A Supreme court get out of jail free card

The highest court in the world of money just made securities fraud a whole lot easier.

Goodgod will we ever learn?

The devastating effects of uncertainty

Arab teachers from around the Middle East come to Abu Dhabi to teach in public schools. They benefit immensely from the easy lifestyle that this place affords. Their salaries are often more than triple the amount they would receive as teachers in their respective countries. However, there is one cost that needs to be considered.

They have no job security. None.

Tomorrow they could be fired. Indeed, just last week all the English (as in literature, not language) high school teachers were let go. For the thousands suddenly without work, there was no forewarning - no prior announcements. But, teachers had, as they always have, the constant creeping feeling of impending termination.

What does this feeling do to work ethic?

I'll tell you. Uncertainty can decimate work ethic.

Now, to be fair, we all face uncertainty in the workplace. Some of us more than others. Specifically speaking of the potential to be terminated; most of us so called 'professionals' have contracts that protect us from arbitrary decisions made by high level executives. Here, however, especially when working for certain branches of the government, contracts seem to have minimal effect.

I suspect there is a threshold amount of uncertainty beyond which work ethic falls to zero. That could be explained in a graph (my inner economist speaking...) but I'm going to try to explain it with words.

Up to a point uncertainty could be a motivating factor:

         "If you don't work hard, you could be fired!"

When uncertainty includes arbitrariness, it is somewhat of a de-motivator:

          "No matter how hard you work, you could be fired!"

But when uncertainty and arbitrariness pass a certain threshold, people simply don't give a damn anymore:

          "You are probably going to get fired no matter how hard you work."


This is the point where high school teachers are in Abu Dhabi. And, the point many 'ex-pat' professionals are approaching here. Arbitrariness and uncertainty perpetuated by a ridiculously top heavy decision making structure are wreaking havoc on productiveness in this sandy Emirate.

I think the broader concept of the uncertainty threshold can be expanded to many sectors of employment. I imagine poor farmers, in say, Tanzania, facing terrible uncertainty (and arbitrariness) waiting for the rains to come. Should they spend that extra money on fertilizer if the chance of rain is pretty damn slim? Frosty beers do give immediate benefits! I don't mean to generalize that all Tanzanian farmers are tempted by alcohol, just that If I were faced with those choices I'm not sure if I could resist.

Ok, I had to draw one.... :)

Of course, incentives can differ wildly depending on the type of job. Some people that are perfectly secure in their job can maintain high levels of productivity...

Abu Dhabi's mercenaries need an incentive to stay

From the NYT on May 14th:

 ABU DHABI, United Arab Emirates — Late one night last November, a plane carrying dozens of Colombian men touched down in this glittering seaside capital. Whisked through customs by an Emirati intelligence officer, the group boarded an unmarked bus and drove roughly 20 miles to a windswept military complex in the desert sand.

The Colombians had entered the United Arab Emirates posing as construction workers. In fact, they were soldiers for a secret American-led mercenary army being built by Erik Prince, the billionaire founder of Blackwater Worldwide, with $529 million from the oil-soaked sheikdom.

Reflex Response is the new name given to the mercenaries formerly know as Blackwater, led by the aformentioned Erik Prince. R2, as the group is know in the Gulf, is in fact an Emirati company, with the government's stake at 51%. Prince has called this place his home for almost a year now, during which time he has been successfully convincing the Sheiks the benefits of a private foreign army (a la Gadafi).

Know for his groups' despicable practices, Prince has been distancing himself from his former company (currently re-branded as Xe). The former name was tainted by their operations in Iraq, where the group received several no-bid contracts amounting to 21 million USD. They have garnered harsh criticism for their behavior (to put it lightly) and have been investigated by several Governments, including the Iraqi government, for their abuses:

From the NYT again:

Contractors often shot with little discrimination — and few if any consequences — at unarmed Iraqi civilians, Iraqi security forces, American troops and even other contractors, stirring public outrage and undermining much of what the coalition forces were sent to accomplish. The mayhem cropped up around Iraq, notably in one episode reported in March 2005 in which a small battle erupted involving three separate security companies... 

...one of which was Blackwater. Most famously, the group opened fire on a crowd of people and killed at least 17 civilians including women and children, and wounded some 30 others in what came to be known as the Nisoor Square Massacre. In April of this year a US federal appeals court reopened the case against four Blackwater mercenaries.

