Pretty women; Ugliness; Fine dining; Changing Évora; Insults; & The UK's NHS again.

My trip down into Portugal last week convinced me there really are some pretty women in Portugal, perhaps because of the lure the capital city, Lisbon. But, that said, there's no real comparison with Spain.

Another observation was that, at least when it comes to modern buildings, the Portuguese have a talent for the ugly.  Either that or no ability to tell architects where to get off. Or perhaps it's a function of wealth.

Our Society gala dinner on Friday was in a fine restaurant in Évora. But I had a misgiving when it became clear they had a surplus pork dish and I wasn't terribly surprised when, as the last to be served, it was presented to me an as alternative to the lamb I'd ordered. Err, no, I said. No problem, they replied. The chef will prepare you an extra lamb dish. So I sat back in expectation of a 20 minute wait and was then surprised to get my dinner 5 minutes later. So, did they have the lamb all the time? Or did it only take 4 minutes to heat up in the microwave? Anyway, the staff were lovely, as they were everywhere in Portugal. I'd recommend everyone goes to see Lisbon, Sintra and Évora before they become like Venice. As for the "Venice of Portugal" - Aveiro - I'm not so sure.

I mentioned changes in Évora over the last 10-15 years. One of these is that a fine building that used to be a 16th century monastery and a (separate!) convent is now a spa hotel. I trust the rooms are a bit bigger than they were 4-500 years ago but it's a 5 star 'boutique' place, so they may not be.

Back to Spain . . . The empty word used by politicians here to insult and blacken their opponents is 'fascist'. I learnt from French TV this morning that the equivalent word north of the Pyrenees is 'liberal'. Ironically, their meanings are polar in the Anglo Saxon world.

Corruption: Below is a translation of an article from yesterday's El Pais on Spain's biggest challenge. It's by Google, so you'll have to do some figuring.

Finally . . . . Below that, there's an article from today's Times, is which the writer addresses the real problems of the UK's NHS - a busted model, myths and lies - talks about the insurance based models of the Continent. Does this herald a change? Or the beginning of change? I rather doubt.

End corruption: an economic imperative, not only an ethical one: Luis Garicano, Professor of Economics and Strategy at the London School of Economics and coordinator of the economic program Citizens.

Most of the debate on the runaway corruption we face is in terms of legal and moral issues involved. But many citizens are willing to close their eyes to these problems if the corrupt apparent generates welfare and jobs. This pact with the devil ("it's a sausage, but it's our sausage") which continue to see in Spain, where corrupt people keep winning elections, and avoiding resign, confident that voters will forget his misconduct.

Contrary to this tolerant view, economic research shows that corruption has huge economic costs. Even forgetting the moral and legal problems, corruption costs us well. I tell a very relevant to Spain study.

In a recent international conference in the Bank of Spain, the young (and promising) economist Enrique Moral Benito showed excellent research work (with García Santana, Pijoan-Mas and Ramos) on the causes of the lack of productivity growth in Spain during the boom years. The starting point is the observation that, between 1995 and 2007, Spain grew a lot, but each unit of labor and capital increasingly produced less. That is, we were growing base of adding more workers (participation of women, and immigration) and more machines, but not on the basis that each employee and each machine to produce more; on the contrary, produced less every year.

This prolonged decline in productivity is an unusual event in a comparative perspective. And it is very worrying for the long term: Once given the demographic realities, Spain has no capacity to increase labor force or the participation of women and migrants, the economic growth needed to sustain the welfare state can only result of productivity growth.

The usual explanation for this decline in productivity is the construction boom: if we grew fat based on a sector with low productivity growth, it is not uncommon that the economy did not experience increases in productivity. But the work of Moral Benito and his coauthors shows that it is not, because this decline occurred within each production sector, rather than by the reallocation of resources from one sector to another. As the boom progressed, in each sector the companies that grew were not often the most productive, but less productive. In many cases, the best companies were immune growth, and were "bad" in the sense of the least productive which took advantage of the large amount of resources, "free money" bubble, to grow.

To try to explain this result, Moral and his coauthors seeking, and reject, different explanations. Just find an explanation with strong predictive power in the data: the importance of crony capitalism in the sector (crony capitalism) and the incidence of corruption (Bribe Payers Index). In short, the only variable that explains how resource allocation worse is how corrupt is this assignment.

This analysis coincides with the sometimes intuitively makes the angry citizen. It is where companies are protected from competition where outlets predominate, access to dodgy licenses, contracts and favors trick where this deterioration in the allocation of resources occurs. Is corruption and cronyism that lead to bad firms are leveraging the bubble, absorbing capital and labor available, at the expense of the more cautious and less connected.

The cost of this misallocation of resources for the Spanish economy is enormous. While total factor productivity (capital and labor) fell by 0.7% annually in Spain, rose 0.4% annually in the EU and 0.7% in the US. If productivity in Spain had grown as the EU, in 2007 our GDP would have been 15% higher than it was. That is, in this scenario, the cost of corruption, contacts and crony capitalism is 150,000 million euros. Even more: Moral and his coauthors estimate that if the initial resource allocation had not deteriorated, Spain had grown to 0.8% annually. In this case, GDP would have been 20% higher, 200,000 million cost misallocation of resources caused by corruption: 5,000 euros per Spanish.

On second thought, these numbers should not surprise us. How else would be rich if licenses were Spain where it is due, if the contracts were the best, if the work is not carried the plug?

Given magnitudes and not worth continuing that "Spaniards are well" or "not have remedy." Corruption is a major problem and we have to do what is necessary to change the culture broth in which flowers, with imagination, with courage and rules are met.

