OCTOBER 16, 2006

COVER STORY

The Organic Myth
Pastoral ideals are getting trampled as organic food goes mass market
By Diane Brady
podcast
COVER STORY PODCAST
http://www.businessweek.com/magazine/content/06_42/b4005001.htm

Next time you're in the supermarket, stop and take a look at Stonyfield Farm yogurt. With its contented cow and green fields, the yellow container evokes a bucolic existence, telegraphing what we've come to expect from organic food: pure, pesticide-free, locally produced ingredients grown on a small family farm.

So it may come as a surprise that Stonyfield's organic farm is long gone. Its main facility is a state-of-the-art industrial plant just off the airport strip in Londonderry, N.H., where it handles milk from other farms. And consider this: Sometime soon a portion of the milk used to make that organic yogurt may be taken from a chemical-free cow in New Zealand, powdered, and then shipped to the U.S. True, Stonyfield still cleaves to its organic heritage. For Chairman and CEO Gary Hirshberg, though, shipping milk powder 9,000 miles across the planet is the price you pay to conquer the supermarket dairy aisle. "It would be great to get all of our food within a 10-mile radius of our house," he says. "But once you're in organic, you have to source globally."

Hirshberg's dilemma is that of the entire organic food business. Just as mainstream consumers are growing hungry for untainted food that also nourishes their social conscience, it is getting harder and harder to find organic ingredients. There simply aren't enough organic cows in the U.S., never mind the organic grain to feed them, to go around. Nor are there sufficient organic strawberries, sugar, or apple pulp -- some of the other ingredients that go into the world's best-selling organic yogurt.

Slide Show >>
Now companies from Wal-Mart (WMT ) to General Mills (GIS ) to Kellogg (K ) are wading into the organic game, attracted by fat margins that old-fashioned food purveyors can only dream of. What was once a cottage industry of family farms has become Big Business, with all that that implies, including pressure from Wall Street to scale up and boost profits. Hirshberg himself is under the gun because he has sold an 85% stake in Stonyfield to the French food giant Groupe Danone. To retain management control, he has to keep Stonyfield growing at double-digit rates. Yet faced with a supply crunch, he has drastically cut the percentage of organic products in his line. He also has scaled back annual sales growth, from almost 40% to 20%. "They're all mad at me," he says.

As food companies scramble to find enough organically grown ingredients, they are inevitably forsaking the pastoral ethos that has defined the organic lifestyle. For some companies, it means keeping thousands of organic cows on industrial-scale feedlots. For others, the scarcity of organic ingredients means looking as far afield as China, Sierra Leone, and Brazil -- places where standards may be hard to enforce, workers' wages and living conditions are a worry, and, say critics, increased farmland sometimes comes at a cost to the environment.

Everyone agrees on the basic definition of organic: food grown without the assistance of man-made chemicals. Four years ago, under pressure from critics fretting that the term "organic" was being misused, the U.S. Agriculture Dept. issued rules. To be certified as organic, companies must eschew most pesticides, hormones, antibiotics, synthetic fertilizers, bioengineering, and radiation. But for purists, the philosophy also requires farmers to treat their people and livestock with respect and, ideally, to sell small batches of what they produce locally so as to avoid burning fossil fuels to transport them. The USDA rules don't fully address these concerns.

Hence the organic paradox: The movement's adherents have succeeded beyond their wildest dreams, but success has imperiled their ideals. It simply isn't clear that organic food production can be replicated on a mass scale. For Hirshberg, who set out to "change the way Kraft (KFT ), Monsanto (MON ), and everybody else does business," the movement is shedding its innocence. "Organic is growing up."

Certainly, life has changed since 1983, when Hirshberg teamed up with a back-to-the-land advocate named Samuel Kaymen to sell small batches of full-fat plain organic yogurt. Kaymen had founded Stonyfield Farm to feed his six kids and, as he puts it, "escape the dominant culture." Hirshberg, then 29, had been devoted to the environment for years, stung by memories of technicolor dyes streaming downriver from his father's New Hampshire shoe factories. He wrote a book on how to build water-pumping windmills and, between 1979 and 1983, ran the New Alchemy Institute, an alternative-living research center on Cape Cod. He was a believer.

But producing yogurt amid the rudimentary conditions of the original Stonyfield Farm was a recipe for nightmares, not nirvana. Meg, an organic farmer who married Hirshberg in 1986, remembers the farm as cold and crowded, with a road so perilous that suppliers often refused to come up. "I call it the bad old days," she says. Adds her mother, Doris Cadoux, who propped up the business for years: "Every time Gary would come to me for money, Meg would call to say 'Mama, don't do it."'

Farming without insecticides, fertilizers, and other aids is tough. Laborers often weed the fields by hand. Farmers control pests with everything from sticky flypaper to aphid-munching ladybugs. Manure and soil fertility must be carefully managed. Sick animals may take longer to get well without a quick hit of antibiotics, although they're likely to be healthier in the first place. Moreover, the yield per acre or per animal often goes down, at least initially. Estimates for the decline from switching to organic corn range up to 20%.

Organic farmers say they can ultimately exceed the yields of conventional rivals through smarter soil management. But some believe organic farming, if it is to stay true to its principles, would require vastly more land and resources than is currently being used. Asks Alex Avery, a research director at the Hudson Institute think tank: "How much Bambi habitat do you want to plow down?"

IMPOSSIBLE STANDARD
For a sense of why Big Business and organics often don't mix, it helps to visit Jack and Anne Lazor of Butterworks Farm. The duo have been producing organic yogurt in northeastern Vermont since 1975. Their 45 milking cows are raised from birth and have names like Peaches and Moonlight. All of the food for the cows -- and most of what the Lazors eat, too -- comes from the farm, and Anne keeps their charges healthy with a mix of homeopathic medicines and nutritional supplements. Butterworks produces a tiny 9,000 quarts of yogurt a week, and no one can pressure them to make more. Says Jack: "I'd be happiest to sell everything within 10 miles of here."

But the Lazors also embody an ideal that's almost impossible for other food producers to fulfill. For one thing, they have enough land to let their modest-sized herd graze for food. Many of the country's 9 million-plus dairy cows (of which fewer than 150,000 are organic) are on farms that will never have access to that kind of pasture. After all, a cow can only walk so far when it has to come back to be milked two or three times a day.

STEWARDS OF THE LAND
When consumers shell out premiums of 50% or more to buy organic, they are voting for the Butterworks ethic. They believe humans should be prudent custodians not only of their own health but also of the land and animals that share it. They prefer food produced through fair wages and family farms, not poor workers and agribusiness. They are responding to tales of caged chickens and confined cows that never touch a blade of grass; talk of men losing fertility and girls becoming women at age nine because of extra hormones in food. They read about pesticides seeping into the food supply and genetically modified crops creeping across the landscape.

For Big Food, consumers' love affair with everything organic has seemed like a gift from the gods. Food is generally a commoditized, sluggish business, especially in basic supermarket staples. Sales of organic groceries, on the other hand, have been surging by up to 20% in recent years. Organic milk is so profitable -- with wholesale prices more than double that of conventional milk -- that Lyle "Spud" Edwards of Westfield, Vt., was able to halve his herd, to 25 cows, this summer and still make a living, despite a 15% drop in yields since switching to organic four years ago. "There's a lot more paperwork, but it's worth it," says Edwards, who supplies milk to Stonyfield.

The food industry got a boost four years ago when the USDA issued its organic standards. The "USDA Organic" label now appears on scores of products, from chicken breasts to breakfast cereal. And you know a tipping point is at hand when Wal-Mart Stores Inc. enters the game. The retailer pledged this year to become a center of affordable "organics for everyone" and has started by doubling its organic offerings at 374 stores nationwide. "Everyone wants a piece of the pie," says George L. Siemon, CEO of Organic Valley, the country's largest organic farm co- operative. "Kraft and Wal-Mart are part of the community now, and we have to get used to it."

The corporate giants have turned a fringe food category into a $14 billion business. They have brought wider distribution and marketing dollars. They have imposed better quality controls on a sector once associated with bug-infested, battered produce rotting in crates at hippie co-ops. Organic products now account for 2.5% of all grocery spending (if additive-free "natural" foods are included, the share jumps to about 10%). And demand could soar if prices come down.

But success has brought home the problems of trying to feed the masses in an industry where supplies can be volatile. Everyone from Wal-Mart to Costco Wholesale Corp. (COST ) is feeling the pinch. Earlier this year, Earthbound Farm, a California producer of organic salads, fruit, and vegetables owned by Natural Selection Foods, cut off its sliced-apple product to Costco because supply dried up -- even though Earthbound looked as far afield as New Zealand. "The concept of running out of apples is foreign to these people," says Earthbound co-founder Myra Goodman, whose company recalled bagged spinach in the wake of the recent E. coli outbreak. "When you're sourcing conventional produce, it's a matter of the best product at the best price."

Inconsistency is a hallmark of organic food. Variations in animal diet, local conditions, and preparation make food taste different from batch to batch. But that's anathema to a modern food giant. Heinz, for one, had a lot of trouble locating herbs and spices for its organic ketchup. "We're a global company that has to deliver consistent standards," says Kristen Clark, a group vice-president for marketing. The volatile supply also forced Heinz to put dried or fresh organic herbs in its organic Classico pasta sauce because it wasn't able to find the more convenient quick-frozen variety. Even Wal-Mart, master of the modern food supply chain, is humbled by the realities of going organic. As spokesperson Gail Lavielle says: "You can't negotiate prices in a market like that."

