Red states & Blue cities: Divided we'll endure anyway

Happy election day! Aid Watch is unable to maintain any pretense of doing its normal business in the midst of all the excitement. Please vote early and often for the candidate of your choice, as long as they passed 8th grade science.

This cool 3-D map shows the Red - Blue split in a way that captures the large Democratic vote in large urban areas. Thanks a lot, cool mapmaker, now we seem even more divided.

We now see that there are really no Blue States, there are only Blue Cities. The rural blue areas are mostly reflecting concentrations of blacks (South), Hispanics (Southwest), or native Americans (West), along with the remaining 11 rural white people voting Democratic somewhere in West Virginia. Otherwise, if you see a patch of blue, it's probably a lake.

Yet after all that, thanks to a certain Seattle-based franchise, supporters of The Coffee Party from either red or blue areas can find drinkable French Roast in just about every last rural or urban square inch of the US. Some will win and some will lose today, but both winners and losers will still enjoy the same cheap caffeine and the same Bill of Rights.

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Photocredit: Alexander O'Neill via Climatico

A more articulate economist formulates perfectly my most unpopular development argument

From the wonderful, recently updated book by Paul Seabright, via Greg Mankiw via Peter Gordon:

Politicians are in charge of the modern economy in much the same way as a sailor is in charge of a small boat in a storm. The consequences of their losing control completely may be catastrophic (as civil war and hyperinflation in parts of the former Soviet empire have recently reminded us), but even while they keep afloat, their influence over the course of events is tiny in comparison with that of the storm around them. We who are their passengers may focus our hopes and fears upon them, and express profound gratitude toward them if we reach harbor safely, but that is chiefly because it seems pointless to thank the storm. (p. 25)

I think Greg is thinking mainly of politicians' responsibility for recession or expansion, but Paul's point was more general -- nobody is really in charge but the economy (usually) works anyway.

In another classic passage from the first chapter titled “nobody’s in charge”, Paul describes buying a shirt and then wonders how it would happen if somebody had to be in charge of providing shirts:

The United Nations would hold conferences on ways to enhance international cooperation in shirt-making…committees of bishops and pop stars would periodically remind us that a shirt on one’s back is a human right. The humanitarian organizations Couturiers sans Frontieres would airlift supplies to sartorially challenged regions of the world…the columns of newspapers would resound with arguments over priorities and needs. In the cacophony I wonder whether I would still have been able to buy my shirt. (p. 18)

We have this terrible tradition in development of leader-worship, in which leaders get credit for any economic success that happens on their watch, and we think development can only happen through the intentional designs of the leaders (advised by us all-knowing development experts). This blog has vainly tried to protest this is all wrong-headed. I'm glad Paul is there to say it better than I can -- read his book!

FT: Celebrities urge G8 to make new unkept promises to keep previous unkept promises

Oh how we wish it would be otherwise! What will it take? Alan Beattie writes on the G8 in the FT:

It stretches the most elastic mind to envisage the collective wrath of Scarlett Johansson, Annie Lennox, Bill Nighy, Kristin Davis and Her Majesty Queen Rania of Jordan, but it descended on the heads of the Group of Eight this weekend.

The obsolescence of the G8 has long been discussed during interminable and inconclusive international gatherings. It became increasingly absurd to discuss various issues – the global economy, finance, trade, geopolitics, energy, terrorism – with the behemoths of the emerging market world absent.

One by one, those central issues migrated to the G20. Paradoxically, given its composition, the G8 responded by focusing on development issues affecting the poorest countries.

The G8’s relationship with aid recipients in the developing world is that of a dysfunctional and abusive spouse. It promises good behaviour, reneges and then vows to be better next time.

...the returns to be gained from cajoling and criticising the G8 were increasingly questionable. Intensive lobbying by development advocates and celebrity campaigners extracted plenty of promises but not commitments that reliably bound group members.

At least Alan fulfilled his pre-meeting prediction that he would be able to use the words "interminable and inconclusive" once again in a G8 story, not to mention coming close to his fantasy G8 column that we featured on this blog before the meeting.

Do only democracies have anti-immigrant movements?

This great picture on changing share of foreign-born residents in the NYT today (showing countries with largest increase): You can see why anti-immigration sentiment is a big deal in the European countries shown and in the US. (This is a descriptive statement, I myself hate xenophobia.)

But what about the countries at the top of the graph? Let's exclude the special and controversial case of Israel from all the following statements.

Correct me if I'm wrong, but I have not heard of prominent anti-immigration movements  in any of these countries.

