Thursday, November 12, 2009

The American Betrayal of the World's Rural Poor

Since the late 1980's, there are any number of examples one could choose to symbolize the dramatic failure of the U.S. and its allies to deliver on their utopian promises for market-driven higher living standards in the developing world. Among them are the worse crisis since the Great Depression, increasing economic inequality, destruction of the environment, and rapid declines in several key measures of welfare. However, the stunning lack of progress made in the lives of the rural poor should go down in history as one of the great betrayals of the neoliberal era.

For decades international financial institutions, aid organizations and the United Nations advocated an aid based approach to fighting world hunger. The way to respond, the hungry were told to believe, was through a series of technological 'green revolutions', increased market access and external support. At the same time international financial institutions were shoving their ideology of deregulation and liberalization down the throats of national governments. The result? The number of hungry people has topped one billion for the first time since records were established in 1970. Instead of placing blame on a failed strategy, the aid community is blaming the global recession and food crisis for their inability to eradicate hunger.

In the run-up to the 2009 UN Food Summit, the international aid community announced the boldest betrayal of hundreds of millions of starving people around the world. The UN Food Summit also backed away from any recommitment to halve world hunger by 2015---a key component of the UN Millenium Development Goals. Now the experts are claiming that even that goal may be impossible to reach until mid-2040. Humanitarian groups have rightly protested that the Rome summit was a failure, and that the three-day event was damaged by the absence of many of the world's leaders. The only silver-lining of the summit is perhaps the long overdue rejection of neoliberal paradigms in the final agreement. National responsibility for food security is one of the core principles in the summit declaration, which demands that plans for food security must be “nationally articulated, designed, owned and led.”

"The responsibility for ensuring food security, agricultural and rural development is the responsibility of each government and its people...It’s not the responsibility of the FAO and certainly not the responsibility of a summit. A summit does not have land. A summit does not have farmers. A summit does not have a budget to invest. A summit is a framework for discussion and debate to arrive at consensus solutions in the face of common challenges at the global level.”

In the aftermath of the fall of the Berlin Wall, American leaders boasted that the global integration of investment, trade, and communication would lead to a diffusion of economic prosperity and human development around the world. In 2009, with all of the enormous global prosperity, free trade, and cutting-edge technology the fact that there are more hungry people now than a decade ago, should make us re-think our basic laissez-faire assumptions about economic development. The prominent libertarian economist Friedrich von Hayek once warned that the social democratic welfare state of the post 1930's New Deal era would lead down the 'Road to Serfdom'. But in fact it is Hayek and the development policy-makers who shared his ideas who have condemned the rural poor to virtual slavery.

Saturday, November 7, 2009

Bolivia's Bold Experiment

Today, Bolivia is a powerful alternative example for other underdeveloped countries facing mass illiteracy, poverty and inequality in the way that revolutionary Cuba once was during the Cold War. But before Bolivia becomes the Cuba of the 21st century it will have to survive a series of so far unyielding challenges.

Evo Morales' emancipatory project for the poor and marginalized groups of Bolivia represents an independent model of economic development in a region traditionally dominated by U.S. economic interests. Since his election in 2005, Morales' brand of revolutionary social democracy and anti-capitalism has vexed American and European economic experts who favor neoliberal approaches to development---a model they have from time to time been prepared to defend through the barrel of a gun.

President Morales expelled the International Monetary Fund and nationalized significant industries upon his election in the face of Western opposition. But despite their fears, Morales and his party Movement Toward Socialism (MAS) have led Bolivia to what is expected to be the fastest economic growth rate in the Latin American region this year.

At home Evo Morales is the front-runner in a December election that will widely be a referendum on the economic policies of his first term. So far, public opinion polls indicate that Evo is regarded favorably in Bolivia, especially compared to this right-wing opponents. Even in Santa Cruz and Tarija, districts where the opposition is most vocal, President Morales gained about 57 and 56 percent respectively. If elected, Morales has promised to continue historic social spending on health care, housing, and education.

The first indigenous President of the America's has also promised to increase even more the role of the state in the Bolivian economy---a key source of antagonism among conservatives. The end result has been overwhelmingly positive. The billions of dollars in additional revenue from the now publicly-owned industries have allowed the government greater resources to spend on badly needed social programs. Public investment increased from 6.3 percent of GDP in 2005 to 10.5 percent for 2009. Higher earnings for exports and a fairer government imposed tax rate also created a budget surplus after years of large deficits.

Government revenues can only be expected to increase as President Morales invests in new lithium production facilities. Bolivia has 50 to 70 percent of the world's lithium reserves and foreign corporations are poised to rake in lucrative profits. But Morales is instead looking toward endogenous control of the reserves. Some are calling Bolivia, "the Saudi Arabia of Lithium" and the mineral resource if managed well could make South America's poorest country a global player in the technology industry.

The economic rebellion in Bolivia is a victory for yet another Latin American leader who launched an ambitious experiment in statist political economy 50 years ago. Cuba's former president, Fidel Castro is without question a primary source of inspiration for MAS' left-wing nationalism and he frequently celebrates President Morales in his widely read Reflections. Today, Bolivia is a powerful alternative example for other underdeveloped countries facing mass illiteracy, poverty and inequality in the way that revolutionary Cuba once was. But before Bolivia becomes the Cuba of the 21st century it will have to survive a series of so far unyielding challenges.

Bolivia still faces relative dependency on energy reserves for export, widespread corruption in regional government and entrenched political instability. In the 1990's privatization and austerity measures promoted by the IMF in Bolivia led to increased unemployment and break downs in social services. State capacity for industry regulation and service delivery have been historically weak and despite obvious improvements, the government still faces difficulties in reaching the most remote pockets of the country with their programs.

Unlike Cuba's one-party system, MAS is seeking radical transformation through the channels of liberal democracy. In this way political economic reforms have to be won by consensus with interest groups that are existentially opposed to the Morales' agenda. The European-descended elite of Bolivia who make up the opposition to Morales, historically controlled the government and remain the primary beneficiaries of the countries mineral wealth. The efforts by the President to redistribute political and economic power among indigenous groups have been met with vehement resistance.

The opposition-led senate for instance has opposed most of MAS' proposals to overcome internal obstacles to development including corruption. In 2008, opposition leaders led violent protestors in attacking MAS supporters resulting in public condemnation from outside Bolivia among Latin American allies. President Evo Morales' ambitious agenda for reform is more broadly complicated by the calculus of electoral politics inside Bolivia. MAS its self is essentially an alliance of social movements bound together less by political ideology than their support for Evo Morales. Even if Morales wins re-election in December, long-term objectives could be easily reversed if interests within MAS splinter in the years ahead.

Though a tiny country in South America, Bolivia's political economy of development hold significant implications for other democratic developing countries around the world. Unlike their Asian counter-parts who have pursued authoritarian state-directed efforts to attract foreign direct investment for economic growth, Bolivia is attempting to grow endogenously and democratically launching a dynamic social and economic empowerment strategy for the poor.

The road ahead for President Evo Morales and his supporters is sure to be paved with even greater difficulties than in previous years. If they can win, Evo Morales will have achieved a progressive vision of state-directed development that other underdeveloped countries have so far been unable to sustain in recent years. The implications of a successful experiment will ultimately reach well beyond their immediate borders and have a significant impact on global debates in other continents.

Sunday, September 27, 2009

Making Sense of Iran: A Political Economy in Transition

The Islamic Republic of Iran shares many of the same problems facing other countries in the global South. The economy is largely underdeveloped, highly dependent on one export commodity, and the state is unable to meet many of the lingering demands of the population. These contradictions in the political economy of development in Iran serve as the backdrop of the ongoing nuclear debate, the controversial re-election of President Mahmoud Ahmadinejad and relationship with the rest of the Muslim world.

The historical origins of Iran's current development process began before the Islamic regime existed. Mohammad Rezā Shāh Pahlavi was the Western-backed ruler of Iran whose legendary mis-management of Iranian society and economy led to the Iranian revolution of 1979. He was the last monarch of the House of Pahlavi of the Iranian monarchy. The shah of Iran initiated a series of economic and social reforms that modernized the country and set a new course for full integration into the world-economy.

