Duh

January 14, 2013 Leave a comment
Categories: Uncategorized

Suits and mobility aid

December 28, 2012 Leave a comment

If we look at aid for individuals, broadly there are three general-ish types:

The first we can call “sustenance aid” and it is things like food or mosquito nets or clean water: it keeps people alive and it keeps people healthy. It’s important.

The second could be called “capability aid” – stuff such as education and internet access. It helps people enhance their human capital. It’s also important.

The third is something I’m gonna call “mobility aid” and here is an example: in America, we now get that people in poverty don’t just need blankets and food, they need to be able to get a job. To do that, they need to interview, and they need a suit. Mobility aid is the suit. It helps people become socially and economically mobile. It lets them use their human capital.

My hunch is that we don’t do enough suits in other countries. We like to keep people alive and healthy (great!) and we like to give them books and an education (also great!) and then we kinda just abandon them (not so great!). And so we help the world have a bunch of healthy, educated and impoverished sustenance farmers.

I’m not totally sure why we do this, but I’ve got a couple ideas:

FIRST, we have this fetish for entrepreneurship, and it’s stupid. Starting a business is hard enough in America, so I’m not sure why we all get super amped-up telling people to start one in, like, Goma. But entrepreneurship is where most of our mobility aid goes.

SECOND. It doesn’t “fit” with how we like to see our aid recipients. We just feel like it makes more sense to drill a water pump for starving poor people than it does to give a suit to a well-educated healthy man so that he has a better chance of beating out patronage for a job.

But this is important stuff! It’s important because we have this pretty noble goal of trying to help people live fulfilling lives and we only give them two-thirds of the tools to do it. It’s important because it shows a level of respect to our recipients that we care about them as functional people and not just hungry mouths. It’s important because it is necessary for aid to “work”.

So I think it’s time we get over our issues and do it.

And that’s where there’s good news – I don’t think changing this is that hard. It’s like a supply chain and we are working out the kinks. Help people be healthy, help them get an education, help them get a job. If we are doing the first two things but people aren’t ending up with gainful employment, let’s follow up, let’s be close to our programs and our recipients, and let’s figure out what the bottleneck is. The aforementioned “suits” are an American example, and people might and probably do need something else in Kampala to let them utilize their shiny wonderful human capital – but we won’t be able to figure out what that need is unless we change our approach. Let’s get started.

Categories: Uncategorized

Foreign Intervention in Africa

If foreign intervention is good, then, African countries should be the most prosperous countries in the world, because we have had the greatest dosages of that: the slave trade, colonialism, neo-colonialism, imperialism, etc. But all those foreign-imposed phenomena have been disastrous. It is only recently that Africa is beginning to come up, partly because we are rejecting external meddling. External meddling and the acquiescence by Africans into that meddling have been responsible for the stagnation on our continent. The wrong definition of priorities in many African countries is, in many cases, imposed by external groups. Failure to prioritize infrastructure, for instance, especially energy, is, in part, due to some of these pressures. Instead, consumption is promoted.

- President Museveni of Uganda writing in Foreign Policy

No doubt much of historical foreign intervention has harmed Africa, but has it all been bad?

And more importantly, moving forward, can there be positive foreign intervention, either economically or militarily – or must Africa develop completely on its own?

Categories: Uncategorized

Common Sense?

Quoted in Monday’s NYTimes:

“Arguing that those working for the benefit of the neediest people in our society should make millions and multimillions like corporate leaders defies common sense.”

-  Ken Berger, President of Charity Navigator

Really?

There may be some foundation to Berger’s argument – though I think it represents mainly a kneejerk reaction to perceived misuse of donor funds – but calling it common sense? That seems a little strong.

It seems to me that, to the contrary, there are some very viable arguments for why large and effective* non-profit leaders should get corporate-style compensation. One of these arguments could be moral; these leaders deserve it based on the social benefit their organization provides. Another could be that their work is often quite difficult, and high salaries are adequate rewards for such a challenging profession.

The most common argument, however, is one of talent attraction, and it’s such a classic argument because it’s by and large true. The most talented, intelligent, and ambitious people are the ones we want running our nonprofits. They are also the people with the most opportunities available to them, both public sector and private. Some of them might be driven to charity work by their moral compass; most are driven by their financial compass. To have this top-talent at the helm of our most impactful and most complex nonprofits is, clearly, going to cost money.

