mother eats during pregnancy, and certain physical predispositions to vascular disease  (Gale et al., 2006).  It has been shown that birth weights of babies in the extreme ranges, very small or very large, are associated with health problems in childhood (Barker & Osmond, 1986).  Likewise, if the mother is obese during pregnancy her child is predisposed to diabetes and other obesity-related diseases  (Barker & Osmond, 1986).  Again, even though these children may not be obese, they still have a greater potential to develop serious illness that will still be contributing to the $100 billion per year that the United States spends on these diseases. 

            Children with extreme birth weights tend to have other issues that cause them to be obese.  Children who are born under- or over-nourished have been shown to develop abnormal eating behaviors later in life, the most common being lack of appetite control.  If a fetus is developed in an environment void of nutrients then it will develop metabolic changes to cope.  The fetus will be born smaller, and its insulin production and release, which is associated with digestion and metabolism, cause the child to have a mismatch with their environment (Gluckman, Hanson, & Low, 2011).  The fetus responds to its prenatal environment and prepares to be born into a similarly undernourished environment; the altered metabolism will cause the child to store more calories as fat.  However, in society today this sort of physical change will often lead to a predisposition to obesity (Gluckman P. D., Hanson, Spencer, & Bateson, 2005).  The child’s insulin pattern is designed to create energy efficiency within the body.  If the child grows up eating fast food or food that is high fat (which is often saturated fat) they are going to store more of the calories they eat as fat than children without these metabolic changes.  This means, it is possible for a child to be born with an epigenetic predisposition to obesity and a metabolism designed to store more calories as fat.  Twin studies done in Denmark show that among twins where one is obese and the other is not; the obese child was very often the smaller of the two twins at birth (Martin-Gronert & Ozanne, 2005).  Birth weight, something determined in the womb, can cause the child to be overweight later in life and needs to be addressed by the Let’s Move initiative.  Because the Let’s Move initiative does not address actions that mothers should take to have babies with healthy metabolisms and birth weights they are only getting further from obtaining their goal by 2030.

 

 How Parents’ Behavior Causes Early Development of Poor Eating Habits

            American children are not only predisposed to obesity in the womb, they also learn poor eating habits by watching their parents eat poorly.  Michelle Obama has been quoted saying that it is “hopeless for the current parent generation” (Obama, 2010). She is referring to the fact that their eating habits have been reinforced for such a long time that changing them is nearly impossible.  Although she meant this in a humorous way, it has a much more grave connotation.  Children start watching and learning from their parents as soon as they open their eyes.  They are making associations and using their parents’ cues to learn how to function.  This is also true for eating habit developments.  Children will take eating cues from their mothers and start to mimic them at a very early age (Gluckman, Hanson, & Low, 2011).  There is also a positive correlation between the amount a mother eats during pregnancy and the amount a child will eat later in life (Gluckman, Hanson, & Low, 2011).  A newborn child’s capacity to learn is far greater than any adult’s, meaning that any imprint that a parent’s actions make on a child will have a much stronger effect than on an adult.  This also makes it much more difficult to change habits in an adult than a child.  If Michelle Obama truly believes that the parent generation cannot change their poor eating habits then how are our children supposed to avoid also learning these bad habits?   The Let’s Move initiative is trying to give children better odds at fighting obesity; however, they are neglecting the most influential periods in a child’s life.  They cannot simply dismiss the poor eating habits of the adult generation if they want our children to be raised in a healthy food environment.  The Let’s Moveinitiative cannot ignore the importance of early childhood conditioning and how parent contribute to those habits that are formed.      

 

The “New and Improved” School Lunch Programs

The Let’s Move initiative has publicized and addressed many of the social issues surrounding obesity.  They have made childhood obesity an important issue that the whole community is able to talk about and begin to address.  This is more than any other administration has done for this grave issue.  However, the one issue they have not fully addressed is how the school lunch programs are also teaching our children bad food habits.  The Let’s Move initiative publicized many of the wrongdoings of our school lunch systems.  One major change that Let’s Move has implemented is improving the quality of the food that is served to students.  The US Department of Agriculture (USDA) would often use school lunch programs as a way to sell meat that was not high enough quality for farmers to be able to sell (Lanou & Sullivan, 2003).  This meat was the lowest grade, with very high fat content, and most people would choose not to eat it let alone feed it to their children.  The Let’s Move program also did a nutritional check on the lunches being provided to students for the 2004-2005 school year; 95% of schools did not meet nutritional requirements (Barnes, 2011).  Many school were serving meals that were composed of high calorie, low nutrient foods high in saturated fat.  Barnes’ study found that most of the children were eating lunches composed of more French fries and potato products than any other food (Barnes, 2011).  It is important to keep in mind that for some children, what they eat in school is the only and/or most nutritious meal they will eat in a day.

The poor meat quality has been stopped, and, nutritionally sound changes have been suggested in the school lunch programs, but they are not drastic enough to make the goals of the Let’s Move initiative a reality.  There are new Federal nutritional standards that schools have to meet.  Michelle Obama has summarized these principles as trying to provide more fruits and vegetables and to make sure that the quality and nutritional content of the foods offered to students is more conducive to a healthy lifestyle  (Obama, 2010).  Let’s Move programs are also providing more training and educational support to the school lunch staff through the USDA, encouraging schools to invest in more healthy ways to cook their foods (e.g., using ovens instead of deep fryers) and encouraging schools to start buying food from local farmers (Barnes, 2011).

 These changes will improve the quality of food that students are eating, but has a difference really been made?  Consider the following table:

March 7, 2011	March 8, 2011	March 9, 2011	March 10,2011	March 11,2011
Corn Dog or Texas Cheese Toast Potato Wedges Baked Beans	Sausage/gravy/Biscuit Egg Patty/ Hash Browns Baked Apples Sweet Peas	Gatti’s Pizza or Chicken Tenders Scalloped Potatoes Green Beans or Buttered Carrots Biscuit	Hamburger w/ Cheese of Hot Dog/Bun French Fries Lettuce/Tomato/Pickle Baked Beans	Pizza or Nacho Chips & Cheese Corn Tossed Salad Sherbet or Juice Bar

Table 1:  A week sample of a school lunch menu from Franlkin County High School in Frankfort Kentucky.  (http://www.franklin.k12.ky.us/food/default.aspx)       

 

March 7, 2011	March 8, 2011	March 9, 2011	March 10,2011	March 11,2011
Beef and Cheese Nachos Bean and Cheese Nachos Salad Bar/Entrée Sides Pinto Beans	Traditional Meat Pizza Traditional Cheese Pizza Salad Bar/ Entrée Sides	Chicken Pot Pie with Biscuit Vegetarian Enchiladas Salad Bar/ Entrée Sides	Pasta Bolognese Vegetarian Pasta Marinara Salad Bar/ Entrée Sides	Roasted Chicken w/ Mashed Potatoes and Whole Grain Role Cheese Quesadilla Salad Bar/ Entrée Sides

Table 2:  A week sample of a school lunch menu from Boulder Valley School District in Boulder Colorado.  (http://bvsd.org/food/Pages/LunchMenu.aspx)      

 

Table 1 shows a copy of a week of school lunches from Franklin County High Schools’ March lunch menu.  Even if the food these schools are providing is local and high quality none of it is overly healthy.  What is worse is that it is teaching children that the food they should eat is pizza, hot dogs, hamburgers, and nachos, yet these are all foods that are commonly classified as junk foods.  Is this the staple diet we would want American students eating – especially ones that may have several predispositions towards obesity?  A salad bar is an option at every meal, however, most students will skip this option altogether  (Cooper, 2007).  Another shortcoming: if a child does not eat meat their substitute for every meal is more than likely going to be some sort of carbohydrate with cheese on top.  Even in schools in Boulder, Colorado school districts, which boast about serving a very large amount of local and organic food, have a menu almost identical to the one pictured above (See Table 2).  Regardless of the quality of the food the students are being given they are still being taught that it is okay to eat food like pizza and nachos weekly for lunch.  These foods may be okay to eat on occasion, but they are very calorie rich and should not be eaten daily. 

These impressions will affect their decisions around food for the rest of their life.  Studies done on college students have shown that many choices around eating are based on childhood (Branen & Fletcher, 1999).  The nutritional content of the food that the students ate was based on their quality of food along with other poor eating habits (Branen & Fletcher, 1999).  Even habits like emotional over-eating can come from early childhood.  This means that schools have an even greater responsibility to prevent these habits from continuing.  A study done by Rebecca Phul and Marlene Schwartz from the Yale department of Psychology found that three fundamental rules were remembered in adults from childhood.  “Rules which restrict intake of certain foods, rules which encourage food intake, and rules where food is used to reward or punish behavior”  (Phul & Schwartz, 2003).  Children cannot be fed unhealthy foods at school when they are growing up because it will impact their personal rules around food all the way into adulthood.  They will think it is acceptable to have junk food for substantial meals on a regular basis because that is what schools are feeding them.  Schools are making a valid effort to improve nutritional education; however, they are not following through by serving healthy meals.