But the shah also widened class-lines and sharply divided Iran into a dual society characterized by structural inequalities between the rich and poor. On the one hand were elites with close linkages with the oil industry and on the other religious clergy, rural masses, and the middle-class. This contradiction caused Iran to be dependent on oil exports and imports of expensive manufactured products. Iranians viewed the shah as largely corrupt and unable to provide basic services in education, health care and housing. The shah purchased billions of dollars in US arms building up a level of regional military might to control vital oil lifelines and exert influence in the region. Economically, the US used Iran as an economic proxy and supplier of a cheap flow of oil to the Western world. A US intelligence official once remarked,
"Iran in the 1970's was widely regarded as a significant regional if not global, power. The United States relied on it, implicitly if not explicitly, to ensure the security and stability of the Persian Gulf sector and the flow of oil from the region to the industrialized Western world on Japan, Europe, and the United States, as well as to lesser powers elsewhere."
The Iranian revolution of 1979 caused the once reliable proxy for Western influence in the middle-east to delink from the economic order, and carve out its own autonomous path toward industrialization. The revolution also sought to reverse the dual economy of the shah on behalf of the popular classes of the nation. The Iranian revolution and movement toward socio-economic transformation frightened many business professionals, technocrats and industrialists who fled to countries in the West. Many of these emigrants have been the source of external pressure on the Islamic Regime to reform.

Since coming to power though the Islamic regime has had to face perpetual economic crisis. The causes of the crisis varied from regional war, misdirected state priorities, and economic sabotage by the U.S. In the 20 years following the Iranian revolution, per capita income declined by 45 percent and inflation remained around 20 to 30 percent every year. Unemployment rose to as high as 20 percent as new entrants to the labor force could simply not find jobs in the heavily export-oriented domestic economy. As a result some 3 millions Iranians have emigrated to other countries. The rural to urban migration in Iran rapidly intensified as well with the capital city of Tehran growing from 4.5 million to 12 million people putting an enormous strain of public service delivery.

The Iranian government has continued to collect most of its non-tax revenues from exporting oil to consumer markets around the world. But despite attempts to diversify the economy, Iran has remained vulnerable to price shocks in the international petroleum market. The weakening of demand in wealthier industrialized nations during the current recession has further exposed Iran's dependency on oil to develop. Iran has failed to successfully raise oil production to collect greater state revenues. To raise production the Islamic Republic will need greater capital investment and intensive drilling technologies. In recent years, Iran has sough to improve relations with the European Union as a potential ally in the development of undercapitalized domestic petroleum.

Even with the economic crisis the Islamic regime was able to score some notable achievements of redistribution including public-spending for infrastructure development including roads, schools, and public libraries. Unlike the former shah, the Islamic regime also prioritized rural development extending running water and electricity to more than half of the villages. The regime successfully carried out a popular ambitious agrarian reform agenda confiscating half a million hectares of arable land to peasant farmers.

Most recently the administration of President Ahmadinijad has generated support from many due to his populist distributional policies within Iran. In response to energy shortages, Ahmadinejad began rationing fuel, and increasing state subsidies for items like sugar and cooking oil. During the first-term President Ahmadinejad, the Iranian government also radically increased the amount of public spending on construction. All of the increased spending kept the economy from total collapse but never tackled the profound level of dependency on oil and created a high level of inflation. Both of these problems are root concerns of the liberal opposition movement.

Reformist rivals of Mahmoud Ahmadinejad saw the last two presidential election cycles as opportunities to reverse the past statist economic policies of the government. These opponents had expected the Islamic regime to phase out public subsidies and liberalize the Iranian economy for the first time since the 1979 revolution. The president before Ahmadinejad, Muhammad Khatami was supported by the disaffected urban middle-classes, college educated professionals and labor movement who were looking for a change of course. The reformers were distraught at the landslide run-off election which elected Ahmadinejad in 2005. President Ahmadinejad's support from some ultra-conservative Iranian political parties and the poor led to a resounding mandate and presented a major setback to the reformist movement. The recent 2009 elections were seen as fraudulent by the reformists who looked forward to regaining their momentum.

Despite the television images of political repression of protests there is some support within the Islamic regime for liberal change. The reformist movement in Iran also consists of high-level clerics and many of their aims were supported by the Supreme Leader himself. In 2006, Ayatollah Ali Khamenei ordered the government to sell 80 percent of all state-owned enterprises in order to increase economic efficiency. Most clerics in Iran actually favor the conventional capitalist model of economic development. They widely support privatization of state-industries, and the development of the private sector.

However, others view such economic liberalization as an attack against the fundamental character of the Islamic revolution. These so called "hardliners" believe that maintaining tight economic control is essential to the political and social continuity of the Islamic regime. Like President Ahmadinejad, they favor central-planning, state industries, national self-reliance and a development agenda that includes poverty eradication, land redistribution, and employment in line with the objectives of the 1979 revolution.

The reformists have explicitly opposed the allocation of scarce resources to support militant Islamist forces throughout the middle-east. Groups such as Hezbollah in Lebanon and Hamas in Palestine have all been sponsored by the Islamic regime in Iran. One of the most influential moves by Iran to support such groups was the creation of the infamous al-Quds force, a highly specialized unit of Iran's military which organizes, trains, and finances Islamic revolutionary movements. The United States military has waged a series of intense counter-operations in order to neutralize key leaders within the organization and slow-down their operations.

The al-Quds Day – literally Jerusalem Day – was created by Ayatollah Ruhollah Khomeini,at the founding of the Islamic regime, and is commemorated on the last Friday of Ramadan in solidarity with the Palestinian struggle for national liberation. During the last weeks events the "Green Movement" of reformists marched through the streets chanting "Not Gaza, Not Lebanon. We are ready to die for Iran," in a direct challenge to the purpose of the gathering its self. There have been previous chants of "Death to Russia" by the reformists as well indicating a deep suspicion of the strategically close relationship between Russia and Iran. The reformists would rather see the Islamic regime focus on domestic economic and political reform than seeking to play spoiler to US hegemony in the middle-east. Many reformists believe that Iran's counter-hegemonical posture has isolated it economically and are convinced that a softening of the country's posture in the eyes of the US could help the economy.

The evolving political saga in Iran signals an intensification of a debate surrounding the nation's distributional policies. The reformists major aim was not to overthrow the Islamic regime, nor to challenge its fundamental structure. Rather the reform movement is mostly seeking to liberalize the political economy of Iran, improve ties with the United States and end financial support for resistance movements in the middle-east. The response of the Islamic regime to these internal pressures for reform will likely define Iran's development path moving forward. In the final analysis, the success or failure at which the Iranian government manages the national economy could be the most important determiner of the country's future.

Friday, September 25, 2009

Missing the Point on Zimbabwe

After years of bitter controversy, Africa's most demonized leader is showing no signs of changing course. Agree or disagree with the politics of Robert Mugabe, it is absolutely clear that the West seriously overestimated its ability to manipulate the internal political saga within Zimbabwe. The meaningless exchanges in name calling, accusations of incompetence, and symbolic non-cooperation by the US and UK did not advance the strategic aims of either country, nor did they help transform Zimbabwean society. Both Mugabe and his Western detractors have largely missed the point about the crisis in Zimbabwe.

Robert Mugabe is coming fresh off the heels of a rousing speech before the United Nations in which he accurately accused Western countries of intentionally undermining a power-sharing deal between his party and the opposition MDC. The agreement came after months of accusations of election fraud, political violence and a sudden outbreak of Cholera that took the lives of hundreds of Zimbabweans. The power-sharing agreement in Zimbabwe was designed with very little influence from either the United States or United Kingdom. The principal actors were the two political parties and the Southern African Development Community led by neighboring South Africa. There is no doubt that both the US and UK had hoped the agreement would fail. The apparent success of the South African arbitration signals the loss of a significant amount of political leverage over the situation in Zimbabwe by Western powers.