Is that because these are non-democracies in which immigrants can be treated as second-class citizens with little or no rights?

Again, this is just descriptive speculation -- I would certainly NOT recommend that approach to the democracies.  But it does show the complicated political economy you get when you mix xenophobia, democracy, equality before the law, and immigration.

US food aid policies create 561 jobs in Kansas, risk millions of lives around the world

I read recently the First Law of Policy Economics: Every inefficiency is someone’s income. US food aid policy is definitely no exception, and it is riddled with inefficiencies.

Exhibit A: This invitation from a coalition of big US shipping interests to an event in Washington today. At this event, USA Maritime will have tried to convince lawmakers and their staff that ancient and outdated US food aid legislation, which requires virtually all US food aid to be bought in-kind from the US, processed and bagged in the US, and shipped on US-flag ships to even the most far-flung destinations, should not be altered.

Let us leave aside for a moment that the report recommending favorable policies for the US shipping industry was bought and paid for by the US shipping industry and may not be the most objective or trustworthy source on the subject.

The main thrust of the shipping industry’s argument is that handling, processing and shipping food aid creates US jobs—13,127 of them to be exact—and boosts US industry, leading to this actual headline: “Food For Peace Program Produces More Than 870 Iowa Jobs.” If these policies were removed, they argue, it would be less profitable to operate a ship under the US flag, the US-flag fleet would shrink, and American jobs would be lost.

“Did you know,” reads the invitation, “that these programs have positive economic consequences for our economy at home?” The report tries to quantify one benefit of current US food aid policies, but (obviously) does not discuss the considerable costs of these policies to US tax payers, to the US’s reputation and credibility abroad, and most importantly to programs’ intended recipients—the millions of hungry and malnourished people fed by the world’s largest food aid donor every year.

The shipping industry’s arguments don’t hold water for many reasons. Here are two of the big ones:

First, assuming that you did want to subsidize the US Maritime industry, US food aid policies that create an overpriced, uncompetitive oligopoly are NOT a good way to do it. There are much cleaner, simpler and more effective ways to support US Maritime, such as direct payments to vessel owners. There is no reason to bundle shipping subsidies in with humanitarian aid other than the deeply cynical logic that it’s easier to rally public and Congressional support around money for starving children than around padding to the bottom line of multinational shipping conglomerates.

Second, current US food aid policies are NOT an effective or efficient way for the US to achieve what should rightly be the primary objective for food aid. According to the government’s own accountability office, buying food locally in sub-Saharan Africa (which is where the majority of US food aid goes) costs 34 percent less than shipping it from the US, AND gets there on average more than 100 days more quickly, AND is more likely to be the kind of food people are used to eating. I am not arguing that cash aid is ALWAYS better than food aid, only that any reasonable food aid policy would allow aid agencies the flexibility to determine what kind of assistance works best in each situation.

Despite resistance from all three sides of the iron triangle holding this legislation in place, innovators have managed to break loose about $400 million for pilot and supplemental programs over the last two years to buy food locally or regionally. This is still a small sum compared to the roughly $2 billion that the US spends annually, but it is progress.

With today’s lame report, the big shipping companies behind USA Maritime are asking us to value a few thousand American jobs in a declining and uncompetitive industry over America's humanitarian reputation abroad AND the lives of the millions more people around the world who would benefit from reform to US food aid policy.

Do we even have to say it? This is NOT a fair trade.

Attention Chinese government, be sure to censor this

Great article in NYT Book Review by Emily Parker on the Chinese government successfully inhibiting academic freedom and freedom of speech in the West.

The Chinese-Canadian writer Denise Chong’s ...  {2009} book, “Egg on Mao,” ... tells the true story of Lu Decheng, who threw paint-filled eggs at Mao’s portrait in Tiananmen Square during the 1989 protests.  ... A Canadian nonprofit economic development group that had invited her to appear at a fund-raiser began playing down its association with her book once learning of the title, Chong said. ...

The United States Library of Congress declined an invitation to hold an event with Chong, suggested by the Canadian Embassy. In a recent telephone interview, a library employee involved in the discussions acknowledged that the political sensitivity of the book was one factor in the decision, along with the library’s relationship with the National Library of China.

{Princeton China scholar Perry} Link ...has been repeatedly denied a visa to China since the mid-’90s, apparently for helping the Chinese dissident Fang Lizhi seek refuge in the American Embassy during the 1989 protests.  Link’s predicament casts a long shadow over other China watchers. “Three or four times a month I get questions from students: How can I avoid getting on a blacklist like you?” Link said. He adds that he’s seen doctoral students avoid writing about democracy in China out of fear of the blacklist.