 

Options for Improvement

            The Let’s Move program has started to create a healthier atmosphere for children in the United States.  They have taken the largest step towards remedying this issue by making it public, and something that can now be talked about.  The government is using their standing to influence big corporations so that large changes can be made quickly – something that very few could achieve.  They are making nutritional changes in schools and encouraging exercise among younger students.  However, there are many factors contributing to childhood obesity that have been overlooked by the Let’s Move initiative that should be considered.  Most of the improvements need to be focused around parental responsibilities before children are born and in the child’s early years.  Women need to consume a responsible number of calories during pregnancy and they need to maintain a healthy weight during pregnancy so their children do not develop predispositions to obesity in the womb.  There also needs to be a focus on education in the way that parents act around their newborn babies.  They should be eating responsibly, and displaying healthy eating habits for their children to start learning at a very young age.  This education must continue once children are in schools and eating without their parents present to monitor.  Schools should be encouraging students to avoid junk and eat meals that are more centered on whole foods like fruits, vegetables, unprocessed grains, and high-quality meats.  The most effective way to do this is by providing meals that are based around these foods.  This will provide students with healthy eating habits that will prepare them to eat right for the rest of their lives.  

            The Let’s Move initiative is a big step in the right direction; the government needs to be involved in order for America to have a chance at fighting the childhood obesity epidemic.  I commend the government for taking such a bold stance against obesity because this often means taking a strong stance against large corporations that supply junk food.  However, the Let’s Move policy has not made drastic enough changes in order to reach their goal of reducing the prevalence of childhood obesity to 5% by 2030 (Barnes, 2011).  They need to look at the new scientific research being done regarding epigenetics and prenatal changes to the fetus.  If they can find ways to address these issues they will have a much better chance at quickly reducing the prevalence of childhood obesity, or they will realize this process is simply going to take more time than they initially expected.  The most uplifting fact is that this government program has begun a movement that, over time, will make it easier for children to grow up at a healthy weight and live longer, happier lives.

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Union Membership and Wages - 1990 -2010: A Case Study, Peter Bacich

Introduction: A Brief History of Labor Unions    

            Labor Unions and collective bargaining play a critical role in the history of the American Worker; however, early attempts at labor organization proved to be unsuccessful and short-lived. The first recognized American labor union was the National Labor Union (NLU), which was formed in 1866. Although the NLU successfully campaigned for legislation mandating an eight-hour workday, it only lasted for seven years and was dissolved in 1873. Later attempts at Labor organization resulted in incidents such as the Pullman Strike of 1894 and the Hatter’s Union boycott of 1902, which were broken up on grounds that the union activities violated the Sherman Anti-Trust Act. The first major victory for Labor Unions came on June 16, 1933 when President Franklin D. Roosevelt signed the National Industrial Recovery Act (NIRA) into law. The primary provision of NIRA was that “Employees shall have the right to organize and bargain collectively through representatives of their own choosing, and shall be free from the interference, restraint, or coercion of employers.”[1] Two years later, NIRA was replaced by the National Labor Relations Act (NLRA), which guaranteed employees the right to self-organize in unions, and was “applied to all employers involved in interstate commerce except airlines, railroads, agriculture, and government.”[2] NLRA also created the National Labor Relations Board to “arbitrate deadlocked labor disputes, guarantee democratic union elections, and penalize unfair labor practices by employers.”[3] The organized labor movement continued to flourish and in 1955 the American Federation of Labor (AFL) and the Congress of Industrial Organizations (CIO) executed a friendly merger and still to this day the AFL-CIO “is the largest federation of unions in the United States made up of 56 national and international unions.”[4] Throughout this time period union membership was restricted to employees in the private sector, a restriction that would change in 1962 when President John F. Kennedy implemented Executive Order 10988 which “provided most employees of the Federal Government with the ability to ‘form, join, and assist any employee organization or to refrain from any such activity.” The Order sought to allow unions to organize in a cooperative fashion rather than create an adversarial relationship between the unions and management in the federal sector.”[5]This led to an unprecedented expansion in union membership, which would peak in 1979 with 24.1% of the labor force belonging to a labor union.[6]

            The demise of the American Labor Movement began only two years later on August 3, 1981. Unsatisfied with the Government’s pay raise offer, the Professional Air Traffic Controllers Organization (PATCO) instructed 16,000 commercial air traffic controllers to go on strike. President Ronald Reagan informed the air traffic controllers that they were to return to work in 48 hours or they would be fired and would be unable to work in a federal capacity ever again. As a result “A fourth of the strikers came back to work but 12,000 did not. The strike collapsed, PATCO vanished, and the union movement as a whole suffered a major reversal.”[7] Between 1981 and 1990, union membership plummeted from 21.4% to 16.1% of the labor force.[8]

Motivation:  

            The decline of the Labor Movement is of particular importance due to its perceived correlation with the American middle class; “It is a widely held view that unions have helped build a strong middle class. They have done so because unionized firms tend to pay significantly higher wages and total compensation (including fringe benefits).”[9] However, there is a growing sentiment in America that the middle class is dying, if it is not dead already. According to a recent article in Forbes Magazine; “The idea that one can have a single-earner family, get a good job, keep it for life and have a comfortable living is all but gone. Long-term job stability is declining, and there aren't good unionized jobs like there once were.”[10] The motivation of this essay is to explore the relationship between union membership and wages between 1990 and 2010 in order to assess whether or not union membership continues to have a positive effect on wages and if it will continue to do so into the future.

Methodology:

            To perform the empirical analysis, I have compiled data using the March Current Population Survey from 1990, 1995, 2000, 2005, and 2010. The datasets contain information on age, sex, total income, years of education, and union membership. To increase the accuracy of the analysis, I have implemented controls to limit the dataset for only those workers who were employed at the time of the survey. I have also limited the age range to include individuals between the working ages of 18 to 54. Dummy variables were created for those who identify as Black, Asian, Hispanic, or Other. In addition to the race dummies, a Male dummy variable was created for the simplicity of regressing binary explanatory variables. Due to the fact that the wage observations occurred in different years, I have adjusted the wages for inflation in 2010 Dollars using the CPI index for 2010. After adjusting wages for inflation, I divided the total wages by number of weeks worked and multiplied by 52 weeks in order to obtain consistency in annual earnings across all of the observations. In order to include the effects of experience, an experience variable was created using the formula ‘exper=(Age-Years of Education- 6)’. Observations that returned an experience variable less than zero were dropped from the data set. The final control was to drop all observations that reported earning less than $15,080 annually which is the amount one would earn if one were paid only the 2010 Federal Minimum wage of $7.25 per hour. The table of Summary Statistics can be found in Appendix A, Table 1.

Basic Regression Specification:

            We will begin by running a basic regression specification with no explanatory variables for the entire dataset. In order to perform this and the following regressions, the variable ‘lwageyr’ was created, and represents the log of the standardized annual income I explained earlier. As a result, any changes in income can be explained as a percentage change rather than a unit change. The basic regression specification can be found in Appendix A, Table 2.

            The regression gives us a constant of 10.58 that requires conversion because a log-level regression was performed. After this conversion, we find that exp(10.58) = 39340.11. This tells us that this regression has an annual income of $39340.11 if the observation did not did not identify as a member of a labor union. The ‘Union’ coefficient for the regression is .133, which suggests that those who identify as a union member are associated with a 13.3% increase in income over the constant of the regression. Furthermore, both the constant and the Union coefficient have P-values of 0.00, meaning they are statistically significant at a 0.01 level. The R-Squared value is 0.002, meaning that only 0.02% of the differences in income can be explained by Union membership and additional regression analysis is needed.

Multivariate Regression Specification:

            The results of the Multivariate regression can be found in Appendix A, Table 3. For this regression I will be including the Union dummy, the Male dummy, all Race dummies, Years of Education, and the Experience variable. As with the previous regression, this regression will be performed on the entire dataset. The Multivariate regression yields a constant of 8.809 that converts to $6694.22. While it is much smaller than the constant in the basic regression, it is of little consequence as it is unlikely someone would accept an annual wage of $6,694 when the Federal minimum wage would equate to $15,080.

            What we do see is a fairly significant drop in the value of the Union coefficient from .1180 to .0789. Never the less, the multivariate regression associates Union membership with a 7.89% increase in income while holding all else constant. Also of note is the 31.3% wage increase associated with males, the 10.1% increase per additional year of education and the 1.43% increase per additional year of experience holding all else constant. However, the results are not all positive; we see that the minorities are marginalized at a rate of -10.5% for Blacks, -8.6% for Other, -7.9% for Hispanics, and -2.7% for Asians. The regression proves to be statistically significant at a 0.01 level for all variables and the R-Squared is much higher at 26.5%.