Make no mistake. These are the worst people in the world. They go above and beyond the call of duty for a bloodthirsty gang of mercenaries. They bribe officials, smuggle arms, open fire upon civilians, and shoot at other private soldiers that are supposedly 'on their side'. There are endless stories about companies like Blackwater that mercilessly shoot down defenseless citizens.



Here in Abu Dhabi, the threat of citizens taking action against the government is slim to none. Unlike Bahrain, the people here are religiously homogenous. Unlike Egypt, no political opposition to the government exists. Unlike Libya, the people here are placated with houses, free school and health care, and all manner of interest free loans encouraging entrepreneurship and personal wealth creation. Basically, any and all reasons for uprising have either been dealt with or simply do not exist. As a friend recently put it, "If Emiratis were to protest... well, they'd probably send their Philipina maids in their place. It's too hot outside you know..." Three bloggers were arrested earlier this year for their harsh criticism of the regime, but I still can't imagine an organized demonstration of any kind. So what use is R2?

The main threat to the Sheiks, if any could be cited at all, may come from Iran. It's no secret that the strife in Bahrain this past spring was fomented by Iran. Here, however, there are very few Shia for Iran to eqip with rebellious ideology or weapons.

In any case, the government is easily courted by a security company from the US, a country with which the UAE has close ties. But it is not clear if the US State Department has had any involvement in the deal, or conversely, if Relex Response is in fact breaking US law by training foreign troops without first receiving their blessing. The UAE has had a strong history of pouring money on American military initiatives, and surely the offer of your own personal international guard makes too much sense to reject.

According to the NYT, R2 is spending $9 million per month on initiatives including training Emiratis, and paying south asian laborers to cook, clean and maintain their camp (as one does in this part of the world). Pennies for a Sheik. But operations have not been so smooth. Like any company that comes to the UAE, R2 has been plagued with what we call "runners". Handfuls of employees have been hired and either quit or were fired within months. They come, make a quick buck and realize this place is a desert. But with all the prostitutes in Dubai (rock up to the Fairmont any night of the week and you'll see what I mean) I'm sure R2 can persuade its mercenaries to stay.

They have no other reason.


For more, check out http://www.blackwaterwatch.com/

The cure for procrastinating grad students?

Been stalling on your thesis? Another day passes and you can't get off reddit long enough to dig in to that source thats been sitting on your desk for a week?

Well, the University of Chicago (who else?) has come up with a clever way to motivate its grad students. ITs called the "write-in" and it works like this: You pay them $50 and you get a space to work, coffee snacks and lunch for a week. At then end of the week if you have shown up everyday and have gotten some real work done (how they measure that I don't know) you get your 50 bucks back!

I wish my old school had a program like this. Imagine the $50-a-pop college party at the end of a productive week!

H/T: The Nudge Blog

Blattman, Banerjee and Duflo Debate

On Chris Blattman's excellent blog a debate about development sprung up last week.

The question was basically this: What is the best first step for South Sudan as an emergent country?

The two sides are as follows: social spending (Duflo and Banerjee) versus security and private sector (Blattman).

Banerjee and Duflo champion social services for the poor (on the economix blog initially), including: schools, health care, health insurance and even a direct cash transfer system.

Blattman argues, given that South Sudan has little to no operational capacity for such bureaucracies, creating a welfare state would be too much of a burden. He advocates making peace with warlords, and creating invectives for them, and the rich in general, to invest in productive fixed assets such as factories or plantations. He also pushes for an operational police force. His point is that politics is primary and security is at the heart of it: maintain peace and support private sector development. Oh, and build roads.

Banerjee and Duflo respond, that pursuing redistributive policies that target the poor is essentially building the identity of the state. Hopefully, as they suggest, a virtuous cycle would start whereby the poor support the state for putting them first and therefor hold off special interest groups (eg. warlords, elites) from capturing the product of nation (oil mostly for now).

Finally, Blattman remains skeptical. With evidence from Sierra Leone he chops down the benefits of cash transfers. From his own experience in Uganda and Liberia, his opinion of the effectiveness of redistribution programs, as far as they spur development, is jaded.

Of course, we are tempted to think that this is an atrificial trade-off, and that the state of South Sudan can pursue both courses at once. While to some extent that may be true (eg. placating warlords could fit on both agendas) I think the notion that these respective policies build the identity of the state is accurate and useful.

