Our Gothic Year

The end of the year brings the curtain down on the first 8 months of our blog.

The two most popular CG posts in 2013 were by Robin:

The first was on Singapore’s comical efforts to raise birth rates, the second was on corruption.

My most read posts were on the looting of the Somali central bank by politicians, and a piece arguing that there may no longer be a policy path to income convergence for poor countries.

Thanks to our loyal readers and followers. We will try to do better in 2014!

 

Citizens

Finally saw “Elysium” at home with Mrs. Angus. What a compassionate and unrepentantly pro-immigration movie!

“I cannot arrest a citizen of Elysium”.

It’s true that even the rich in America don’t have the healthcare and security of the residents of Elysium, but there are billions of non-citizens whose lives are much worse than the “dystopian” scenario of Los Angeles in the movie.

We need to get Lant Pritchett a brain hacking chip and Michael Clemons an exo-suit, and make a lot more people into “citizens of Elysium”.

 

Business Illiteracy as an Obstacle to Development

A new NBER working paper called Business Literacy and Development: Evidence from a Randomized Controlled Trial in Rural Mexico tests whether females entrepreneurs in rural Mexico are being held back by a lack of business skills.

More specifically, the authors develop a model that yields two testable hypotheses:  (1) among the treatment group, those with less entrepreneurial ability should be more likely to quit their business; and (2) those with more entrepreneurial ability should increase their profits after receiving the treatment.  They measure ability by pre-treatment business profitability and the treatment is a free, 48 hour business skills course for female entrepreneurs.

They find that “those assigned to treatment earn higher profits, have larger revenues, serve a greater number of clients, are more likely to use formal accounting techniques, and more likely to be registered with the government. “Low-quality” entrepreneurs are the most likely to quit their business post-treatment, and that the positive impacts of the treatment are increasing in entrepreneurial quality.”

 

“If we only get to hear Mass in Spanish, we might as well go to sleep!”

From Chiapas comes news that the Catholic Church is approving the use of indigenous languages in church services. Even though it took around 500 years and seems to be in response to the Church losing market share to other religions (phone call for Bob Tollison!), I have to tip my hat to Pope Paco for getting this done. 

 

EPN sees corruption everywhere but in his own house

Sure he went after La Maestra, the head of the teachers’ union after she broke from the PRI, but what about Carlos Romero Deschamps, the head of the petroleum union and PRI Senator? He is rated by Forbes as the second most corrupt person in Mexico:

“Paulina Romero, his daughter, displays onFacebook her travels around the world in private jets –accompanied by her three English bulldogs Keiko, Boli and Morgancita–  her voyages on yachts, dining in first class restaurants and sporting $12,000 Hermes luxury bags. Her brother drives a $2 million limited edition red Enzo Ferrari sport car, a gift from their father, whose trade union monthly salary is $1,864. Romero Deschamps, a federal senator, is reported to have a “cottage” in Cancun with a value close to $1.5 million. According to political analyst Denise Dresser, in 2011 he received $21.6 million for “aid to the union executive committee” and $15.3 million from union dues. My “hands are clean,” Romero Deschamps claims. The Peña Nieto administration seems to agree. He is not under investigation.”

His case is no different from that of La Maestra except that he’s remained loyal to the PRI.

It is fascinating to me that in Forbes’ list of the 10 most corrupt Mexicans, there is a serving PRI Senator and 5 PRI ex-state Governors, yet somehow the PRI is going to reform Mexico.

champs

Score one for Jeffrey Sachs in the geography versus institutions debate

While hopefully all economists believe that both institutions and geography are important to development, there is a debate in the literature about which factor is more important.  Acemoglu, Johnson, and Robinson, for example, come down on the side of institutions, arguing that geography mattered in the past but is no longer significantly correlated with income.  I understand econometrically why they need to make this claim but it has always seemed to be relatively weak to me.  I give my students an excerpt from Ryszard Kapuscinski’s Shadow of the Sun called “Mountain of Ice.” Kapuscinski, one of my long-time favorite writers on Africa, came down with a virulent form of malaria and the description is so horrifying that it ensured I never missed a dose of my anti-malarial medicine when visiting malarial regions.

I think economists are sometimes too flippant when they downplay the effects of diseases like malaria on income.  I wonder if they would feel the same if they came down with the same strain that Kapuscinski did.

There are many difficulties with getting people in malarial regions to use bed nets effectively.  Before I read Nina Munk’s tremendous book The Idealist, I didn’t realize that people were using them to protect their livestock rather than their kids.

The company Psyop has teamed up with the Against Malaria Foundation (AMF) to try to change people’s perceptions of malaria.  To do so, they have created a 90-second animated film called “Nightmare: Malaria” “that begins as a sweet bedtime story before quickly devolving into a hallucinatory trip that paints a picture of how the disease affects a body. Symptoms such as high fever, violent convulsions, vicious sickness, and attacks on the liver and brain are rendered with psychotic energy befitting a Hunter S. Thompson tale.”  The moral of the story is that people can avoid these symptoms by using bed nets.

They have also created a video game, where “players avoid killer mosquitoes and collect teddy bear tokens amid fever-dream visuals, [which] further impresses how diabolical malaria can be.”