Regime change in Zimbabwe has been an explicit goal of both the United States and United Kingdom. The US had expected that record hyper-inflation in 2007 would force political change in Zimbabwe removing Robert Mugabe and his party from power. These calculations were wrong. The hyper-inflation also became a primary target of Mugabe who blamed the ailing economy on foreign interference and economic sabotage. The ZANU-PF was able to galvanize the military veterans from the national liberation struggle and the rural poor of the country while painting the opposition party as collaborators with the UK in the lead up to the disputed presidential run-off elections.

Even as Mugabe and his opposition counterpart Morgan Tsvangirai finally united to resolve long-standing political disputes and jump start the economy, the West has to date refused to remove sanctions. The result has been the vindication of Mugabe's criticisms as the African Union and SADC unanimously condemned all existing sanctions against the unity government. There is evidence to suggest that Zimbabwe will continue re-allocating lands from white land-owners to black farmers. Zimbabwean President Robert Mugabe spoke with CNN correspondent Christina Amanpour about the controversial land redistribution act which critics allege is the root cause of the nation's current economic turmoil. 10.8 million hectares, have been seized by the state over the past nine years from whites and given to black Zimbabweans.

So far, it is the most radical agrarian reform program ever in post-colonial Southern Africa. Acute inequality between black and white land-ownership is one of the unresolved issues in the region. In the televised interview, Mugabe made no apologies for the land seizures and restated his belief that he was acting in the national interests of his countrymen.

The international politics of Zimbabwe often obscure the principal contradictions causing underdevelopment within the country and the immediate need for both economic recovery and transformation. Zimbabwe was once one of the industrial giants of Africa. Decades of emphasis on primary commodity exports and Structural Adjustment Programs implemented after the fall of colonialism have contributed to a widely uneven economic development model in the country that have left it vulnerable to internal mismanagement, external price shocks and manipulation.

Zimbabwe's agricultural sector is the principal source of export revenue in the country. Decades of liberalization under the leadership of the ZANU-PF de-emphasized industrial development and contributed to lingering unemployment, lack of energy and poverty in urban areas. Now the country faces extreme shortages in both fuel and essential machine tools and technologies needed for manufacturing. The impact of these shortages have even caused Zimbabwe's highly dependent agricultural sector to suffer.

Neither Robert Mugabe nor Morgan Tsvangarai appear to have any idea how to resolve fundamental contradictions within the political economy of Zimbabwe. For example, both parties continue to overemphasize foreign investment rather than organize a coherent vision for industrial policy. Paradoxically, the rebel Robert Mugabe has been in the forefront of the unity government groveling for foreign investment into the Zimbabwean economy. The IMF originally offered over 400 millions dollars in unconditional support to Zimbabwe, a sharp reversal of the bank's previous refusal to lend funds to the former regime. But the funds have already heightened existing tensions within the unity government over how to spend the money and the IMF reversed course delaying payment of the funds.

The crisis in Zimbabwe is that the country is severely underdeveloped, the politicians have no unifying vision to move forward, and external actors have a vested interest in maintaining the uneven framework of the country's development. Emotional speeches and sanctions aside, the Zimbabwean people deserve better than the status-quo.

Sunday, September 13, 2009

The Limitations of Representative Democracy in Kenya (Africa)

Democracy versus Authoritarianism is one of the major debates in the comparative political economy of development. The conventional view is that representative democratic systems are more responsive to the material demands of citizens than authoritarian systems. For example, development economist Amartya Sen has previously observed that famine only occurs in authoritarian regimes. Democracy, according to Sen was more responsive to citizens needs and thus able to prevent famine from occurring. So what conclusions are we to draw from nominally democratic systems in Africa, that clearly lack the ability to respond to the wishes and opinions of their citizens?

Kenya has a representative, multiparty, electoral democracy and embraces a model of capitalism defined by economic liberalization. Kenya has both a market economy and open society complete with scores of foreign aid agencies, missionaries and non-governmental organizations. The Freedom in the World Report ranks countries according to the amount of political rights and civil liberties, thru which countries are classified as “Free”, “Partly Free” and “Not Free.” According to Freedom House, Kenya is "Partly Free", ranking more favorably than countries like Zimbabwe, Libya, or Eritrea (countries considered authoritarian in the West). While there are still challenges, civil liberties and political rights are relatively well recognized in Kenya. Yet, the East African nation of Kenya is on the verge of an expansive famine that is threatening the lives of millions.

The New York Times reports,
"A devastating drought is sweeping across Kenya, killing livestock, crops and children. It is stirring up tensions in the ramshackle slums where the water taps have run dry, and spawning ethnic conflict in the hinterland as communities fight over the last remaining pieces of fertile grazing land."

The New York Times has stopped short of calling the current drought a famine, but facts on the ground suggest the same characterizing features---extreme scarcity of food. The real culprit in this case is typical of other recent converts to representative democracy in Africa. Politicians in Kenya are more concerned with being elected to representative seats in parliament than performing the necessary duties of public service. Worse yet, voters elect politicians with whom they share ethnic or familial ties instead of choosing candidates on the basis of their competence and vision for the poorest sectors of society. The images of ethnic violence after claims of voter fraud in 2007, were terrifying. Perhaps just as tragic has been the general incompetence and elitism of the resulting power-sharing coalition in Kenya.

Like other young democracies in Africa with significant cultures of nepotism, another of Kenya's great hurtles is the lack of political education among citizens. Very few are aware that as citizens they are entitled to certain basic inalienable rights, not limited to civil liberties only, but also freedom from fear and want. When State institutions fail to deliver social protection, people trend toward ethnic violence rather than organized demands for greater responsiveness from the State.

Kenya is a perfect case-study of the ineffectiveness of State consolidation in parts of Africa after the fall of colonialism, but also the tremendous shortcomings of 21st century identity politics. Kenyan author Ngugi Wa Thiong'o best summarized, in his analysis of the 2007 general elections, the ridiculousness of identity politics in Kenya and the need for a real agenda for development.
"I am not a member of any of the contesting parties. They don’t adequately embody the vision of the unity of the small farmer, the worker, the jobless and landless Kenyans across all the regions of their birth and residence. They don’t seem to recognize sufficiently that Kenya like Africa as a whole has only two tribes: the haves and the have-nots."
The widespread incapability of the State to promote the welfare of citizens in Kenya can not be blamed on the Kenyan government alone. Most recently, Western aid agencies and governments have played directly into the hands of ineffective politicians by perpetuating the myth that the fundamental responsibility to help protect the physical and material well-being of people in need lies with Western NGO's rather than the government. External social engineering in Kenya has subversively redefined the role of government to exclude the provision of basic necessities to focus instead on liberal institutional reforms.

The reason, according to the New York Times, that donors have been slow to assist Kenyan's during the crisis is because of aid conditionalities tied to such reforms!
"Part of the reason may be the growing disappointment with Kenya's leaders.They have been poked and prodded by Western ambassadors---and their own citizens---to overhaul the justice system, the police force and the electoral commission."
In the midst of a human catastrophe, the aid agencies are digging in their heals in the fight against corrupt behavior, but few have addressed the deeper structural issue in Kenya. The inability of the Kenyan State to fulfill its fundamental responsibilities of social protection had left poor Kenyan's without basic provisions of food, health care, housing, education, and meaningful employment well before the current drought. The failure of welfare provision in Kenya is the very reason for the existence of so many external aid agencies there in the first place. No wonder NGO's are slow to address this point. Globalization is no substitute for responsive governance.

In Africa, there are frequent campaigns for regime change against alleged authoritarian strongmen whose exploits lead to economic inefficiencies or social failures. Should the grounds for regime change in cases of authoritarianism apply for nominal democracies in Africa as well? Do Kenyan citizens for example have a legitimate case for regime change in their country when the regime is non-responsive to their needs? The very suggestion would be opposed by most liberals but the search for answers among the popular classes of Kenya is inevitable.