Will the state grow akin to an enlightened version of African socialism of 1960's? Or more like the capitalist enterprise of the 90's plus security and sensibility? Perhaps it is unfair to cast upon them such shadows. In any case, let us all hope for Lant Pritchett's work to have some impact.

In the end, I must admit, I am convinced by Banerjee and Duflo. Perhaps because because of quixotry, perhaps because of this:

Airline safety videos - Who the hell watches those anyway?

First, at Delta they got a sexy stewardess to add a little sizzle to their video. It became somewhat of a meme on the interblags: Smoking is not allowed!




Then New Zealand Air does this!

Breaking the mold alright!  You will probably pay attention now! At least until you're forced to watch it more than 3 times...

I say lets democratize it. Make an art out of it. Someone ought to create a competition on youtube for the best inflight video. They'd get so many good entires they could have a different one for each flight! So often the corporate world doesn't understand the incentives of the youtube generation. People just want recognition.

And down with the forced consumption of advertising! If I'm going to be forced to watch ads, you'd better pay me for it. Right now. In cash or booze kind.

What do you think of this?

Not suitable for work, but essential viewing.

Shopping Can't Save the World

Over the previous 50 or so years we have seen the development of charities driven by classical capitalists. The Bill Gates' of the world, if you will. These magnates destroy take from the little guy with one hand give back to society with the other.

In a two action motion, they complete a viscous cycle. In the fist action they perpetuate the inequalities and injustices of the global capitalist system, they reinforce, and profit from the agreements and accords that keep poor people poor and ignorant. They profit big time. 

Then, in the second, they attempt to absolve themselves of the guilt that their business practice has brought upon them. They set up charities. And people forget. That they were ever bad in the first place is a secondary consideration. (I mean, they run charities, so how could they have done wrong in the past?)

Don'f forget! Microsoft is one of the most ruthless, dastardly and morally corrupt corporations in the world. They have abused so many people, from Namibian schools, to Danish programmers, it is remarkable. They are still malicious, even with a cherry on top. Of course, the same goes with many top companies in the States in particular, including Apple, Nike, Starbucks, Gap, etc...

These days, however, a new kind of business model has become the norm. One in which the two actions of destroying and deluding repairing society happen all at once. Its called brand aid and it's that same delusion we were used to, now it just happens all at once!

Should you feel better about buying a shirt you don't need from GAP because a portion goes to fighting aids? NO. Should the fact that Apple gives some tiny amount to fighting aids or feeding the poor forgive their abusive business practices NO!

These kinds of charity are merely promotional material. How could Old Navy or Microsoft get rich without poor people to abuse? Not as easily, that is for sure. It is in Starbucks best interest to keep the poor disenfranchised, but give them just a little help, so the public image of GAP changes so slightly, allowing the Nike to sell an extra million t-shirts/programs/anything.

Here's a little presentation from Lisa Ann Richey, the author of the upcoming book entitled Brand Aid: Shopping Well to Save the World. Please, please watch this Bono clip at 3:47. Ugh.

This is not to condemn projects that promote small business in impoverished nations, as Zizeck does in this great little video. There are thousands of products out there that are wonderful and worthy of your dollar. It is just to say that the odds are stacked against the poor. Big businesses enjoy it, and won't change anything. A little cash the flows straight to entrepreneurs in poor countries is a good thing. Indeed it is the least we can do, but it just won't solve anything.

It reminds me of the moral question my family sometimes asked itself when we lived in Kenya. Should we hire some more people? Should we help out more poor Kenyans, who most likely are over qualified for any position we can offer? Sure. But it won't solve anything.

That 1% goes to fight poverty in someway does not forgive overspending on silly things people don't need. That a handbag is made by a poor Ghanain woman does not make it good to buy fifty. It won't fix anything on the systemic level, therefore the moral penance it seems to afford is illusory, and by no means does it justify living beyond our means (as environmentalists). The best thing we can do for the poor is understand that the rules of capitalism are made by the WTO, the World bank and the OECD (and often local governments) and they are implicitly working against the poor by having the best interests of the rich at heart. And, even more important, we should strive to solve that. And how.

Hat tip to: Slavoj Zizek and Brand Aid

To Read

Two exciting new books are coming out in the next two weeks or so. These two books, as heralded as they are, represent the credit that randomized experiments have garnered in the field of development economics.

