The sheepskin effect–Zimbabwe edition

Zimbabwe’s new central bank governor, John Panonetsa Mangudya, has a Ph.D. in Business Administration from Washington International, where all classes are online, all degrees take one year, and the student can choose his or her degree depending on the size of their bank account.

According to the menu of possibilities, a Ph.D. in Business Administration costs $6,900.  That seems like a bargain since the master’s degree in the same discipline is only $600 less–and they both only last a year anyway!

The “university” advertises:

No classrooms!
No deadlines!
Low “fixed tuition”

I put the quotation marks around university on purpose.  I’m wondering why fixed tuition also has quotation marks around it.

I know Zimbabwe doesn’t have it’s own currency anyway, so perhaps it doesn’t matter much if the CB governor knows anything about monetary policy.  As one University of Zimbabwe professor wrote“Mangudya is a substantial figure and well-trained with lots of experience, but the governor’s job is seriously constrained by the dollar economy. Money supply is obviously out of the bank’s control, as are interest rates.”  

Mangudya does seem to have a fair amount of experience but I’m not so sure about the “well trained” part of that sentence.  Does the sheepskin effect still work when the university is Washington International?

 

The militarization of the border

Todd Miller, a journalist who has reported on the Mexico-US border for 15 years, wrote a stunning piece for the NY Times last year called “War on the Border.”  Here is an excerpt from that piece:

“In 2012, the Migration Policy Institute reported that immigration and border enforcement spending totaled almost $18 billion. That is 24 percent more than the $14.4 billion combined budgets in the last fiscal year of the F.B.I., the Secret Service, the Drug Enforcement Agency, the Marshals Service and the Bureau of Alcohol, Tobacco, Firearms and Explosives. Add the billions anticipated in the Senate bill, and you have what the trade publication Homeland Security Today calls a “treasure trove” for contractors in the border security industry.

Projected as an approximately $19 billion industry in 2013, defense contractors seem, in the words of one representative from a small surveillance technology company hoping to jump into the border security market, to be “bringing the battlefield to the border.”

In 1999, the anthropologist Josiah Heyman wrote that the Southwest was becoming a “militarized border society, where more and more people either work for the watchers, or are watched by the state.”

There is nowhere else in the country with such extensive and concentrated surveillance technology; nor is there any part of the United States in which people are as clearly divided between the police and the policed.”

I learned from that article that Mr. Miller was expanding on this theme with a new book called Border Patrol Nation. I pre-ordered mine about 9 months ago and it just showed up yesterday.  Here is the official description:

“Traveling the country—and beyond—to speak with the people most involved with and impacted by the Border Patrol, Todd Miller combines these first-hand encounters with careful research to expose a vast and booming industry for high-end technology, weapons, surveillance, and prisons. While politicians and corporations reap substantial profits, the experiences of millions of men, women, and children point to staggering humanitarian consequences. Border Patrol Nation shows us in stark relief how the entire country has become a militarized border zone, with consequences that affect us all.”

The book jumped the queue and is now at the top of my “to-read” pile.

 

Life among the Econ, part II (Pritchett edition)

“While all economists might share some commonalities from selection and training there are huge differences across the sub-specialties of the discipline. The clan called “open-economy macro-economists” deal with crises in which interventions are dramatic, dependent on decisions of few people, and in which outcomes are measured in days and weeks and two quarters is a long horizon. In contrast the clan called “development economists” typically deal with chronic problems which rarely have discrete interventions, societies (not outsiders) are primarily determinative of outcomes, and in which a decade is the short-run, not the long-run.”

Much more here, including this:

“an obvious “tell” of a development amateur is saying any of the following:

“It’s easy.”
“We can do this quickly.”
“We have a solution for every problem.””

 

Whamma Jammeh

The Gambia has been independent since 1965. It has had exactly two presidents. They are Dawda Jawara from 65-93 and after deposing him in a coup in 1994, Yaha Jammeh from1994 to the present.

According to the Penn World Tables (variable RGDPCH) real per-capita income in 1965 was $1245 (in internationally comparable PPP adjusted dollars). In 2010, it stood at at $1271. In 46 years, INCOMES ROSE $26!!!!

YIKES. 

Here’s some data-driven journalism in the form of a chart of Gambias real per capita GDP over time:

Image

But Jammeh seems to know why and is finally doing something about it. The culprit is……..English!

Nice work President Jammeh. After 20 years of stinking as a ruler, you have found the key to improving your country. Kudos.

Hat tip to Michael Clemens.