While Americans may love the idea of natural food, they have come to rely on the perks of agribusiness. Since the widespread use of synthetic pesticides began, around the time of World War II, food producers have reaped remarkable gains. Apples stay red and juicy for weeks. The average harvested acre of farmland yields 200% more wheat than it did 70 years ago. Over the past two decades chickens have grown 25% bigger in less time and on less food. At the same time, the average cow produces 60% more milk, thanks to innovations in breeding, nutrition, and synthetic hormones.

It's also worth remembering how inexpensive food is these days. Americans shell out about 10% of their disposable income on food, about half what they spent in the first part of the 20th century. Producing a budget-priced cornucopia of organic food won't be easy.

Exhibit A: Gary Hirshberg's quest for organic milk. Dairy producers estimate that demand for organic milk is at least twice the current available supply. To quench this thirst, the U.S. would have to more than double the number of organic cows -- those that eat only organic food -- to 280,000 over the next five years. That's a challenge, since the number of dairy farms has shrunk to 60,000, from 334,000 in 1980, according to the National Milk Producers Federation. And almost half the milk produced in the U.S. comes from farms with more than 500 cows, something organic advocates rarely support.

What to do? If you're Hirshberg, you weigh the pros and cons of importing organic milk powder from New Zealand. Stonyfield already gets strawberries from China, apple puree from Turkey, blueberries from Canada, and bananas from Ecuador. It's the only way to keep the business growing. Besides, Hirshberg argues, supporting a family farmer in Madagascar or reducing chemical use in Costa Rica is just as important as doing the same at home.

Perhaps, but doing so risks a consumer backlash, especially when the organic food is from China. So far there is little evidence that crops from there are tainted or fraudulently labeled. Any food that bears the USDA Organic label has to be accredited by an independent certifier. But tests are few and far between. Moreover, many consumers don't trust food from a country that continues to manufacture DDT and tolerates fakes in other industries. Similar questions are being asked about much of the developing world. Ronnie Cummins, national director of the nonprofit Organic Consumers Assn., claims organic farms may contribute to the destruction of the Amazon rain forest, although conventional farming remains the proven culprit.

Imported organics are a constant concern for food companies and supermarkets. It's certainly on Steve Pimentel's mind. "Someone is going to do something wrong," says Costco's assistant general merchandise manager. "We want to make sure it's not us." To avoid nasty surprises, Costco makes sure its own certifiers check that standards are met in China for the organic peanuts and produce it imports. Over at Stonyfield, Hirshberg's sister, Nancy, who is vice-president of natural resources, was so worried about buying strawberries in northeastern China that she ordered a social audit to check worker conditions. "If I didn't have to buy from there," she says, "I wouldn't."

For many companies, the preferred option is staying home and adopting the industrial scale of agribusiness. Naturally, giant factory farms make purists recoil. Is an organic label appropriate for eggs produced in sheds housing more than 100,000 hens that rarely see the light of day? Can a chicken that's debeaked or allowed minimal access to the outdoors be deemed organic? Would consumers be willing to pay twice as much for organic milk if they thought the cows producing it spent most of their outdoor lives in confined dirt lots?

ETHICAL CHALLENGES?
Absolutely not, say critics such as Mark Kastel, director of the Organic Integrity Project at the Cornucopia Institute, an advocacy group promoting small family farms. "Organic consumers think they're supporting a different kind of ethic," says Kastel, who last spring released a high-profile report card labeling 11 producers as ethically challenged.

Kastel's report card included Horizon Organic Dairy, the No. 1 organic milk brand in the U.S., and Aurora Organic Dairy, which makes private-label products for the likes of Costco and Safeway Inc. Both dairies deny they are ethically challenged. But the two do operate massive corporate farms. Horizon has 8,000 cows in the Idaho desert. There, the animals consume such feed as corn, barley, hay, and soybeans, as well as some grass from pastureland. The company is currently reconfiguring its facility to allow more grazing opportunities. And none of this breaks USDA rules. The agency simply says animals must have "access to pasture." How much is not spelled out. "It doesn't say [livestock] have to be out there, happy and feeding, 18 hours a day," says Barbara C. Robinson, who oversees the USDA's National Organic Program.

But what gets people like Kastel fuming is the fact that big dairy farms produce tons of pollution in the form of manure and methane, carbon dioxide, and nitrous oxide -- gases blamed for warming the planet. Referring to Horizon's Idaho farm, he adds: "This area is in perpetual drought. You need to pump water constantly to grow pasture. That's not organic."

Aurora and Horizon argue their operations are true to the organic spirit and that big farms help bring organic food to the masses. Joe E. Scalzo, president and CEO of Horizon's owner, WhiteWave, which is owned by Dean Foods Co., says: "You need the 12-cow farms in Vermont -- and the 4,000 milking cows in Idaho." Adds Clark Driftmier, a spokesman for Aurora, which manages 8,400 dairy cows on two farms in Colorado and Texas: "We're in a contentious period with organics right now."

At the USDA, Robinson is grappling with the same imponderables. In her mind the controversy is more about scale than animal treatment. "The real issue is a fear of large corporations," she says. Robinson expects the USDA to tighten pasture rules in the coming months in hopes of moving closer to the spirit of the organic philosophy. "As programs go," she says, "this is just a toddler. New issues keep coming up."

Few people seem more hemmed in by the contradictions than Gary Hirshberg. Perhaps more than anyone, he has acted as the industry's philosopher king, lobbying governments, proselytizing consumers, helping farmers switch to organic, and giving 10% of profits to environmental causes. Yet he sold most of Stonyfield Farm to a $17 billion French corporation.

He did so partly to let his original investors cash out, partly to bring organic food to the masses. But inevitably, as Stonyfield has morphed from local outfit to national brand, some of the original tenets have fallen by the wayside. Once Danone bought a stake, Stonyfield founder Samuel Kaymen moved on. "I never felt comfortable with the scale or dealing with people so far away," he recalls, although he says Hirshberg has so far managed to uphold the company's original principles.

The hard part may be continuing to do so with Danone looking over his shoulder. Hirshberg retains board control but says his "autonomy and independence and employment are contingent on delivering minimum growth and profitability." Danone Chairman and CEO Franck Riboud expresses admiration for the man he considers to be Danone's organic guru, but adds: "Gary respects that I have to answer to shareholders."

The compromises that Hirshberg is willing to make say a lot about where the organic business is headed. "Our kids don't have time for us to sit on our high horses and say we're not going to do this because it's not ecologically perfect," says Hirshberg. "The only way to influence the powerful forces in this industry is to become a powerful force." And he's willing to do that, even if it means playing by a new set of rules.

THE LAST OF THE INDEPENDENTS

Aidin Vaziri

Sunday, March 25, 2007

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When Tower Records went under last year, few people were surprised. With online sales and illegal downloads on the rise, neighborhood music retailers of all sizes have felt the squeeze. Take into account added pressure from the big-box stores and rising rents, and many of the Bay Area's independent record shops -- if not already gone -- are endangered. Meet some of the survivors and find out what's keeping them alive.

AMOEBA MUSIC

As one of the biggest independent music retailers in the Bay Area, Amoeba has also seen the biggest market changes.

"Every five years you would typically have a crop of new 14-year-olds that were discovering music and coming into the store," says Joe Goldmark, co-owner of the 25,000-square-foot Haight Street store. "But you don't have that anymore. They don't shop for music in stores. They download."

As a reaction, he says, the two Bay Area stores have simply emphasized their strengths.

"The No. 1 thing we try to do is customer service," he says. "We try to be as user friendly as we can be."

Increasing DVD sales have helped the store get through the CD slump, and there are tentative steps to get into the download business.

"We are just trying to stay ahead of the curve," Goldmark says.

Ultimately, he believes that it's the physical shopping experience that will help Amoeba stick around, and the store is sweetening the deal by offering free in-store concerts, a knowledgeable staff and generous trade-in credit.

"We try to make it a fun destination," he says.

1855 Haight St., San Francisco. (415) 831-1200. 2455 Telegraph Ave., Berkeley. (510) 549-1125. www.amoeba.com.

AQUARIUS RECORDS

Since settling into its current home in the Mission, the oldest independent record store in San Francisco has been catering to discriminating fans of indie rock, unusual sounds and hard-to-find releases.

Allan Horrocks, who became a co-owner in 1995, attributes much of the store's staying power to the exhaustive staff-generated reviews that not only accompany new releases on the shelves but also appear on Aquarius' Web site and get sent out through its biweekly e-mail newsletter.

"Having a record store is a lot like making a mix tape for your friends," he says. "We just happen to have 10,000 of them."

1055 Valencia St., San Francisco. (415) 647-2272. www.aquariusrecords.org.

BIG AL'S RECORD BARN

"Big" Al Farleigh, a former roofer who got into the record business after he fell and broke his back, was forced to shut down his original Santa Clara store after the landlord sold the building.

Eight months later he reopened at his current 6,000-square-foot location in San Jose, where he's been for nine years.

"I do records like nobody," he says. "I got stuff here nobody's got."

Farleigh recently bought 50,000 vintage 45s to add to his stock from a South Bay jukebox company that went under.

"It's something to see," he says. "The store is like a museum. I'm 74, and the guy who works for me is 82. It's a lot of fun."

Farleigh says his formula for success is simple: "People come in here looking for a record, and they don't mind paying a fair price for it."

522 S. Bascom Ave., San Jose. (408) 294-7200.

GROOVE MERCHANT RECORDS

Famously name-checked by the Beastie Boys in the song "Professor Booty" ("This one goes out to my man the Groove Merchant/ Coming through with the beats for which I've been searchin' "), this Lower Haight institution has provided record collectors with hard-to-find jazz, soul, disco, psychedelic rock and Latin American vinyl gems since 1989.

"We're customer oriented," says Chris Veltri, who bought the store from its original owners in 1997. "Everything that's in here is handpicked for certain people in mind."

Despite heavy competition from online auction houses that also deal in vintage goods, Veltri says he has little trouble keeping the regulars coming back.

