Room for improvement, Mexico edition

The OECD recently published “Education at a Glance: 2014” for Mexico.  While Mexico is part of the OECD and it makes some sense to compare education results to other members, I think we should also remember that Mexico is one of the poorest members and the comparison may be a bit unfair.  Having said that, Mexico still has lots of room for improvement when it comes to education.  Here are the main conclusions:

First, the good news: 15-year-old Mexicans are doing better in school. In 2012, Mexican 15-year-old students scored 413 points, on average, on the PISA mathematics assessment – an increase of 28 points since PISA 2003 and the biggest improvement among OECD countries. This improvement coincided with a decrease in the proportion of students who failed to reach the baseline level of performance in mathematics from 66% in 2003 to 55% in 2012.”

Not so good news: Enrollment rates for 15-19 year-olds remain very low. While access to education for 5-14 year-olds is universal in Mexico, it has one of the smallest proportions of 15-19 year-olds enrolled in education (53%) among OECD and partner countries, despite having the largest population of this age group in the country’s history.”

in fact, “Mexico is the sole OECD country where 15-29 year-olds are expected to spend more time in employment than in education.”

In worse news, More than 20% of 15-29 year-old Mexicans are neither employed nor in education or training.”

Perhaps one reason that enrollment rates are so low is because secondary education doesn’t always bring about higher income in the labor market.  The report finds that “employment rates in Mexico tend to be below the OECD average among people with higher levels of education. For example, 72% of people with upper secondary or post-secondary non-tertiary education in Mexico are employed, compared with the OECD average of 74%.”

What could possibly go wrong?

I just learned that Ecuador, which currently uses the US dollar as its currency, is planning to distribute a new digital currency in December.   They do have a President that has a Ph.D. in Economics, although I don’t know if that’s reassuring or worrying.  Here is one supposed benefit that I’m skeptical about (for a variety of reasons):

With public debt at its highest level since 2010 (roughly 25% of the nation’s GDP), Ecuador’s president Rafael Correa views the digital currency as a way to pay off debt and help poorer Ecuadorians, who are largely cut off from traditional banking.

LOLZ, sounds like Dr. Rafa is tired of not having a seignorage level to yank on. And of course, you can help poor, unbanked citizens without introducing a digital currency, just look at the success of M-PESA  (mobile money) in Kenya!

The whole point of digital currencies is to get out from under government regulation. A government run digital currency is a delicious oxymoron.

The article does mention some very clear drawbacks to the plan, including:

Digital money is also more difficult for people to wrap their heads around and trust.

A centralized digital currency (one controlled by a state’s central bank rather than market forces) may be easier to replicate and counterfeit, says Bonney, so it requires investing in protection from cyber attacks. For example, Bitcoin, the world’s largest digital currency, relies on powerful computers and sophisticated cryptography to stay secure.
For now, the Ecuadorian government has banned Bitcoin in favor of a digital currency it can regulate. 

To say nothing about concerns that the government has put spyware in to monitor all uses of the new currency.

This is either a weird publicity stunt or the beginning of the end of the hard-won low inflation regime in Ecuador. I’m putting .65 of the probability on weird stunt.

What do you guys think


Making bank on the border

CNN Money just published an article called “Wall Street bets on prison growth from border crisis.”  Given the source, I understand that the perspective will be financial and how investors can make money, but this piece floored me (and depressed me) in its tone-deafness and willingness to cheer the rise of private prisons.  Here are some of the standout lines:

There’s a crisis on the U.S.-Mexico border, and Wall Street is betting that it will result in a boom for private prisons.

Geo Group (GEO)and Corrections Corporation of America (CXW) are two of America’s largest for-profit prison operators. They have thousands of open beds, and they have deep relationships with the federal agencies charged with doling out contracts to house undocumented immigrants, including children.

“It’s highly likely that the federal government will have to turn to the private sector for help with this crisis. Both companies are extremely well positioned,” said Brian Ruttenbur, an analyst at CRT Capital Group who covers the stocks of Geo Group and Corrections Corporation of America (CCA).

Investors are clearly seeing dollar signs. Shares of both CCA and Geo Group have spiked since the border crisis landed on front pages this summer. CCA has climbed 8.5% since July 30, and Geo Group is up over 7%. That’s a lot better than the S&P 500’s 1.5% advance over that time span. “Investors see this as an opportunity. This is a potentially untapped market that will have very strong demand,” said Alex Friedmann, an activist investor who owns shares of both CCA and Geo Group.

The article then admits that the growth of private prisons might be controversial, but quickly turns positive again, noting that:

“investors are attracted to prison stocks because they give generate lots of cash flow, have strong dividend yields and high occupancy rates compared to other real estate options.”

Where the pigs live

Fast Co. has a cool article up about where livestock live around the world, coupled with some very cool maps.

Here are some of my favorite tidbits from the piece:

“China has 750 million pigs, seven times the U.S. population.”  Not only that, but they mostly live on the East coast. Here’s a map of their distribution.



“Most U.S. chickens live in the south”



The maps, which were created by the International Livestock Research Institute, in Kenya, the UN’s Food and Agriculture Organization, calculates livestock down to the square kilometer, which seems incredible.  Of course there are bigger reasons for mapping livestock than just finding out where US chickens live.  Tim Robinson, of the ILRI, notes that maps like this allow governments to react more quickly and efficiently to livestock-related viruses:

“The obvious use for such maps in the immediate future is to help target surveillance to areas most at risk, which could provide advance warning should the virus spread and allow authorities to move quickly to contain it.”