Of course, it’s no surprise to see the president of a charity watchdog arguing against this idea. It’s a lot easier for him and his organization to keep count of tangibles (like bed nets, medicine, school supplies, etc.) than it is to make a quantified measurement of the impact of a good leader. His whole organization is based off condemning nonprofits on the very basis of spending too much on salaries and other “overhead” instead of the poor.

But in the non-profit world, just as in the corporate, it’s not a zero-sum relationship. Every dollar spent on the leader’s salary is not a dollar less being spent on the poor; rather, it’s an investment. It’s an investment that’s admittedly hard to measure (though looking at the fact many directors oversee the solicitation of donations worth many hundreds of times their own salary is one positive and indicative count). But the impact of a good leader – one that organizes efficiently, spends effectively, innovates, and more – is well worth a million dollars to an organization with hundreds of millions to spend. The – relative to budget – small savings from a cheaper leader are not remotely worth the decrease in leadership quality. These are people that have an enormous impact on the effectiveness of the organization.

Clearly, there’s cognitive dissonance up the wazoo when people working for the benefit of the poor are well-paid. But this cognitive dissonance is a logical fallacy. We seek the most qualified to lead our businesses, we try to do the same for our government. Why shouldn’t aid organizations be given the same status?

If we want non-profits to be effective, innovative, and efficient, they need first-rate leaders. Such leaders are expensive. These are simple facts.

 To deny them, in my opinion, defies common sense.

* The world of large and effective non-profits (think Red Cross, MSF, etc.) is quite different than the prolific small and corrupt non profits that amount to little more than ways to steal money from donors. This post does not concern that type of institution.

Categories: Uncategorized

Thoughts on Kristof’s Moonshine

I’m late to the game here (some traveling outside of the Internet-zone kept me in the dark), and much has already been said in the development-related blogosphere about Nicolas Kristof’s op-ed last week in the New York Times. For the most part, the reaction has been extremely critical. A number of bloggers have denounced Kristof’s article both academically and personally. Other influential voices have been more tepid, but they are in the minority, and still are quite far from an endorsement.

The way I see it, Kristof had one main and major flaw in how he approached a serious and influential topic: he severely misinterpreted the data. This has been well documented by others, but it is worth repeating some of the major points here.

Kristof cites one well-known academic paper in his column, and uses it to justify stating that the poor spend as much as four times as much on alcohol, parties, and prostitution as they do on their children’s education. It’s a shocking conclusion, mainly because it is, by and large, wrong.

As discussed by many other bloggers, the supporting paper explains the low expenditures on education by stating that they tend to be in countries where education is, in fact, free. Furthermore, Kristof seems to manipulate the numbers when he speaks of worldwide averages on education spending. Prostitution, commonly mentioned in Kristof’s article, is not discussed anywhere in the source material. And finally, while I believe this is inadvertent, his column sounds like it is applying the issue to every poor African family.

This is shoddy journalism and disrespectful to everyone ranging from the writers of the supporting article to the readership of the New York Times to, most importantly, the impoverished themselves. These mistakes should not have been made to begin with, and certainly should not have survived editors and fact-checkers to make it all the way to publication. They should be acknowledged in an apology by Kristof, which does not seem to be forthcoming.

Kristof has been heavily criticized for this misrepresented data and misguided conclusions, and rightly so, in my opinion.

However, some of the other criticisms have stood out to me as either irrelevant or significantly less valid. A lot of these criticisms seem to be forgetting that Kristof does not have a target audience of the aid/development community. He is writing for the general public in one of the world’s most widely read news sources. Kristof’s goal, in this column and others, is to introduce a relatively uninitiated culture (for example, mainstream America) to how the rest of the world lives. As such, his content is going to be oriented accordingly.

Of course he is not going to spend time talking about the vices of rich American families who also spend money on booze and prostitutes, as many have criticized him for – why should he? He’s not endorsing the mistakes of rich America, nor is he ignoring them, but rather they quite honestly fall out of the realm of his column, which is about the developing world, not the developed.

Kristof is also going to use one story to portray a larger issue. When the larger issue exists (and it does in this case), that’s not generalization, that’s smart marketing. He will get a lot more readers interested in how people live in Africa by putting a face on it. Abstractions and statistics only get you so far. Is he saying all of Africa is just like the Obamzas? No. He’s saying they are one of many examples of a larger problem. This is not common in academic aid writing; it is common in journalism.

