We’re all the 1%, but we’re no Scott Bakula

Did anyone ever notice that Sam Beckett avoiding leaping into African people?

Writing in Foreign Policy, Charles Kenny points out that, when you consider the global income distribution, middle-class Americans are actually part of the global 1%.

So by global standards, America’s middle class is also really, really rich. To make it into the richest 1 percent globally, all you need is an income of around $34,000, according to World Bank economist Branko Milanovic. The average family in the United States has more than three times the income of those living in poverty in America, and nearly 50 times that of the world’s poorest. Many of America’s 99 percenters, and the West’s, are really 1 percenters on a global level.

His point is sound – it’s one that has been made repeatedly by development gurus in response to the Occupy Wall Street protests. He goes on to make the case that we not only need more redistribution from the middle-class within countries, but across them as well. I’m sympathetic to this argument – `local’ inequality surely pales in comparison to the injustice of global inequality, the latter being associated with millions of people still stuck in absolute poverty.

Yet it’s clear from his writing in general that, when considering public policy, Kenny gives the welfare of people within and outside of the US equal weight. This is typical of those involved in international development – we wouldn’t be in this field if we cared only for our own (although maybe that statement is a little self-serving).

These preferences are consistent with John Rawls’s veil of ignorance (discussed earlier here), the argument that policy should be set before we know what position in society we will assume, a bit like Scott Bakula/Sam Beckett in Quantum Leap. For example, we might feel differently about US immigration policy if we thought there was a chance we might be born in Haiti. Kenny touches upon this briefly while discussing Herbert Simon:

Nor did the Western 99 percent “earn” most of their wealth, any more than the top 1 percent “earned” theirs. It’s the luck of where you’re born, according to the late Nobel Prize-winning economist Herbert Simon, who estimated that the benefits of living in a well-functioning economy probably account for 90 percent of individual income.

While I completely agree with this line of thinking – welfare weights shouldn’t be nation-specific, I think it’s a problematic way to convince others to embrace policies which are already unpopular, like taxing the middle class or easing restrictions on immigration.

Why? I think that most people just don’t feel the same way:  average levels of altruism for foreigners are certain to be lower than for other citizens, so we should be wary of making arguments which are too dependent on non-discrimination. People still see citizenship as part of a social contract – we’re all in this boat together, even if we were randomly assigned to it. Those that ended up in leaky boats are not our immediate concern (again, not the way I feel).

There are no simple solutions to the challenge of getting people to broaden their concept of the `boat’ to include other nationals, although one could argue that the international Occupy protests, for all their faults, have actually helped in this regard.

Time inconsistency, Malawi edition

In The Guardian on Wednesday, Bingu Mutharika responds to claims he is becoming autocratic:

“What they are trying to do is to draw a parallel between the leadership of Zimbabwe and Malawi. There is no basis for that. That is totally unfair and uncalled for. I have been very democratic.

“From 2004 until now, there is no single political prisoner in a Malawian jail. Is that consistent with the restriction of democracy in this country? We have been very democratic, we have been very patient. I have asked the opposition to come and see me but they refuse.

“It is simply not true. Because if it were true, all these people would have been rounded up. None of them have. They are free now. If indeed Malawi was starting to be a police state, would they still be walking free? That’s the question.”

In the Guardian today:

A prominent critic of Malawi’s president has been jailed in what activists say is the latest sign that the country is turning into a police state.

Ralph Kasambara, a human rights lawyer and former attorney general, has spent three nights behind bars after a fracas at his law practice in Blantyre.

A Couple of Provocative Thoughts

Don't provoke him. You wouldn't like him when he's angry.

A few weeks ago, Nick Eubank wrote a piece about Somaliland in the Guardian’s Poverty Matters blog. Somaliland is an interesting one – it’s a state that is not officially recognized and therefore in receipt of less aid than would be expected (though it is incorrect to assert, as he does, that it receives no foreign aid), but is performing well above reasonable expectations. They have a pretty well-functioning democracy, biometric passports – like Lee, I still can’t get over this – and pretty good economic performance.