            Finally, we will perform the same multivariate regression by each time period to track the changes in the Union Membership coefficient over the last 20 years (Appendix A, Table 4). The annual regression yields some troubling results; between 1990 and 2005 the Union coefficient decreased from 9.87% to 5.89% before increasing to 7.77% in 2010. Even with the recent upward trend, Union membership is still associated with a smaller percentage increase in wages than in 1990. The regression also shows that each Race variable has seen wages decrease on a percentage basis over the last 20 years, suggesting that perhaps racial discrimination has become more of an issue in the workplace. The constant suggests that the base level of wages has also decreased consistently over the last 20 years. Each variable is statistically significant at a .01 level, with the exception of the Asian coefficients in 1990 and 1995. The P-values for the coefficients are 0.115 and 0.765 respectively allowing us to reject the null hypothesis that being Asian is associated with a decrease in wages.

Conclusion:

            The implications of the regressions are also of extreme economic significance. For example 14,715,100 workers were members of a Union in 2010 and the median wage of non-union members in our 2010 data is $39,550. The 7.7% wage premium equates to an additional $3,045.35 per worker annually. Multiply this by the number of union members and you receive an additional $44,812,629,785 dollars that was injected into the economy because of higher union wages. This would be even more significant if union membership was anywhere near the 24.1% it was in 1979 and also if union wages were not allowed to fall as they have over the last 20 years.

            Econometrician Richard A. Levins appropriately summarizes the argument best when he comments “labor unions became strong enough to shift corporate profits from very wealthy owners to the middle class, in the form of better wages and benefits.”[11]However, it is not only about increased wages, but also about increased job protection and quality of life for the millions of working class individuals who rely on unions to ensure that they are protected. According to the analysis performed above, reinvigorating the labor movement would not only benefit individual laborers but the entire American economy as well.

 

 

 

 

 

 

 

Appendix A.

Table 1:

Table 2:

Regression of Log (Annual Wage) on Union Membership
VARIABLES	lwageyr
Union Membership	0.134***
	(0.00580)
Constant	10.58***
	(0.00118)
Observations	236,278
R-squared	0.002
Robust standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1

 

 

Table 3:

Regression of Log (Annual Wage) on all Explanatory Variables
VARIABLES	lwageyr
Union Membership	0.0789***
	(0.00519)
Males	0.313***
	(0.00198)
Black, Non-Hispanic	-0.105***
	(0.00325)
Asian, Non-Hispanic	-0.0273***
	(0.00566)
Hispanic	-0.0793***
	(0.00295)
Other Race, Non-Hispanic	-0.0862***
	(0.00719)
Years of Education	0.101***
	(0.000509)
Years of Work Experience	0.0143***
	(0.000106)
Constant	8.809***
	(0.00776)
Observations	236,278
R-squared	0.265
Robust standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1

 

 

 

 

 

 

 

 

Table 4:

Regression of Log (Annual Wage) on all Explanatory Variables by Year
	1990	1995	2000	2005	2010
VARIABLES	lwageyr	lwageyr	lwageyr	lwageyr	lwageyr
Union Membership	0.0987***	0.0873***	0.0604***	0.0589***	0.0777***
	(0.00880)	(0.0109)	(0.0126)	(0.0141)	(0.0140)
Males	0.332***	0.297***	0.314***	0.321***	0.301***
	(0.00411)	(0.00454)	(0.00493)	(0.00417)	(0.00442)
Black, Non-Hispanic	-0.0982***	-0.0960***	-0.0902***	-0.120***	-0.118***
	(0.00706)	(0.00812)	(0.00822)	(0.00656)	(0.00681)
Asian, Non-Hispanic	-0.0213	-0.00410	-0.0431***	-0.0483***	-0.0325***
	(0.0135)	(0.0137)	(0.0147)	(0.0112)	(0.0110)
Hispanic	-0.0477***	-0.0541***	-0.0955***	-0.0887***	-0.0880***
	(0.00690)	(0.00727)	(0.00686)	(0.00615)	(0.00619)
Other Race, Non-Hispanic	-0.105***	-0.0563**	-0.146***	-0.0748***	-0.111***
	(0.0272)	(0.0219)	(0.0245)	(0.0115)	(0.0124)
Years of Education	0.0904***	0.0962***	0.103***	0.107***	0.115***
	(0.000879)	(0.00120)	(0.00130)	(0.00116)	(0.00127)
Years of Work Experience	0.0154***	0.0152***	0.0141***	0.0135***	0.0136***
	(0.000228)	(0.000254)	(0.000260)	(0.000222)	(0.000231)
Constant	8.936***	8.826***	8.786***	8.766***	8.659***
	(0.0136)	(0.0181)	(0.0198)	(0.0175)	(0.0196)
Observations	47,469	40,376	38,890	57,522	52,021
R-squared	0.314	0.254	0.265	0.252	0.255
Robust standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References:

 

Goudreau, Jenna. "Disappearing Middle-Class Jobs." Forbes. 22 June 2011. Web.

 

Hirsh, Barry T., and David A. Macpherson. "Union Membership, Coverage Density, and Employment Among All Wage and Salary Workers, 1973-2010." 2011. Web.

 

Kaminski, Matthew. "What Labor Wants." Wall Street Journal. 19 Sept. 2009. Web.

 

Levins, Richard A. "Unions Built the Middle Class and Must Save It." Aflcio.org. Web.

 

Northrup, Herbert R. "The Rise and Demise of PATCO." Industrial and Labor Relations Review 37.2 (1984): 167-84. Web.

 

Shimabukuro, John O. "Collective Bargaining and Homeland Security." Report for Congress (2002). Web.

 

Smith, Sharan. Subterranean Fire. Chicago: Haymarket, 2006. EBSCOhost. Web.

 

United States of America. Congress. An Act to Diminish the Causes of Labor Disputes Burdening or Obstructing Interstate and Foreign Commerce, to Create a National Labor Relations Board, and for Other Purposes. Washington D.C: National Archives, 1935. Web.

 

Weidenbaum, Murray. "Unions Rarely Miss Their Payday." USA Today Magazine Mar. 2010: 22-23. Web.

 

 

 

 

 

The 1997 Asian Financial Crisis: An Investigation into the Economic Impacts on South Korea and its Policy Responses, Gookjin Jeong

The 1997 Asian Financial Crisis: An Investigation into the Economic Impacts on South Korea and its Policy Responses

Introduction

In the late 1990s, a financial disaster struck Asia. Many Southeast and East Asian countries found themselves in a seriously troubled state, witnessing       their real GDP growth rate plummet, their stock markets collapse, and their government deficit become unsustainably high. Among the group of unfortunate countries affected by the 1997 Asian Financial Crisis was South Korea, which had been showing steady and robust growth in the years immediately prior to the crisis. In this paper, I contend that while there were indubitable weaknesses—and plenty of room for improvement—in Korea’s handling of the crisis, the measures implemented to ameliorate the macroeconomic status were, on balance, undoubtedly effective. I first investigate the causes of the Asian crisis on a very general level. I then analyze some specific economic impacts the crisis brought about to the Korean economy and look at the policy measures the Korean government implemented in response. I conclude by listing and discussing lessons that Korea could learn, both in its government policy responses that were instituted to alleviate the crisis and in future attempts to prevent such a large-scale catastrophe.

 

Background

As currency rates change and state economies grow, the overall financial positions of states relative to each other shift inevitably. After World War II, which left the international community in a state of utter ruin, different regions of the world had their own paths to recovery. The United States emerged as the economic and military superpower in the postwar era; however, its long-term decline after the extraordinary post-1945 U.S. hegemony was perhaps a natural and unavoidable phenomenon, simply because of the speedy growth of many national economies. In terms of economic power and prowess, various Western European and Asian countries quickly caught up with the United States in the decades following the devastation of the Second World War. Japan, by the 1980s, seemed to be emerging as a possible rival to the United States as the world’s leading industrial power. For example, Japanese auto manufacturers gained ground on U.S. rivals when smaller cars became popular after the oil-price shocks of the 1970s.[1] In electronics and other fields, Japanese products became dominant in world markets, and this export-led growth became a powerful economic force in Japan’s nearby economies, as well as in the United States, where Japanese creditors financed much of the growing U.S. international debt.[2] These successes, however, concealed some serious problems; the economic growth observed in the 1980s led investors world-wide to resort to speculation in their decision making, driving prices of stocks and real estate to unrealistic levels.[3] When Japanese stock markets and real estate collapsed towards the end of the 1980s, many banks were left with bad loans backed by overly deflated stocks and real estate. These losses were covered up, and the underlying problems, including lax banking regulations and political corruption, persisted throughout the 1990s.

            Despite the example of Japan’s financial system, these mistakes “were repeated almost exactly in the 1990s by other countries of East and Southeast Asia.”[4] Real estate and stocks became seriously overvalued as rapid economic growth led to speculation and unrealistically high expectations. In turn, banks made bad loans based on the overvalued assets. Even though this continued to happen, banks were able to circumvent actual responsibility because of pervasive political corruption all over Asia. Finally, in 1997, all of these circumstances culminated in a grave financial crisis, which quickly spread throughout the world and reverberated for two years.

            In the following sections, this paper examines the causes of the crisis, its impacts on the South Korean economy and politics, and the effectiveness of Korean government’s policy responses.

