Economics, Literature and Scepticism

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I am a PhD student in Economics. I am originally from South Africa and plan to return there after my PhD. I completed my M. Comm in Economics and my MA In Creative Writing (Poetry) at the University of Cape Town, where I worked as a lecturer before starting my PhD.

Wednesday, August 12, 2009

Health Care, Insurance, Credit Markets

Posted by Simon Halliday | Wednesday, August 12, 2009 | Category: , , |

I arrived back in South Africa last week having travelled from Italy via London.  Ensconced in my parents' warm home, sheltered from the rain, my mum told me of the misfortune that has plagued the family of our domestic worker (later corroborated in discussions with Lettie herself).  Lettie, our family's domestic worker, works three times a week for my parents at their home.  My parents, through their business, employ Lettie's daughter.  My parents have at various times also employed Lettie's nephew, her son, and other family members, in addition to assisting with job applications, references, loans, gifts, etc. lives in Philippi a poor area on the fringes of the Cape Town.  A few month's ago, Lettie heard from a friend that her son had a child with a young lady who also lived in Philippi.  Lettie hadn't known about this because her son had been embarrassed and had not wanted to tell her.  Lettie went along to the house, saw a child in soiled swaddling and covered in flies. She took the child home to look after it.  Lettie is now looking after her grandchild while her son studies, in the hope that he will finish and be able to get a decent job.  So, problem number 1: a new dependent., Lettie's daughter (actually her niece, but Lettie's sister passed away and Lettie basically adopted her), who works as a cleaning lady at my mother's office, contracted TB some months ago.  The disease makes her terribly ill, and the drugs to counter the disease have incredibly harsh side effects.  Consequently she misses work and works less productively when she does work.  Nevertheless, my parents ensure that she maintains her job because she does try to work hard and when well she works effectively.  So, problem number 2: TB.

Last week, a 4-year-old boy (whose grandmother spoils him, Lettie assures me) was playing with matches.  The matches burnt down several shacks/homes in the vicinity.  The neighbours want to hold the grandmother responsible, but the grandmother cannot pay for the houses that burnt down because she is too poor.  Apart from the clothes on their backs, Lizzie and her boyfriend lost everything to the fire.  Additionally, the smoke from the fire exacerbated her TB and she's had to go into hospital because she was coughing up so much blood.  The doctor said that they will probably have to remove her left lung.  So, problem number 3: fire.

I could wax lyrical on the extent to which I think government needs to act in these three areas: 1) family planning and household structures, 2) health care, and 3) household insurance for the poor.  Leaving that aside, discussing these things with Lettie (and my folks) clarifies for me some of the potential effects of what I do.  When I stare at a screen looking at Stata output from a regression including a dummy variable for a 'negative shock', any of the above problems could count as a negative shock.  Moreover, the work that I've been doing more recently assesses the extent to which people within a household, or the genetic or legal relatives of its members, are often unable to deal with financial crises because the risks that they face are often correlated. In response to a hypothetical question like 'Who would you turn to in a financial crisis?' the strongest responses are for entirely unrelated people who are not household members.  This is exactly what has happened in this situation - government has not stepped in (or maybe does not know that it should), and so my parents in their private capacity as genetically unrelated, but morally invested, individuals feel the need to do something.  I have no idea where this research will go, but the example before me delivers the message forcibly: where government fails, those who have better social networks are probably those who will survive a crisis. 

Note: I understand that government has provided health care for Lizzie at Groote Schuur, but we can discuss the extent to which this care is effective and efficient another time.

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