"You just have to be really focused and always look ahead," he says.

687 Haight St., San Francisco. (415) 252-5766. www.groovemerchantrecords.com.

GROOVES

Giving music fans not so much a record store as a sensory experience, Grooves owner Ray Andersen has decorated his windows with colored vinyl and his walls with all kinds of tantalizing rock, jazz, blues, soundtrack and lounge rarities.

A prominent character on the '60s San Francisco scene as head of the Holy See Light Show, Andersen doesn't seem particularly surprised by his vinyl-only store's continuing success.

"CDs haven't done anybody any good," he says.

It's a philosophy his customers seem to share. Since 1997, Andersen has kept them coming back by regularly slipping gems from his personal collection into the general clutter.

"People like the idea of being able to find something serendipitously," he says.

Much of the store's success, he reckons, has to do with the eclectic population of the Bay Area: "I wouldn't want to do this in Ohio."

1797 Market St., San Francisco. (415) 436-9933. www.groovesrecords.com.

MOD LANG

Mod Lang was recently forced to move from its University Avenue home, a block from the UC Berkeley campus, after rents shot up.

"It's not just record stores," owner Paul Bradshaw says. "The price of running a small business in downtown Berkeley is just not feasible anymore."

The store, which once specialized in import CDs, was also affected by an influx of tech-savvy UC students.

"One person can buy a CD and go back to the dorm and put it up on a server that 400 people can access," he says.

With that insight, Bradshaw realized Mod Lang no longer had to cater to that demographic.

"It was a liberating moment," he says.

Mod Lang relocated to El Cerrito and started carrying more vintage country, soul and jazz vinyl releases. The hardest part has been shaking people's perception that it's still a Britpop specialty store, but the owner believes the customers are slowly coming around.

"We moved 4 miles and it feels like 400," he says. "You have to find your niche and accept that it's a different time."

6328 Fairmount Ave., El Cerrito. (510) 486-1880. www.modlang.com.

RECYCLED RECORDS

One of the only used-record stores in the Upper Haight that managed to survive the bust. For almost 30 years, owner Bruce Lyall has kept the focus the same: " '60s rock -- everything from the Beatles to the Grateful Dead."

There is a small corner for CDs, but Recycled has mostly adapted to the changing times by embracing online auction houses on eBay and expanding its inventory to include paper goods such as collectible books, posters and movie memorabilia.

"You just have to go with it," Lyall says. "You can't fight it."

1377 Haight St., San Francisco. (415) 626-4075. www.recycled-records.com.

ROOKY RICARDO'S RECORDS

"Business has never been better," says Richard Vivian, who opened Rooky Ricardo's on a rough stretch of Haight Street in 1987.

This overstuffed vinyl emporium features mostly soul and oldies 45s, but there are also a few surprises in the mix.

"I make my rent selling girl-group records," Vivian says.

Besides offering the thrill of discovery for young music buffs ("My customers are always in their 20s," he says), the store also sells vintage turntables, offers weekly repair clinics and does occasional business through online retailers such as Global Electronic Music Marketplace.

Despite his devotion to an outdated format, Vivian isn't at odds with new technology.

"A lot of my customers first hear this music on iTunes or Pandora," he says. "But at the end of the day, they need to touch the records, listen to them and thumb through them."

448 Haight St., San Francisco. (415) 864-7526. www.rookyricardosrecords.com.

SOUNDWORKS

Catering primarily to professional DJs, Soundworks has carved out its niche with the Bay Area club set by carrying a judicious supply of vinyl and offering a monthly record pool.

Owners Tom Seymour and Sam Labelle work with, rather than compete with, the like-minded stores in the city.

"Each of us has a little family," Seymour says. "And we help each other out."

Although Soundworks is facing a rent increase, Seymour and Labelle believe they can ride it out, unlike recent lease casualties such as BPM and Open Mind Music. It's all about keeping a skilled clientele.

"Not only do MP3s sound like crap when they're amplified, but the main problem with laptop DJs is it's hard to tell if they're mixing live," Labelle says. "They're making themselves expendable."

228 Valencia St, San Francisco. (415) 487-3980. www.soundworks-sf.com.

STREETLIGHT RECORDS

Streetlight has faced stiff competition not only from chains and online sellers but also illicit file-sharing networks that are loaded with hot sellers.

According to Andrew Shadgett, a manager and employee at the Market Street location since 1988, the four shops have survived by keeping up with their customers' changing demands.

"We're all neighborhood stores," he says. "We listen to what people are looking for and what people want."

While Tower Records' closure actually helped bring new faces into the stores, they still feel the burden of loss leaders like Best Buy and Target that undercut prices on new releases.

Still, Shadgett believes Streetlight can offer something the bigger chains can't.

"People still like the social component of going to a small record store," he says.

2350 Market St, San Francisco. (888) 396-2350. 3979 24th St., San Francisco. (888) 682-3550. 980 S. Bascom Ave., San Jose. (888) 330-7776. 939 Pacific Ave., Santa Cruz. (888) 648-9201. www.streetlightrecords.com.

TWEEKIN' RECORDS

This little specialty store may be tucked away in a sublevel space in the Lower Haight, but it's known around the world by club DJs.

Since 1991, Tweekin' has featured a tightly edited selection of the latest electro, break and hip-hop records (plus some disco reissues) and has let its customers sample the wares before making any purchases.

"We carry stuff you're not going to find on iTunes," says Anthony Mansfield, who became a co-owner last year.

He adds that the staff has made a serious effort to adapt to a changing market by building up its Web site and offering MP3 clips for every new release in stock.

"For a small store," he says, "we do a lot of work."

593 Haight St, San Francisco. (415) 626-6995. www.tweekin.com.

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THE END IS NEAR

Time is ticking for CDs.

There's no shortage of evidence to show that compact discs are rapidly going the way of the eight-track tape. While vinyl sales have unexpectedly surged in the Bay Area, the LP's younger, shinier and glitchier cousin hasn't fared so well. According to year-end sales figures released by Nielsen SoundScan in 2006, sales of the physical format dropped nearly 5 percent, while digital sales shot up 65 percent. That means that while overall music sales jumped more than 19 percent last year, most of the purchases were made by clicking a mouse rather than stepping into a store.

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THE LOSS LEADERS

Wondering why it's getting harder to find the latest releases at neighborhood stores? Blame big chains like Wal-Mart and Target, which sell new CDs as loss leaders.

That's the practice in which the big-box retailers draw customers into their stores by offering hot sellers at cut-rate prices in the hopes of getting them to linger and make impulse purchases on bigger-ticket items such as televisions and stereo equipment.

Earlier this month Best Buy offered breakout singer-songwriter Mat Kearney's debut album, "Nothing Left to Lose," at $7.99, while Rasputin listed the disc at the discounted price of $11.99 and Streetlight had a few new copies for $11.98. The mega-retailers simply write off the loss as an advertising expense.

Many industry insiders suspect that that pricing strategy led to Tower Records' demise in the United States. And Virgin Megastores could be next. The chain reported a $495 million loss in the past two years.

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LEAVING THE VILLAGE BEHIND

After nearly 40 years of operating this Mill Valley institution, Village Music owner John Goddard announced that he was planning to permanently shut its doors in September.

"I got this place rolling on my own terms, I ran it on my own terms, and I'm closing it on my own terms," he says.

There are several reasons, he says, among them a lack of local support and general burnout. But ultimately it was a business decision.

"The price of rent in Mill Valley is absolutely insane," says Goddard, who started working at Village Music in 1957, when he was 13, and took over in 1968. "I can't afford to stay open."

In recent years, the cluttered warehouse -- stocked with a treasure trove of 33s, 45s, 78s and rock 'n' roll memorabilia -- has mostly served as a popular destination for international collectors and touring musicians such as Tom Waits, B.B. King and Elvis Costello, who once called it "the greatest record-collecting store in the world."

Goddard says the only thing that has kept him around this long is stubbornness.

"The man created the store out of nothing and operated it almost as a public service to the community," says blues guitarist Ry Cooder, who recently made an in-store appearance at Village Music. "But that's not good enough anymore."

Many regulars would like to see it granted landmark status by the city, which they feel is quickly homogenizing.

"It's sad to see an institution close," says Richard Vivian, owner of San Francisco's Rooky Ricardo's record store. "It should be a museum."

But Goddard doesn't seem likely to change his mind in the next few months.

"I might be open to the idea of somebody buying the store and having me run it for a while, but it depends on the day you ask me," he says.

In the meantime, Village Music will get a bang-up goodbye. Costello has agreed to perform in the store sometime in May, and DJ Shadow (Marin resident Josh Davis) has designs on playing every day in September until the doors close for good.

"Might as well," Goddard says. "He's practically paying my rent now."

9 E. Blithedale Ave., Mill Valley. (415) 388-7400, www.villagemusic.com.

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THE REST

More independent record stores that are still hanging in there:

Bird & Beckett Books and Records, 2788 Diamond St., San Francisco. (415) 586-3733. www.bird-beckett.com. Neighborhood bookstore that carries a small collection of classical, jazz and rock records.

Down Home Music Store, 10341 San Pablo Ave., El Cerrito. (510) 525-2129. www.downhomemusic.com. Specializing in jazz, folk and blues since 1976.

Green Apple Books and Music, 506 Clement St., San Francisco. (415) 387-2272. www.greenapplebooks.com. An annex stuffed with new and used CDs, plus a discriminating selection of vinyl.

In House Records, 988 Mission St., San Francisco. (415) 543-4003. www.throwdownsound.com. South of Market spot geared toward house DJs.

Jack's Record Cellar, 254 Scott St., San Francisco. (415) 431-3047. Another vinyl-only store, best known for its walls of 78s. Open Wednesday through Saturday, or by appointment.