 

Underlying Causes of the 1997 Asian Financial Crisis

By the end of the 1990’s, countries of East Asia had established themselves as the most successful emerging market economies in the world. Their fiscally prudent government policies, combined with high private savings rates, sped up economic growth and raised standards of living. These countries undoubtedly set an example for others to follow; thus, that this region might become involved in one of the worst financial crises in history was “hardly ever considered […] a realistic possibility.”[5] Why and how, then, did they end up in such a deep financial quagmire? Part of the answer lies in the fact that these countries were the victims of their own rapid economic growth; their success led both domestic and foreign investors to underestimate the countries’ weaknesses. Essentially, there were three underlying factors that contributed to the susceptibility of this region to a large financial crisis: unsustainable deficits, lax regulations, and macroeconomic policy mistakes.

First, current account deficits in many of East and Southeast Asian countries had become unsustainable. As can be seen in Figure 1, most of the Southeast Asian economies had “large current account deficits, […] in some cases exceeding 5% of their GDP.”[6] A country’s current account keeps track of exports and imports; current account deficits, also commonly referred to as trade deficits, are produced when the country’s imports exceed its exports.

          

Figure 1. Current Account Positions of the Asian Crisis Economies[7]

 

In order to finance the growing current account deficit, the Asian governments encouraged foreign capital inflows through international capital mobility increase and capital account liberalization.[8] This in turn caused these governments to become over-dependent on short-term foreign funds, which slowly drained the economic power of domestic financial institutions.[9] Especially in Korea, substantial difficulties accumulated in the financial sector as a result of “weaknesses […] in the financial structure of the Korean economy.”[10]

            Second, the absence of an adequate regulatory framework for businesses—the banks in particular—has been a contributing factor to the crisis in Southeast and East Asia. Lax regulations allowed unsound and possibly corrupt relationships to develop. In Korea, “it was not unusual that one division of chaebol (the Korean term for large corporate conglomerates) would be a bank, lending to other divisions of the samechaebol.[11] With easy access to funds, it is indeed no surprise that some of the investments were drowned in dubious ventures.

            Third, a number of basic errors in macroeconomic policy, including the Asian Tiger governments’ decision to unofficially fix the value of their currencies to the dollar, contributed to triggering the crisis.[12] Fluctuations in the strength of the dollar, therefore, had significant implications for the amount of capital these Asian countries could generate. For instance, when the dollar fell against most currencies in the early 1990s, the governments of the Asian Tigers were able to effectively depreciate their currencies against third-party currencies, thereby remaining competitive in the international market.[13] However, these effects were reversed when the dollar appreciated in 1995, and the Asian economies “suffered substantial losses in competitiveness, with adverse effects on net exports and growth.”[14] Korea was no exception, and as the dollar became stronger, Korea not only experienced an accelerated increase in its trade deficit, but also a dramatic decrease in the profitability of investments undertaken for exports.[15] These three factors combined to produce what turned out to be one of the most severe financial meltdowns in history, and its impacts on many countries across Southeast and East Asia were undoubtedly significant.

 

Impact of the Crisis on the Korean Economy

            The Korean economy suffered on many levels as a result of the crisis, with several indicators of economic health displaying signs of the declining conditions. First, expectations for the equity markets dropped considerably. Stock markets, on balance, serve as a barometer of opinion on the health of an economy. Because the level of any stock market is ultimately contingent upon the prospects for continued profits of the companies listed on the market, in periods when economic problems are taking place, or even anticipated, stock markets tend to fall to reflect the lower expected earnings.[16] In the case of Korea, as in other East and Southeast Asian countries, the stock market plummeted drastically during 1997, as shown in Figure 2. Second, a decrease in the money supply—which was due to capital flight overseas—resulted in an increase in interest rates in financial markets.[17] In addition to this market response, Korean government monetary authorities raised interest rates in an effort to prevent further, continuous depreciation of their currencies. As can be seen in Figure 2, Korea was among countries with the highest interest rates over a three-month period in 1997, excluding the outlier country Philippines. Third, the first two factors combined with subsequent currency devaluations “initiated a severe contraction in real economic activity in [Korea],” marked by such phenomena as increased corporate bankruptcies and rising levels of unemployment.[18]

          

 Figure 2. Exchange and Interest Rates During the Asian Crisis[19]

South Korea’s Path to Recovery: Immediate Response

            The initial government response to the crisis was a failure largely attributable to prevalent political corruption at the time. At the beginning of the crisis, with an election only a month away, the then-Korean president, Kim Young Sam, placed the good of the ruling political party ahead of the needs of economic development.[20] Moreover, President Kim had surrounded himself with corrupt politicians, who were very influential in formulating and executing economic policy. For example, there was a split on appropriate economic policy between the Korean Ministry of Finance and the Bank of Korea, which made it difficult for the government to take effective steps to resolve the problem.[21] This was not, however, the sole cause for the inefficacy and perverseness of Korea’s initial response. Another major reason was a series of domestic developments that took place in early 1997, one of which involved the idea of financially bailing out large corporate conglomerates whose survival—or the failure of survival—had seriously debilitating consequences on the stability of the whole economy.[22] However, when Hanbo Steel, the 14th largest chaebol in Korea, began to experience serious financial difficulties in January of 1997, the government economic policy team then in office refused to honor the notion of the bailout. The team truly believed that “in an economy run on market principles, a chaebol group should stand on its feet.”[23] Furthermore, and more importantly, there were no funds in the public sector to provide financial help to chaebols in economic difficulties such as Hanbo. The consequence was “the beginning of bankruptcy proceedings for Hanbo, Sammi, Jinro and others.”[24]

            To make matters worse, during October and November 1997, an eventually unsuccessful effort was “mounted to hold the line on the devaluation of the won, by selling foreign exchange.”[25] It used 60% of Korea’s dollar reserves, without even accomplishing the objective.[26] It is indeed a well-known principle among many political scientists and economists that the control of exchange rates in a managed float system becomes largely futile if foreign exchange reserves are depleted. This failed attempt brought Korea to the verge of an uncontrollable exchange rate by using up more than half of Korea’s dollar reserves in less than two months. Thus, the initial policy responses by Korea’s government to the crisis as it developed were both futile and perverse: they increased the vulnerability of Korea’s financial system even further without succeeding in resolving the chaebol crisis. Additionally, they “ate up Korea’s cushion of foreign exchange reserves at a juncture at which the liberalization of financial and foreign exchange markets had made preservation of foreign exchange reserves […] critical.”[27]Near-depletion of foreign exchange reserves inevitably led the Korean government to lose autonomy over its ability to use the money supply to offset the market pressures regarding exchange rate, since the government could no longer use its supply of foreign currencies to buy back the domestic currency available in the international market.

 

Role of the International Monetary Fund

            The nature of the crisis in Korea was different from that of a typical financial crisis, which usually involves an excessive external debt leading to a balance of payment deficit. It was truly a liquidity crisis due to serious mismatches in maturity, in currency, and in the capital structure “in the balance sheets of the financial and [even] non-financial sectors of the economy.”[28] And because it was a liquidity crisis, the Korean economy desperately needed a rapid infusion of hard currency reserves more than anything else.[29] In the face of such a daunting problem, Korea needed a global intergovernmental organization to save its economy. Fortunately, the International Monetary Fund (IMF) devised economic bailout plans in an attempt to preserve the fast-declining Korean economy. There were, however, two problems with this: financial inadequacy and incorrect interpretation of the nature of the crisis.

The amount of financial assistance the IMF and the Korean government agreed upon on December 3, 1997 was far from sufficient. The total amount of money that the IMF together with other international financial institutions offered to bail out Korea was $58.4 billion.[30] Out of this, however, $23.4 billion was reserved as a second line of defense that would be made available to Korea by G-7 countries only if the initial amount of $35 billion contributed by the IMF and other multilateral institutions proved inadequate for economic reconstruction.[31] The disbursement of the $35 billion was to be spread over more than two years until the year 2000, with the provision of each installment conditioned upon the progress the Korean government was to make in “structural reforms and the further tightening of its monetary and fiscal policies.”[32]  Foreign banks judged these amounts to be altogether utterly insufficient, even in terms of meeting the nation’s short-term economic and financial obligations. Therefore, given the large amount of these short-run obligations, as well as Korea’s precariously low levels of foreign currency reserves, the situation did not seem to improve even with the bailout money. As rollovers were rebuffed, the limited foreign reserves were quickly depleted, and foreign creditors further accelerated the withdrawal of their funds from Korea, pushing the country “to the verge of a sovereign default.”[33]

The amount of short-term loans being insufficient is one issue; the IMF’s misguided intentions are another. Critics of the IMF argue that stabilization packages for Korea were poorly constructed and, instead of alleviating the problem, deepened the crisis and lengthened the recovery period.[34] These critics argue that not only did the IMF fail to predict the crisis, but it also failed initially to understand its causes, ascribing it to macroeconomic imbalances. As a consequence, the IMF prescribed the “usual package of fiscal and monetary austerity, which proved costly for the Korean economy” because of the aforementioned atypical nature of the Korean crisis. [35] In short, the IMF failed to correctly interpret the nature of the Korean crisis and thus applied the same type of solution that it prescribed to the Latin American debt crisis two decades before.