If we have limited resources (we do) and can choose only one thing to buy, should we buy bednets, textbooks or deworming medicine for poor children in Tanzania? Randomized control trials in economics help us to understand the real effects of interjections such as these. By employing this method of looking at differences in differences we can allocate aid funds most effectively ie. with the greatest positive impact and the least negative one. (If our ends were to get more education happening, it turns out deworming is the most effective, who knew? This feeds from a recent post on indirect aid sometimes being the most effective. )

The question of extrapolation is a pertinent one. Deworming worked well in Kenya, but will it work as well as say, bed nets in other more malaria-ridden circumstances? Luckily some very bright people are working in this field, and I figure extrapolation is well considered and rarely taken as given throughout the field.

These two books mark the forefront of the effort to make aid more effective and less defective....and it seems, in a very digestible way! (Who doesn't like digestible forefronts!?). I hope they can deliver to the UAE.

Click on a book to find out more:

  and 

Check em out:

and

The case against humanitarian aid

Although aid talk these days is centered on Japan, Ill let Tales from the Hood and La viaid loca lecture you about the issues surrounding those charity efforts. Basically, the short lesson is they don't need your old socks.

Instead, today I would like to convince you that humanitarian aid, as opposed to disaster relief (Japan) or development aid (Kenya), is bad.

Consider this: Humanitarian intervention lowers the cost of war.  Casualties of war require medical attention which requires money and resources. The Red Cross for example, brings in all kids of resources to help those in need.

"Free relief for all of my soldiers and wounded civilians? Sign me up!"

Humanitarian intervention lessens the burden of war on those who wage them; the wounded are cared for, the hungry are fed.

---

Consider this: The media brings in all kinds of charity.

To quote La vidaid loca link from above, "Media attention on an emergency is a significant driver of the general public’s interest in giving to an emergency."

Media brings in money.

---

Imagine for a minute that you are a rebel militant in some forgotten post-war country:

Together with your brothers, you wish to rise to power. You and your comrades will become rulers of the land so that you can live the life of a provider; a king. However, your resources are dwindling, and poverty is rampant. Some seasons are plentiful - when the rains come, and when resource deals are struck - but there is always the risk that activists will block trade deals, government forces will capture all the rents, and rains will fail. The risk you face is high no matter your action. The life you live is most likely short. Money is what you need. Money is power.

Which is the 'path of least resistance'? Choose one, or two that fit together:

a) Farm: Knuckle down, get a real job tilling the fields and pray that the rains are good.

b) Revolt: Go into battle with government forces on the little weaponry you have left from your last resources-for-arms deal and try to take control of the resource rich areas.

c) Look for a job: Go to the city to look for a job. Maybe you could become a taxi driver.

d) Get some education: Learn a new skill to apply to a productive endeavour in the near future.

e) Cut off a few limbs of starving children: Create a big humanitarian crisis so international aid resources come flowing into your country.

Escalate a humanitarian crisis -> media -> humanitarian aid -> free resources -> good chance to syphon off funds -> money AND  healthy soldiers -> more war -> natural resource capture -> money




Humanitarian aid has perverse incentives: it decreases the cost of war, and increases benefits to warlords for going to war.


We should not give humanitarian aid.
(...and we haven't even talked about colonialism yet)
Convinced?

Nudges and Fun

If you check my links over on the right --> you may notice a site called nudges.org. If you haven't checked it out already, it's a fantastic blog written by two prominent behaviouralist economist/authors by the names of Thaler and Sunstein. Their central concept is the nudge.

A perfect exemplification of the nudge is the urinal with a fake fly inked into the bowl.

Why add the fly, you may ask? Trademarking? Fun?

Studies have shown that, across different washrooms in different states, urinals with targets like the fly are less spilly... Guys want to hit they fly! These washrooms smell better, need less maintenance and are not as wet on the floor!

A little 'nudge' like this can cause drastic changes in peoples behaviour. There are tonnes more examples, and great discussion about behaviouralist economics at their blog.

Even better examples, and certainly more fun ones, come from the people at thefuntheory.com.

This one is my favourite:

Can you think of a lil' nudge to change people for the better?

ht: Marc Goss

How rational of you...

One of the central problems with moden economic theory is that it assumes all human beings are rational. Whether the brand be bounded, norm-based or evolutionary, economic theory has been constrained by rationalist ways of thinking. Slowly but surely, influences from sociology and psychology will break down the "rational choice" theories that dominate the field. Of course, there are many other problematic assumptions that are widely accepted in mainstream economics, but the assumption of rationality remains central. It has informed and continues to inform most every fallacious assumptions in modern day economics.