Click here to read more about the project and check out many more cool maps.



Is that the PRI in your pocket or are you just happy to see me?

For those of you wondering why Carlos Slim didn’t fight harder about EPN’s telecom reforms, here’s some tantalizing information.

Slim’s yerno, (Slim Shady Jr.?) has won the design contract for a $9.5 billion airport project from the Mexican government.

Thats dollars, not pesos, people.

Now sure, Slim’s not getting the whole $9.5 billion (yet). Design costs are like 5-10 percent so it’s a mere $425-$950 million. And they have a beard as well, Sir Norman Fraser, who’ll need paid off.

Still it’s a pretty good start for the ever resourceful Slim, who has had the PRI in his pocket since the early 1990s.


The Abuse-o-meter: Creativity in shaming Mexican politicians

Mexico is well known for having a wide gap between the excellent laws on the book and how these laws are enforced (or not as the case may be) in reality.  It’s understandable that the public would be suspicious about whether the President’s impressive reform movement will actually produce changes on the ground.

One man is trying to shame the government into following through with the new education laws. a He has constructed a billboard with an abuse-o-meter, documenting the amount of corruption in Mexican education.  Here is a picture:


Damien Cave of the New York Times had a nice piece on the movement.  The man behind the billboard is Claudio X. González Guajardo, president of Mexicanos Primero.  Cave describes his thinking: “But the abuse meter is an unusually brash and precise critique. With its Times Square-like lights displaying a running tally of money lost to waste and corruption since the first day of school on Aug. 17, the large billboard is a 24/7 stab at populist complaint, using shame to spawn outrage.”

The organization also has a website called Fin al Abuso and has promoted the use of the hashtag #abusometro on Twitter.  As Cave points out, the campaign is an excellent “sign that Mexican civil society is getting more sophisticated. And it also highlights the divide between a growing and digitized middle class — which expects transparency, data-driven decisions and speedy results — and an old guard in government that still relies largely on secrecy and paperwork.”

Who knows whether the tactics will work in this case, but in my opinion this is a very creative response and I hope that it lets politicians know that the old way of doing business will no longer be tolerated.

Now to (Not) Win Friends and Influence Voters

Mexican President Enrique Peña Nieto has made huge progress in his first two years.  Reforms have been passed opening up the sacred cow that is Pemex, taking on the very strong teachers’ union, and reducing the power of some of the big monopolies in Mexico (owned by some of the richest people in the country, and in the case of Carlos Slim, the world).

All of this activity hasn’t increased his popularity much though.  The public is rightly skeptical of how much enforcement there will be of the reforms, economic growth is much slower than the government predicted, there is still a good swath of the population that doesn’t want Pemex opened up to foreign investment, and there are still huge problems with the narcos and security in general.  EPN’s popularity has fallen from 49% to 43% in recent months.

Yesterday was the Segundo Informe of the EPN Presidency, which is the state of the nation talk the President gives every year.  The government also released a slick new video of the president championing his reforms and Mexico in general, along with hugging old ladies and patting kids on the heads.  Here is a version dubbed in English.  I always find politicians’ campaign videos embarrassingly (and unintentionally) funny, but this one is a doozy in my opinion.



EPN should have paid attention to some other minor matters though, like turning the main public square (the Zócalo) into a parking lot for the 5 hours of his address.  Presidential assistants were allowed to park their cars in the Zócalo, using it as free and convenient parking, thus creating huge headaches for traffic and business downtown.  How many assistants does the President have?  How many are needed for him to give a speech downtown? EPN has been so roundly criticized for this that he has already issued a public apology on his webpage.  Here is a picture of how not to win friends and voters in the capital:


(Not) Making Progress on Foreign Aid

Nancy Qian has an excellent review paper on foreign aid called Making Progress on Foreign Aid.*  There are a lot of interesting findings in this paper, and it’s definitely worth reading in its entirety, although I disagree a bit with the optimism of the title.

Here are some of the most interesting results in my opinion:

“The literature shows that the primary purpose of aid is often not to alleviate poverty and that out of all of the foreign aid flows, only 1.69% to 5.25% are given to the poorest twenty percent of countries in any given year.”  I knew the percentage was low but I didn’t expect it to be this low.  Important to keep in mind if you’re trying to make any sweeping generalizations about extreme poverty and aid.

Speaking of which, it is almost impossible to draw meaningful conclusions about the effectiveness of aid because it varies so much across donors, recipients, and across time.  As Qian writes, “The aggregation also makes it very difficult to develop credible identification strategies for establishing causality. It is then not surprising that many studies of the aggregate effect of aid on aggregate outcomes have been shown to be highly sensitive to sampling, measurement and empirical strategies.”  So Bill Easterly and Jeff Sachs could probably use the same data and find totally different results about aid effectiveness.  It’s hard to see any resolution in the near future.  I predict even more cycling in the literature on this topic.

*Qian N. 2014. Making Progress on Foreign Aid. Annu. Rev. Econ. 3: Submitted. Doi:10.1146/annurev-economics-080614-115553)