With hardly improving conditions, Korea was able to avoid a worsening set of circumstances only with the help of the United States.[36] On December 19, 1997, at the Korean government’s request, the U.S. not only persuaded the IMF to quickly enter into a new round of negotiations with the Korean government for future supplies of bailout money, but also exerted its influence on the financial institutions of the aforementioned G-7 countries to roll over their short-term credits to Korea for a short period of time.[37]

 

 

Short-term and Long-term Policy Responses

            Logically, any set of economic policies adopted by any government during and after a tough financial crisis should both seek to reduce the likelihood of a similar crisis in the future by cleaning up the balance sheets of financial institutions and evolve a financial system that can best help the nation resume economic growth with some degree of stability.[38] With these strategies in mind, the long-term reforms implemented by the Korean government since the 1997-98 crisis have been undertaken to achieve several key goals, which are described in the following paragraphs.

            A. Strengthening legal and regulatory infrastructure: The first step in comprehensive financial-sector reform was laying foundation for a statutory and regulatory framework to implement necessary reforms.[39] On December 29, 1997, 13 financial bills, including a bill to establish a consolidated financial supervisory authority, were enacted. Thanks to this legislation, the Financial Supervisory Commission (FSC) was established in April 1998, with effective statutory authority to regulate many aspects of reforms that were to take place.[40]

            B. Rehabilitating financial institutions: Generally, this involved such drastic measures as the closure of unviable financial institutions, with the associated write down of shareholders’ capital. In June 1998, five banks with negative BIS ratios were closed, and seven banks were required to submit restructuring plans by the end of July 1998.[41]Less severe policies included re-capitalization of undercapitalized institutions, close supervision of weak institutions, and increased potential for foreign participation in domestic financial systems.[42] More specifically, however, it became evident that Korea’s banking sector had two major problems: inadequate capitalization and poor-quality assets.[43] As just mentioned, the former was taken care of with assistance from the IMF, and improvement of the quality of assets was accomplished by requiring non-bank institutions, such as securities companies and insurance companies, to endure similarly rigorous restructuring processes.[44]

            C. Strengthening prudential regulations: In December 1999, under the terms negotiated with the IMF, the Korean government strengthened prudential regulations (regulation of deposit-taking institutions and supervision of their conduct, as well as setting down requirements that seek to minimize their risk-taking, so as to ensure the safety of depositors’ funds and keep the overall stability of the financial system) by introducing a forward-looking approach in asset classification, taking into consideration not only the future performance of borrowers but also their track record in debt servicing. This essentially guaranteed that the amount of risk involved in banks’ and non-bank institutions’ lending of money was minimized, thereby also increasing the general stability of the system.[45]

            D. Promoting capital account liberalization: Perhaps the most significant financial sector reform in Korea was made with regard to this goal. In order to further liberalize capital account transactions, the Korean government took numerous measures in order to increase their international capital mobility, the degree of which explains how freely capital is able to move between and among different nations. For example, Korea adopted a free-floating foreign exchange rate system in December of 1997 from a previous managed-float system, in which the government could raise or lower exchange rates at will by using its foreign exchange currency reserves. In addition, harsh restrictions on mergers and acquisitions by foreigners were completely abolished in February 1998. The government also implemented full liberalization of foreign investment in Korean bonds, and permitted foreign ownership of national land and real estate in July 1998.[46] These reforms, designed to increase Korea’s international capital mobility, allowed large inflows of foreign capital and investment, which were pivotal to Korea’s long-term economic growth (significant increases in real GDP).

            E. Strengthening corporate governance of financial institutions: In order to reinforce the governance of financial institutions, many measures have been taken, most relating to increasing various types of diversity within the institutions themselves. For example, the Korean government allowed foreigners to own commercial banks and become bank executives in December 1997 and May 1998 respectively, thereby improving governance of financial institutions and strengthening the rights of commercial bank minority shareholders in January 2000.[47]

            As a result of extensive restructuring of the financial sector in Korea, many insolvent or weak institutions have been weeded out; in fact, 787 insolvent financial institutions—or 37.5% of the total—were either closed or merged by June of 2003.[48] In addition, trading volume in Korea’s foreign exchange market has shown some significant growth since the crisis, thanks in large part to the reforms that contributed to liberalizing capital account transactions. Furthermore, the foreign exchange authorities in years following the crisis had shown remarkable restraint in intervening in the foreign exchange market, producing a clear and noticeable increase in overall exchange rate flexibility.

 

 

 

Reasons for Optimism

            Despite the weak and utterly perverse initial responses of the Korean government, there existed much hope for Korea’s future prospects soon after the crisis. In retrospect, this crisis was merely a short interruption in Korea’s growth path, and it even helped strengthen Korea’s institutional structure and enact numerous reforms to help develop the economy over the long-run. Specifically, however, the optimist perspective was based on following considerations:

            First, the then-newly elected president of Korea, Kim Dae Jung, was a committed individual, who was dedicated to the pursuit of the welfare of the whole society, possessed a great deal of resolve, and put the common good above political considerations and above his personal predilections and interests. This was directly shown through various reforms he instituted in spite of the fact that he was politically opposed to them.[49]

            Second, Koreans again demonstrated high levels of social commitment in the economic disaster, once they realized its magnitude. In particular, this was illuminated through the generally peaceful manner with which Korean labor unions have attacked the crisis. Despite the innately militant character of the Korean unions, they have been relatively quiet in this crisis. Therefore, even though the population blamed the past President, his entourage, past policy-makers, and the international community for the crisis, the crisis did not generate substantial political or social unrest.

            Lastly, Korea demonstrated its flexibility and ability to change course quickly and in fundamental ways. The reforms that were implemented post-crisis were undoubtedly tough on the general public, but the Korean citizens were indeed willing to bear the collective action costs in order to save their national economy. The financial response by the international community, like that of the IMF, had also afforded Korea the necessary breathing space, although the initial amount of aid package was financially inadequate.

 

Lessons to be Learned

            Despite the relative quickness of action and tranquility with which the crisis was handled by the Korean government, there are nevertheless a number of lessons to be learned from the way this particular disaster was resolved.

            The first point relates to the sequencing of capital account liberalization. Although the Korean government needs to be commended for fundamentally increasing their international capital mobility, the particular order it followed—its decision to “liberalize short-term capital flows ahead of long-term capital flows”—was a serious mistake. Korea should have realized that short-term capital flows are more financially volatile than long-term ones. By liberalizing short-term before long-term flows, Korea accumulated far too much short-term liability, which led to uncontrollable mismatches in maturity and currency, at least in the periods immediately following the crisis.[50]

            The second point has to do with the superiority of a pure floating exchange rate system to a managed float system. Korea, along with most other East Asian countries, considers itself to be a managed float system, which can best be described as a rather curious mixture of a completely floating system and a fixed exchange rate system. The managed float system initially lets the invisible hand of the free market affect the exchange rate however it wants, but it differs from the floating system in that there are upper and lower limits on the levels that the exchange rate can reach. Once those imaginary bands (or limits) are reached by either rising or dropping exchange rate, government intervention becomes permissible, and the exchange rate is restored such that it is contained within the upper and lower limits. One way the government can intentionally change the exchange rate is through the use of its foreign currency reserves, but this is inherently problematic because once the country runs out of its limited supply of foreign reserves, it no longer has any practical means to keep the exchange rate contained within the limits. Thus, with a managed float system, a country must make a choice between international capital mobility and domestic monetary policy autonomy.[51] This phenomenon is commonly referred to as the Impossible Triangle with regards to a state’s economic interactions with other states, in which it must choose two of three things: international capital mobility, fixed exchange rate system (and the subsequent stability of the exchange rate), and domestic monetary policy autonomy. Precisely because of the inevitability of a necessary sacrifice in one of these three things, a managed float system or fixed system is not very ideal for countries wanting to achieve capital mobility and monetary policy autonomy at the same time.

            The third point relates to prudential supervision. Although Korea rightly strengthened prudential supervision as one of the policy responses to the crisis, it was necessary for it to be careful about further strengthening. In a country that has had a long tradition of running the economy on government initiative, further reinforcing of prudential supervision can “bring about more regulations that can stifle the development of a sound financial system.”[52]

            The fourth and last point regards the confidence of foreign investors. The crisis in Korea left its economy scarce in capital. In order to attract foreign capital, several conditions need to be met. Transparency on the business and government level, as well as the rule of law, are very important to maintain, since without them capital will not flow into the country in the first place. If foreign investors lose confidence in the transparency of business and government transactions or in the rule of law in a country, they will quickly move their investments elsewhere in order to guarantee more stable returns in other, less politically risky nations. As mentioned previously, in the initial responses section of the paper, Korea suffered from various chaebols’ corrupt financial transactions, as well as from a greedy President who put his own needs before the needs of the whole country. These were precisely the factors which contributed to lowering foreign investors’ confidence, and they subsequently withdrew significant portions of their investment from Korea. Thankfully, however, the newly elected President instituted numerous reforms to increase the government oversight and overall transparency of business transactions, and prospects looked optimistic from then on.