I was curious about who the target audience for these things are.  Surely they aren’t the people in the malarial regions themselves, given that they probably already have a good idea what malaria looks like (and probably don’t have the time or money to be watching these videos and playing the games).  It isn’t totally obvious from the article but it seems like the idea is to educate Western audiences to the horror that is malaria.  It seems to be working in that the “game was downloaded to iOS and Adroid devices over 130,000 times…[and]… has already resulted in 42,000 visits to the AMF donate page, which should translate nicely into a lot of nets.”

I like how innovative this approach is but it still needs to be paired with ways to get people in malarial zones to use the nets effectively.

Do the MDG limbo–how low can you go?

I haven’t been real impressed with the Millennium Development Goals because I feel like it encourages countries to work the system.  That is, they have incentives to put a lot of butts in the seats for education, but less incentive to do a good job of educating young people.  There seems to be a real risk of fulfilling the targets by focusing on quantity instead of quality.  So I was interested to see that Lant Pritchett and Charles Kenney have a new working paper entitled “Promoting Millennium Development Ideals: The Risks of Defining Development Down”  where they argue that the MDGs are too low of a bar for developing countries.  I’m curious about their argument and just the authors’ identities make reading the paper a no-brainer.  Here is the abstract:

The approach of 2015, the target date of the Millennium Development Goals, sets the stage for a global reengagement on the question of “what is development?” We argue that the post-2015 development framework for development should include Millennium Development Ideals which put into measurable form the high aspirations countries have for the well-being of their citizens. Standing alone, low bar targets like the existing Millennium Development Goals “define development down” and put at risk both domestic and global coalitions to support to an inclusive development agenda. Measuring development progress exclusively by low bar targets creates the illusion that specific targeted programs can be an adequate substitute for a broad national and global development agenda.

Religion and culture as obstacles to development?

PRI has a thought-provoking article about a town called Awra Amba in Northern Ethiopia that eschews traditional customs and religion as obstacles to development.  Awra Amba, with a population of about 500 people, has an average per-capita income of about double the national average, and lower mortality and higher literacy rates than surrounding regions.

Zumra Nuru, the founder of the town 40 years ago, dreamed of it being an economic and egalitarian utopia.  So what specifically have they done differently?

First, the population does not “follow organized religion” and thus does not rest on the Sabbath or holidays. Second, the town places a lot of emphasis on gender equality and education: “You will see women here doing what is traditionally considered ‘men’s work,’ like plowing, which effectively doubles the workforce.”

Apparently the neighboring towns were initially less than impressed and labeled the residents as heretics.  Nuru notes that “They threw a grenade right into the center of the village once, but luckily, no one was hurt. They’ve tried shooting members of our village. They’ve sabotaged our harvest on occasion.”  One neighbor from a Christian community argues that the residents are “selfish” and that he “hates them.”  Hmm, how Christian of him.

The development community of course has had a different reaction and the town has quickly become a darling of that group.  The article claims that neighboring communities are starting to be less angry and more curious about what the town is doing right and how they might be able to replicate it.  For instance, they are starting to send their kids to schools in Awra Amba, bring their corn to the town mill, and shop at the stores in town. So perhaps the message has started to spread.

Clemens & Sandefur bring the thunder

Oh my.

Foreign Affairs has their exhaustive and incisive takedown of Paul Collier’s “Exodous”

My favorite bit came at the end:

To get a sense of just how big the gains that Collier brushes aside are, consider the following back-of-the-envelope calculation. Assume for a moment that everything Collier says is correct. He argues that there is an optimal level of emigration from low-income countries and that it lies somewhere between Bangladesh’s rate of around four percent, which he deems beneficial, and Haiti’s level of around ten percent, which he deems harmful. Many low-income countries have emigration rates far below four percent. If those rates were raised to four percent, that would mean about 13 million new immigrants (using the World Bank’s definition of low-income countries and its 2010 estimates of cross-country migration numbers). If all of them moved to OECD countries, the foreign-born population of the OECD countries would rise from 12 percent to 13 percent — the same level found in the United States and far below the 20 percent share in Canada and the 27 percent share in Australia.

Those people would move from countries with average annual incomes of about $600 to countries where average incomes are over $30,000, transforming their lives and adding hundreds of billions of dollars to the world economy every year. In other words, even if one concedes Collier’s dubious moral and empirical claims about immigration, his own analysis suggests colossal potential gains from new immigration without substantial offsetting harm. But somehow, in his policy conclusions, Collier preoccupies himself exclusively with restricting immigration.

Can I get an Amen?

 

Mexico’s “functioning democracy”

The Washington Post has an article congratulating Mexico on its just-passed energy reform.  Given that Pemex has desperately needed reform for decades, and little to no action has been taken during that time, I agree that it is both impressive and promising that EPN got his energy reforms through Congress.  The WP goes a bit overboard though in arguing that “While [the US] Congress was congratulating itself on reaching a minimalist bipartisan deal on the budget, Mexico demonstrated how a more functional democracy can tackle a nation’s biggest and most sensitive problems.” 

This WP headline was in my Google Alert this morning right next to the following article, “Mexico Lawmaker Strips in Congress to Protest Energy Bill.”  It made for a funny juxtaposition.  Apparently, a left-wing MP named Antonio Garcia Conejo stripped down to his skivvies to protest what he called “the stripping of the nation.”  Here is Mexico’s functioning democracy in all its stripped down glory!

antonio_conejo