Ray Fisman, a professor at Columbia University in New York, and a great world expert on the subject, suggested in a book due out later this year that success in the fight against corruption lies in the combination of legal sanctions and economic incentives on one hand with the other moral and social rejection.

As an argument, consider the amazing and inspiring example of Antanas Mockus. This Colombian philosopher and mathematician made in two short terms as mayor of Bogotá (two years each, 1995-1997 and 2001-2003) more to end corruption and strengthen the rule of law that most political will in decades.

When Mockus became mayor, the municipal government of Bogotá was completely corrupted, runaway crime. Bogotá was the world capital of crime, with 4,200 murders in 1993. How do changing attitudes and law enforcement in such a place? Mockus started by a surprising place, traffic regulations, and in a surprising way: using mime (yes, pampering with tights and white painted face) around the city. When a pedestrian crossing in red, a military member 400 mimes (theatre students, mostly) crossing behind, making mockery with grimaces and gestures. When a driver blocking a street, mime taught him a card with a thumbs down and handing other passersby to help him. In a few months, according to Fisman, the proportion of pedestrians obey traffic rules increased from 26% to 75%.

Of course, the work was not only Mockus attitudes. For example, the police closed public transport (2,000 agents), notoriously corrupt, and established a program to buy guns in private hands.

This combination, changing rules and changing attitudes, succeeded also in other areas. His campaign to reduce water usage included both incentives and prices as a video of himself showering, but turning off the shower to soap.

The Spaniards have not yet made the decision to end corruption. We remain tolerant of those who use their public office for their private purposes, especially if they are "one of us". This has a calming and high cost in terms of welfare. We must prioritise change the rules, incentives and attitudes to eliminate these behaviours.

The NHS is bust because the model is totally flawed

We’re still hopelessly addicted to the NHS: If we want health care on a par with the Continent, we have to introduce insurance schemes

On one thing the three main parties are agreed. The NHS will be safe in their own hands and unsafe in the hands of the other lot. The truth is, however, that the NHS will be safe in none of their hands.

This election campaign has seen a procession of uncosted pledges and vows of fiscal rectitude that don’t add up. The NHS, however, has given rise to the most dishonest promises of all.

The Tories and Lib Dems have promised to meet the funding requirement of an extra £8 billion a year by 2020 laid down by Simon Stevens, the NHS England chief executive. Labour, which is to make the NHS its big issue this week, has promised £2.5 billion a year extra.

Yet the NHS is heading (once again) for a funding crisis that even these dubiously costed pledges cannot address. Hospitals are expecting to rack up an extra £2.5 billion deficit by the end of the year. By 2020, the health service faces a £30 billion funding gap.

Between May 2010 and February this year, the number of patients waiting longer than the 18-week target for treatment almost doubled. The British Medical Association says that a third of family doctors are considering retiring within five years, mostly because of overwork, bureaucratic frustrations and stress. Yet in this political looking-glass world, Labour is promising to magic up 8,000 more GPs and the Tories are pledging seven-day access to all NHS services.

Improvements to the NHS, we are told, will be funded partly through the £22 billion “efficiency savings” to be made by 2020. But this is actually a euphemism for an impossible £22 billion of cuts.

The real swindle lies in the pretence that the NHS model works, and that the only issue is which party is most committed to it. In fact, successive governments have poured ever-more eye-watering amounts of money into the service. NHS net expenditure increased from £64 billion in 2003/04 to £113 billion in 2014/15. Such money will never be enough, though, because demand for health care is infinite and taxpayers’ willingness to fund it is not.

In addition, the NHS is far too big and unresponsive to be run from Whitehall. Targets have produced perverse incentives; regulators have covered up poor care because of the imperative to sustain the illusion that the service is getting better and better.

The NHS is bust because the model is fundamentally flawed. This does not mean there aren’t fine and committed healthcare staff doing wonderful things for patients. But the NHS simply cannot do what it says on the tin: provide equal care for all, free at the point of use.

Britain tells itself that the NHS is a national treasure because no other system in the world matches it for decency and compassion. This is simply untrue. In the Mid Staffordshire Trust, more than 1,200 patients died through the incompetence, negligence and callousness of the staff, a story repeated elsewhere.

My own previously firm commitment to the NHS was irrevocably shaken by the way my own elderly parents were treated with indifference, neglect and even cruelty. From those experiences and many worse horrors recounted to me, I concluded three things: that there was a moral problem at the heart of the NHS; that if you were old and feeble you were particularly vulnerable; and that the most important thing patients lacked for their own protection was leverage.

That last crucial factor is provided by social insurance health schemes run by countries such as Austria, Belgium, France, Germany, Luxembourg, the Netherlands and Switzerland.

These are privately run insurance schemes and health providers that are socially redistributive because they cover those who are genuinely unable to pay. Because they are so generously funded, their standards of even basic care are higher than in the NHS.

These schemes are extremely popular not just because standards are so high. They are well funded because people can see how their money is being spent. And the choice of schemes and providers provides purchasers with leverage. Healthcare professionals are thus answerable not to bureaucrats or politicians but to patients themselves.

No healthcare system is perfect, and European social insurance schemes are beset by similar problems of unlimited demand. But their combination of higher standards and social justice is not even on the British political agenda. 

This is because, in a country whose values and national identity are in flux, people cling to the foundational myth of the NHS as the one national institution with which they are proud to identify. But it is a myth. And after the election, we are going to find out its impossible price.