Jazz Quarter, 1267 20th Ave., San Francisco. (415) 661-2331. Rare and out-of-print jazz records. Open Tuesday through Saturday.

Medium Rare Records, 2310 Market St., San Francisco. (415) 255-7273. www.modsystem.com/mediumrare. Show tunes, dance and lounge.

The Music Store, 66 W. Portal Ave., San Francisco. (415) 664-2044. Small record store with a knowledgeable staff, lots of vinyl and an '80s-leaning used-CD selection.

101 Music, 1414 Grant Ave., San Francisco. (415) 392-6369. A vinyl store with junk-shop ambience. Offers eight-track, cassette and reel-to-reel tapes, and working turntables.

Rasputin Music, 2401 Telegraph Ave., Berkeley. 69 Powell St., San Francisco. 1820 S. Bascom Ave., Campbell. 5777 Mowry Ave., Newark. 1035 Contra Costa Blvd., Pleasant Hill. 15590 Hesperian Blvd., San Lorenzo. 920 Admiral Callaghan Lane, Vallejo. (800) 350-8700. www.rasputinmusic.com. Fast-expanding local chain, offering a competitively priced variety of new and used releases.

The Record Man, 1322 El Camino Real, Redwood City. (650) 368-9065. www.recordman.com. A former residential building stuffed with albums, plus separate units for used CDs, reel-to-reel tapes and videos.

Reverb Records, 1816 Haight St., San Francisco. (415) 221-4142. www.reverbsf.com. Club music, dance tracks.

Saturn Records, 5488 College Ave., Oakland. (510) 654-0335. www.saturnrecords.com. Rockridge collectors' store, offering mail order and online sales.

Did we miss your favorite Bay Area independent record store? Let us know.

E-mail Aidin Vaziri at avaziri@sfchronicle.com.

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This article appeared on page PK - 18 of the San Francisco Chronicle

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God Hates Fags

http://news.bbc.co.uk/2/hi/uk_news/magazine/6507971.stm

BBC NEWS
The end of the American dream?
Analysis
By Steve Schifferes
Economics reporter, BBC News website

The US economy has been generating strong economic growth over the past few years as it has come out of recession.

After growing at more than 3% a year in 2004 and 2005, the pace picked up to a blistering 5.6% annual rate in the first quarter of this year - although the pace has since then slipped back to 2.9%.

So far, though, little of that growth has translated into the hands of the average worker, according to new research from the Economic Policy Institute (EPI).

For real household incomes, the median point - the level at which half of households earn more and half less - has actually fallen over the past five years.

The unprecedented split between growth and living standards is the defining economic agenda
Jared Bernstein, Economic Policy Institute

That marks a notable contrast with the 1990s, when the economic boom boosted both jobs and incomes.

The puzzle of economic expansion without significant job or wage growth has been troubling US economists and commentators of all political persuasions.

Slowing wages

"The unprecedented split between growth and living standards is the defining economic agenda of the day," says the EPI's senior economist, Jared Bernstein.

During the five years from 2000 to 2005, the US economy grew in size from $9.8 trillion to $11.2 trillion, an increase in real terms of 14%.

Productivity - the measure of the output of the economy per worker employed - grew even more strongly, by 16.6%.

But over the same period, the median family's income slid by 2.9%, in contrast to the 11.3% gain registered in the second half of the 1990s.

The wages of households of African or Hispanic origin fell even faster.

And new entrants to the labour market fared particularly badly.

Average hourly real wages for both college and high school graduates actually fell between 2000 and 2005, and fewer of the jobs they found carried benefits such as health care or company pensions.

The poor performance of the US economy in delivering fuller wage packets may be one reason why the public gives the Bush administration's such a low rating on economic policy.

According to the latest Gallup poll, only 37% approve of Mr Bush's handling of the economy, and 70% think economic conditions are getting worse, substantially worse figures than in 2004.

With mid-term elections to the House of Representatives and Senate - both, currently, held by Mr Bush's Republicans - due in November, the contrasts are concentrating minds in both main parties.

Where has the increase gone?

One way to comprehend what is happening is to look at the split between how much of the economy is won by profits and how much by wages.

The share allotted to corporate profits increased sharply, from 17.7% in 2000 to 20.9% in 2005, while the share going to wages has reached a record low.

Meanwhile, a large section of the workforce - the unemployed or those not seeking work - have not benefited from economic growth.

Unemployment has remained stubbornly high despite the economic recovery, with the latest figure at 4.7% compared to 4% at the end of 2000. Overall job growth in the first half of the current decade has been just 1.3%.

In the 1990s, job growth of some 12% goes some way towards explaining why prosperity in that earlier period spread down the income scale.

Rising inequality

Even for those with jobs, the fruits of economic growth have been more unequally distributed within the labour market.

The incomes of the top 20% have grown much faster than earnings of those at the middle or bottom of the income distribution. The income of the top 1% and top 0.1% have grown particularly rapidly.

From 1992 to 2005, the pay of chief executive officers of major companies rose by 186%.

The equivalent figure for median hourly wages was 7.2%, leaving the ratio of CEOs' pay to that of the average worker at 262.

In the 1960s, the comparable figure was 24.

There has been much debate about the extent to which the tax policies of the Bush administration, which lowered many taxes on capital, have contributed to this trend.

The administration argues that the tax cuts have been vital to the economic recovery, and that more jobs and higher wages will eventually follow GDP growth.

It also says that the encouragement to invest delivered by lower taxes has made the US more productive, and therefore more competitive in the global economy.

Explanations

The authors of the EPI report argue that low minimum wages, weakened union power, and the loss of both blue and white-collar jobs to off shoring do much to explain the jobs picture.

Admittedly the Federal minimum wage has been static for a decade, but the downward pressure on wages is probably coming from other sources.

One is immigration, which may have a greater effect on the wages of low-skilled workers.

Another is the "China effect,", the idea that low prices of imported manufactured goods are pushing US industry to cut its workforce in order to increase productivity.

The head of the US central bank, Ben Bernanke, recently admitted that globalisation was producing losers as well as winners.

"The changes in the pattern of production are likely to threaten the livelihoods of some workers and the profits of some firms, even when these changes lead to greater productivity," he said.

So for politicians of all parties, trying to understand how the average family can gain a greater share in future prosperity may prove one of the biggest electoral challenges of the year.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/5303590.stm

Published: 2006/09/04 08:02:14 GMT

© BBC MMVII

British accents in U.S.

http://news.bbc.co.uk/2/hi/uk_news/magazine/6470095.stm

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Golden State may be blinded by its luster

California slipping in rate of growth and in job creation

Joel Kotkin

Sunday, February 25, 2007

For much of the past century, California has often seen itself -- and been seen by others -- as America's avant-garde state. John Gunther, writing in his famous "Inside USA" in 1946, gushingly described it as "the most spectacular and most diversified American state ... so ripe, golden." Recently, Gov. Arnold Schwarzenegger compared California to "the ancient city-states of Rome and Sparta," praising it as "the harmonious, the prosperous state, the cutting-edge state."

Perhaps it's time to ditch the celebratory rhetoric and take a closer look at the sober realities. Our magnificent state may still be the home to Silicon Valley, Hollywood, the nation's largest port complex and the world's richest agricultural valleys, but by many critical measurements the state is slipping.

The most obvious signs are economic. Although far from moribund, the state may not be as fundamentally strong as its boosters, including the governor, suggest. The state rate of GDP growth over the past decade has been strong, ranking fourth in the nation, but California has been losing ground in the new millennium. In 2004-05, it fell to 17th, behind not only fast-growing Arizona and Nevada but also Oregon, Washington and rival "nation-state" Texas.

Job creation has been even less impressive. In the Bay Area and Los Angeles, it can only be considered mediocre or worse. If not for the strong performance of the interior counties of the state -- what Bill Frey and I call the "Third California" -- the state already would be rightly considered a laggard when it comes to creating employment.

More disturbing, as California's population has grown -- largely from immigration -- per-capita income growth has weakened. From the 1930s to as late as the 1980s, Californians generally got richer faster than other Americans. In 1946, Gunther reported, Californians enjoyed the highest living standards and the third-highest per-capita income in the country.

Today, California ranks 12th in per-capita income. And it's losing ground: Between 1999 and 2004, California's per-capita income growth ranked a miserable 40th among the states.

This slow growth reflects a gradually widening chasm between social classes. Although the rest of the country has also experienced this trend, the gap between rich and poor has expanded more rapidly in California than in the rest of the country.

Today, notes a recent study by the Public Policy Institute of California, California has the 15th-highest rate of poverty of all American states. When cost of living adjustments are made, only New York and the District of Columbia fare worse. Tragically, many of California's poor are working. Somehow, this does not seem the best road to the governor's dream of a "harmonious" society.

How did this happen to our golden state? There are many causes.

Certainly poverty has been greatly exacerbated by huge waves of immigration, particularly from Mexico and other developing countries. But other states -- including Texas and Arizona -- have also absorbed many immigrants, as well as people from the rest of this country, and have not experienced similarly strong jumps in their poverty rates.

Changes in the economy are clearly suspect. From the 1930s to the 1980s, California created a broad spectrum of opportunities for white- and blue-collar workers alike. Even the 1990s expansion, suggests Debbie Reed of the policy institute, helped reduce poverty by expanding a wide range of employment opportunities.

Today, economic growth in California -- like that in much of the Northeast -- seems tilted largely toward elites. Once a state known for its relative social democracy, the Golden State is becoming what Citigroup strategist Ajay Kapur has dubbed a plutonomy, dominated largely by a small wealthy class and their spending.