            Overall, there are two important functions of a financial market: to provide liquidity (convertibility of capital into money) and to allocate credit efficiently. The South Korea environment demonstrated that bond markets can provide liquidity to relatively large firms in bank-dominated emerging economies, particularly during a banking crisis. However, capital markets “have many prerequisites, such as reliable rating agencies, no ‘too big to fail’ beliefs, and so on.”[53]

           

Conclusion

Korea was at the time still an emerging market economy, and a lesson to be learned for other emerging market economies is that even with stable macroeconomic conditions and strong economic performance overall, financial liberalization can still destabilize an economy in the presence of hidden weaknesses in the banking system, many of which went concealed and unnoticed for some time in the case of Korea. In theory, an effective regulatory and supervisory framework could address these kinds of weaknesses and reduce the amount of risk involved in financial liberalization. In practice, however, this is a very ambitious and difficult policy to implement for emerging market economies. Nevertheless, Korea, with the help of the IMF, the United States, and a responsible team of domestic government officials, was able to effectively resolve the crisis and recuperate, becoming one of the largest and most successful economies in the world quickly thereafter.

It is important to recognize that, nowadays, the traditional role of the IMF is virtually nonexistent. Although the IMF remains a channel through which countries in the Global North provide some amount of capital to those in the Global South, its primary role is no longer to give financial bailout packages to economically troubled nations. In light of this change in the general responsibilities of the IMF, many states are less likely to engage in economically risky behavior, subsequently reducing the likelihood of what came to be known as the “moral hazard” problem.[54] Now that the so-called safety net of IMF’s massive financial assistance no longer exists, Korea will have to adopt politically prudent and economically sound monetary policies in order to avoid another financial crisis.

 

 

Annotated Bibliography

Adelman, Irma, and Song Byung Nak. “The Korean Financial Crisis of 1997-98.” Working Paper, University of California at Berkeley. http://are.berkeley.edu/~adelman/crisis.pdf. Accessed December 2, 2011.

 

            Much like the paper written by Kihwan Kim, this paper discusses the 1997 Asian Financial Crisis as it relates specifically to the Korean economy and politics. However, it is different from Kim’s paper in that it spends little time discussing the background information and quickly shifts the focus to Korea’s policy responses and their efficacy. This paper was helpful in developing my overall argument in my paper, because it helped me analyze clearly whether the economic and political reforms instituted by the Korean government were effective in the long-run in improving the Korean economy.

 

Bearce, David H. “Monetary Divergence: Domestic Political Institutions and the Policy Autonomy-Exchange Rate Stability Trade-off.” Comparative Political Studies 35 (2002): 194-220. http://sobek.colorado.edu/~dabe1889/Research/2002CPS.pdf. Accessed December 5, 2011.

 

            This journal article was written by my international affairs professor, David Bearce. The subject of the paper was also a main topic for one of his lectures this semester, and I enjoyed learning about what came to be known as the Impossible Triangle, which depicts the trade-off among three different factors regarding a state’s economic relations with other states: international capital mobility, fixed exchange rate system, and domestic monetary policy autonomy. This helped me most in the “Lessons to be learned” section of my paper, where I discussed some mistakes that the Korean government made in devising its policy responses to the crisis.

 

Demetriades, Panicos O., and Bassam A. Fattouh. “The South Korean Financial Crisis: Competing Explanations and Policy Lessons for Financial Liberalization.” International Affairs 75 (1999): 779-792.

 

This rather brief journal article specifically emphasizes two competing explanations for the causes of the South Korean financial crisis, and later gives short but insightful analysis of the policy lessons that the Korean government took away from the experience. It also mentions the economic changes that were brought about to various sectors of the Korean economy and discusses some of the ways in which Korea should deal with financial liberalization in an increasingly globalizing world. This was extremely helpful for my research not only because of its brevity, but also due to the way it encompasses two different potential explanations for the crisis in question.

 

Goldstein, Joshua S., and Jon C. Pevehouse. International Relations, 10th Edition. Boston: Longman, 2011.

 

            This book offers a current and comprehensive introduction to international relations theory, as well as various topics in international affairs, including security, military, economic issues around the globe. One of the inherent benefits of using a book like this is that it offers an account of the 1997 Asian financial crisis in light of many other concurrent events at the time and of the particular state the international community was in.

 

Karunatilleka, Eshan. “The Asian Economic Crisis.” House of Commons Library, Economic Policy and Statistics Section. February 11, 1999.http://www.parliament.uk/documents/commons/lib/research/rp99/rp99-014.pdf. Accessed November 16, 2011.

 

            This research paper offers a comprehensive review of the course of events that took place leading up to and during the Asian Financial Crisis, in addition to examining the global impact of the crisis in terms of such issues as international trade and foreign direct investment. Towards the end, the paper discusses possible solutions for avoiding a big economic collapse in the future. This paper is perhaps the most important source for determining the underlying causes and key factors that combined to trigger the initial events of the crisis. It is, however, limited by the fact that it does not specifically focus on the effects of the crisis on the South Korean economy.

 

Kim, Kihwan. “The 1997-98 Korean Financial Crisis: Causes, Policy Responses, and Lessons.” Paper presented at the High-Level Seminar on Crisis Prevention in Emerging Markets, organized by the International Monetary Fund and the government of Singapore, Singapore, July 10-11, 2006.

 

            This paper focuses on the Asian Financial Crisis as it relates specifically to the South Korean economy. It analyzes facts regarding the causes of the Korean Financial Crisis, the policy responses that the Korean government decided to undertake, and offers lessons to be learned not only by South Korea but also by the entire international community. This paper is particularly pertinent to my research as it outlines the effects of the 1997 Asian Financial Crisis on the South Korean government, as well as the policies that it chose to adopt in response.

 

 

Lee, Jong-Wha, and Changyong Rhee. “Crisis and Recovery: What We Have Learned from the South Korean Experience?” Asian Economic Policy Review 2 (2007): 146-164. Accessed October 31, 2011. doi: 10.1111/j.1748-3131.2007.00061.x.

 

            This journal article analyzes the process of economic recovery from the 1997 Asian financial crisis specifically in South Korea, and details some lessons that the Korean government learned from it. In particular, the article focuses on some of the reasons that South Korea was able to recover speedily from such a large-scale crisis, including the swift adjustments that the Korean government made to its fiscal and monetary policies, social structure reforms, as well as other macroeconomic concerns the corporate and government bond markets addressed.

 

 

 

Healing the Ills of Conservation: A Community-Based Framework for Indigenous Healthcare Services in Rural East Africa, Billy Kromka 

As is the case with conservation in Tanzania, the relationship between the Western World and indigenous communities in terms of healthcare is contentious, non-participatory, and plagued by one-sided, ethnocentric disregard of traditional practices. Rooted in colonialism, this closed, exploitative presence of the West in Tanzania has catalyzed a vicious, self-perpetuating cycle of marginalization, social fragmentation, loss of cultural identity, and health decline among indigenous groups. Examining this precarious position of indigenous groups through the ethnographic lens of the Maasai and their traditional healthcare practices highlights the urgent necessity of developing a more collaborative Western-traditional relationship. Specifically, the West must recognize the legitimacy inherent within most traditional medicine by establishing community based, local educational efforts targeting traditional medical practitioners and those interested in healing. This effort will ensure the survival of traditional wisdom while also making up for its shortcomings in the face of modernity. 

In analyzing the conflicts and issues present at the interface of modern and traditional medicine, it is important to examine the conditions from which they arose: colonialism and conservation. National parks and current conservation efforts ultimately stem from late 19th and early 20th century colonization of Tanzania by the British. Christianity, the English Enclosure Movement, and the Westward Expansion of the U.S. heavily influenced the authoritative, pompous, and exploitative course that colonization in Tanzania took. Not only did the Enclosure Movement socialize an aristocratic sense of entitlement among colonizers by creating “two contrasting landscapes of production…and of consumption,” both controlled by aristocracy, but it also “reinforced the fundamental separation of humans and nature” (Igoe 81). This divisive sense of control and superiority was compounded by the Christian notion of dominion; as interpreted from the Book of Genesis, this idea influenced “people of post-Reformation Europe by emphasiz[ing] their right to conquer nature” (Igoe 78). Thus, arriving to the shores of East Africa was a privileged class of an indoctrinated society looking to extend both the productive and consumptive aristocratic activities of back home, namely hunting and commercial farming. 