Are you economically rational?

Take this quiz by the witty Dan Ariely.

I scored mostly rational. Econ 301 applies mostly to me... Do you fit the model?

Mo says No

The Mo Ibrahim foundation has decided for the second year in a row, not to award the coveted Excellence in African Leadership award. The 5 million dollar cash prize, as I discussed in an earlier post, is awarded to an African leader who have been democratically elected, served within their constitutional term limit and have left within the last three years. As he expressed in this piece for the Financial Times, Mo and his team were just not impressed by anyone this year.

This year, like last year, the prize committee – chaired by Kofi Annan, the former United Nations secretary-general, who is independent of the board – has decided not to make an award.

So does that mean that African leadership has been, as The Economist might say, “hopeless”? And has the foundation, established to celebrate good leadership in Africa, ended up proving that there is no such thing?

No. Whether there is a winner of the prize or not, the purpose of the foundation is to challenge those in Africa and elsewhere to debate what constitutes excellence in leadership. The standards set for the prize winner are high, and the number of eligible candidates each year is small. It is always likely there will be years when no prize is awarded.

Though a disconcerting that there is no leader worthy of the prize, it's still nice to see this organization keeping their standards and not just doling out the cash to candidates who came close.

Kyoto Prototype

On my last visit to Nairobi a few months ago I was fortunate enough to be introduced to a fascinating fellow by the name of Jon Bohmer. Jon is the founder of an energy solutions company called Kyoto that won a huge competition put out by the Financial Times (and another from Brit Insurance Designs of the Year) for their solar oven. Kyoto has high hopes for revolutionizing all Kenyan energy systems.

Jon's wife Neema is a well respected member of a Somali tribe in Kenya that has recently inherited a vast expanse of beautiful land in the Rift Valley. Their plans for this land are just as grand as the land itself. But before getting into the big picture ideas, Kyoto has been not-so-quietly offering up innovations for saving energy. Take a look for your self.

The question that is invariably asked about projects like this is: Do these products actually sell? For now the answer is still no. Jon explains that it is difficult to get people to change their habits especially with regard to everyday routines such as cooking, washing and lighting.

According to the WHO, 1.6 million women and children die each year from smoke inhalation. This does not come a surprise for people that have seen the way food is cooked. However, out of all the products the one with the least appeal is the solar oven. Despite its obvious health advantages, people just can't get with the idea that you can cook with the sun (when it is out) and would always rather see a flame or proper oven at work on their food. I suppose sometimes you'd rather spend the extra money to get what you like.

On thing Jon believes firmly, if incorrectly, is that he cannot give these things away for free. He argues that a free item that necessitates a change in behaviour, is not likely to be used, whereas a small investment of money obligates a small change of behaviour. I disagree. If people are fully aware of the financial and health related gains in a new product, they are just as likely to use it either way. Jessica Coen and Pascaline Dupas agree. They set up randomized trials in Kenya using bed nets to test this question. They found that free ones were just as likely to be used as ones that cost 3USD. Unfortunately this study is not open to the public but one using pregnant women as the sample is.

Whereas all of the smaller products can save people time, effort and money if they so choose, the bigger projects in the works promise structural change. As of very recently, Jon and his team can install an array of private, portable, affordable and easy to maintain solar powered appliances including solar water pumps, solar air conditioning, solar desalinization, and general solar electricity. In the areas of Kenya that get sun everyday these really work well, including the land he has married into! Their scope for energy production in the rift valley is huge. He says within two years they'll be up and running, providing Kenyans with cheap and reliable electricity! A recent study of medium sized firms in Africa found that electricity was a major constraint on growth.

Another project that seems a bit further off involves algae. According to Jon, algae can be used for cleaning and fertilizer, but most importantly algae is a great source of nutrients. He believes firmly that algae can be the source of food security for millions of poor East Africans and beyond. If energy/money saving solar ovens can't find demand among the poor, will edible algae?

Also in the works is a Kyoto Institute at Narok University, where the team hopes to disseminate the value of solar energy and other innovative energy solutions. Maybe he'll be able to convince a young troop of Kenyans that a little algae for breakfast is a good thing. Go Kyoto!