For example, despite all the hype about the renewed Internet boom in Silicon Valley, there has been only modest expansion of employment, even in the past year. Undoubtedly lavish takings by a relative handful of engineers, managers and investors are boosting high-end restaurateurs in San Francisco and revving up BMW sales, but benefits don't seem to accrue as much to assemblers, midlevel managers and other high-tech workers.

Similarly, the governor's entertainment industry friends, as well as art and developer elites close to Mayors Antonio Villaraigosa and Gavin Newsom, may feel these are the best of times. But Los Angeles and San Francisco, along with Monterey, now suffer a poverty rate of more than 20 percent, among the highest level in the country.

Parallel to these developments, California is losing its once broad middle class, the traditional source of its political ballast and much of its entrepreneurial genius. Outmigration from the state is growing and, contrary to the notions of some sophisticates, it's not just the rubes and roughhouses who are leaving.

Indeed, an analysis of the most recent migration numbers shows a disturbing trend: an increasing out-migration of educated people from California's largest metropolitan areas. Back in the 1990s, this was mostly a Los Angeles phenomena, but since 2000, the Bay Area appears to be suffering a high per-capita outflow of educated people.

A look at data from the 2004-05 American community survey, these emigrants include many workers in technology, arts, finance, science, management, high-end sales and medicine -- the creative class. Perhaps the only saving grace is that some migrants are still staying in California, largely in the Sacramento and Inland Empire regions.

This middle class flight is likely driven by two things: greater opportunities outside the state and the cost of housing in-state. Over the past 50 years, housing prices in coastal California in particular have grown much faster than elsewhere; the Bay Area's rate of housing inflation over the past 50 years has been twice the national average.

Given the shrinking per-capita income advantage for being in California, moving elsewhere increasingly makes sense, particularly for those who do not already own homes and don't have wealthy parents. In some parts of the state, barely 10 percent of households can now afford a median-price home; in the rest of the country that number is roughly 50 percent.

Taken together, these trends suggest that California could be devolving toward an unappealing model of class stratification. As educated white-collar and skilled blue-collar workers leave, businesses in the state will be forced to truncate their operations -- perhaps having an elite research lab, design office or marketing arm in California but shunting most midlevel jobs elsewhere.

Remarkably, neither political party seems to have a clue about any of this. David Crane, Schwarzenegger's economic adviser, seems to think the state can make do by concentrating on the highest value-added work. He seems untroubled that more mundane jobs go elsewhere. That may make sense if you are a venture capitalist, dot-com wiz or movie producer, but it's not so great if you are an electronics technician, customer support employee or movie grip.

Doctrinaire Republicans don't have many answers, either. Some like to blame immigration, which may well be diminishing, for virtually all our problems. But singling out immigration is like howling at the moon: The immigrants are already here and most will stay. Sure, we should control the borders, but for the foreseeable future the newcomers, and more importantly their children, will shape our future, like it or not.

Beyond bashing immigrants, the only clear priority for the right seems to be keeping property taxes low for their core home-owning constituency. Any shift in Proposition 13 -- like even slightly revising its profound generational bias toward older Anglos -- is off limits. So we are stuck with a dysfunctional system that benefits the already affluent and encourages local governments to pursue sales-tax-inducing big-box development over plans for new housing or industrial construction.

The Democrats, for the most part, are positively harebrained. Over the past decade, their support for a corrupt workers' compensation system certainly helped drive potential expansions and relocations to other states. Their economic program of redistribution and regulatory excess has hurt small business and the middle class while benefiting favored constituencies such as trial lawyers, politically connected developers and public employees.

Yet for all its problems, California still possesses the means to retool and grow its economy. One step would be to invest much more in its basic infrastructure -- the recent bond measures for transportation and levees, while welcome, are woefully inadequate. A particular priority should be to make trading with other countries easier and faster so that critical employment does not migrate to Houston or the Hampton Roads area of Virginia, which now have our lucrative global business in their sights.

We also must reform our education system so that businesses can find the workers they need here. The fanciful notion that all California youth should go to four-year colleges should be scrapped for a targeted vocational project that can allow many of them to find better futures as plumbers, technicians, welders and machinists -- respectable professions that offer a realistic chance of a middle-class life and socially beneficial employment.

At the same time, housing for middle-income people can be stimulated by reducing the onerous regulations and fees on builders that drive prices ever upward.

Most of all, to regain its promise, California needs to stop stroking itself and reverse course. A state that's great for a relative handful of moguls -- no matter how enlightened -- and their servants cannot serve as the national model for anything but decadence and decline.

Joel Kotkin is an Irvine senior fellow at the New America Foundation. He is the author of "The City: A Global History" and is working on a book on the American future. Contact us at insight@sfchronicle.com.

http://sfgate.com/cgi-bin/article.cgi?f=/chronicle/archive/2007/02/25/ING0BO934F1.DTL

This article appeared on page E - 1 of the San Francisco Chronicle

January 31, 2007

Wall Street Finds a Lot to Like About Tobacco

By ANDREW MARTIN

There are plenty of reasons cigarettes would seem to be a terrible business.

The number of American smokers usually drops about 1 or 2 percent a year. Government agencies keep adding cigarette taxes and outlawing smoking in restaurants, workplaces and even on public sidewalks. And tobacco companies continue to pay billions of dollars in legal settlements, money that is used in part to produce antismoking ads.

For all the industry’s apparent troubles, however, the future of cigarettes appears to be brighter than ever.

That at least is the message investors are sending as the Altria Group — the company once known as Philip Morris and the maker of the world’s most popular cigarette, Marlboro — prepares to split itself by spinning off its Kraft Foods division to shareholders and become, once again, primarily a tobacco company. Today, Louis C. Camilleri, the chief executive of Altria, is expected to set a timetable for completing the spinoff.

It is a move that Wall Street is responding to with the equivalent of a standing ovation, but it is not because Kraft Foods, the world’s second-largest food company, after Nestlé, will finally shed the taint of tobacco.

Investors are glad that Altria will finally be rid of Kraft Foods, the maker of Oreo cookies, Velveeta and Tang. Since October, when the company announced its plan for the move, its shares have risen 10 percent.

“Something that is forgotten in all of this is people like to smoke,” said David Adelman, an analyst at Morgan Stanley, who noted that United States tobacco stocks have beaten the Standard & Poor’s 500-stock index in each of the last six years. “It’s enjoyable and there’s not an alternative product.”

He added: “If frozen dinners get too expensive, people will try something else. That’s not true with cigarettes — you are not up at night worried about that product that is going to make cigarettes obsolete.”

In the five and a half years since Altria sold 280 million shares of Kraft at $31 each in an initial public offering, the stock has remained relatively unchanged, closing yesterday at $34.83. Altria owns 88.6 percent of Kraft’s stock.

By contrast, shares of Altria have nearly doubled during that period, moving from $47 to yesterday’s price of $87.54.

It is a remarkable turnabout, considering that in late 2001, Philip Morris announced its plan to change its name to the Altria Group (drawn from the Latin word altus, meaning high, to suggest high performance). At the time, executives said the name change was intended to reduce the damage to the company’s reputation that cigarettes were causing, reflected in the long-depressed share price at the time.

Now, it is Kraft that is seen by many investors as a hindrance to the company.

Why is Wall Street so infatuated with cigarettes? Cigarettes have certain advantages over other consumer products, not the least of which is that they are addictive. They are inexpensive to make, require almost no innovation, there is a global market for them, and cigarette makers can raise prices without seeing much of a drop in business.

On top of all that, a recent string of court decisions has convinced investors that the worst of the litigation against tobacco companies is over.

That, in turn, has allowed Altria to move forward with a revamping that begins with cutting Kraft loose and will ultimately allow Altria to use the huge amounts of cash generated by cigarettes to buy back stock or acquire other tobacco companies, particularly overseas.

“You take away Kraft out of Altria and you are left with a balance sheet that is extremely strong,” said Charles Norton, portfolio manager at the Vice Fund, a mutual fund that invests in tobacco, gambling, alcohol and military contractors. Altria is the fund’s biggest holding. “It’s just a cash cow. The free cash flow on this business is just tremendous.”

The future prospects are particularly attractive in developing countries, where smoking has not yet declined as it has in more developed parts of the world like the United States and Europe.

In China, for instance, the Philip Morris International unit of Altria signed a deal in 2005 that allows it to manufacture and sell Marlboro cigarettes to the country’s 350 million smokers. There are an estimated 1.3 billion smokers worldwide.

But even in the United States, with 45 million smokers, the Philip Morris USA unit of Altria continues to generate sizable profits by raising prices. It also hopes eventually to lure consumers with new tobacco products, including a small tea-bag-like pouch that is smoke-free, spit-free and tucks into the cheek.

It says it is also working on developing cigarettes that are less harmful.

“The exciting part for me,” said Bonnie Herzog, an analyst at Citigroup, “is that tobacco use today will evolve. It’s unlikely that there will ever be a 100 percent safe cigarette, but we feel that a reduced-risk cigarette is on the horizon.”

But some health advocates say that the diminished social acceptability of cigarettes will hurt the long-term prospects of companies like Altria.

“The industry knows that its days of successfully selling their product in this country are limited,” said Dr. David A. Kessler, who called for regulating the tobacco industry as commissioner of the Food and Drug Administration in the 1990s and is now dean of the medical school at the University of California, San Francisco.

“They may be finding favor on Wall Street, but they’re not finding favor in the public arena,” he added. “There are fewer and fewer places that you can go and smoke in public.”

Still, on Wall Street, analysts are much less enthusiastic about the future of an independent Kraft Foods — which makes a wide range of well-known food products — compared with Altria’s prospects.

Kraft has struggled for several years to find its way in a rapidly changing marketplace, and Irene B. Rosenfeld, the chief executive, is expected to lay out her plans for a turnaround next month.