This reminds me of the heavy-handed pressure by the Chinese government on the World Bank during my days there (which has probably escalated in the 9 years since). As just one example, if I did an academic paper putting the name "Taiwan" in some obscure table of econometric results, I would be required to say instead "Taiwan Province of China." (I usually ignored this requirement, a small step towards that upward trajectory out of the World Bank.)

More recently, the Chinese government has reportedly exerted pressure limiting the practical use of the World Bank Institute's Governance Indicators, which measure democracy as one of their six indicators (with the Chinese of course scoring very poorly, they don't look so good on corruption either). Perhaps this accounts for the contortions on the web site for the Governance Indicators:

{They are} one of the most comprehensive cross-country sets of governance indicators currently available....

"the Worldwide Governance Indicators show that governance and corruption can be robustly measured and the lessons drawn can in fact be put to subsequent use by reformist governments, the development community, civil society and the media" said John Githongo,

...{they} are not used by the World Bank Group to allocate resources {aid}.

While the World Bank has at the same time been making the case for over a decade that:

Aid is less effective in a weak governance environment.

So Chinese government, what ARE we allowed to talk about? Well, the official World Bank blog does have good coverage of  a Chinese dung beetle named after a World Bank staffer.

Climate Blowback: What I didn’t say was not what I didn’t mean not to say

My post criticizing Sachs on climate change got many negative responses yesterday. The main problem was that I was much too terse about an issue that people care a lot about (you should probably apply a "weekend discount" to things I post on weekends!). So some understandably jumped to conclusions about what I was saying, which were inaccurate.

Honestly, I know very little about climate change. But I do know a little bit about political economy, which offers cross-disciplinary insights to the climate change discussion. So let me try again.

What I was NOT saying:

Here’s how to solve global warming. How and whether we know man-made global warming is scientific fact (I think it is from what I have read). That I am qualified to provide any detailed guidance on climate change.

What I was saying:

There is no such thing as a neutral technocratic solution. All solutions are political. The aura of the neutral technocracy just winds up giving cover to some political interests who have their own agenda.

The poor have very, very little political power. Because of this, other things equal, they were more likely to be victims of environmental destruction in the first place. And because of this, they could still lose out in attempts to reverse environmental destruction. I am talking here about poor individuals, not about poor country governments.

Current policy discussions on global warming show little sensitivity to these political realities.

Let's show some compassion for gifted individuals like Secretary Clinton, whom politics forces to babble

This is my blog that just went up on the Foreign Policy web site on Hillary Clinton's development speech today. There's a positive ending! Plus my wife likes it! MORNING UPDATE: News coverage of Hillary's speech was overwhelmingly dominated by her plans to visit New Zealand. This supports one of two theories: (1) there was indeed too much babble, eliminating any newsworthiness, (2) the media doesn't care about development.

UPDATE 2: Nick Kristof has a much more favorable take.

Audience check: am I too nasty? should we accept a certain amount of babble as unavoidable?

Underwear Bomber illustrates limit of “Do Something” approach to public policy, with aid application

One of the celebrities once said about global poverty, “just do something, even if it’s wrong.” This approach is deeply appealing to politicians. Politicians love to show off to the public they are addressing a tragic problem by “doing something,” without having to bother with all that crap about “whether it actually works.”

The latest terrorism scare provoked by the Underwear Bomber prompted these profound insights into political economy. The New York Times reported a forceful  response: the TSA is now doing full-body pat-downs of 5-year-old girls.

I have been waiting forever to vent about airport security as incompetent and useless, as well as killing off the airline industry. I might have been afraid the TSA would put me on a watch list for such a rant, but no worries: according to recent reports, they can’t check their own watch lists.

I failed to speak out for a more basic reason: I know nothing about the topic. I had limited myself to reading the occasional newspaper article on chainsaws getting through security. Fortunately, Chris Blattman came to my rescue by finding a real security expert, Bruce Schneier. A quick scan of his work shows his expertise on the limits of “do something.”

Before the underwear bomber, Schneier had already said airport security is “a show designed to make people feel better."  He has repeatedly said “Only two things have made flying safer [since 9/11]: the reinforcement of cockpit doors, and the fact that passengers know now to resist hijackers”. (The latter just worked on the Underwear Bomber.)

Being a sensible but ignored critic usually stimulates a snarky edge (don’t ask me how I know this). Schneier on his post-Underwear Bomber blog:

What sort of magical thinking is behind the rumored TSA rule about keeping passengers seated during the last hour of flight? Do we really think the terrorist won't think of blowing up their improvised explosive devices during the first hour of flight?