Borne out of this narrow and heavily socialized European mindset was the “civilizing mission“- the main agenda of colonialism in East Africa that now underlies the intellectual arrogance of Western medicine. The rhetoric of the civilizing mission served as “a mandate for Europeans to ‘uplift’ the ‘inferior’ races of the world” (Igoe 93). Essentially, it validated total European hegemony by justifying the subjugation of indigenous people as a means to maintain “effective administration of [that] part of the world” (Igoe 93). It was that ideal in conjunction with an active American-European conservationist dialogue that led to the decision to turn the already partitioned areas of land into fully established national parks based on the exclusionary Yellowstone model. Although there have been some recent progressive attempts at developing more sustainable conservation alternatives such as Wildlife Management Areas and Community-Based Conservation, these attempts have been limited and relatively unsuccessful. Thus, exclusionary fortress conservation remains the guiding paradigm behind modern day National Parks in Tanzania. Consequently, all of the geographic marginalization, economic deterioration, socio-cultural disintegration, and health decline that indigenous groups face as a result of fortress conservation still persists and exacts an increasingly severe toll on indigenous society, particularly evident in Maasai health and traditional medicine. As a whole, conservation practices in Tanzania have simultaneously forced Maasai people into a position of very high health risk while drastically limiting their economic, social, and medicinal means of dealing with the problems of such a position. 

Disruption of the traditional Maasai pastoral herding system has served to be one of the most crippling and systemically destructive consequences of conservation. Traditionally, Maasai practiced a transhumance pattern of pastoralism that “involves regular cyclical movements of livestock over substantial distances…in response to seasonal climatic changes” (Parkipuny 138). As a flexible resource management system based on rotation and mobility, transhumance pastoralism suited the Maasai niche very well and produced great socioeconomic success. However, these “mobility patterns have been greatly reduced as result of the loss of pasture to conservation areas,” thus forcing Maasai to adopt “increased sedentarisation into villages” (Goldman 73). Needless to say, disturbing such a finely tuned and well-adapted process through thousands of years of trial-and-error has created prolific human and ecological troubles. The large-scale restrictions imposed upon the Maasai herding system have created an “inability of pasture to recover [that] has led to decreased vegetation cover and soil erosion” that has been ecologically destructive (Igoe 62). Not only is this ecological destruction contradictory to conservation efforts as it threatens biodiversity, but it has caused a substantial decline in the herding economy of Maasai. The cattle upon which the entire Maasai economy is founded play an integral social role as well. Therefore, with the vitality of the cattle threatened by a declining herding economy, the “local people believe that social relationships within their society have suffered accordingly” resulting in “an increased wealth discrepancy within Maasai society” (Igoe 8). Increasing social stratification while concurrently diminishing everyone’s economic means to survival placed an immediate and heavy stress on the physical well-being of Maasai society. As stated by indigenous experts and leaders of NGOs alike at an Arusha workshop, these “increased wealth discrepancies in rural herding communities” caused by “the declining availability of pasture and water, combined with the privatization of pastoralist rangelands” resulted in “food insecurity and increased malnutrition” (Igoe 25). Prompted by these growing health concerns and an inability to meet the mounting economic demands of a recently liberalized state economy through traditional means, Maasai people began to seek out alternative livelihood strategies.

Though the intent of the Maasai in this process of livelihood diversification was to expand and stimulate their economic production to ensure a healthy, secure society, it unfortunately only contributed new conditions of human suffering and exacerbated old ones. Of the livelihood options available to Maasai individuals, each provided a different, yet similarly negative impact on their intimately linked physical and socio-cultural well-being. For those desperate individuals that turned immediately to farming, they were soon bitterly reminded of the fact that “by and large extensive agricultural production is not suitable for Maasailand” (Parkipuny 136). These impoverished families that turned to “emergency farming” were met with even greater food insecurity and malnutrition than they had known before. Although farming is a bit more productive now than when it first began, the marginal areas most Maasai have been forced to are “too dry for farms to be viable during most years, the soil is depleted very quickly and the grain market is almost never strong enough for people to make a reasonable profit” (Igoe 63). Thus, due to the impracticality and impossibility of sustaining a stable and widespread herding or agricultural economy, Maasai society has been forced to fragment and emigrate to urban areas in search of new livelihoods.

This diaspora of Maasai to scattered urban areas, prompted by sheer desperation, has now exacerbated the breadth and depth of social and physiological ills to an alarming point, leaving the Maasai in their current state of foreboding instability. The most evident risk posed to Maasai by this urban integration is tremendous exposure to new, deadly diseases and sickness, the most threatening of these being HIV/AIDS. It has been shown that the “movement of some Maasai men to peri-urban or urban areas for employment has created greater exposure to HIV infection” due to the fact that Sub-Saharan African urban centers are the primary breeding grounds for HIV/AIDS (Coast 110). Maasai women migrants desperately seeking income are even more vulnerable to the contraction of HIV (among other diseases) than men are due to the nature and limitations of work opportunities for uneducated females in the city. Although there are “some local women [that] travel to urban markets to sell traditional medicine and tobacco, many also engage in prostitution” (Igoe 108). Heightening this already dangerously high HIV risk factor for Maasai is the fact that these urban individuals frequently return back to their polygamous village communities where contact with multiple sexual partners is commonplace. Studies conducted by the American Society of Tropical Medicine and Hygiene have confirmed that although it is not yet ethnographically visible, “the HIV/AIDS infection rate is likely to increase because of integration of the Maasai people into urban communities” and because of this, other disease such as “TB will pose more of a threat to the health of the population” (Haasnoot et al). Therefore, the contraction, spread, and proliferation of HIV among Maasai society comes as a direct, prominent, and consequential risk of urban work.

             The significant health decline in Maasai society is made dramatically more threatening, and is in part caused, by a sparse and fundamentally lacking base to seek healthcare; their traditional medical system has been substantially disintegrated and corrupted while the only other alternative, Western hospitals, is very limited. In order to understand the cyclic way in which traditional medicine has been, and continues to be, degraded, it is crucial to understand the fundamentals of traditional Maasai medicine. There are two providers of healthcare in Maasai society that have very distinct healing methods: laibons and herbalists. Similar to primary care physicians, the predominantly female herbalists rely strictly on direct administration of herbs, roots, and other plant-based, usually purgative, medicines in the treatment of immediate health concerns. These Maasai women “learn about medicinal plants by following their mothers,” accumulating “environmental knowledge [that has been] passed from generation to generation;” thus, they traditionally have “a detailed knowledge of the types of medicinal plants that grow in the vicinity of their homesteads, and some that grow at great distances” (Igoe 49). Therefore, these herbalist medicine women rely on an oral educational tradition dependent on intimate and extensive field experience with their mothers. Laibons, however, are the products of paternal lineages of gifted Maasai men that provide a more holistic healing experience. Ole Seki, a Maasai elder from Emboreet village, explained that the primary duty of a laibon is to be a doctor, but “people go to him to ask him to pray for rain; he can pray for strength of cows; he can predict which direction one’s wife will come from; and he is there to ensure a good future.” Essentially,laibons occupy a shamanic role as prophetic quasi-doctors able to harness supernatural elements and contact the spiritual realm. As “prophets who speak from God to men,”laibons provide mainly preventative ntasim [medicine] for both social and physiological ills, “predict[ing] and protect[ing] the community from [harm], both mystical and real” (Fratkin 124). Similar to herbalists, the ntasim of laibons relies on local natural resources. However, these ntasim, consisting of elements such as “fur found inside a lions stomach [and] bone from the head of a cobra,” are generally used as investments of strength, protection, or some other desirable quality rather than practical remedies to an immediate ailment (Fratkin 63). Though herbalists and laibons clearly occupy two distinct roles in Maasai healthcare, they have been similarly disintegrated by conservation and neoliberalism.

            Traditional Maasai healthcare has suffered an extensive loss of traditional knowledge, natural resources, efficacy in remaining treatments, and overall legitimacy due to the marginalization and ensuing livelihood diversification brought about by conservation and neoliberal economics. At the most basic level, establishment of closed-access conservation areas caused an immediate, tangible loss in natural resources for Maasai communities. This has been particularly devastating to traditional medicine, and consequently the overall health of Maasai society, due to the aforementioned dependence of both laibons and herbalists on natural resources for their treatments. For instance, many women in the marginalized Simanjiro area have voiced complaints about “the difficulty in finding drinking water and traditional medicines because so many areas ha[ve] been enclosed” (Igoe 108). Although decreased access to natural resources has significantly hindered traditional medicine, the loss of laibon legitimacy by means of corruption and decreased traditional knowledge has proven to be far more devastating to traditional medicine. In order to satisfy a powerful new neoliberal demand for money, Maasai people dispersed to cities, leaving traditional healers no other option but to follow suit and pursue “new types of opportunities…in urban areas [where] the wages are low, the costs of traveling to cities are high, and the temptations are expensive” (Igoe 108). Highlighted in an interview I held with Maasai elder Ole Seki from Emboreet village, these temptations of urbanity have proven to be exceptionally expensive in the realm of Maasai healthcare. In a disillusioned tone Ole Seki lamented the loss of legitimacy in traditional Maasai medicine; “now being a laibon is becoming a business, they tell lies and are fake.” Becoming frustrated he noted that “the youth don’t care about learning laibonpractice and go to hospitals while the elders refuse hospital care, but are left with broken traditional care.” This generational dissipation of traditional medical knowledge and genuine laibon practice is directly proportional to the ever-increasing level of Western urban influence in Maasai life. According to Ole Seki, corruption in laibon practice first began in the Ilseuri age-set decades ago when the Tanzanian government started imposing Western ideologies and practices. Corruption and self-interest in laibons has become progressively worse as Maasai society has evolved from the oldest age-set,Ilseuri, to Ilmakaa to Irlandisi to the youngest age-set, Korianga, where their society currently stands with few remaining truthful, altruistic laibons. Therefore, Western institutions have forced a paradoxical state of affairs where indigenous groups are dependent on Western hospitals and organizations to treat the problems caused by their very presence; however, the main dilemma for Maasai society arises when attempting to access and utilize this Western medicine.