Eubank suggests that it’s the very lack of aid and subsequent development of tax structures that has led to Somaliland’s good performance, a view to which I have some sympathy. I’ve written in the past about why developing taxation systems is crucially important for all developing countries and why it tends to be difficult. If a side-effect of Somaliland’s lack of access to aid is being forced to be more representative and more developmental, could there possibly be a benefit to restricting rather than increasing aid volumes?

It’s a provocative idea, because it flies in the face of almost everything we’re led to believe about development and levels of development funding, but as a thought experiment, it’s worth considering. It would be likely to yield specific benefits:

  • Most obviously, it incentivizes the creation of a viable tax regime with the benefits of accountability, representation and responsiveness that issue from one
  • It also creates far more pressure to achieve concrete and valuable results than any system of performance assessment – strictly limited aid volumes makes failure far more costly
  • Ownership would take a big boost. The biggest boon to local ownership of the aid agenda would be the ability and necessity to refuse aid packages that are not wanted. If bad aid or aid out of line with the local development vision replaces good aid, the incentive to exercise ownership of the agenda and refuse the aid is that much higher
  • A limited volume of aid would mean that the limited management capacity of local institutions is not stretched over hundreds of projects and programmes (as is the case now), but focused on a few tightly prioritized programmes, with consequent benefits for implementation.

Offsetting these benefits is the obvious drawback that much of what needs to be done could not be financed with a strict aid ceiling. The value of the thought experiment is not to assess whether we should cap aid, but to see what benefits it would bring so we can work out how to generate these benefits without limiting aid volumes. The hardest two to incentivize without some resource constraint are the improved ownership (which really requires that local institutions to refuse aid far more than they actually do) and the management effects. Suggestions welcome.

Staying in the region, Chris Blattman also linked to a paper suggesting that Somalia was better off without a state. While the writer of the original paper seems to be a libertarian (and somehow the headline ‘Libertarian Dislikes Government’ isn’t all that shocking), it does make an interesting basic point: the correct counterfactual when we consider poorly governed or chaotic states is not a ‘good’ Government, but a ‘different’ one. This is something to bear in mind when we consider countries with corrupt, dictatorial or ineffectual Governments. Very often it’s not the specific leadership or political party that is at the root of bad governance or decline, but the structural characteristics of their rule: their relationship with the opposition, their relationships with the public, their ability to govern effectively and the options open to them. In very different contexts I’ve argued this for Malawi and Zimbabwe. In Malawi, the same leadership was fine in one political context and dictatorial in another. In Zimbabwe, the temptation to lay all blame at the feet of a very convenient (and abhorrent) villain blinds many to the complex roots of his crimes and Zimbabwe’s decline. The saddest thing is that this point is often neglected even by immensely powerful decision makers – the invasions of Afghanistan and Iraq both show marks of this error.

Going back to the original article, is there a case to be made for statelessness when the Government is predatory? The argument is strongest in the static view, comparing a bad state and statelessness. The more dynamic the view taken, where we consider how tyrannical or corrupt regimes can become effective ones, the less this view makes sense, though it’s also true that plenty of tyrannical regimes didn’t evolve but were overthrown. Again, the thought experiment of whether some developing countries would be better off stateless is most valuable in focusing our attention on the long term needs and real dynamics of state building – not just in terms of building institutions but understanding how bad or predatory institutions can evolve into good ones. It’s happened in many countries, and links back to the questions of accountability, representation and taxation discussed above.

Conflict and climate assertions

I always suspected El Niño had a violent past

So Nature has released a study by researchers from Columbia University purporting a link between the El Niño effect and violent conflict in a subset of countries (those that face large shocks in temperature when El Niño comes knocking).

There are tons of reasons to be skeptical of these results – one thing that made me pause was the complete lack of theory in the paper, and thus there’s no real attempt to discern why El Niño might increase the risk of violence. Even stranger – the results get stronger when the authors control for rainfall and temperature in the affected countries, which really doesn’t leave much of a theoretical channel for the resulting outcome. To make matters worse, the structure of the article makes it nearly unapproachable – which is not the fault of the authors, but the journal itself (why isn’t this appearing in a social science journal? I have a theory).