I wish that, just once, some terrorist would try something that you can only foil by upgrading the passengers to first class and giving them free drinks.

The prescribed response for useless or harmful "do something"  is democratic accountability (just like in aid!). It's a bit harder to enforce accountability when Homeland Security can use the partially justified cover of secrecy to hide their incompetence. (Is this why aid agencies also resist disclosing information?)

So thank goodness for Mr. Schneier! And let's have lots and lots of Schneiers on the "do somethings" in foreign aid and global poverty as well!

The Political Economy of Aid Optimism or Pessimism

Bill and Melinda Gates are making a big media presentation today at 7pm of their Living Proof Project, in which they document aid successes in health. They call themselves “Impatient Optimists.” We can comment more after we hear their presentation. However, they invited comment already by posting progress reports on the Living Proof website. Actually, we have also previously argued that aid has been more successful in health than in other areas.  However, one petty and parochial concern we had about the progress reports is that Bill and Melinda Gates continue to make a case for malaria success stories based on bad or fake data that we have criticized on this blog already twice. The Gateses were aware of our blog because they responded to it at the Chronicle of Philanthropy.

Yet they continue to use the WHO 2008 World Malaria Report as their main source for data on malaria prevalence and deaths from malaria in Africa. As we pointed out in the earlier post, the report establishes such low standards for data reliability that some of the numbers hardly seem worth quoting. From the WHO report: “reliable data on malaria are scarce. In these countries estimates were developed based on local climate conditions, which correlate with malaria risk, and the average rate at which people become ill with the disease in the area.” Where convincing estimates from real reported cases of malaria could not be made, figures were extrapolated “from an empirical relationship between measures of malaria transmission risk and case incidence.”

In Rwanda, which the Gateses say showed a dramatic 45 percent reduction in the number of deaths from 2001 to 2006, a closer look at the WHO data shows that there is an estimate of 3.3 million malaria cases in 2006, with an upper bound of 4.1 million and a lower bound of 2.5 million. And, according to which method is used to estimate cases, the trend can be made to show that malaria incidence is actually on the rise. The Gateses also highlight Zambia as a “remarkable success,” claiming that “overall malaria deaths decreased by 37 percent between 2001 and 2006.” While they provide no citation for this figure it appears to come from the very same WHO report, which concedes that compared to African countries with smaller populations, “nationwide effects of malaria control, as judged from surveillance data” in Zambia are “less clear.”

The downside of all this is that it appears we are having no effect whatsoever on the Gates’ use of fake or bad numbers and thus on the highest profile analysis of malaria in the world. The Gateses ignore our recommendation (and that of others) that they invest MUCH more in better data collection to know when GENUINE progress is happening. (Would Gates have put up with a Microsoft marketing executive who reported Windows sales were somewhere between 2.5 and 4.1 million, which may be either lower or higher than previous periods’ equally unreliable numbers?)  Are we insanely pig-headed for insisting that African malaria data be something a little more reliable than if the Gateses had asked the pre-K class at the Microsoft Day Care Center to give their guess?

Well, this is the third time we are saying this on this blog, so maybe we should give up. When people like the Gateses are so tenacious in the face of well-documented errors, it’s time for us economists to shift from normative recommendations (don’t claim progress based on pseudo-data!) to positive theory (what are the incentives to use bad numbers?)

What is the political economy of “impatient optimism”? Here is a possible political economy story – there are two types of political actors: (1) those who care more about the poor and want to make more effort to help them relative to other public priorities, and (2) those who care less and want to make less effort relative to other priorities.

Empirical studies and data that show that aid programs are having very positive results are very helpful to (1) and not to (2), while of course the reverse is helpful to (2) and not to (1). So each type has an incentive to selectively choose studies and data. Knowing this and knowing the public knows this, the caring type (1) might want to signal they are indeed caring by emphasizing positive studies and data, and may have no incentive to actually evaluate whether the positive data are correct or not. So the Gateses might want to say (as they did): “The money the US spends in developing countries to prevent disease and fight poverty is effective, empowers people, and is appreciated.”

If this purely descriptive theory is true, it could explain why some political actors stubbornly stick to positive data even if some obscure academic argues it is false or unreliable.

It cuts both ways – the anti-aid political actors would also have no incentive to recheck their favorite data or studies. Then the debate over evidence will not really be an intellectual debate at all, but just a political contest between two different political types.