Tuesday, September 8, 2009

Still Confused About the Economic Crisis? Economists Are Too

As the economic crisis reaches its one year anniversary, mixed messages continue coming from the economic "experts" about what exactly is happening in the global economy and for how much longer. Dominique Strauss Kahn, Managing Director of the IMF, claimed recently in a Italian newspaper that economic recovery could come a full quarter earlier than expected.
"For the (global) economy, we have been saying for a year that the recovery will come in the first half of 2010. It might even be a quarter ahead and that would be a good thing,"
UNCTAD on the other hand has warned recovery is not around the corner and called for the creation of a an alternative world reserve system that would replace the supremacy of the US dollar with several currencies. UNCTAD also called for tighter controls on global financial flows.
''Tumbling profits in the real economy, previous over-investment in real estate and rising unemployment will continue to constrain private consumption and investment for the foreseeable future,''
What accounts for the two very different diagnostics on the global economic crisis? There is little consensus among economists on the health of the global economy, namely because they can't agree on any complete diagnosis of the disease. How international economists forecast our economic future depends on whether or not they believe the global recession is primarily financial in nature or a much deeper structural crisis in production, and consumption of goods and services.

Governments are being asked to choose between two significantly differing views about how the global economy is functioning and therefore what sets of policies to implement to navigate the storm. Though economists love to claim complete empirical objectivity when providing policy advice, the two alternative paradigms on the "Great Recession" highlights the all important role that politics and ideology play in shaping macroeconomic change. Paul Krugman's recent analysis on the forecasting of macroeconomists is on point. The crisis in the economics profession may be just as great if not greater than the crisis in the real or financial economy---depending on your point-of-view.

Monday, September 7, 2009

Import Substitution in Modern China

I have been fascinated the last few days with a timely IMF working paper that argues rebalancing economic development in China will mean rapidly stimulating domestic demand and entering new non-tradable industries, even requiring some degree import- substitution. The paper is an ironic testament of these desperate economic times, considering the pervasive but wrong assertion among liberal economists that import-substitution failed in the 20th century. Besides ignoring the near complete decimation of important sectors within several developing national economies, the apologists for unfettered external export continue to pretend countries pursuing variations of import-substitution performed horribly. They didn't.

A blog post by Harvard economist, Dani Rodrik could not make this point much clearer. ISI "had a more-than-respectable productivity record" in the middle of the 20th century. So what are the prospects of the industrialization strategy making a comeback in the 21st? They could be greater than many care to admit.

Sunday, September 6, 2009

The End of Global Free Trade? Not Quite

In the past, globalized "free-trade" has generated enormous hostility and intense social protests between the poor and the intergovernmental organizations who they perceive as primarily serving the interests of elites and multinational corporations. These protests have only increased during the current economic crisis. But is the global free-trade regime in any significant danger? The masters of the free-trade universe are already in panic-mode.

In the name of "ensuring that trade flows as smoothly and freely as possible" among countries, organizations like the WTO and OECD seek to prevent governments from implementing policies that regulate trade to promote national interests or benefit vulnerable citizens (workers, farmers, etc). The OECD has recently released a report called, Trade-Separating Fact from Fiction, in which the organization warns against widespread questioning of the benefits of trade and free markets during the current crisis.

Freer flows of trade are part of the solution to the current economic crisis... Still, there are calls from some to protect industries and workers against imports by raising tariffs, imposing quotas or resorting to various non-tariff barriers. We would all pay a high price for heeding such calls.

The WTO is making a similar case for continued faith in globalized free-trade, warning governments not to make "protectionist" trade policy changes in response to greater unemployment. Governments risk catastrophic social unrest if they fail to offer some relief to constituents who are most vulnerable to shocks in the global trading system. In the so called BRIC countries such as India, China, and Brazil popular outrage about increasing pauperization, unemployment, and social service cuts are challenging the stability of their societies. Over 50,000 Indian farmers for example have mobilized in recent days against the WTO and demanded that the Indian government offer more defense against the organization's dictates.

For now, many developing countries are locked in a delicate balancing act between meeting the immediate needs of their citizens, and opening new markets for their exports in wealthier nations. The contradiction between dependency on external markets for exports and meeting domestic needs suggests that there is a significant trade-off under the current economic development strategy pursued by emerging economies. A structural shift among the largest emerging economies would appear to be highly unlikely in the near future.

I predict that ultimately, the BRIC nations will side with their pocket-books and seek to continue the path toward high-speed economic growth under the status-quo in the "Doha Round" WTO deliberations. So far, it appears that BRIC governments are merely paying lip-service to the aspirations of the poor---many of whom have asked for a complete break with the WTO altogether. However, we can expect to see some coordinated push-back against future rulings that explicitly limit freedom of action on trade policy by Brazil, India et al. and while this is not the complete reorganization of the global trading system the poor need, it is a long overdue step in the right direction.

Saturday, September 5, 2009

China's New Statistical Conundrum

Many investors are betting on the continuation of China's remarkable economic growth despite the near complete decimation of the emerging economy's export-oriented development frenzy. Early signs show that the Chinese government will actually retain its extraordinarily high annual growth rate this year, defying cynics who doubted the resilience of the export-oriented industrialization paradigm--- except for one small problem. The economics statistics coming from the Chinese Communist Party don't exactly add- up. The lack of reliable economic statistics coming from China only serve to further complicate efforts at avoiding deeper crises in the real economy.

According to a dispatch in Foreign Policy magazine, local-level Chinese government officials are fudging data on everything from economic growth, unemployment, to retail sales. The reason? Local Chinese officials are under intense scrutiny to meet routine targets and therefore have powerful incentives to cut corners and/or manipulate the harsh realities on the ground to save face. Jordan Calinoff writes for example that,

A look at GDP growth also raises serious questions. China's economy grew at an annualized 6.1 percent rate in the first quarter, and 7.9 percent in the second. Yet electricity usage, a key indicator in industrial growth and a harder metric to manipulate, declined 2.2 percent in the first six months of the year. How could an economy largely dependent on manufacturing grow while its industrial sector shrank? It couldn't; the numbers don't add up.
If China's main export markets in the 'triad' US, Europe, and Japan fail to recover as expected, the nation will undoubtedly face greater unemployment and social unrest among the working- class. The overly optimistic economic forecasts coming from China may obscure the reality that a model champion of export-led industrialization may soon see its reign come to an end; with bang, rather than a whimper.

Saturday, August 29, 2009

On the Triumph of the Commons

I have always hated when, in basic economics classes, professors hasten to raise ecologist Garrett Hardin's "Tragedy of the Commons", as the definitive argument against voluntary collective action on environmental issues. An article in the New Scientist, disputes Hardin's thesis and suggestions and instead poses that the effective management of the environment and survival the human species depends on our ability to reason and find common ground. Author Mark van Vugt writes, that over-exploitation of natural resources is not inevitable if we act collectively.
Today we understand human nature and motivation far better than we did in Hardin's day. In particular, we know that individuals do not always act selfishly but also have some regard for the interests of others and the natural environment. Games such as the prisoner's dilemma and the public goods game demonstrate that under certain conditions people do behave altruistically (New Scientist, 12 March 2005, p 33). Besides, countless success stories attest to the fact that communities can overcome the tragedy of the commons without a great deal of coercion.
Neo-classical economists love to conjure the "Tragedy", when they want to undermine any call for collective social or environment action. I doubt van Vugt's article will change many of their minds. Nevertheless, it sure is great ammunition for poking wholes in the basic assumptions in one of their favorite amoral theses.

Friday, August 28, 2009

New Social Protection Partnership, Senegal and UNICEF

UNICEF and the government of Senegal are partnering together to deliver 3.800 FCfa or $8 US a month to the children of vulnerable families in the country. The monthly minimum wage in Senegal is around 40,000 FCfa or $87. Effective partnerships like the child social protection agreement between Senegal and UNICEF could serve as a model of how the government can overcome institutional constraints and ultimately win the fight against poverty.