Edward Carr also stepped in and rightly choked-slammed the results. While I agree with him that the paper is a mess and we shouldn’t make too much of the results, I found some of his complaints to be off the mark:

This design makes sense only if you assume that the random back-and-forth shifting did not trigger adaptive livelihoods decisions that, over time, would have served to mitigate the impact of these state shifts (I am being generous here and assuming the authors do not think that changes in rainfall directly cause people to start attacking one another, though they never really make clear the mechanisms linking climate states and human behavior).  The only way to assume non-adaptive livelihoods is to know next to nothing about how people make livelihoods decisions.  Assuming that these livelihoods are somehow optimized for one state or the other such that a state change would create surprising new conditions that introduced new stresses is more or less to assume that the populations affected by these changes were somehow perpetually surprised by the state change (even though it happened fairly frequently).

Carr seems to be suggesting that, by using run-of-the-mill regression analysis, the authors are implicitly assuming that people in `treated’ countries don’t react in ways to offset future El Niño effects. It seems to me that this approach isn’t making that assumption at all, it’s attempting to measure the average impact on the incidence of conflict. We might expect that the impact to be higher under the assumption of non-adaptive livelihoods than under adaptive livelihoods (unless part of that adaptation is picking up an AK-47), but none of this feeds into the average effect.

Now – it is unclear what that average effect is measuring (and this might be what Carr is getting at), as the impact in year 0 is the impact of El Nino on the unadapted, where the impact in year 0 + T might be the impact on El Nino on the semi-adapted. While this might certainly be an issue for the external validity of the findings (if people have been adapting during the period observed, we’re not likely to see similar effects in the future), it doesn’t affect the researchers’ ability to say “here’s the aggregate impact of El Niño on X over this period.” It’s still a valid statement, if a less interesting one.

I should note this isn’t the first time I’ve taken issue with research on the impact of climate on civil conflict, especially with how this stuff gets reported in the news. The Guardian has already managed to mistakenly conflate the result of increased risk of conflict with direct culpability by claiming that the research “shows 50 of 250 conflicts between 1950 and 2004 were triggered by the El Niño cycle.” This is a common mistake, one I discuss in length here.

DFID calls Malawi’s bluff

They blew it up!

I wrote before about how both Malawi and DFID were in a bizarre bluffing game over the recent expulsion of the British High Commissioner following the leak of a memo criticizing Bingu wa Mutharika’s government. It seems that we’ve reached the end of the game, with the British Government moving first:

Malawi will no longer receive general budget support from the UK Government, Andrew Mitchell announced today.

General budget support is used to allow governments to deliver their own national strategies for poverty reduction against an agreed set of targets. This has now been suspended indefinitely.

The Development Secretary took the decision after the Government of Malawi repeatedly failed to address UK concerns over economic management and governance.

This is, of course, a load of toff. DFID has put up with Mutharika’s authoritarian streak for several years now. Maybe this is the underlying reason behind Mitchell’s decision, but this would not have happened nearly as soon without the diplomatic crisis several weeks ago.

Still, this is a pretty amazing reversal of what looked to be an incredibly robust relationship during Mutharika’s first term. This all changed when the election cemented his position. Ironically, the British have (in part) to blame for this by helping fund the fertilizer subsidy which made him so popular.

As I explained before, the more successful the aid is rerouted, the less successful this action will be at actually incentivising change. Life will be less painful in the short run, but what about the long run?

Of course, DFID takes a moment to take as much credit for past progress as possible:

The UK has helped improve food security in Malawi for over seven million people a year by providing them with high yielding maize and legume seeds via the Farm Input Subsidy Programme.

UK support to strengthen the health service has helped save the lives of 3,200 pregnant women and 40,000 children since 2004. UK funding has built over 3,200 primary school classrooms and 4,800 toilets since 2001, helping keep more girls in school.

Hat tip to Kim Yi Dionne for the link.

Reading is Fundamental

... and if you don't think so, it might be time to enroll in this school...

Rajiv Shah has chosen a set of his favourite development books over at The Browser. It’s obviously a selection designed to stimulate a bit of interest in USAID’s current approaches to development, and it’s a pretty good one (though Chris Blattman has a legitimate beef with one of his comments).

