Tabloid Edition

The Poor Subsidizing the Rich

Mr. Finkelstein (pbuh):

Up to a million people on income support will be eligible for half fares on London's buses under Ken Livingstone's oil deal with Hugo Chávez, Venezuela's president.

And while the people of Venezuela are giving foreign aid to Londoners, I noted this on iPienso (via Marginal Revolution):

Caracas, Venezuela - where despite Chavez's "revolution for the poor" the Gini coefficient has increased from 0.44 in 2000 to 0.48 in 2005.

The Gini coefficient is a measure of income inequality.

Interesting, no?

Gap Year Volunteering

Well, quite:

Gap-year volunteers may be better off spending their time travelling than helping out on spurious schemes abroad that do more harm than good, a charity said today.

In fact, in terms of helping those poor people in other countries you'd do rather better staying in Britain at work and sending them the money.

After all, it's not as if their major problem is a shortage of unskilled labour now, is it?

Bono's Red

How terribly effective:

Perhaps Bono was grouchy because his celebrity-laden "Red" campaign to promote Western brands to finance begging bowls for Africa has spent $100 million on marketing and generated sales of only $18 million, according to a recent report.

Public Housing Should Be Crap

So, I wandering through a graduate text on poverty ( as you do...Poverty and Discrimination, Kevin Lang.) and I come across this:

However, if government offers subsidized housing, people who have significant resources will prefer the higher-quality housing available at the market price to the lower-quality housing available at the subsidized price. In this way, government can put fewer resources into identifying who is really poor and may be more effective at targeting resources at the truly poor.

So council and other forms of social housing should intentionally be crap so as to make the best use of scarce resources.

Interesting, don't you think?

Save the Children on Childhood Poverty

Save the Children has a report out on childhood poverty. Some snippets:

Given the multi-dimensional nature of poverty, its measurement should encompass a variety of
dimensions and not just income (Perry, 2002), since focusing solely on income may miss out important
aspects of what it means to be poor (Nolan and Whelan, 2005). Furthermore, it has been pointed out
that poverty measures based solely on income are often limited, given the difficulty in obtaining an accurate calculation of a household’s income and widespread misreporting of income by respondents in surveys. Material deprivation indicators should compensate to some extent for the misreporting of income, which is believed to be a particular problem at the lower end of the income distribution (Willitts, 2006).

Interesting, don't you think? We're no longer to define poverty as actually being poor. That is, not having a decent income is no longer to be the definition.

So, we are to move to indicators of material deprivation. Lots of fun can be had there. I think we'd all agree that someone without sufficient food (in the absence of someone spending the cash on drugs, booze or tabs I mean) poor, yes. But a colour TV? Car? New furniture? Dishwasher?

How about, not enough bedrooms that teenage children of different sexes need to share a bedroom? Yes, that is indeed one of the definitions of severe poverty here. I agree that it may well not be desirable but severe poverty or excessive fertility?

Nevertheless, our confidence in the use of the enforced lack approach in this study is strengthened by the fact that research evidence has not highlighted differential reporting of deprivation indicators by families with children – families tend not to differ much from the general population (Willitts, 2006).

Beg pardon? Families are entirely different from the general population. They've, err, got children.

This whole report is confusing me mightily. I wish I could work out how to get table 2.6 into this blog post. What it seems to be saying is that it is possible for a two parent one child family to not be in poverty on £132 a week (that's post housing costs) while it's possible for another to be in severe poverty on the same income ( both severe income poverty and severe deprivation).

Which, if true, leads one to the conclusion that it's what people are doing with the money they have, not the amount of money they have, which is the determinant of poverty or not.

OK then, fine. There are parents who are feckless wastrels and those who are not. I'm a little amused that Save the Children has devoted a whole report to this but there we go.

So, where does this leave the case that we must spend more to alleviate poverty?

Ah, here's the table:

Does that actually mean what I think it does?

Making Poverty Histo......

OK, so one of the things the Jeffrey Sachs initiative is trying to tell farmers in Africa is how to harvest and store hay. Mmmm hmm. It's a pretty basic technology, so why haven't they been doing it before?

It's hard for me to believe that no one has thought about cutting grass and saving it. I'm sure they are uneducated but that's a pretty basic idea for someone who lives off the land. Rather, it is probably very difficult to save because of the lack of law and order, including the ability to store things without theft, or have the right to then sell them in a future drought (at, presumably, higher than-average prices). Then again, if they really never have thought of cutting and saving grass, they really have zero chance of becoming a modern society on their own.