The Incentives of Recognition

Here is an excerpt from a recent NYT op-ed calling for the 'de-recognition' of weak African states by the international community:

"If [de-recognition] were to happen, relatively benevolent states like South Africa and a handful of others would go on as before. But in the continent’s most troubled countries, politicians would suddenly lose the legal foundations of their authority. Some of these repressive leaders, deprived of their sovereign tools of domination and the international aid that underwrites their regimes, might soon find themselves overthrown."

Hwhile my first reaction is to conjure up in my mind a situation where this idea might wield any beneficial results, my second (more entertaining perhaps) reaction is to say go for it! We gave them their identity the first place and it's not really working out, so they honestly don't deserve it any more. Maybe if we ignore them for a while they'll just get better on their own. In fact lets de-recognize all of the headaches in the world!

But then again, we could definitely do a better job of ruling those places over there so lets not be passive about this. Being the humanitarian that I am, I say why don't we just buy them all up and create new states and good governments that provide for their citizens? And while we are at it, we should also revoke all of their human rights; I really can't stand hearing about all the atrocities any more, also that'll make them easier to rule when the time comes.

Website of the Week - Gapminder

You may say that Gapminder.org is old news. Well, that may be true; it blew up on the scene in early 2006. Since then they have not only been updating their software, statistics and style, but also producing an ever growing number of videos promoting "a fact based world-view." I use quotation marks because that is a direct quote from the site, but also because macro facts such as these have been the folly of development economics since the 60's. However, if we are aware of their limitations, as those at Gapminder are, the numbers are still compelling.

Gapminder is best put to use when debunking myths. One of my favourite myths is the answer to the question "What stops population growth?". On numerous occasions I have taken up the task of overthrowing popular misconceptions apropos this topic.

A popular fallacy I have dealt with is that war, disease and natural disasters help to curtail the growth of our population. If we do not closely examine the issue of population growth it is easy to fall into that trap. As Dr. Rosling will show you, the complete opposite is the case:



Broadly speaking, better health care and better education are the only things that slow population growth rates. (China notwithstanding)

Many other entertaining videos can be found at gapminder.org including this one where Dr. Rosling predicts when the income per person in India will catch up to the US.

Mo Ibrahim's 10 million dollar Cash Prize

Mohammed Ibrahim is a big cheese. He made his billions (2.5 US, according to Forbes) by launching  a telecommunications company called Celtel in several African countries. With Celtel now sold to the Zain group (for 3.4 billion US), Mo has taken up the task of improving the political landscape in Africa. He created the Mo Ibrahim Foundation in 2007 with the purpose of stimulating debate on good governance, collecting data and creating statistics on good governance, and recognizing achievement in African Leadership.

Toward this end, he created an African Leadership award. To be considered for the award leaders must have been democratically elected, served within their constitutional term limits and have stepped down within the last three years. Joachim Chissano from Mozambique won it first in 2007, then Festus Mogae from Botswana, and last year they decided not to award any African Leader. Bad news guys! Better shape up, you wouldn't want to lose out on a cool five million USD over 10 years and a further 200k a year for life!

The Foundation also releases quite a tidy index on quality of governance in Africa.  Here are some rankings:

(It seems that this islands do better than the mainland. Why would that be the case?)

Bill Easterly and Laura Freschi over at AidWatch show off some of the FT's interpretation of the Mo index. Pretty graphics. Of course, I am skeptical about the statistics, especially their usefulness for comparisons across countries and across time (diff in diff type). However, I think Mo is attempting to do something noble and should be encouraged. Given the history of big men in African politics, creating an extra incentive for leaders to be good seems necessary.

Creating incentives for leaders to step down gracefully, another goal of the foundation, is also very important. If people like Qaddafi and Mugabe would just slip away, I'm sure their nations would greatly appreciate it. 

Speaking of those two, some other brutal bastards that are still in office include:

Isaias Afewerki 

Laurent Gbagbo 

José Eduardo Dos Santos 

and, pictured below with the Obamas,

Teodoro Obiang Nguema:

Do you think a cash incentive is enough?

A dollar a day keeps the doctor away

The arbitrary measure of poverty that the World Bank concocted out of thin air several decades ago, and the language that surrounds that famous "dollar a day", is unfortunately stuck in our discourse on poverty.


Widespread efforts have been made to redefine poverty, focusing on access to basic amenities such as health care, habitation and education. A broader view, as encouraged by Aramrtya Sen among others, would analyze poverty in terms of an "individuals potential to function", which is to focus on what can be achieved with a certain level of income and the barriers to opportunity. This highlights constraints beyond access to basic necessities, such as broader monetary conditions and power relations.