According to an article in the national newspaper Le Soleil, the purpose of the program is to mitigate the adverse effects of high food prices in the short-term, reduce poverty in the medium-term, and prevent the inter-generational spread of poverty. The funds will be principally designed for children ages 0 to 5.

Despite having one of Africa's longest and most stable constitutional democracies, Senegal has been unable to effectively deliver social protections, or reduce widespread poverty and chronic unemployment--- an unemployment rate of 48% with 54% living below the poverty-line. The West African nation ranks a low 156 out of 177 according to the Human Development Index, a composite measure of general well-being among the population. The remaining roadblocks to translating economic growth into social equity are lack of financial resources or political will for industrial policies and social programs to reverse these trends. Partnerships between Senegal and intergovernmental agencies like UNICEF can be effective but only if they are implemented efficiently.

Tuesday, August 25, 2009

Rural Japanese Voters in Revolt

The upcoming elections in Japan could be a referendum on the nation's development policies over the last 20 years. Rural farmers blame the ruling Liberal Democrat Party for promoting an uneven development model that favored urban centers over smaller towns and cutting social protections for the most vulnerable populations. Now, it is widely expected that the Liberal Democrats could face a thrashing at the ballot box later this month.

According to CBS News, Japanese rural voters are revolting against the status-quo in economic development.
Voters here blame former Prime Minister Junichiro Koizumi, a Liberal Democrat, for policies they believe benefited urban centers at the expense of rural Japan. During his five years in office from 2001-2006, Koizumi championed free market reforms to steer the world's second-biggest economy out of its "lost decade" of the 1990s.

He privatized government entities, relaxed trade restrictions on food imports, loosened labor laws, pushed banks to purge bad debt and cut pork-barrel spending. To slash costs, Tokyo ordered smaller villages and municipalities to merge.

Critics point to Koizumi's reforms for exacerbating the urban-rural divide and creating an underclass of temporary workers unprotected during economic downturns.

European Power, African Sunlight

Previously, I blogged about a 400 billion Euro plan to power Europe with sunlight from the Sahara desert. Desertec, as the $573 billion initiative is called, would be the world's most committed solar power project to date. The lingering question is to what, if any benefit will such a project be for north African nations who themselves face widespread energy shortages and routine blackouts? Not to mention the long history of colonialism/ neo-colonialism that has taken place via the exploitation of Africa's natural resources. Will the sun be any different?

Nevertheless, European investors are looking to capitalize on Africa's most abundant resource. Cash-strapped north African governments are unlikely to challenge what could turn out to be another economic opportunity and revenue source. Below is a short video from a Dutch news station describing the German lead project, the technologies and scientific processes that will be used to harness the power of the African sun.

Monday, August 24, 2009

What A Malaria Mosquitoe Wants

Malaria continues to be Africa's number 1 killer and one of the main reasons why mortality rates continue to be so high in West Africa. There are extensive efforts by scientists, governments, and activists to eliminate the threat of Malaria, if not prevent the high cases of fatality throughout Africa. But one of the most cost effective and potent ways of fighting Malaria and the mosquitoes that carry the disease continues to be education.

The following funny video is one of several featured on the a campaign designed to creatively inform the public on simple facts regarding the disease and ways to prevent its spread. At the end of their latest short cartoon the narrator reminds us to "be careful in the dark. Malaria carrying Mosquitoes only bite at night."

Photo Essay Highlights the "Oil Age" in the Developing World

There is an absolutely amazing photo essay in Foreign Policy Magazine called "Scenes from the Violent Twilight of Oil". The essay provides moving images and included captions of some of the world's most important oil producing states like Venezuela and Nigeria and reminds us that even as the world looks to lessen its dependence on "black gold" in the future, the resource still colors our present---for better or worse.

Children play in the halo of a natural gas flare in Ebocha. The name means "Place of Light," after the flare at an Agip petroleum refinery that has burned there, night and day, since the 1970s."

You can enjoy the rest of the photo journal by clicking here.

Wednesday, August 19, 2009

My Guest Appearance on Radio Show, "Real Talk With Ray Baker"

Below is a recent discussion I joined on "Real Talk With Ray Baker". We reviewed the case of Georgia death-row inmate Troy Anthony Davis, the African Growth and Opportunity Act (AGOA) and the state of the US-Africa trade relationship. Ray's show is one of my favorite sources for up to date information and he keeps me honest in his questioning. I always learn a lot from being a guest. ( The file may take a second to load)

Austin Thompson On "Real Talk with Ray Baker" by aus10

Monday, August 17, 2009

Neoliberalism on Trial in Zambia

The former president of Zambia, Frederick Chiluba was regrettably acquitted on charges of corruption and stealing public money from the country. The press today has run a series of articles presenting criticism of the decision and the lack of justice for corrupt African heads of state in general. The cruel irony is that the BBC, New York Times and other media outlets conveniently neglect to mention that it was neoliberal policies imposed by western technocrats that facilitated the secrecy and corruption in Zambia during the Chiluba presidency.

I first learned about Frederick Chiluba writing a college research thesis about the development of opposition to privatization amongst civil society organisations, particularly trade unions in Southern Africa from 1991-2001. Chiluba won presidential elections in 1991, unseating socialist president Kenneth Kaunda who had held power since independence from British colonial rule in 1964. Chiluba's victory was heralded as a triumph for multi-party democracy and anti-statism but eventually his administration plunged the country deeper into socio-economic crisis and political corruption.

Like in other African countries, western financial institutions sought to exert their influence on public policy in Zambia by extending liquidity on the grounds that the state adopt anti-social external conditionalities. Chiluba egotistically accepted the Structural Adjustment Programs (SAPs) of the World Bank and IMF cutting price controls, ending public subsidies to various sectors of the economy, and most importantly privatizing public-owned assets like the strategically important mining industry. With the backing of international financial institutions and under the rhetoric of liberal democracy, President Chiluba purposefully ignored the human consequences of his policies on mineworkers, their families and other poor communities---not to mention trampling over basic civil liberties when opposed.

Today, the adverse impacts of neoliberalism in Zambia have made it politically unpopular to ignore the terrible human consequences and economic shortcomings of such policy prescriptions. Despite this fact, other African governments continue to routinely accept unjust external conditionalities on the cash that they receive from foreign investors. Frederick Chiluba may have escaped justice for his crimes against the Zambian people, but the neoliberal prescriptions that facilitated his downfall and ruined the economy should not.

Sunday, August 16, 2009

Making HIV/AIDS Funding Recession-Proof

There is a growing consensus among the scientific and human rights community that the best way to help lengthen the lives of millions of people who are HIV/AIDS positive, is to universalize access to quality treatment and expand medical care rights. But universal access to antiretroviral treatment will require significant new investments from state governments. So what to make of this human rights necessity in light of the so- called Great Recession of 2009?

Taking on experimental roles in the struggle against HIV/AIDS, non-governmental organizations and for-profit corporations are picking up some slack as state governments face new fiscal constraints due to the global recession. Pharmaceutical companies Pfizer and Mylan have committed to lowering the prices on medicines for patients with drug-resistant HIV as part of an agreement with former President Bill Clinton and his Clinton Foundation. Despite the good work of non-state actors, it is easy to recognize the dangerous possibility that some state governments will use the current recession as a justification to withdrawal from providing medical services to the poorest individuals living with HIV/AIDS.

The International AIDS Society, which is the world's leading independent association of HIV/AIDS professionals, has warned that sharp national budget cuts from HIV/AIDS support in the developing world have already taken place by some state governments. The continued trend of underfunding vital social and public medical programs will only cause serious setbacks to getting HIV/AIDS treatment to areas with the greatest amount of need, the Society has said. The global economic downturn is also having an adverse effect on migrants as important AIDS programs are threatened by donor and state government program cuts, warned a new UN report released at the 9th International Congress on AIDS in Asia and Pacific.

