Relevant and even prescient commentary on news, politics and the economy.

Water, Rights and Privileges, and Global Markets

An article about famine in the Horn of Africa by Maude Barlow appeared today. It is worth your consideration. (h/t coberly) My own response is in comments. Following are excerpts:

Most Westerners see the crisis in the Horn of Africa as a combination of a large population, chronic poverty, corruption on the part of African government officials, failed states and no rain, and that none of this will ever change so giving money to this self perpetuating crisis is throwing it away. But I offered another narrative that I believe is closer to the truth.

I believe the water and food crises in the Horn of Africa are the direct result of old-fashioned colonial exploitation: land grabs by foreign hedge and investment funds and wealthy countries setting up large foreign-based agribusinesses that are guzzling the lion’s share of the water resources and using them to grow crops and biofuels for export and drive up speculation.

Foreign acquisitions are forcing small farmers and peasants off the land depriving them of access to food and water. The food and water of the region is being used for export for profit and not being used for local people. As a result, food prices in the region have gone up 200 per cent in less than a year and the price of water has risen 300 per cent. The foreign minister of Ethiopia defends his government’s actions with the neo-liberal explanation that these foreign “investments” will make the country wealthy enough that it can stop producing food and start buying it on the world market.

But exactly the opposite is happening when you drain the land of its water, as is being done by this agribusiness industry, and the rains stop coming. The drought is directly related to both climate change and the resulting desertification of a land stripped of its water sources. Here is what is essential to know: deserts can arise because humans treat land and water badly.

Desertification is taking place in over 100 countries in the world, as we strip the land of land-based water from aquifers and rivers, sending it to thirsty mega-cities (who dump it untreated into oceans), or using it to grow food and other goods for the world market, where it is transported out of local watersheds in the form of “virtual water exports.”

[end of excerpts. feel free to research the subject yourself. if Barlow is right, she provides a much more reality based understanding of what is going on in the world than the usual politicized and politicized economics analyses we usually see… coberly]

Clinton Global Initiative – Economic Empowerment (Lunch Session)

(Joined in progress)

Governor Jennifer Granholm of Michigan

Michigan – “No Worker Left Behind,” which provides retraining for those downsized auto workers and others.

Escalation of high school curriculum so that graduating students must have taken college prep courses—has resulted in reduction in dropout rate because the community understands that this is a good thing for its students.

MI expects to create 89,000 jobs over the next decade in Alternative Energy—including the Lithium-Ion batteries that will power the hybrid and electric cars.

Governor Granholm states (recapitulation from last year) that Greenville, MI, “is determined to live up to its name” and expects to be able to sell alternative-energy generated (solar, wind, etc.) power to traditional companies.

Depend upon and expect to partner with private sector; strategic investment with the private sector has enabled Granholm to reduce the size of the State Government and maintain the state-constitutionally-required balanced budget. (Grants and Federal assistance in developing alternative energy have helped as well.)  “We can lead the world,” but are facing investment from the governments of China and Korea that are already investing billions (Korea just announced $12B investment) in developing those.  Granholm: “Would hate to see the development and design done here and the manufacturing done overseas.”

Rajiv Shah, US Agency for International Development (USAID)

Formerly of the Gates Foundation; father worked for three decade for Ford.

Almost every country that has emerged from extreme poverty did it by developing Ag and then moving away from an Ag-centric economy.  We know that Ag-lead development is three to four times more effective than “general GDP” growth.  If focus on Africa and South Asia, would (and do) know that this pathway needs to be enhanced.  Despite the efforts of such as AID, local and \

Speaks well of the Green Revolution.  (Muhammad Yunus, when I asked him about it at last year’s conference, was a touch more ambivalent about its success.)  Notes that the Green Revolution didn’t extend to Africa because “we just failed to try.”  Our agency (USAID) “has been as guilty as anyone”; real aid to Africa has declined by ca. 85%.  This has resulted in child malnutrition rates rising in those countries to a 30-40% range.  Ultimate result is that ca. 130MM people were moved back into poverty.

Need roads; notes that Michigan has many “FM #” roads (Farm to Market).

USAID is investing in the countries that are putting out their own efforts to develop Ag economy; more interested in working with countries that work with them to develop new businesses, including those that add verticals to existing situation, such as processing coffee beans locally, instead of having them shipped and enhanced in developed countries such as Italy.

Very happy that USAID is not needed so much to provide direct food aid; prefers to facilitate development.  Most profound model is that of South Korea—which invested in agriculture and education and developed an export-led growth strategy.  Went from having lower GDP per capita than Kenya to being a member of (and, this year, the host of) the G-20.

Some specific developments are soybeans in Brazil that require less nitrogen (fertilizer) to grow.  Have great hope for Ghana, Rwanda, Tanzania, and Senegal—devoting resources to those countries in expectation of great returns.

Focused on reforming the procurement and investment mechanisms of USAID to make it easier to work with organizations such as the Gates Foundation and local NGOs. In the case of Haiti, developed a single form to clear all of the hurdles to approval that those local NGOs had never processed. There are many creative people in government who are employing the same entrepreneurial spirit to develop responsible and effective ways of improving resource allocation and expediting public-private partnerships to leverage the best features of both.