These ideas, although pushing the concept in the right direction, often miss the blaring problem that the language of the World bank has created. 


"A dollar a day": doesn't it sound like a magic dollar arrives at the doorstep every day? Ok, perhaps you don't explicitly think like that, but the phrase certainly misses the biggest problem with income for the poor; the risks associated with uncertainty and inconsistency. 


As Eleni G. Medhin, the director of the Ethiopian Commodities Exchange, once suggested, the risks that a poor farmer must bear are greater than any speculator, investor or human being on earth. If the rains fail, people will die. (For those relying on income from medium sized firms, unpredictable policy changes seem to be most crucial.)


Buzzing around the Kenyan countryside with my friend Teddy, I came upon this cow carcass.  Prior to my visit the rains did not come, and then they did not come again. As Teddy put it, "This Maasai was a millionaire, now look at what he has got."

Where is the next dollar coming from? Who is it owed to? These are critical questions for those living with no social safety net.

SuthEfrica

This video doesn't mention the 'tin can town' outside of Cape Town that I posted about earlier. South Africa has been building oppressive structures since the 1930s and somehow cant stop. They plan out places for poor people to live that will keep them poor. With no space for society, no space for creativity and no space for business, these oppressive designs have kept and will keep poor black people poor.

Calling Out Quiet Corruption (or Cultural Imperialism?)

"In Uganda, teachers in public primary schools are absent 27 percent of the time. In Chad, less than one percent of the non-wage recurrent expenditures reaches primary health clinics.  In West Africa, about half the fertilizer is diluted before it reaches the farmer. " - Shanta Devrajan, World Bank Chief Economist for Africa


The World Bank this year has focused their African Development Indicators on a concept called 'Quiet Corruption'.

According to the WB this form of corruption, the likes of which Dr. Devrajan discusses on his blog, quitely stifles the chances for growth and prosperity among the poorest people in the world. This type of corruption, they say, is very different from the headline-grabbing corruption scandals that indict morally depraved people for heinous crimes involving some transfer of wealth. Instead of overtly breaking the law for personal monetary gain, perpetrators of quiet corruption may simply not show up for work <=. This notion is broad enough to include all actions that deviate from what is normally expected, such as putting in a lower level of effort than expected, or bending the rules for some people and not for others. 


If we can define this term so broadly it could include what Nicholas Kris(jerk)off wrote in the NYT about the choices that poor people make. Poor people put in less effort to provide for their children than he expects. (Ok, perhaps that is stretching the term, but I just had to mention that terrible article. I won't quote it or deal directly with the problems with it - too annoyed - so you'll have to click on the links.)  


While we cannot deny the facts he quotes, what we can do is find the reasons why quiet corruption is so rampant and why poor fathers blow all their cash on beer (as he should have instead of perpetuating ignorance). If there is a ribbon that ties these concepts together it is the notion of 'role models'. Who are the role models in society? The richest, most powerful and most famous people in many developing countries are the corrupt political elite. They are also, unfortunately, the most emulated. If the people at the top made it there by being corrupt, and they are now above the law, wouldn't that pervert most peoples incentives for honest work? If it appeared that the only way to get ahead would be to cheat, lie and steal then I might also drown my conscience in beer. I might also not show up for work as often. 


But Dr. Devrajan is right: incentives need to change. Work could be more piecemeal, police and regulatory bodies should be better funded, and perhaps most important, the voices of the informed critics must be heard. 


But wait, in light of my contempt for Mr. Kristof, aren't we being a little bit one sided on this issue? I mean, life just doesn't work the same way in all places and we can't expect it to. Here in the UAE, as my neighbour once told me, "It's not a task based life, it's a person based life." Things almost always work differently in person than they do on paper. Some things In the UAE are expected to take more time then they would in the West, and meetings are a good token. Should I demand that this meeting - that I should be in right now - start on time? Should it think of this as corruption that we are expected to be in a meeting, getting paid as if we are, but really we are chinwagging the hours away (or in my case writing blog posts) ? No, that would be rude, people are just getting to know each other before the meeting starts, and that is part of this culture.


So when is it 'quiet corruption' and when is it just an acceptable part of culture? Perhaps the context of rampant poverty makes a difference?