His column also only scratches the surface of a number of valid and complex trains of thought. He doesn’t discuss, for example, how booze can buy social capital. But that’s what happens when you write a 800-word column instead of a 8,000 word journal article – you simply can’t discuss everything. He writes a fairly comprehensive introduction given the small space available

We shouldn’t hold Kristof to the same standards as aid professionals – his standards are not lower, of course, but they are quite different. He is writing for a different publication and a different audience. As well done as I think that much of our aid/development writing is, there is a reason not everyone reads it, and that many more instead read the op-eds in The New York Times.

This serves to make Kristof a very loud voice for aid and development, which makes it essential that he represents the developing world correctly, and is thus why it makes it very worrisome when he does things like dangerously misrepresent hard data. But, his loud voice also makes his column valuable when done well, and ultimately the value of this specific article outweighs its flaws.

The topic of those with very little choosing to spend their money on substances like alcohol rather than education is difficult to talk about, but it exists nonetheless. Anyone who has spent time with communities in the developing world has seen this time and time again. As convenient as it can be to ignore discussing the issue, impoverished decision making and priorities make for a conversation integral to effective development. When trying to help people attain economic empowerment, it is necessary to understand both what decisions they make and why they make them. Kristof’s column is a necessary, though clumsy, reminder of that fact.

But more importantly, given his target audience, Kristof’s writing in general has another meaningful purpose: it humanizes the impoverished of the world to those who might not meet them.

There is a tendency among the general developed world populace to reduce the foreign impoverished to one dimension: poverty. In doing so, despite harmless intentions, this public ignores that the developing world is actually full of quite regular people who just happen to have less. Instead they end up viewing the impoverished as a different type of person with whom they have very little in common.

That’s not a good point of view for development efforts, as we’ll do a lot better when it is understood that people across the world are all pretty similar at the core. Showing that the poor, just like the rich, are real people who enjoy a drink even when it’s not the best idea is a step in that direction.

So what should readers take away from Kristof’s column, besides the importance of accuracy and fact-checking? It’s not that poverty is the fault of the poor. It’s not that Americans don’t struggle with the vices that the impoverished do. It’s that, all across the world, people are complex and multifaceted – and that there is a lot that ties us all together, both good and bad.

If Kristof succeeded in delivering that message, I can hardly condemn it.

Categories: General

New Garments and Attitudes are Being Made in Haiti

I found TIME’s recent photo essay, Commerce Comes to the Aid of Haiti, fascinating. It examines how American entrepreneurs have poured capital into Haiti’s textile industry, creating jobs and income for Haitians, while keeping international focus on the damaged nation. Both the photo essay and the accompanying article talk about how great this is for Haiti.

To me, this was fascinating not just because it is another prime example of how the private sector can participate in aid and recovery, but because the magazine is championing the factories of the garment industry in a poor country.

Usually, those get called sweatshops, and the public perception of them is far from positive.

Garments and textiles have long been in the crosshairs of the anti-sweatshop movement. And what is going in Haiti is really no different than what goes on in countries such as China, Bangladesh, or Vietnam. While these new factories look a bit cleaner, it is pretty certain that the workers are being paid a fraction of what the same retailers would pay workers in America. It’s also doubtful that the workers could even afford the very goods they are making. These are the things that make sweatshops so odious in American culture, and fuel the perception they must be shut down.

But this time, something is different.

Instead of calling them horrific labor abuses, these factories are being called “big economic drivers”. Gap is promoting a “Made-in-Haiti” line instead of hiding where the production of its garments occurs. American firms, with great public enthusiasm and support, are outsourcing work to Haiti.

These are things that have been seen as bad if not immoral corporate practices in the past (there’s a reason that garment countries have worked to keep their association with the developing world quiet), but now, they are being rightly portrayed as helpful to developing and fragile economies.

So, if these things are being championed in TIME magazine, it seems to represent a massive shift in public perception of the economic role of the garment industry in developing countries. People are beginning to understand that industry and commerce are long term and powerful solutions to the economic problems of poor nations.

The reason for this sudden change is somewhat unclear. However, it is the fact that a change does exist that is of great importance.

Poor countries will only experience their most rapid growth once they are able to become part of the international economic system. Becoming part of the system requires these developing countries to utilize the few economic advantages that they have. In countries like Haiti (or China or Bangladesh or Vietnam), their best advantage tends to be a relatively cheap labor force.