While many analysts say that Kraft is better off without the taint of tobacco, it still faces formidable challenges in repositioning its products at a time when consumers are less loyal to brands and more attracted to natural products, analysts said.

Investors in Altria are expected to get 0.695 share of Kraft for every share of Altria they own, said Ms. Herzog, who predicted that Altria would distribute the shares early in a 120-day period between the announcement and the distribution.

There is, however, a possibility that the distribution could be delayed by a legal challenge.

Michael D. Hausfeld, a lawyer in a pending class-action lawsuit against tobacco companies, said he might file an injunction to stop a spinoff of Kraft. The lawsuit, first filed in 2004 and known as the Schwab case after the lead plaintiff, Barbara Schwab, contends that cigarette manufacturers defrauded consumers by marketing light cigarettes as safer than regular cigarettes.

The idea behind seeking an injunction is that a judgment could be so enormous that Altria might need Kraft — with a market capitalization of $57.25 billion — to pay off the damages.

“Apparently at this point they have decided to spin Kraft off because they believe there’s a diminishment in their legal exposure,” Mr. Hausfeld said. “We disagree. If anything, the light’s fraud presents the strongest legal merit claims against the industry and Philip Morris.”

He estimated that a judgment in the case could be “several hundreds of billions of dollars” because 30 million to 50 million people who smoked light cigarettes made by several different tobacco companies were affected over more than 30 years. Asked to comment on Wall Street’s affection for tobacco stocks, Mr. Hausfeld said: “Wall Street loves money. And cigarettes are money. You are clearly earning huge returns at the expense of people’s lives.”

Several analysts who track Altria have dismissed the chances of an injunction’s success, and in an October conference call with investors, Mr. Camilleri, the Altria chief executive, said, “We believe that such an action would not have merit and that we would ultimately prevail.”

Altria’s plan to spin off Kraft is part of a long-term revamping plan that may ultimately split the domestic and international tobacco businesses into two companies because Altria thinks they would have more value as independent companies.

For example, Philip Morris International would no longer be dragged down by problems associated with smoking in the United States, like diminished demand and government intervention.

“At times, as a tobacco investor or a tobacco analyst, it seems like an unending stream of negative news,” Mr. Adelman of Morgan Stanley said. “You hear about smoking bans, a new piece of legislation. You hear about criticism from the World Health Organization.

“And then lo and behold, manufacturers release their results,” he said. “And they are good.”

Nick Bunkley contributed reporting from Detroit.

url:http://www.nytimes.com/2007/01/31/business/31tobacco.html?hp&ex=1170306000&en=dd704550f8368d4d&ei=5094&partner=homepage

anuary 9, 2007

Essay

Yet Another Worry for Those Who Believe the Glass Is Half-Empty

By RICHARD A. FRIEDMAN, M.D.

Now, it seems, pessimists may really have something to worry about: their health.

A study by researchers in the Netherlands has found that people who are temperamentally pessimistic are more likely to die of heart disease and other causes than those who are by nature optimistic.

The study, led by Dr. Erik J. Giltay of the Psychiatric Center GGZ Delfland and published in The Archives of General Psychiatry, followed 941 Dutch subjects, ages 65 to 85, from 1991 to 2001. Subjects were ranked in quartiles as pessimistic or optimistic on the basis of their reactions to statements like, “I still have positive expectations concerning my future” and, “I often feel that life is full of promises.”

Dr. Giltay and his colleagues found that subjects with the highest level of optimism were 45 percent less likely than those with the highest level of pessimism to die of all causes during the study. For those in the quartile with the highest optimism score, the death rate was 30.4 percent; those in the most pessimistic quartile had a death rate of 56.5 percent. There were 397 deaths in the study, and prevention of cardiovascular mortality accounted for nearly half of the protective effects of optimism.

This is the kind of study that worries me. Not personally, though — I’m as optimistic as they come. No, I’m worried about my pessimistic friends and patients who will get hold of this article. After all, if the findings are valid, how much can anyone really do about a gloomy disposition?

Up to this point there has been solid evidence that certain pathological mental states, like depression, are linked with a significantly higher risk of cardiovascular death, but the relationship between normal personality traits like optimism and health have not been as thoroughly studied.

For example, there have been several well-controlled studies showing that depression can as much as double the relative risk of having a first heart attack or dying of heart disease, independent of other factors. And for people who already have well-documented heart disease, depression increases the risk of death about threefold.

But finding a correlation between certain attitudes and health outcomes doesn’t, of course, prove causality. Maybe pessimists have shorter lives because they are sicker to start with than optimists; that may be why they feel bleaker about their future in the first place.

Dr. Giltay carefully controlled for baseline risk factors like blood pressure, cholesterol, smoking and alcohol consumption in his study. Even after controlling for these confounding variables, there was still a significant excess of mortality in the pessimists compared with the optimists. And when he factored in the subjects’ own perception of their health — optimists, not surprisingly, report feeling better — pessimists still had higher morbidity and mortality.

What about the possibility that some of the pessimistic subjects were simply suffering from undiagnosed depression? After all, depression is a strong risk factor for cardiovascular mortality.

Dr. Giltay conceded that the subjects were not psychiatrically screened for depression or any other mental disorder, so this is a possibility. But he said depression was unlikely to explain the correlation between pessimism and mortality.

Perhaps, but we know that depression exists, too, on a spectrum. Mild chronic depressive states like dysthymia could easily masquerade as everyday pessimism, so this study cannot rule out mild depression as a contributor to excess mortality in the pessimistic subjects.

Still, assuming that these findings are replicated and optimism does indeed confer a survival advantage, what mechanism could explain it?

One possibility is that optimists may simply cope better with adversity than pessimists do and engage in behaviors that are more likely to promote health. It is well known, for example, that optimism is strongly associated with seeking social support and coping better with stress. There might even be biological differences between optimistic and pessimistic people that give optimists an edge. This is not so far-fetched if you consider that depression is associated with alterations in many neurotransmitters and hormones like cortisol, which can adversely affect physical health.

At this point, pessimism in the absence of clinical depression is not considered a disease or a risk factor for developing one. But if these data are replicated, perhaps it should be. If that’s the case, then trials of optimism-enhancing treatments, including psychotherapies and probably antidepressants, won’t be far behind. After all, there is already preliminary evidence that serotonin-enhancing antidepressants can alter normal personality traits like sociability, even in people without depression.

But even if pessimism could be “treated,” would that guarantee a longer life? Judging from recent research in depression, it may be no slam dunk. Efforts to decrease heart disease and mortality by treating depression have been disappointing. Two large randomized trials involving depressed heart-attack patients found no survival benefit in treating them with either cognitive behavior therapy or serotonin-enhancing antidepressants, though their depression did improve. (There is some debate about the findings.)

In the end, pessimists have enough to fret about without worrying that their own temperament will doom them to a short life. If pessimists should worry about anything, though, it’s that they may have an undiagnosed — and treatable — depression. Treating depression may not guarantee a longer life. But it will certainly make it a happier one.

Richard A. Friedman is is a professor of clinical psychiatry and the director of the Psychopharmacology Clinic at Weill Cornell Medical Center.

Why so many grads 'fail to launch'

Many 20-somethings find themselves moving home to live with Mom and Dad, just like the movie 'Failure to Launch.' Blame it on the inertia -- and some very real challenges.

By MP Dunleavey

At 24, Lorena Bravo would appear to be a card-carrying member of the so-called boomerang generation.

Despite being bright, articulate and well-educated (she has a bachelor's degree in psychology and a master's in teaching), Bravo couldn't find full-time work after she graduated. So she recently moved back home with her parents in a Los Angeles suburb.

But if you're thinking Bravo fits the model of "Failure to Launch" -- the new movie starring a Porsche-driving Matthew McConaughey, who loves living with his parents so much he won't leave -- you'd be wrong. She doesn't love living at home; she just doesn't see another option.

That makes her a poster child for a darker side of the boomerangers, many of whom graduate unprepared for the daunting financial realities that await them -- whether it's dealing with massive debt, a dicey job market, the high cost of living or, D, all of the above.

"It's a myth that 20-somethings don't want to get on with life, that they don't want to grow up," says Abby Wilner, co-author of "The Quarterlifer's Companion: How to Get on the Right Career Path, Control Your Finances, and Find the Support Network You Need to Thrive,” a book that aims to help recent grads get on their feet. "It's a choice to move home and often something they do out of financial necessity."

Rocky financial landscape

The transition from college to real life has never been easy. But today's young adults face an unprecedented number of financial hurdles.

• Whether you're attending a pricey private college or a public one, college costs have nearly doubled in the last 20 years (and that's after adjusting for inflation).
  

• The average student will graduate with about $15,500 in student loans, according to the College Board. And that's not including loans from parents, home-equity loans or credit-card debt.
  

• About 25% of college students use credit cards to help pay tuition and fees
  

• According to a 2004 survey by Nellie Mae, graduating students carry an average credit-card balance of nearly $3,000.

Years ago, a college grad could hope to land a good job to cover all these expenses, but it's no longer that simple. Increasingly, all that BA will get you is a service-sector job, says Elana Berkowitz, editor of Campus Progress, a division of the Center for American Progress.

Half the workers in restaurants, grocery stores and department-store chains are under 24, she notes.

"Time was, you could get an entry-level job and be able to pay your way," says Cathy Stocker, Wilner's co-author. "Now, even if you're lucky enough to get an entry-level job, many people can't pay their student loans and make rent."

Not surprisingly, a 2004 survey that Stocker and Wilner conducted found that 61% of college grads had lived at home between the ages of 21 and 25. More than half did so for more than a year.

Drowning in debt

Needless to say, this isn't part of the college student's game plan. "You go in believing that a BA is your ticket to the American dream," says Lorena Bravo. "But for most of us, college just didn't pan out the way we expected."