One thing I like about the list is that it goes outside the standard development texts, with one selection about the development and impact of fixed nitrogen fertilizer. He also selects a work of economic history, Gregory Clark’s A Farewell to Alms. I’m glad to see some economic history here, but I probably would have chosen some different ones. Here are some suggestions:

The Great Divergence by Kenneth Pomeranz, which looks in detail at the Industrial Revolution, and why it didn’t occur in Japan or China. I can’t stress enough how important it is that we understand why massive economic transformations occur, because every country that goes from poor to rich goes through one. Why did China not have its own in the 19th Century? Pomeranz looks at some of the reasons.

Of course, one of the seminal papers about the Industrial Revolution was Jan de Vries’ The Industrial Revolution and the Industrious Revolution, which makes great play of the importance of increased output and consumption powered by effort and extended working hours – these provided a kick that supported deeper processes pushing an Industrial Revolution. It’s been criticised since its publication, but it injected a layer of complexity into the analysis of the industrial revolution that was missing. Its ideas contribute to Chris Bayly’s thinking in The Birth of the Modern World, probably the most impressive work of history I’ve come across.

Another cracking book, again flawed, is David Landes’ The Wealth and Poverty of Nations, again explicitly looking at the role of cultural norms in generating industrial transformation. I don’t agree with this 100% or even close to that, but it’s a thought provoking and excellently written work.

Finally, I’m going to cheat a little with my last two. The first is one I haven’t actually read yet: The Origins of Capitalism by Ellen Wood, subtitled A Longer View. This looks absolutely fascinating, bringing together history, economics, culture, philosophy and ideology into a wide-ranging analysis of modernity and capitalism in Europe. I can’t wait to read it.

The last book I would select as an economic history is actually a work of fiction (harking back to a previous post when I suggested five non-standard sources of learning on development). I read North and South by Elizabeth Gaskell on the recommendation of my brother-in-law and I couldn’t agree more with his high estimation of it. Written in 1855, at a time when industrial capitalism was just taking root in England, it offers remarkably thoughtful critiques of the cultural and economic impacts of industrialization and the ways in which capital and labour interact and would continue to interact under this system. It’s astonishing to think it wasn’t written with a century of hindsight. It recognizes the transition to capitalism for what it is: messy, violent, hugely beneficial and all-encompassing: no one can opt out.

Any other favourite development books out there? Always grateful for new suggestions, especially those that are well written as well as intelligent.

Is aid really a moral duty?

Through Roving Bandit, I spotted this coverage of Andrew Mitchell’s defense of aid as a moral duty:

In a direct riposte to those in the media and on the Tory right who have attacked the government’s decision to spare the aid budget from George Osborne’s austerity programme, Mitchell said: “It is a stain on all our consciences that a girl born in South Sudan today is more likely to die having a baby than to complete primary school.

“When we know what life – and death – is like for over a billion people living on less than 80p a day, and we have the wherewithal to do something about it, then, yes, I do believe we have a moral imperative to do so.”

I agree with Peter Singer’s basic argument: that we do have a moral imperative to help the poor out of poverty. Many, including Singer himself, have used this to argue that overseas aid is a moral duty.

Yet this argument is conditional on aid being the most effective means of reducing poverty, or at least the most effective way you can reduce poverty. It’s not clear, when stacked up against trade, immigration, investment, etc, that aid really is a moral duty. It’s a bit like arguing that baking cakes is a moral duty, but choosing to focus just on the icing.

Readers would be reasonable to point out that the average person can’t do much about these other paths out of poverty, at least not in expectation. This is also Singer’s argument – aid is the easiest way for people to ease suffering in the short term. Still, this isn’t true for Andrew Mitchell – he’s in the cabinet of a major government. If he’s going to argue that we have a moral imperative to give aid, he should also spend more time arguing for other policies that might have equal or even greater success in reducing poverty.

Influence

"You want my advice, Tone? I say we whack him.'

Duncan Green has a really good set of suggestions for advocacy with ‘effective but authoritarian’ states. The first five are especially good and worth quoting in full:

1. One party states can be more open to robust evidence than multi-party ones. Disturbing, I know, but these governments often appear more interested in hard evidence than their more democratic counterparts. Petitions and emails won’t do it – you need data, though individual impact stories can work quite well too. Let’s not get too starry-eyed though, there will be areas that are off limits, and you need to know what they are.