            The same type of ethnocentric, intellectual arrogance that informed the establishment of national parks and other conservation initiatives informs the current model of Western medical interaction in East Africa. As exemplified by Olasiti Village, this type of distant, uncommunicative presence of Western medicine in rural East Africa does little to remedy, and in fact only engrains, the ills caused by modernity’s urban expansion. Olasiti encapsulates the unpromising fate of Maasai society if urban expansion and Western influence remain at their current level. Olasiti once was a Maasai village and recently has been turned to a government municipality due to increased human settlement there. This increased human settlement was an inevitable byproduct of the “increased [Maasai] sedentarisation into villages” that Dr. Goldman points out as a direct result of conservation. Although antiretroviral drugs (ARVs) and medical services are still provided to “villages,” municipalities such as Olasiti no longer receive these mobile health services. Therefore, sick individuals must seek out alternative treatment from sparse hospitals or dispensaries located in far-away regional centers. For those very few individuals that are able to afford the cost of transportation and time required to reach these hospitals, there is no guarantee they will even receive treatment because the limited availability of these hospitals causes them to be extremely overcrowded. Xenon, an Olasiti resident serving as our guide through the village, explained “most of the children in the orphanage were placed there because their parents were forced to spend all of their money on treatment for HIV and other medical issues;” thus, children are born into poverty stricken conditions of compounding economic and physiological adversity. It is clear from the Olasiti example that the distant, uncommunicative presence of Western medical institutions grounded in unyielding intellectual arrogance contributes significantly to the poverty-sickness cycle consuming indigenous communities.

            Although it is improper to discount all traditional medical practices, this sense of intellectual superiority held by Western medicine is not wholly unwarranted. There are actually considerable amounts of traditional Maasai and other indigenous medical practices that are ineffective, not truly medicinal, and/or unintentionally promote human suffering. The general deficiency of effective, comprehensive treatment is best shown through a quantitative lens. Even for those groups that are still relatively isolated, such as the Samburu Maasai of Kenya, “nearly half the population dies before reaching old age, mainly due to infectious diseases including pneumonia, tuberculosis, and malaria” while “one or two out of five children die before their fifth birthday, mainly from malaria, measles, or diarrhea and dehydration” (Fratkin 52). Furthermore, some of the traditional remedies and treatments to these epidemics plaguing indigenous life have adverse or ineffective results. For instance, in the otherwise easily curable case of diarrhea, it has been documented that “a number of healers g[i]ve herbal enemas to children with infectious diarrhea, thereby exacerbating dehydration” and unknowingly perpetuating human suffering (Green). As exemplified by Maasai laibons, many traditional medical practices are integrated with superstitious beliefs in sorcery and witchcraft. When medical practitioners have to tend to both spiritual and biological healing their efforts are often heavily occupied by demands of the former that in turn leave pressing concerns of the latter unattended. This is a prominent pitfall of traditional healthcare because unfortunately it is easy for laibons to “become more involved in sorcery than in healing” (Fratkin 101). Thus, in the realm of healthcare, Western influence is potentially beneficial and in fact necessary in combating the long-standing epidemics and recent health risks faced by Maasai society.

            Despite these shortcomings of traditional medicine and the subsequent, undeniable need for Western medicine, it would be of resoundingly negative impact to let Western medicine completely usurp and eliminate the role of traditional medicine as it is on course to do now. Contrary to the scientific Western perspective of traditional medicines as unfounded, arbitrary, and erroneous, many of the herbal medicines used by indigenous groups have proven to contain legitimate healing properties specific to their purpose. For example, many of “the plants utilized in orpul medicines by the Maasai…have already been empirically demonstrated to possess pharmacologic activities in vitroand/or in vivo” (Burford, Ngila, Rafiki). The loss of traditional healthcare would mean a loss of these well-established, productive treatments, but also, more importantly, a loss of the traditional healers and rituals used to dispense them. The ritualistic “songs, meditation, and prayers that form part of the orpul experience” and laibon duties “are likely to contribute significantly to recovery…of psychosomatic and stress-related illness” (Burford, Ngila, Rafiki). Aside from their potential to provide physical well-being, the role of traditional healers and rituals constitutes an integral thread in the socio-cultural fabric of Maasai society. As stated by Ole Seki, laibons are there to tend to the social, as well as physical, well-being of Maasai, “ensuring a good future,” and “making happy those that are losing hope.” Laibons, as well as many other traditional healers, “serve as what might be called change-brokers, guiding and reassuring [others] who are ‘torn by their changing worlds’” (Green). Thus, eliminating traditional medicine would create a deep socio-cultural-medicinal vacancy, once filled by well-adept herbal remedies and traditional ritual that, as demonstrated by the Olasiti example, is unable to be adequately filled by the superficial patch of Western medicine.

             Unfortunately, this scenario of complete elimination of traditional medicine is unfolding at an alarming rate and will soon reach its precipice if an alternative relationship between the West and indigenous communities is not quickly established. Given the exponential loss of traditional knowledge and livelihood practices in the face of pressing urbanization, it is critical that this alternative approach of Western medicine target traditional healers with an open, educational dialogue before it is too late and all their remaining wisdom is lost. As demonstrated by the words of Samburu laibon Lonyoki, traditional healers have the desire to integrate with the Western ways and recognize “it is important for [their] children to go to schools, to become doctors or to learn medicine for the animals, but it is also important for them to know the old ways too” (Fratkin 14). The only thing standing in the way of this healthy integration is the prideful unwillingness of Western medicine to concede to its insufficiency and devolve power and knowledge to local medical practices. Though the cases are limited, every time the divisive closed doors of Western medicine have been opened for local communities by the hand of education, the outcome has been very successful. For instance, the existing literature regarding tuberculosis (TB) epidemics “indicates that health education programs for TB are generally well received and improve TB control” (Hasnoot et al). In Haiti, “a decade after an effective tuberculosis treatment program was put in place…tuberculosis was increasingly seen as an airborne infectious disease [and] treatable,” thus enabling future prevention by traditional healers now educated on its biological origin and pathophysiology (Farmer). This Haitian example is relevant to the current situation in East Africa for “it is shown that local [Maasai] healers often accurately recognize the symptoms of TB but fail to acknowledge the biological cause” and provide an effective treatment (Hasnoot et al). In order for the Maasai and other indigenous groups to regain and maintain a stable quality of life, these types of local, community based educational efforts must be instituted on a large scale across all of East Africa.

            Establishing these integrative educational programs is not only the moral obligation of Western medicine, but also an economic necessity.  It is neither rational nor economically feasible for the West to continue its current mode of medical operations in East Africa because “the number of Western trained medical personnel, the number of clinics and hospitals in rural areas, and the amount of money available to ministries of health are all inadequate to existing needs” (Green). The rapid population growth in Sub-Saharan Africa adds to the impossibility of the West even sustaining its current inadequacy, let alone building a viable system that meets human needs. Participation gaps inherent within the current Western-traditional medical relationship also pose a threat to the economic stability of the West. In the realm of conservation, the “loss of local support and the marginalization of local knowledge from management has begun to have consequences that…may jeapordize future conservation goals” (Goldman 72). This self-destructive situation of conservation holds implications for the medical system since the imposition of Western medicine is premised on the same ethnocentric disregard of traditional knowledge and practice as conservation is. Continued exclusion of the quickly disintegrating population of traditional healers from the Western healthcare system will eventually cause indigenous communities to be completely dependent on hospitals and dispensaries. Due to the fact that this exclusionary system cannot even keep up with current needs, an increased volume of patients would create an unmanageable stress that would ultimately lead to failure of the system and loss of any mutually beneficial opportunities presented by a Western-traditional medical relationship.

            Epidemic disease, human rights violations, and cultural disintegration are emerging at an alarming rate in indigenous societies, especially the Maasai’s. In order to avoid a complete loss of traditional knowledge and subsequent dependence on inadequate Western medical institutions, it is imperative that the West assumes some humility and fosters a more open, collaborative relationship with indigenous groups. Educating the fleeting traditional healers on the principles and practice of Western medicine through local, community-based efforts will allow the two systems of healthcare to grow and spread in an organic, complementary manner. This type of cooperative medical interaction is not only achievable, but also necessary for the vitality of both institutions in East Africa, and, more importantly, the physical and cultural survival of indigenous groups like the Maasai. 

 

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