 

“You’re welcome to come to Africa”

As I mentioned last week, Russ Roberts has a podcast with Jeffrey Sachs that is well worth listening to.  The exchange gets increasingly testy, with Sachs constantly interrupting and offering long-winded lectures.  I’m impressed with how calm, focused, and professional Russ remained throughout.  Sachs has no data (he keeps saying that we just need to wait until 2016), so his “proof” consists of anecdotes.  It makes it pretty hard to argue against but also not very convincing.

Amongst all the tension there were some very funny moments as well, although they certainly weren’t intentionally funny on the part of Sachs. Here are some of my favorite exchanges:

 

Russ: So that sounds good. I’d love to come to Africa some time, see what’s going on.

Sachs: You’re welcome to come to Africa.

**

Sachs: Well, I’m proud of it.

Russ: You should be.

Sachs: And I’m proud of other things, too.

Russ: You should be.

**

Russ: The challenge is: Is there a sustainable market? What a market does is it allows you to help other people by doing something that they value and they pay you for it. Do you see that happening? And why didn’t that appear to be happening?

Sachs: Okay. Of course it’s happening. And Russ, you love markets; I love markets. And of course markets are functioning. And they function better now that there are phones, now that there is more electrification, now that the roads are improved. Because transactions costs are a critical part of making markets work.

Sachs: And I think it’s worth my saying, though I wouldn’t have thought there would have been such confusion about it, but you know I’m a macroeconomist and development economist and I’ve worked in about 130 countries around the world at some level or another, or visited that number and worked in most of them in one way or another.

**

Russ: The problem is—

Sachs: So this is just a piece of this.

Russ: The problem—

Sachs: It’s not a problem.

Russ: No, but the problem is—

Sachs: It’s not a problem–it’s a piece of the puzzle.

Russ: No, the problem is I don’t think we know very much as economists about how to create markets.

**

Russ: And those are the ones I was referring to in our quote which you took from our transcript, which I still think is true, that if—

Sachs: No you don’t.

Russ: Yes, I do.

**

Sachs: I know, but you’re citing something from the beginning of a project.

Russ: First 5 years,

Sachs: Why are you doing that?

Russ: First five years.

Sachs: No, no. By the way it’s not even the first 5 years of the project. It is within the first 5 years of a 5 year project. Of a 10 year project, excuse me. So that’s a kind of game—

Russ: No, I don’t think it’s a– no, timeout.—

Sachs: It really is not–it’s not justified Russ.

Russ: I thought the Lancet article covered 2007-2010 which would not be—

Sachs: Yes. The project goes from 2005–2015.

 

New energy opportunities in Mexico

Shannon O’Neil and James S. Taylor recently wrote a great primer on Mexican energy reform.  Click here to read the whole article.

The part I found most interesting is at the end, where they discuss the possibilities for future energy development in Mexico.  Besides the opportunity for partnering with PEMEX, here are some areas where they see real investment potential:

1. Shale oil and gas. Mexico possesses substantial shale gas resources that Pemex has effectively left untouched. There are five promising, geographically disbursed basins in the country, as identified by Pemex. The Cuenca de Burgos (as the Eagle Ford is known in Mexico) is estimated to hold two-thirds of Mexico’s technically recoverable shale gas resources and would have significant appeal for companies familiar with the geology of the formation and the infrastructure that exists in the region.”  

2. “Pipelines. With the current lack of sufficient pipelines creating inefficiencies in the sector, we believe there are significant opportunities to invest in midstream infrastructure.”

3. “Electricity. The energy reform also includes the opening to private investment for electricity generation. The major areas of opportunity in this field will be in the addition of power generation capacity (nuclear energy will remain solely responsibility of the Mexican government) and in the upgrading and improvement of the electricity grid.”

It is amazing that the government was able to reform PEMEX at all, given how much of a sacred cow it has been.  But as the authors make clear, this was just the first step of many.  Mexico needs a host of secondary reforms to clarify and support the new laws.  Apparently the executive branch is currently working on that and should have a package together in the next couple of weeks.  Vamos a ver…

“We need a free trade agreement with ourselves”

The WSJ had a short report called “US energy revolution attracts Mexican interest” on how manufacturing in the US is becoming increasingly competitive, to the point that it is attracting firms from south of the border.   While brief, the report makes some good points, like the fact that (1) there is a reason US manufacturers don’t all immediately bail to the country with the lowest wages; (2) that Mexico seriously needs to address problems of monopoly that make it hard for companies to compete; and (3) that Mexican firms are starting to look at moving northwards.