2. Research will have more influence if it is done by an organization the government trusts – such as the parastatal Academies of Social Science in Vietnam and China and major Moscow-based universities. In any system, the messenger matters as well as the message, but these governments seem to specifically use such parastatals as channels to gather new knowledge.  Such research institutions are also often hungry for connections with external agencies so you’re pushing at an open door.

3. Your political economy analysis had better be good: understanding how decisions are taken in Addis or Moscow is absolutely critical. Personalities, relationships (both personal and professional), the histories, cultures and incentive systems of different leaders or ministries. Until you have a confident grasp of these, your influencing is highly likely to go wrong (always with the risk of backlash).

4. The importance of symbolism, pride and sovereignty. Traditional NGO name-and-shame tactics are as likely to lead to a counter-productive backlash as a breakthrough.  Instead, offer things that work. Find the Achilles’ heel that the government recognizes as a weak spot and focus on that. They can be surprisingly grateful for suggestions.

5. Alliances with non-state actors: in terms of citizens, most authoritarian regimes are keenly aware of issues of legitimacy, if not of direct accountability, and acts of citizenship are far from absent even when elections are either not held, or perfunctory. Building alliances with other actors (academics, churches, private sector) is just as important as in more open state systems.

Numbers three and four are particularly important. Always approach leadership upwind: nothing makes authoritarian Governments angrier than the feeling that they’re being ambushed. I would caveat point five by saying that it’s exceedingly important to ensure that support to NSAs is transparent; you don’t want to give anyone the chance to make accusations of perfidy based on their paranoia. In general, these rules can be extended to ‘intransigent’ states where leadership is democratically elected but is particularly sensitive to criticism, especially from external actors. Malawi probably fits this bill.

Can Malawi deal with a British aid freeze?

In the wake of the diplomatic row between Malawi and the UK over a leaked memo criticising Bingu Mutharika, the UK has suspended all aid to Malawi. Jimmy Kainja, over at the Guardian blog, notes that Mutharika suddenly looks a little more willing to compromise:

However, Mutharika announced on Monday that “genuine dialogue and consultations have been initiated” between the two countries. He was confident that “new modus operandi will be agreed to the mutual regard” of Britain and Malawi’s “shared common vision and interests”.

“With regard to Malawi’s bilateral relations with the United Kingdom, I wish to assure this august house that both Malawi and Britain are committed to strengthen such relations in all aspects … we expect our development partners to continue to support us,” Mutharika said during the Malawian parliament’s budget session.

This seems to suggest that Mutharika was never entirely serious, or perhaps misunderstood the full ramifications of expelling the British high commissioner. DFID has historically been a major contributor to Malawi’s fertiliser subsidy program, so this aid crunch has the potential to do a lot of political damage to the current government.

Many consider the aid freeze to be too harsh. This is one of those big, unanswered questions – how should we weigh the “aid shouldn’t incentivize bad governments” against the “cutting aid will hurt the poor argument”? This might be strongly determined by how much you discount future suffering versus suffering today.

Kainja argues that we can have it both ways, if DFID would only re-route its aid through NGOs and civil society organisations. This is problematic for two reasons: Firstly, a large hunk of DFID’s aid is a combination of general budget support and sectoral budget support. They give money to the Malawian government to do things, like run hospitals and buy fertilizer. It would be extremely difficult for DFID to fund similar operations in the NGO sector, especially in the short term.

Finally, rerouting the aid, if successful, doesn’t really do much to `punish’ the Malawian government. This row isn’t over corruption or theft of aid, it’s over creeping authoritarianism. If the average Malawian sees no change in access to aid-funded resources, it will be unclear exactly what a rerouting would accomplish.

 

Ideology and results-based aid

Jonathan Glennie considers the merits and limitations of results-based aid.

There was a time when countries were being forced to adopt fees for basic health services, a practice now discredited by the overwhelming evidence. Today, by proposing to hand decision-making over fully to the recipient country, COD aid demonstrates a post-ideological humility regarding how to achieve development. The fact that China has become a mighty power has only added to the sense that there is more than one way to fry and egg.

Yet the question of which eggs we should be frying still lingers. It will still be easy to disagree whether the targets set in any results-based agreement will have any meaningful impact on development. Recipient governments might have an explicit say on what their priorities are, but donors can continue to cherry pick the outcomes they want to start, say, a COD contract for.

So there is still room for ideology and disagreement here.