In the past, wealthier Western nations have spoken about their intentions to financially support developing countries in the fight against HIV/AIDS. However, the president of the International AIDS Society, Julio Montaner blasted the G8 for their apparent lack of concern with the HIV/AIDS crisis, even calling their silence "criminal" after their last meeting. He also accused them of using the crisis as a cop out.

Though price-cutting actions of pharmaceutical companies are very relevant, the vast majority of antiretroviral funding comes from governments and non-profit donors. We must do everything in our power to secure more public resources for the struggle against HIV/AIDS. Despite progress, in South Africa alone it is estimated that 61% of deaths are attributable to HIV/AIDS related complications. State governments should be encouraged to do more even as the means to do so are more constrained under the current economic slow-down. If the international community and individual state governments fail to live up to their prior commitments regarding HIV/AIDS funding, it will be a casualty not simply of the recession but misdirected public priorities.

Friday, August 14, 2009

The World Bank is Singing a New Tune in Africa

Brandishing an empathetic new tagline on its main website, "Working for a World Free of Poverty", the World Bank is obviously looking to address the main criticisms of its past performance and recast its formerly tarnished image. Yesterday, World Bank President Robert Zoellick finished a week- long visit to Africa in order to vocalize the Bank's committment to economic development despite the deepening recession. Among other things he emphasized that the Bank is... looking toward a world that is no longer dominated by the United States and other advanced economies?
"We need multiple poles of growth and that will make for a more solid and
balanced international economy and there is absolutely no reason that Africa
can't be one of those multiple poles of growth."
To label the call for a more egalitarian economic world-order by World Bank President Robert Zoellick as ironic, would be a supreme understatement. Zoellick, an appointee of George W. Bush, was one of the key signators of the Project for the New American Century (PNAC), a neo-conservative document that believed the US "must have a secure foundation on unquestioned U.S. military preeminence" among other imperial objectives for the 21st century. Certainly, the world has changed enormously since the 1990's with agressive calls for reform in the world economy to empower developing countries in the 21st century. Zoellick proclaimed the Bank's support for an"African Century for Development" and the creation of a new asset management unit to work with government-controlled funds to invest in African economies with the highest growth potential to spur private-sector activity.

Like the Obama administration, (which has also been looking to reform the US image around the world and Africa in particular), the World Bank is clearly focusing on delivering a message of partnership rather than paternalism in relations with African governments. Whether or not the new World Bank rhetoric will match actual World Bank policy depends on the character of the conditionalities placed on African countries in order to receive support. Let's hope they can get it right this time and avoid reviving the "Washington Consensus" of privitization, liberalization, and strict political-economic managment that ruined the prospects of genuine poverty eradication and development in recent years.

Wednesday, August 5, 2009

Presidential Term-Limits and Democracy

Niger is moving to eliminate term-limits through a referendum. The United States and its European allies have swiftly condemned the referendum and the possibility of incumbent President Mamadou Tandja serving another term as anti-democratic. The attempt to end presidential term limits in Niger is by no means novel. Several other developing countries have also moved to alter their constitutions in order to remove constitutionally mandated limits on the executive branch. In nearly every case, referendums have been the result of presidents appealing for more time to carry out the will of their constituents.

The traditional thinking in the West is that term limits are absolutely necessary to prevent tyranny and the ability of a 'bad' person to become president for life. This belief has been an important aspect of Western liberal democracy for hundreds of years and many continue to believe that term-limits have a universal merit for all human kind. Certainly, there have been a very long list of authoritarian governments that have used the veil of democracy to support their absolute rule. But it would be wrong to argue that there exist no reasonable arguments in support of the elimination of presidential term-limits or to unfairly demonize other countries that try to make them.

Commentators are wrong to immediately characterize every challenge to traditional liberal democratic term limits as anti-democratic. There can hypothetically be legitimate scenarios in which citizens in developing countries desire the ability to experiment with other forms of democracy based upon their own realities. For example, in many unequal developing countries parliaments are often controlled by wealthy elites who favor a weak executive branch in order to prevent any comprehensive attempt at political or economic reform. In another context citizens may favor the policies or programs of an incumbent president to any challenger in the opposition. Term-limits encourage changes in a given course of action but hinder the ability of people to choose continuity.

The effect of short term limits can have a detrimental effects on long-term social and economic planning. In countries struggling with the effects of long-periods of structural poverty and marginalization, development goals cannot always be defined according to 4 or 5 year time horizons. Many of the most successful examples of economic development have come from Asian countries with 15 to 20 year plans. There are many, many countries that have performed abysmally when it comes to poverty reduction and provision of basic necessities that have term limits, with executive branches that lack clearly defined agendas for the long-term---including Nigeria, which was quick to criticize the referendum vote in Niger.

Many intellectuals and policy-makers are resolved to oppose altering a constitution to change term limits even when the majority of citizens in a given country vote to do so. These liberal commentators make the philosophical argument that majority rule can easily lead to tyranny over the minority without "objective" constraints such as term-limits to protect them. However, this reasoning is contradictory and unfortunately often goes unquestioned when raised. There is no objective way to predict that in all cases rule by the majority will lead to tyranny just as it is impossible to assume that representative systems cannot exercise absolute power i.e. oligarchy.

The absence of term-limits does not necessarily give presidents the right to wield absolute power over their citizens. Even in a system without term limits incumbent presidents that perform poorly can be voted out of office in a transparent system. The bigger issue is whether or not there exists transparency, accountability and opportunities for wider citizen participation. The absence of either transparency or democratic participation however, can occur in countries with term-limits and regular elections. Frankly, I think a healthy debate about the limitations of conventional thinking on presidential term limits is long overdue and may actually wind up increasing, not diminishing the prospects of genuine democracy in the developing world.

Tuesday, August 4, 2009

Basic Minimum Income For All: A Missing Piece to Africa's Development Puzzle

Though they are abundant in mineral-resources, many African governments are notoriously corrupt, incapable of delivering vital social services or responding to domestic structural unemployment and poverty. New York Times recently reported that during the current economic recession more export-oriented African economies are having difficulty attracting foreign investment and private capital.

Kudos to the Times for including the commentary of Emira Woods, a native of Liberia and co-director of the progressive Foreign Policy in Focus, who rightly commented that foreign direct investment has not effectively "trickled-down" to the poor in African nations and therefore cannot be relied upon as "the way to solve the many problems facing African countries". Woods' perspective is unfortunately left out of many of the most important economic policy debates, despite overwhelming evidence to support her conclusion.

Yes, development theoreticians and practitioners should work toward a rebound in economic growth rates, but simultaneously they must also ensure that GDP wealth is distributed on a more equitable basis than in past years. In my opinion, one simple approach to doing so would be a guaranteed basic minimum income for citizens of mineral-resource exporting countries in Africa. Although there is a need to further analyze its feasibility, the strong conceptual grounds for a basic income grant should put it front-and-center in the African development debate.

A basic minimum income, is "an income unconditionally granted to all on an individual basis, without means test or work requirement." Unlike other general minimum income strategies, the minimum basic income is designed to give the recipient the cash directly rather than through indirect transfers like food vouchers, minimum wages or public housing. The cash would be given either to households or individuals without any restrictions on how the income could be spent by recipients. However, implementing a basic minimum income system does not abdicate the responsibility of African governments to deliver social services because the basic income "supplements, rather than substitutes, existing in-kind transfers such as free education or basic health insurance." According to the Basic Income Grant Coalition, characteristics of the ideal basic income grant would minimally,
  • provide everyone with a minimum level of income,
  • enable the nation's poorest households to better meet their basic needs,
  • stimulate equitable economic development,
  • promote family and community stability
  • affirm and support the inherent dignity of all
There have already been extensive discussions in post-apatheid South Africa about the benefits of a basic minimum income there as a solution to lingering poverty and inequality--- so far little progress has been made. Namibia attempted a small-scale guaranteed minimum income program that achieved mixed, but mostly positive results. This past February, news reports in oil-rich Libya claimed that the country's oil revenues were expected to be distributed directly to the Libyan population. President Muammar Al-Gaddafi called on the government to begin the direct transfer program as a strategy to root out political corruption and improve social development.