Here is the report itself:

The media cliche is that free trade has sent U.S. jobs south to Mexico and overseas to China. But the boom in U.S. energy production, creating cheap fuel for manufacturing, has foreign investors thinking more about creating jobs in the U.S. Raul Gutierrez, who leads Mexican steel producer Deacero, tells us that, thanks to cheap energy, the U.S. is becoming more competitive as a place to manufacture. His company produces and sells on both sides of the border and he says that the U.S. is an attractive place to do business. Meanwhile, he’s urging his compatriots to end the government-enforced monopolies that have kept prices high for electricity and other industrial inputs south of the border. In urging Mexicans to embrace competitiveness reforms, he adds: “We need a free trade agreement with ourselves.”

The last line of the report is truly excellent: both funny and true.

h/t to one of my favorite blogs, Fausta’s Blog, for alerting me to this gem.

New and interesting working papers

I just came across several new working papers that look checking out.

1. The untold story of the Mexican debt crisis: Domestic banks and external debt, 1977-1989 by Sebastian Alvarez
Scholars have thus far neglected the role played by Mexican banks in international capital markets and in the country’s external indebtedness process. This paper argues that the imbalances which Mexican banks incurred in running their international operations eventually brought them to the brink of bankruptcy once the crisis began. Given that the banks that were at risk represented a large share of the domestic market, this paper argues the whole Mexican banking system was threatened with collapse. The improved understanding of the banking system’s exposure to and dependence on foreign finance provides new insights into Mexico’s debt renegotiation outcomes and the nationalization of the banking system in the aftermath of the crisis. —

2. Two Centuries of International Migration by Tim Hatton
We focus principally on long-distance migration to rich destination countries, the settler economies in the nineteenth century and later the OECD. The chapter describes the structure, direction and determinants of migration flows and the assimilation experience of migrants. It also examines the impact of migration on destination and source countries, and explores the political economy behind the evolution of immigration policy. We provide an historical context for current debates on immigration and immigration policy and we conclude by speculating on future trends.

3. The Long-Term Effects of Protestant Activities in China by Yuyu Chen
Combining county-level data on Protestant presence in 1920 and socioeconomic indicators in 2000, we find that the spread of Protestantism has generated significant positive effects in long-term economic growth, educational development, and health care outcomes. To better understand whether the relationship is causal, we exploit the fact that missionaries purposefully undertook disaster relief work to gain the trust of the local people. Thus, we use the frequency of historical disasters as an instrument for Protestant distribution. When we further investigate the transmission channels over the long historical period between 1920 and 2000, we find that although improvements in education and health care outcomes account for a sizable portion of the total effects of missionaries’ past activities on today’s economic outcomes, Protestant activities may have also contributed to long-term economic growth through other channels, such as through transformed social values. If so, then a significant amount of China’s growth since 1978 is the result not just of sudden institutional changes but of human capital and social values acquired over a longer historical period.

4. Why didn’t economists predict the Great Depression? by Leon Taylor

I’m sure this paper is worth checking out too, but I included it because my first thought was that you could replace the words “Great Depression” with almost anything else and still be accurate.  It would have been way more surprising if economists actually did predict something that actually happened (we’re good at predicting things that don’t happen or things that happened in the past!).

Educating humanity, really?

A website called Educating Humanity had the following headline yesterday about Mexico! “UFO Descends Over Airport in Mexico.”  Here’s the description of the video: “Yohanna Diaz explains on national TV that these UFOs are fairly common over airports in Mexico.” (my emphasis)

I guess I have a really different idea of what it means to educate humanity because here is the website’s “about us” page:

Educating Humanity has become a major resource to a global audience for UFO cases, it currently contains more than 4000 quality post and is one of the few sites that continues to grow by being updated daily.

Educating Humanity’s objective is to increase the level of understanding about the UFO phenomena, to bring a higher level of awareness regarding government knowledge, involvement and cover-up of these historical events.

As well as being a reference and research site, we attempt to keep things interesting by posting the best daily UFO sightings (without showing you every shaky light in the sky). We endeavor to include all major stories and articles on space exploration and news of extraterrestrial discoveries.

One of the more popular features has become the ‘Breaking UFO News’ section, which is updated throughout the day with news from around the world. Each story is highlighted only once (usually from the source). Our aim is to bring you relevant and meaningful news from reputable news sources. We make it a point to edit out the superficial and meaningless stories that are many in the world of the Ufology.

We are working hard to report on and bring about disclosure of the facts concerning UFOs, extraterrestrial contact, intelligence and technology that our governments have had under a truth embargo for more than sixty years.

Nice touch with the “truth embargo” at the end!