Larry Elliott on Doha

At last, something I unequivocally agree with from Larry Elliott:*

By no stretch of the imagination is what is on offer a development round - it is the usual mercantilist stitch-up with the great powers seeking to extract as many concessions as they can while giving the bare minimum in return.

How can we still be having trade talks in which people act as if ignorant of the facts about trade?

The G8's approach to trade is harder to explain than its foot-dragging on aid. This, after all, is a pretty rightwing bunch, steeped in the orthodoxies of market economics. One article of faith is that free trade is better than protectionism, and that if a country lowers its tariffs to foreign importers but gets nothing in return, both parties benefit. There's not been much evidence of this thinking in the Doha round so far.

Institutionally the US has never really believed this and from the look of things nor does the EU. Which is part of the problem of course.

We should be starting from the plainest and most obvious result in all of trade theory: if we lower our tariffs, then we benefit. Even in theory (a theory I don't think applies in the real world) the exception to this is the infant industry argument and that doesn't apply to the already rich nations. So economic logic should be driving us to lower tariffs, without asking for reciprocation.

But that's not the way the talks go, sadly. As clear an example as you need of the fact that we are not ruled rationally.

* I'm sure Mr. Elliott is just as excited about this as I am.

Jeffrey Sachs on Development

A quite mind-boggling piece by Jeffrey Sachs here. The "extreme free-market ideology of the World Bank"?

What has he been smoking?

Worse, much worse, is his commenting upon the changes in Chinese agriculture, and their applicability to the African experience. Yes, roads, irrigation, fertilizer have all indeed made a difference. But he fails to mention (even to dismiss them) absolutely the most important changes in the Chinese system.

The reform of land tenure and the freeing of the price system. Without those two, all of the other things will have no effect.

Simply amazing.

David Morton on Mozambique

Really rather missing the point here I think:

Mozambique lacks the resources or the will to properly dispose of the hundreds of tons of deteriorating weaponry from a 16-year-long civil war that officially ended in 1992.

Note that word, resources.

But, most importantly, all this talk about privatization and being on the "right track" is very much beside the point. As Kaminski concedes, one in six Mozambican adults is infected with HIV. "Appreciating the change for the better takes some imagination," he writes. But you cannot speak of "the change for the better" unless the discussion starts with HIV. It's the only yardstick that matters in Mozambique, and in the rest of southern Africa as well. Some 37,000 Mozambican children contracted HIV in 2006, a jump of 60% over six years before. Nearly four of every 10 adults in Beira, the country's second largest city, are HIV-positive. Those are apocalyptic figures, however creative your thinking.

Yes, there is indeed such a crisis, but what is it that will be needed to deal with it? Resources. So all that talk about privatization and being on the right track is the point, not beside it at all.

In the comments, MysticBear gives a very good potted history of the country (the accuracy I don't vouch for, I just rather liked it).

One thing is true though, one of the problems really was the nature of the colonial power, Portugal.  You can argue whether they were there too long or not long enough but there was certainly no preparation for independence. From fighting vigorously (most especially in Angola) to buggering off home at the moment of the 1974 revolution back home was a turn on a sixpence. It's said that Mozambique was left with 33 university graduates at the moment of independence.

Now university graduates might not actually be necessary for the establishment of a decent economy but they certainly are if you're going to try and impose a Soviet style centralized one, run by the wise technocrats at the centre: rather presupposes the existence of said technocrats really.

No wonder the place was buggered.

Aid to Africa

An interesting statistic, don't you think?

The productivity increase that resulted from $187 billion's worth of aid going on "public investment" in 22 African countries between 1970 and 1994 is a very precise figure: zero. The Ajaojuta steel mill in Nigeria helps to explain why so much produced so little. The Ajaojuta project began in 1979. Nearly 30 years and more than $5 billion later, it has yet to produce a single bar of steel.

And another:

To the objection that a huge portion of aid disappears into the pockets of corrupt officials, Sachs's reply was that corruption is not Africa's main problem. Yet capital flight from Africa increases in direct proportion as aid to the continent goes up: $94 billion left sub-Sarahan Africa for Swiss bank accounts in 2004. That amount leapt to an incredible $150 billion in 2005.