More Haiti

The flak started quickly. Rusty suggested taking Red Cross training and being part of the solution—the very solution that can’t reach the country. kharris compared me (un?)favorably to The Drudge Report for saying (after Robert Gates did) that the delivery obstruction was “deliberate.”

The problem is the evidence keeps mounting—and it’s all on my side. Exhibit One:

US forces last week turned back a French aid plane carrying a field hospital from the damaged, congested airport in the Haitian capital of Port-au-Prince, prompting a complaint from French Cooperation Minister Alain Joyandet. The plane landed safely the following day.

Exhibit Two:

The State Department has also been denying many seriously injured people in Port-au-Prince visas to be transferred to Miami for surgery and treatment, said Dr. William O’Neill, the dean of the Miller School of Medicine at the University of Miami, which has erected a field hospital near the airport there.

“It’s beyond insane,” Dr. O’Neill said Saturday, having just returned to Miami from Haiti. “It’s bureaucracy at its worse.”

Exhibit Three (wrong people doing distribution):

When the aid helicopters descend on the Pétionville Club golf course, once a playground for the wealthy and now a sprawling city of makeshift tents, the residents hurry toward them. But to get there, they must climb a steep embankment to a landing zone on top of a hill where the 82nd Airborne Division distributes the food and water….

The elderly get priority, but some of them cannot make it up. Families with young children also have priority, so some people are said to have borrowed babies and hauled them up the hill….

Since members of the 82nd Airborne, from Fort Bragg, N.C., began distributing food on Saturday, their delivery method has evolved.

On the first day they wore rifles slung around their backs. By Monday, they had ditched the rifles and were trying to present themselves more as aid workers than as soldiers. [emphases mine]

This is the job usually done by the Red Cross (or that was done the first few days in New Orleans by the SCA, who had the advantage of knowing how to move a large amount of supplies through mud and floods), and who know the issues involved in distribution. This is the job those $10 contributions by texting are supposed to be supporting.

This is the job that isn’t being done for nonexistent “security” issues.

New Orleans, without the SCA

Via Constance, I see that the donations are pouring in. Medecins sans Frontieres (Doctors without Borders), Partners in Health, even the American Red Cross.

There is supply. And there is clearly demand. But it appears that delivery is being deliberately impeded:

As life-saving medical supplies, food, water purification chemicals and vehicles pile up at the airport in Port-au-Prince, and as news networks report a massive international effort to deliver emergency aid, the people in the shattered city are wondering when they will see help….

BBC reporter Andy Gallagher told an 8 pm (Pacific Time) broadcast tonight that he had traveled “extensively” in Port-au-Prince during the day and saw little sign of aid delivery. He said he was shown nothing but courtesy by the Haitians he encountered. Everywhere he went he was taken by residents to see what had happened to their neighbourhood, their homes and their lives. Then they asked, “Where is the help?”

“When the Rescue teams arrive,” Gallagher said, “they will be welcomed with open arms.”…

U.S. Defense Secretary Robert Gates…was asked by media in Washington why relief supplies were not being delivered by air. He answered, “It seems to me that air drops will simply lead to riots.”

Gates says that “security” concerns are impeding the delivery of aid. But Gallagher responded directly to that in his report, saying, “I’m not experiencing that.”

Describing the airport, Gallagher reported, “There are plenty of materials on the ground and plenty of people there. I don’t know what the problem is with delivery.”

The longer the wait, the more likely the prophecy becomes self-fulfilling. Which still does not make it true. And, in this case, there is no Superdome to store people in.

How to target the poor?


Several other conferences are happening elsewhere in the world, but with less fanfare than in Pittsburgh, both in media coverage and police activity. We do forget the ‘smaller’ issues of distibution of goods, so here is a reminder.

How to target the poor?

How can governments and aid agencies target the poorest? Some use detailed means tests, measuring assets and incomes. Others let the community decide for themselves. The first seems vulnerable to error and misrepresentation, the second to manipulation by elites.

One of the papers I’m most looking forward to at BREAD: a horse race between the means test and participatory methods.

When poverty is defined using per-capita expenditure and the common PPP$2 per day threshold, we find that community-based targeting performs worse in identifying the poor than proxy-means tests, particularly near the threshold. This worse performance does not appear to be due to elite capture.

Instead, communities appear to be systematically using a different concept of poverty: the results of community-based methods are more correlated with how individual community members rank each other and with villagers’ self-assessments of their own status. Consistent with this, community-based methods result in higher satisfaction with beneficiary lists and the targeting process.

Kharris clarifies the report in comments:

The “Target the Poor” study is based on experience in Indonesia, which helps to remind us (I hope) that not all policy solutions can be drawn from a US/Developed World context. Do we know that Indonesia has an income tax system that can stand up to the rigors of a reverse tax? Will the money arrive? No direct deposit for the target group. No bank account. Some may not live in a very monetized economy. A tax-based assistance program is better, I’d think, for the urban poor than the rural poor.

From the Into – “In developing countries, most potential recipients work in the informal sector and lack verifiable records of their earnings.” Tough to offer a reverse tax in such cases.

A separate note – the study has to do with delivery, not dialectic. The assumption is that society is a given, and that the decision to help the poor has been made. Now, how best to go about it?