Often, when private companies are allowed access to this labor force, we see something like what is going on in Haiti: an impressive financial engine that allows even the poorest of countries to develop a sustainable economic model. These poorest nations are able to produce goods and thus trade with the richest nations, creating jobs and livelihoods. As time progresses, this translates to economic growth on a large scale (think China or India), raising the standards of living not for just the factory workers, but for country as a whole.

The problem is that this all relies, of course, on the continued support of the consumers in rich countries, so the public perception of the goods that they buy becomes essential to the process.

In the past, the consumer-backed anti-sweatshop movements and boycotts have greatly hampered the development of such private-industry fueled growth in poor countries. However, if these same consumers are now beginning to see the “made in insert-developing-country-here” tag as a sign of who is being helped as opposed to who is being hurt, it would pave the way for public acceptance and eventual promotion of these programs – and the ensuing economic growth and poverty reduction that would result.

So maybe it’s not the “Made-in-Haiti” shirts that are the most important export from the stricken nation right now. It looks like maybe it is the new attitude towards sweatshops and the garment industry that will be even more helpful in the end.

Categories: Private Sector

How USSR Privatization Can Inform Aid Policy Today

May 10, 2010 1 comment

When the USSR fell apart in the early nineties, the former communist countries had some serious economic restructuring to do. In no state was this more important than in Russia, at that time the largest planned economy in the world. It had become clear that Russia would abandon its communist system in place of the free-market through a process of privatization and liberalization, but the best strategy for this process had yet to be determined, and the new Russian government was at a loss.

Enter the west, the IMF, and Jeffrey Sachs.

Acting as advisers to Yeltsin’s government, they recommended the implementation of Sachs’ economic brainchild: the crudely named “shock therapy.” Rather than deliberate and gradual reforms, Sachs’ policy prescribed that the planned-to-free-market economy transition should happen basically entirely overnight.

The idea may have been noble: the sooner the country embraced a free market, the sooner it could leave behind the painful inefficiencies of a planned economy. But just like its psychological counterpart that often left subjects traumatized and hurt, the rapid transition was disastrous for Russia. After the introduction of capitalism in Russia, the poverty rate increased thirty-fold, per capita incomes fell drastically, and life expectancies dropped significantly due to an inability to afford even simple medicine. In fact, the shock therapy was so destructive it took a full decade for Russia to return to its pre-transition GDP, and by then, most of the country’s wealth had ended up in the hands of a small number of oligarchs.

Unsurprisingly, the Russian shock therapy strategy has been widely seen as an economic disaster.

However, the reason for this failure is not the underlying economic theory, as the central tenets of the free-market are well confirmed. Rather, the failure was something familiar to much of our development policy today: a willful ignorance of the role that culture plays in economic functioning and growth.

Simply put, the economic system of a country has great influence on the cultural institutions of the nation. After decades of living in a planned economy, the cultural impact of communism in Russia was huge. Russians lived with a set of norms, understanding, and experiences that did not correlate with a free-market system. This meant that capitalism needed to be introduced gradually with a focus on promoting concurrent cultural adaptation.

Effective economic growth, as was the goal of Sachs’ shock therapy in 1992 and is the goal of development policy today, necessitates cultural understanding. But far too often, development strategists find it more convenient to ignore that fact, believing that what works in western countries will function flawlessly, efficiently, and immediately everywhere else.

(Taken to its logical extreme, you get something like Paul Romer’s “charter cities”, where people from rich nations would build cities with rich-nation rules and systems for developing countries. The idea is, apparently, that people in developing countries are incapable of developing their own nations; only when rich-nation saviors come in with their economic system and a healthy dose of imperialism can these people have any hope of being lifted out of poverty. Romer calls culture a “side effect”. Look out for a future post on this atrocity…)

This is not to say, of course, that we should abandon what has worked for western nations in our quest to assist developing nations. The free-market, for example, is the most powerful economic engine that we have discovered, and its further effective employment in the poorer nations of the world could greatly help residents spur economic growth. But as Russia has showed us, such economic tools do not work in a vacuum, but only by collective interaction with the cultural norms and ideas of a complex country.

Sachs believed shock therapy would work for Russia because it had worked previously in Latin America. But as is so often forgot, different parts of the world are, well, different. And so, due to what can only be described as an enormous collective western ego, Russia experienced something so economically destructive it made the Great Depression look easy.

Let’s not inadvertently now force that on the developing world, too.

Categories: Aid
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