There is also new evidence from other developing regions that direct cash-transfers can be an effective means to tackle poverty and inequality. Duncan Green, Head of Research for Oxfam GB writes in his latest blog post, about the success of conditional-cash transfers in Latin American countries. Cash transfers in Brazil for example are responsible for helping lift 16.5 million Brazilians out of poverty between 2003 and 2007. Green is conscious to note that the success of cash transfers in some middle-income Latin American countries can not necessarily be transplanted in regions like Africa where the vast majority of the people are poor.
" transfer programmes may have to be adapted to low income countries, for example putting more emphasis on targeting poor regions rather than means testing, which is expensive and not much use when nearly everyone is poor. Insisting on conditioning cash payments on school attendance or health check-ups may not make sense when schools and clinics are either absent or of dismal quality. In that case, the government has to sort out supply of essential services rather than just focus on increasing demand."
Unlike the Latin American cash transfer model, a basic minimum income would provide unconditional cash transfers for the poor in African countries where poverty-stricken populations make-up the majority of citizens. In addition to pooling revenues from mineral resource exports, ideally official development assistance from the West could be diverted to help fund minimum income systems---a type of foreign assistance that can benefit African people directly. As we are witnessing in the current crisis, whenever the global economy suffers a recession Africa's growth shifts into reverse due to decreasing external demand. A basic minimum income could be a part of a long-term sustainable economic growth strategy of stimulating local demand in Africa. A guaranteed basic minimum income won't solve all of Africa's economic and social development problems, but it certainly would be a great starting point.

Thursday, July 30, 2009

US Health Care in Comparison

Commentators much more capable than myself are weighing in on the important health care debate taking place in Washington D.C. However, given the historic magnitude of the Obama Administration's push for health care reform I have decided to diverge from my usual focus to humbly remind my readers exactly why the American system needs fixing. Let's put it in perspective.

According to the OECD Health Data 2009 the United States' performance is comparatively lacking on all fronts. The OECD is comprised of the world's wealthiest nations with the highest living standards. Unfortunately, for citizens of the United States, our system spends much more and covers less people.

Spending More
"Total health spending accounted for 16.0% of GDP in the United States in 2007, by far the highest share in the OECD. Following the United States were France, Switzerland and Germany, which allocated respectively 11.0%, 10.8% and 10.4% of their GDP to health. The OECD average was 8.9% in 2007."

Covering Less
"For this amount of expenditure in the United States, government provides insurance coverage only for the elderly and disabled (through Medicare, which primarily insures persons aged 65 and over and people with disabilities) and some of the poor (through Medicaid and the State Children’s Health Insurance Program, SCHIP), whereas in most other OECD countries this is enough for government to provide universal primary health insurance."
The United States has fewer doctors per-capita than any other OECD country. We also lag behind world leaders in increasing life expectancy and declining infant mortality rates. This is all despite being the world's wealthiest country. The reason? Unlike most other industrialized OECD nations, the US does not have a universal health care system. Even the current reforms being advocated by President Obama fall short of providing universal quality care for every American. Furthermore, the administration left the single-payer option off the table which would have been the most efficient cost cutting mechanism. As a country that prides its self on being the "best" in the world, health care should offer every American a powerful dose humility.

Tuesday, July 28, 2009

A Pro-Poor Approach to Reducing Carbon Emissions

This post is one in a series of debates between myself and Alexander Hurst of the Hurst Critique. In this first post I explain that while carbon emission cuts in the long-term are necessary, developing countries should be prioritizing poverty eradication and sustainable economic growth with their public investment dollars.

Environmentalists and political commentators in the US recently went into a tizzy when India’s Environment Minister, Jairam Ramesh, told the United States’ Secretary of State, Hillary Clinton, that he refused to submit to pressure from the U.S. to lower carbon emissions.The United States is among a host of other rich countries that want to see a coordinated strategy to cut global greenhouse gasses that are contributing to the un-natural warming of our planet. India, like China believes that any significant reduction would impede their attempts at high-speed economic growth---a necessary aspect of poverty eradication.

Of course there is indisputable evidence that global warming is a threat to all countries rich or poor, but scientists agree that the impact of climate change will not be shared equally among actors. Poorer developing countries will bare the larger brunt of a warming process that was almost exclusively generated by pollution in richer nations over the last 200 years. It is unrealistic for industrialized countries to expect poor nations to commit to excessively broad carbon emissions reduction proposals. In this part of the world it is poverty eradication, not an impending environmental catastrophe that is the spending priority for governments.

Global Poverty is the Planets Greatest Catastrophe

The future catastrophic effects of global warming have gotten prime time coverage in the western press, and rightly so. Even though there remain a few skeptics on the lunatic fringes, the majority of political actors in the US, Europe, Japan and Australia accept the consensus of scientists that an epic environmental crisis lies ahead.

There is however, a tinge of euro-centrism among many environmental advocates and politicians that is troubling. There is virtually no political action or debate about the silent killers of poverty, hunger, and disease that kill millions of people right now, (not some uknown date in the distant future). The massive amount of death taking place in the poorest regions of the planet are lucky to gain any public audience in the dominant media.
  • 25,000 children die every day around the world.
  • 10.6 million died in 2003 before they reached the age of 5 (same as children population in France, Germany, Greece and Italy)
  • 2.2 million children die each year because they are not immunized
  • 1.4 million die each year from lack of access to safe drinking water and adequate sanitation
  • Each year, more than 8 million people around the world die because they are too poor to stay alive.
  • Every year there are 350–500 million cases of malaria, with 1 million fatalities: Africa accounts for 90 percent of malarial deaths and African children account for over 80 percent of malaria victims worldwide.
  • Some 1.1 billion people in developing countries have inadequate access to water, and 2.6 billion lack basic sanitation. (source)
These are just a few statics that underscore the catastrophic effects of global poverty around the world. What these numbers do not highlight however is that it was the rapid economic growth of the United States and Europe over the last two centuries that contributed to massive improvements of social services and living standards. For example the life expectancy of a US male at the beginning of the 20th century was 48 years old. By the end of the century, that number had increased to 74.

Even given that it was done through destructive fossil fuels, Sustainable economic growth and poverty reduction in richer nations saved millions of lives over the last century. This same trend is taking place in emerging countries today. Public resources should be used to continue this progress and sustain it by reducing dependence on fossil fuels responsibly and in phases. More on this later on.

Global Poverty Worsens the Impact of Climate Change

Keep in mind that scientists agree that even if we were to act today to curb carbon emissions, the damage we have done so far is already irreversible. Developing countries are suffering the effects of climate change including increasing cases of drought, water scarcity, desertification and flooding right now. Poverty leaves millions of people vulnerable to these changes and they are more likely to see their livelihoods threatened by the effects. The political, and social turmoil caused by these environmental shocks could destabilize entire countries or significant regions. Global warming has increased the costs of being poor like never before and now for countries like India, lifting people out of poverty is vital to protecting them from its impacts. The spending priorities in developing countries must work toward containing the human suffering caused by climate change using public resources to reduce poverty and protect poor families particularly in rural areas.

Research and Development Takes Time

Today, there are thousands of new technologies being developed which would replace the carbon emitters we rely on. However, these replacements are far from being capable of supplanting current energy technologies. Countries like India and China are making key investments in alternative sources of energy that will allow them to continue reducing poverty over the long-term including solar, hydro, nuclear, and wind. But like in the United States this process will take time and money, both of which put poor developing countries at a disadvantage. Developing countries face a host of financial constraints that mean that they must use the public resources that they do have wisely. While research and development is essential, a responsible strategy to sustain poverty reduction and growth while phasing out carbon emitters is more viable. This was one of the major concerns of the Indian government in consultations with the US.