Bravo emerged from college in 2003 with $18,000 in student-loan debt. "That's nothing," she says, "I know people who graduated with $100,000 in debt. I was one of the lucky ones."

Still, she wasn't able to find a job that paid more than $20,000 a year, even with the degree and plenty of college work experience.

So after temping for a year, Bravo impulsively decided to get a master's degree in teaching -- in the hope that an advanced degree would be the ticket to a better life. Instead, she racked up another $70,000 in student debt and discovered she doesn't have the stomach to be an elementary-school teacher after all.

Now, living at home, Bravo says she knows dozens of young people who are doing the same thing, most of them struggling to save money, get a grip on debt or come up with some kind of viable career plan.

Bravo has decided to focus on her ballroom dancing skills -- she hopes to compete in a national competition this fall -- and become a professional dance teacher. "They can make $70 or $80 an hour," she says.

Lack of preparation

Nicole Relyea, 24, laughs pretty hard at the idea that anyone might believe 20-somethings move back home as a cushy exit ramp from life's pressures. "Right, right, it's much easier trying to live with your parents, looking over your shoulder all the time," she jokes.

The real problem, she says, is that college students need more preparation to deal with the drastic shifts that life demands of them after graduation, both financially and career-wise.

"You think, six months ago I had a great on-campus job and social life. Now, I'm living at home, I have two friends and no academic stimulation for the first time in 20 years -- sitting in the basement, surfing the Internet, looking for work," Relyea says. "It's like, wow, I was just studying the cultural history of aborigines and now I'm looking at jobs where the main duties are answering the phone and typing.' "

"How are you supposed to make that shift? It's really something nobody prepares you for."

Relyea herself struggled to find a job after graduating in 2004 with $15,000 in student loans. She moved back home to save money and, like Bravo, she temped for over a year. Last fall she finally landed a full-time position with a nonprofit in her hometown of Madison, Wis.

Still, her $26,000 salary barely covers rent, living expenses and $160 in monthly student-loan payments. She's also studying to get her certificate in massage therapy and is weighing graduate school.

"The graduate degree would be for me, because I like school," she says, "but the massage-therapy certification might be the most useful thing I have."

Real-life solutions

Because it's Hollywood, the parents in "Failure to Launch" can hire a sexy consultant (Sarah Jessica Parker) to help get their reluctant son to move out -- and give the audience a lot of laughs.

But "Quarterlifer's Companion" co-authors Abby Wilner and Cathy Stocker worry that the mooching-off-mom-and-dad stereotype is getting more attention than the real issue: Most new grads need some helping making a realistic financial plan. Here are some steps:

Put aside preconceptions

Parents may assume that colleges provide seniors with some kind of exit strategy, but that's not the case, says Relyea. "Nobody says, 'Okay, today we're going to learn how to write a cover letter.'"

There are on-campus career talks and seminars, of course, but harried seniors don't always realize the importance of making time for those, Relyea adds.

Provide senior orientation

Start by helping your adult children recognize that things are going to be different now and ask them questions.

Six months before graduation, for example, ask about credit-card and student-loan debt. "You don't want to stress them out," says Stocker, "but you can say, 'Let's make a game plan together.'"

Offer financial training wheels

Wilner and Stocker recommend that parents and 20-somethings take advantage of the fact that living at home can be a kinder, gentler financial learning environment.

New grads "can chip in with some of the monthly bills, so you get hang of bill paying," suggests Wilner. "This is also a good time to form a budget. Monitor your spending. Keep receipts. Get a realistic idea of what you spend and how to manage it."

Stocker adds that parents can encourage saving by offering to "match" a portion of whatever their 20-something socks away.

Discuss expectations on both sides

While everyone I spoke to for this article stressed that living with the folks can be a smart financial move, without a clear plan or a deadline for finding a job, the situation can backfire.

To prevent nest-induced inertia, "The Quarterlifer's Companion" offers a contract that helps both parties define the terms of shared living conditions, including how the new "roommate" is going to contribute to the household; what his or her goals are; and when he or she might move out.

Both parties review the contract every three months, say, to evaluate progress and make any needed adjustments.

Show, don't tell

While it may be tempting to push your 20-something toward a job ("Let me introduce you to my friend Marv in accounting"), allow your adult child to hold the job-hunting reins. But do provide the same kind of networking advice you might to a friend. Relyea says the most helpful thing her mother did was to take her to networking events and professional lunches, where eventually Relyea met a contact who led to her current job.


http://articles.moneycentral.msn.com/CollegeAndFamily/MoneyInYour20s/FailToLaunch.aspx?page=all

You know it's bad when even Animal Planet is reporting something like this...



Nov. 16, 2006 — Far fewer polar bears cubs are surviving off Alaska's northern coast than in years past, a federal government report released Wednesday has concluded.

The study of polar bears in the south Beaufort Sea, which spans the northern coasts of Alaska and western Canada, also found that adult males weigh less and have smaller skulls than those captured and measured two decades ago.

The study does not directly blame the changes on a decline in sea ice. However, fewer cubs and smaller males are consistent with other observations that suggest changes in sea ice may be adversely affecting polar bears, the study said.
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The study warns that the decline in cub survival and the smaller adult males are the same conditions that preceded a decline in the polar bears of western Hudson Bay, Canada, where the population dropped 22 percent in 17 years.

Advocates seeking protections for U.S. polar bears say the report proves their point.

"It's just another example of seeing all of the impacts that scientists have previously predicted coming to pass," said Kassie Siegel of the Center for Biological Diversity in Joshua Tree, Calif. Siegal is the lead author of the petition seeking to list polar bears as threatened under the Endangered Species Act.

"The Grim Reaper of global warming is now clearly killing polar bear cubs," said Deborah Williams, president of Alaska Conservation Solutions, an Anchorage-based group aimed at halting climate change. "This study should be interpreted as a cry from the North to reduce greenhouse gases."

The report stopped short of saying the Beaufort Sea polar bear population, one of two in Alaska, had declined.

However, "Significant changes in cub survival and physical stature must ultimately have population level effects," the report concluded.

The report estimates the Beaufort Sea polar bear population at 1,526, down from a previous estimate of 1,800 bears. That would be a 15 percent decline, but researchers said the current study used different methods of counting.

The Beaufort Sea bears is one of two Alaska stocks. The other is the Bering-Chukchi stock off Alaska's northwest coast, a population shared with Russia.

Polar bears are classified as marine mammals because they spend much of their lives on sea ice. The listing petition claims that polar bears are threatened because of drastic declines in ocean ice due to global warming. A decision by the U.S. Fish and Wildlife Service on listing America's polar bears as threatened is due next month.

Polar bears depend entirely on sea ice for survival, according to the USGS report. Warming has caused major changes and scientists foresee more melting.

"Because more profound declines in sea ice area and extent are predicted for these northern regions, continued monitoring and conservative management of the SBS (Southern Beaufort Sea) polar bear population is warranted," the report concluded.

Siegel said the effects of shrinking sea ice are occurring exactly as summarized by the scientists quoted in her group's listing petition.

"Only it's happening sooner than they thought," she said.

The USGS report compared data on cubs collected from 1990 through last spring to studies from 1967-89.

Females give birth in January and emerge from dens with new cubs in March or early April. Cubs typically accompany their mother for 2 to 3 years.

For polar bears measured during autumn months, the number of surviving cubs born that spring declined from a mean of .61 cubs per female to a mean of .25 cubs per female.

"This decline can only be explained by lower survival of cubs after den emergence," the report said.



Changes in the physical stature of polar bears, both body weight and skull size, appeared to parallel the decline in cub survival, the study said. The decline occurred even though bears measured in the latter study were older. The study called the decline significant.

"Such changes in physical stature may suggest different impacts of reduced summer sea ice on adult male and female polar bears," the study said.

In spring, adult males often forgo foraging opportunities and focus on finding females for mating, the study said. Entering the summer in relatively poorer nutritional shape, they may be more vulnerable to summer sea ice retreat, which can separate polar bears from the most productive foraging habit, the study said.
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Reduced foraging opportunity for adult females usually is first reflected in poorer survival of their young, the study said.

Several recent observed deaths were directly related to sea ice retreat or changes in food availability associated with sea ice retreat.

In autumn 2004, four polar bears drowned trying to swim from short and distant pack ice. During winter and spring 2004, researchers recorded evidence of three polar bears hunting, killing and eating other polar bears.

Last spring, three adult females and one yearling were found dead. Three of the bears had depleted their lipid stores, an indication they had starved. The fourth, one of the adult females, was largely scavenged, and cause of death could not be determined. However, her death was unusual, the study said, because prime-age females in the past have had high survival rates.

"These anecdotal observations, in combination with both the changes in survival of young and in physical stature reported here, suggest mechanisms by which a changing sea ice environment can affect polar bear demographics and the status of populations," the report said.

From NYT

Article reposted below:

December 1, 2006
Sex Abuse of Girls Is Stubborn Scourge in Africa
By SHARON LaFRANIERE

SAMBAVA, Madagascar — Thirty miles outside this down-at-the-heels seaside town, Justin Betombo tends his vanilla plants and cheers the local soccer team as if he had not a care in the world. And in fact, what was once his greatest worry has been almost magically lifted from his shoulders.

In the local prosecutor’s office, a file filled with accusations that he had sodomized his 9-year-old niece has vanished.

Mr. Betombo was arrested in 2003 after the girl, Kenia, said he had savagely assaulted her. The police obtained his confession, which he later recanted, and a doctor’s certificate that Kenia had been sexually violated, rendering her incontinent and anorexic. Twice they sent the case file to the prosecutor.