Of course, we HATE this political economy theory when it’s applied to US. We are VERY unhappy when people conclude that because we are skeptical about malaria data quality (and thus whether they show progress), therefore we really don’t care about how many Africans are dying from malaria and wish that all government money went to subsidize fine dining in New York. And, the Gateses would probably not be fond of this political economy explanation of their actions and beliefs either. Both of us would prefer the alternative “academic” theory of belief formation, in which it is all based on evidence and data, not political interests.

How to distinguish which theory explains the behavior of any one actor is determined by the response to evidence AGAINST one’s prior position – do you change your beliefs at all? The Gateses seem to fail this test on malaria numbers. We hope we do better when it comes our time to be tested, as we should be.

Is USAID about Aid or Development?

Guest blog by Lant Pritchett, Professor of the Practice of Economic Development, Kennedy School of Government, Harvard University The name of the United States Agency for International Development (USAID) is too clever by half. By forming the acronym “aid” it attempts to create popularity (who could be against “aid” broadly interpreted as “assistance” to the world’s poorest?) at the expense of perhaps confusing everyone, including itself, about its actual mission. There are many ways of providing assistance to people in poor countries that do little or nothing to produce development. While we might all whole-heartedly agree that de-worming is demonstrated to be cost-effective assistance, its impact on development is, at best, tiny. An existential question the next leader of USAID has to face is whether USAID is about assistance—in whatever forms and for whatever goals political support can be mobilized and logistics can be arranged—or whether it really is an agency whose mission is to promote development.

The difference matters. One reaction to the critics of aid effectiveness who point to failures in development despite historically high and sustained levels of foreign assistance is to circle the wagons by arguing the goal of aid is just assistance, full stop. In this case the debate is only about whether aid is assistance: “Did this aid support an activity that has some positive benefit to human well-being?” This makes the question easy to address with available methods, likely to often produce a positive answer, and almost certainly irrelevant to development.

Development, for better or worse, has always been defined as a deliberate acceleration of modernization, conceived as a synchronized (if not simultaneous), complex, four-fold transition of economy, polity, administration, and society. Modernization is a one-word description of what the West accomplished from the nineteenth century onwards. Development, as accelerated modernization (which may or may not follow exactly the West’s historical trajectory or modalities), is what Japan accomplished following the Meiji Restoration, rising from an isolated backwater to global power; development is what Korea achieved from 1962 to today, rising from a poor, weak, powerless, post-conflict state to what it is today. The goals that are the aim of development—having a productive and prosperous economy, a polity guided by the wishes and in the interests of its citizens, a administratively capable state, a cohesive society—are desirable goals. Moreover, development is the only demonstrated and sustained way to achieve the objectives of increased well-being.

Being an agency for international development implies more than that the agency provides assistance to improve the well-being of individuals in countries that are not developed, but that the central goal of the organization is to promote development. Promoting economic development, for instance, means supporting actions and policies that create widespread opportunities for people to improve their incomes. Unfortunately, as any reader of this blog likely realizes, this is much more difficult—and much less photogenic—than planting the flag over the delivery of specific services addressing popular causes.

A new leader could make USAID exclusively about aid and focus on the narrowly prescribed goal of making aid effective assistance, but the real problem pressing the Obama administration is not that aid has not been effective assistance but rather that development needs to happen. Development needs to happen in Pakistan, in Afghanistan, in Iraq, in Somalia, in Zambia, in Guatemala, in Bolivia—and continue to happen in India and China. Even addressing a series of important problems for well-being like vaccinations, schools for girls, HIV/AIDS prevention or malaria does not add up to a development agenda. If the next leader of USAID does not own that objective and mission—putting the big “D” in USAID and not just little “a” in aid—he or she is sealing USAID’s irrelevance.

African Governments Should Be Accountable to Their Own People, Not Aid Agencies (Maybe Not Even the ICC)

Award-winning Ugandan journalist Andrew Mwenda was eloquent on this point at our recent conference: Andrew Mwenda on Taxation and Accountability in International Aid from LF on Vimeo.

Some recent research supports his view -- aid is associated with less democracy, and of course less democracy means less accountability to your own people:

Simeon Djankov & Jose Montalvo & Marta Reynal-Querol, 2008. "The Curse of Aid," Journal of Economic Growth, Springer, vol. 13(3), pages 169-194. Link to abstract here.

Perhaps a distantly related issue -- Some are also wondering if it really helps to make Sudan's leader accountable to outsiders, in this case the International Criminal Court. The always perceptive Alex de Waal is not so sure.