A Pro-Poor Strategy to Fight Global Warming

There are good intentions why the US would like to see developing countries commit to a broad declaration in support of carbon reductions over a period of decades. If developing countries follow the same path as the western world and Japan, we would need several additional planet earths to contain all of the waste. However, there are a series of challenges facing poor countries today that absolutely cannot be put off---these include the effects of western generated climate changes. The most important question in my opinion is where the governments in developing countries can get the highest-value return for their public investment dollars? The US would be wise to assist developing countries in reaching those spending priorities to free up resources in places like India, China or South Africa to phase out dirty energy altogether. As cleaner technologies and capabilities emerge, poorer countries are likely to make the switch---Brazil and China have already become leaders in the field of alternative energy. What we do know for sure, is that millions of people will die in the years to come if we do nothing to reverse the scourge of global poverty in the world. But don't count on the dominant media or the politicians to admit it.

The New Radical Humanitarian Interventionists

The United Nations General Assembly has begun debate on a proposal to adopt the controversial Responsibility to Protect, which would allow nations to use military force to prevent genocide and other humanitarian crimes against vulnerable populations. In reaction, several political and civil leaders are raising concerns that "R2P" will inevitably favor western influential nations like the United States, who could use the cover of humanitarian intervention to further their own geopolitical ends in developing nations. American historian Noam Chomsky and Kenyan author Ngugi Wa Thiong'o were two of several panelists who presented their opposition to R2P at a recent press hearing in the UN. You can watch a video of the panel discussion here.

The UN debate is mostly focusing on the use of military force in cases where a genocide or war crimes are taking place. But there is no question that in the west there is a growing chorus of actors who would like to see the authority apply to an ever expanding definition of humanitarian crises. Some of these thoughts verge on revolutionary attacks against 20th century ideals of national sovereignty in the developing world in the name of assisting the world's poor.

A two-sided debate about intervention and development is in this months issue of the Boston Review as a part of a new forum in the magazine. Below are just a few descriptions of what the pro-interventionist believe the world would look like if richer countries did have such a right to intervene when necessary. The discussion is instructive for people considering the merits of "R2P".

Use Military Force to Oppose a Stolen Election

Peter Collier-
"So what could we do about a stolen election in Guinea-Bissau? The most radical suggestion is to use the provision of security as an incentive for accountability....To deter an incumbent from stealing an election, the consequences would need to be potent because the incumbent has so much to gain. We can reasonably assume that merely linking assessments of the conduct of the election to aid would not be sufficient. The president might genuinely despair a reduction in aid, but he will be more concerned for his own power. A link to security may, then, be more effective."

“The world's poorest countries have diverged from the rest of mankind. They will never tap their vast reservoir of frustrated human potential unless the international community provides basic public goods that go beyond the typical aid agenda.”
Nancy Birdsall (Center for Global Development)-
"First, find ways to foster sovereignty of the people instead of the incumbent government. Mo Ibrahim—the Sudanese founder of Celtel, the mobile phone service provider that has swept Africa—gives an annual prize to democratically elected African heads of state who step down (such as Mozambique’s Joaquim Chissano) when their terms end. Nicolas van de Walle, an Africa expert at Cornell University, recommends that donors make clear that they will halt aid where heads of state hang on beyond twelve years; that could apply today to Belarus, Burkina Faso, Cameroon, Egypt, Ethiopia, Uganda, Zimbabwe, and Uzbekistan. Raghuram Rajan, while Chief Economist at the IMF, suggested that in post-conflict countries, voters might like the option of electing a non-national for one transitional term. For example were Somalia to settle down, Somalis would almost surely elect Nelson Mandela or Kofi Annan over any one of their warlords."

Replace State Sovereignty With International Security/Accountability

Peter Collier-
"Why is outside intervention necessary? The countries of the bottom billion are, paradoxically, too large to be nations, yet too small to be states. They are too large to be nations because, with rare exceptions, too many different peoples, with too many distinct ethnic and religious identities, live in them...If countries of the bottom billion are structurally unable to supply security and accountability, then some form of international supply is required."
"But more commonly, ordinary people are still befuddled by an outdated rhetoric: international pressure for accountability is presented by threatened elites as a return to colonialism. Protected by this conveniently emotive assertion, presidents grandly claim that they are defending national sovereignty. However, since they are usually not accountable to citizens, what they are really defending is presidential sovereignty."
Stephen D. Krasner-
"The only answer—and the one that Collier and others have come to reluctantly—is for external actors to exercise authoritative control over some state functions...Ideally, the assumption of executive authority results from a contractual agreement entered into voluntarily by all relevant parties."

"Political leaders in these states have every reason to horde power, especially when there are natural resources that can be looted. Citizens are rarely in a position to make credible threats of revolt, which might encourage leaders to create more responsive institutions. But, if third parties play a more decisive role—for example, by conditioning aid on good governance—there is some hope."
You can read counter-arguments to the pro-interventionists in the "Development in Dangerous Places" debate in the Boston Review.

Thursday, July 23, 2009

Global Development as US National Security Policy

Senators Richard Lugar (R, Indiana) and John Kerry (D, Massachusetts) are introducing a new piece of legislation that they hope will reform US foreign assistance to poor countries. Among other things it will attempt to offer more support to the US Agency for International Development and review the effectiveness of current policies and procedures. So far, so good according to the brief op-ed presented by Senator Lugar to the Center for Global Development. However, I was deeply troubled by Senator Lugar's repeated characterization of US foreign assistance as a tool of US national security objectives.
"In recent years we have seen a welcome renaissance in American foreign assistance, which was starved for funds during the 1990s. Members of both parties have supported new programs and new spending, and American efforts overseas today are helping to fight disease and hunger and end the poverty that can be a seedbed for terrorism. Development, along with defense and diplomacy, is now a pillar of our national security policy."
Rather than a benign gesture of American good-will and a moral commitment to eradicate global poverty, Senator Lugar views development as a "pillar of our national security...along with defense and diplomacy"? There may be circumstances in which US national security interests and developmental needs overlap, but realistically this can not possibly always be the case. To define the US role in assisting poor countries as just another means by which to reach our own security interests seems a bit Machiavellian. There are also pragmatic reasons to be concerned about the convergence between defense and development. The merger risks the creation of a "spaghetti bowl" of overlapping agencies and initiatives that are confusing, ineffective, and actually less efficient in delivering assistance to vulnerable populations.

Senator Lugar's comments are likely connected to a broader paradigm shift in the way the US carries out its development initiatives. The relatively recent change can be understood by considering two entirely new organizations in the US government designed to integrate foreign assistance and grand strategy. In 2004, George Bush established the Millenium Challenge Corporation to promote US standards of good governance, and economic freedom. Unlike other development strategies that target the people who need help the most, the MCC will only distribute assistance on the condition that countries meet a US list of accepted codes of behavior. There is also a new US military-command in Africa called AFRICOM, that officials say will "strengthen governance, improve health care and meet economic development goals". The expansion of the command into Africa is raising concerns that the Pentagon is attempting to use development as a cover for narrower political and economic interests there.

There is very little information now about the legislation that will eventually be proposed by Senators Lugar and Kerry out of the Senate Foreign Relations Committee. A hearing took place on Wednesday including testimony from Jeffrey Sachs of the Earth Policy Institute. As more info surfaces and the legislation begins to take shape, the development community, both inside and outside the US, should pay close attention. If USAID and its foreign assistance agenda becomes subject to partial strategic calculations, it will mean the death of any disinterested attempt by the richest country in the world to eradicate extreme poverty, hunger, and inequality.

Wednesday, July 22, 2009

The South African Township Protests in the Images

Protests are spreading in townships throughout South Africa as part of a massive uprising against failed social service delivery. South Africa's black townships have remained in both chronic poverty and unemployment with very little social protection from their local governments. The latest unrest is sure to rock the country to its core until changes are made. There are pictures coming in from around the net. Here are a few images taken Monday at a march directly from the ABAHLALI BASEMJONDOLO movement of the Western Cape where some of the strongest actions have been taking place, as photographed by Sydelle Willow Smith. You can also see more striking images of the protests in the French newspaper Le Monde.