There matters ended. Mr. Betombo attended one hearing in the prosecutor’s office, but Kenia’s parents say they were not told about it. The records are nowhere to be found. And Mr. Betombo walked away a free man. Kenia’s parents, distressed by what they saw as a travesty of justice, asked that her name be published, hoping that her case would set an example.

Among sub-Saharan Africa’s children, such stories are disturbingly common. Even as this region races to adopt many of the developed world’s norms for children, including universal education and limits on child labor, one problem — child sexual abuse — remains stubbornly resistant to change.

In much of the continent, child advocates say, perpetrators are shielded by the traditionally low status of girls, a lingering view that sexual abuse should be dealt with privately, and justice systems that constitute obstacle courses for victims. Data is sparse and sexual violence is notoriously underreported. But South African police reports give an inkling of the sweep of child victimization. In the 12 months ending in March 2005, the police reported more than 22,000 cases of child rape. In contrast, England and Wales, with nine million more people than South Africa, reported just 13,300 rapes of women and girls in the most recent 12-month period.

“The prevalence of child rape in South Africa goes from really, really high to astronomically high,” said Dr. Rachel Jewkes, a specialist on sexual violence with South Africa’s Medical Research Council.

Africa is not unique in its high rates of abuse. While a survey of nine countries last year by the World Health Organization found the highest incidence of child sexual abuse in Namibia — more than one in five women there reported being sexually abused before age 15 — it also found frequent abuse in Peru, Japan and Brazil, among other nations. Relatives are frequent perpetrators in Africa, as in much of the world. But this continent’s children face added risks, especially at school. Half of Malawian schoolgirls surveyed in 2006 said male teachers or classmates had touched them in a sexual manner without their permission.

The number of abuse cases is rising in South Africa, Zimbabwe, Zambia, Uganda, Kenya, Sierra Leone and other African countries, statistics show. Whether that means more children are being victimized or more are coming forward — or both — is impossible to determine, experts say.

Researchers cite various reasons that abuse is so common: poverty, which makes it harder for parents to keep children safe; a legacy of violent, oppressed societies, and cultural mores that allow offenders to escape criminal punishment, often by marrying their victims or compensating their victims’ families.

But, ultimately, said Dr. Jewkes, of the Medical Research Council, the vast gap between the status of men and boys and that of women and girls explains much of the climate of relative tolerance. “If I had to put my finger on one overriding issue, it would be gender inequality,” she said.

Increasingly, African nations are openly acknowledging the problem, partly because AIDS has made children more likely to fall ill or die from sexual abuse. Campaigns against abuse are under way in Zimbabwe, Lesotho, Swaziland, Kenya, Sierra Leone and elsewhere.

The impact is apparent in Zimbabwe, where a child rights group estimates that at least 2,000 child rape victims have died of AIDS since 1998. “Literally for the first time in Zimbabwe’s history, child abuse is no longer a taboo subject,” said James Elder, a Unicef spokesman.

That said, the response is minuscule compared with the extent of abuse, said Pamela Shifman, a child protection specialist at Unicef headquarters in New York. “We see huge numbers of girls affected,” she said. “These crimes are still treated as the fault or the problem of the victim.”

South Africa is perhaps furthest along in developing the specialized courts, medical treatment and counseling that have long been standard fare in the West. But even there, Dr. Jewkes said, appalling police work — for example, not verifying the addresses of suspects and accusers — routinely dooms prosecutions.

Beyond that, said Joan van Niekerk, national coordinator of Childline, which runs South Africa’s child crisis hot lines, children regularly complain that coping with the criminal justice system is worse than the sexual abuse itself.

Like much of the region, Madagascar, an island of 18 million off Africa’s southeastern coast, is making headway, but still falls short of even South Africa’s low standard.

Since 2000, Unicef has set up 11 child-protection teams of doctors, educators and judges to inform the public about sex abuse and assist victims. Hassan Mouigni, who leads vice investigations at the main police station in Antananarivo, Madagascar’s capital of 1.4 million, sees some results. This year, he said, the station has investigated 95 cases, compared with 40 in all of 2003.

But medical and legal authorities say the vast majority of families still hew to a tradition of accepting payment from perpetrators. The few who press charges are plunged into a criminal justice process that Mr. Mouigni calls deeply frustrating.

He can offer victims who arrive at his station little more than an officer behind a typewriter — no counselors, no video cameras to record testimony, no toy-filled rooms or friendly intermediaries. Instead, girls as young as 5 are expected to confront their tormentors face to face. Perhaps most daunting, poor families must produce at least $15 to cover investigation costs like gloves and paper for medical exams.

That was nearly enough to deter Claudine Ravoniarisoa, who appeared at Mr. Mouigni’s station one recent Thursday with her 15-year-old daughter. Wringing her hands nonstop, the girl told officers that a neighbor had raped her while her mother was hospitalized. “He destroyed my life and my body,” she said.

But once her mother learned of the costs, she decided to identify the perpetrator only as “Mr. X.”

“I have no money to pursue this,” she protested, while an officer tried to persuade her to do so.

In another room, Domoima Rahamtanirima pressed a case against her brother-in-law in the molestation of her 5-year-old, Menja. For two weeks afterward, Mrs. Rahamtanirima said, the girl cried when she urinated.

Mrs. Rahamtanirima borrowed money for the required medical exam. Nothing was left to buy the medicine the doctor had prescribed for Menja. Her file complete, the little girl traipsed in her frilly white dress to a courthouse as packed with accusers, accused and their supporters as a New York subway station at rush hour. She waited four hours, then sat down at a table before them all and, in a tiny voice, identified her uncle, seated across from her, as her assailant.

“We had to do it,” said her mother, who said that everyone in her village knew about the case and asked that her daughter’s name and picture be used. “Everybody should be aware that things like this should not happen to children.”

A Quest for Redress

Kenia’s parents, Antoine and Joazandry Moravelo, are equally passionate about the need for justice for their daughter. But after four fruitless years, they have all but given up hope. Though her photograph and name have appeared in local newspapers, they say, no one has been held accountable.

Kenia, the sixth of eight children, moved in with her aunt and uncle Lydia and Justin Betombo at the age of 8 after they promised to educate her. Sharing child care is common in Africa, and the Betombos, who lived 45 minutes away, had more than the Moravelos: a car and a two-room, tree-shaded house with sheet metal walls instead of the Moravelos’ thatched-roof reed hut.

But Kenia said the house was no haven. She said, “my uncle showed me his penis whenever he had a chance, and I always ran away.” Her aunt’s stock response, she said, was, “Don’t talk about that.”

One night in mid-2002, when her aunt was out, Kenia said, her uncle summoned her to his bed. “Because I refused, he came over to my bed,” she said. Afterward, she said, he told her, “If you talk about what happened, I will kill you.” She said she told her aunt anyway, and was instructed to keep quiet. The physical consequences of the attack, however, were hard to hide.

Kenia lost control of her bowels, had to quit school and was increasingly homebound. For six months or more, her only treatment was from a traditional healer who told her to boil herbs and wash with them. Finally, emaciated and weak, Kenia approached a neighbor. “She said, ‘I am sick; I am sick,’ and she was crying,” said the neighbor, Suzanne Mboty, who knew Kenia’s parents.

Hours after the neighbor reached his village, Mr. Moravelo retrieved Kenia. “She was so thin, so thin, I couldn’t believe it,” he said. Her mother said Kenia could not even sit down. “I opened her bag, and I saw all her underwear full of feces,” she said. “I said, ‘My God, what is this?’ ”

Kenia refused to say. But at the local health clinic, the nurse held up scissors and threatened to operate if Kenia did not talk.

That began nearly four years of medical procedures for Kenia, including a colostomy, two operations to close it, and repeated hospitalizations for wasting, incontinence and anorexia. Her mother said she sometimes refuses to eat because defecation is painful. Medical reports indicate that the muscle controlling defecation has been largely destroyed and her anal canal is heavily scarred.

The family is rent: Kenia’s parents had to sell their rice field and move to Diego-Suarez in the north for her treatment. Most of their other children remained behind, in the care of elder siblings. Kenia, now 13, is temporarily in Antananarivo, where a doctor is trying to treat her with a special diet.

A surgeon who recently examined her said a full recovery was unlikely. The uncertainty preys on Kenia, her mother said. “Sometimes she tells me, ‘My body is hurting. I have so many problems. I don’t go to school. I just feel this sickness all around me,’ ” she said.

The family’s legal efforts have met even less success. Mr. Moravelo lodged a complaint with the cash-short police, but the officers had no car; he hired a taxi so they could pick up Mr. Betombo for questioning. Frightened and sobbing, Kenia confronted her uncle at the chaotic station.

Justice Subverted

Mr. Betombo and his wife denied Kenia’s account. But ultimately — after the police beat him, Mr. Betombo said — he signed a confession, was arrested and carted off to the prosecutor’s office in nearby Antalaha.

Kenia’s father said that was the last he heard until a few days later, when friends told him that Justin Betombo was “free and happy” back in his village.

Mr. Betombo said he had convinced the prosecutor that his confession was false. Kenia’s parents say they were never summoned to contradict him.

“I took this girl in as my daughter,” Mr. Betombo said. “I really can’t understand why they say that I could have done such an awful thing to her. I think they were jealous of me and they wanted to ruin my life.”

Sambava’s police department again sent the file to the prosecutor’s office months later. But Sophie Ramahakaraha, the prosecutor in charge, now says that she has no record or memory of it. Real instances of child rape are rare, she said. “Very often the parents are poor and they use this procedure to get money,” she said.

But to Daul Randriamalaza, a Sambava police inspector, there is no question about who was the victim here.

“I don’t want to talk about corruption here, but that is what could have happened in this case,” he said as prisoners watched from the station’s tiny cell.

“I have children myself. How can I be happy about this?”