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rise and fall of athens

With my recent completion of Lords of the Sea: The Epic Story of the Athenian Navy and the Birth of Democracy, I have come to a point of rest in my gradual survey of 5th and 4th century Athens, which has taken me from Thucydides to Aeschylus to Xenophon to Plato to Plutarch all the way up to present day. What follows is my tentative encapsulation of the rise and fall of Athens in the 5th and 4th centuries, respectively. I am planning to write a cogent narrative of the rise and fall that integrates the a) tremendous works of drama and comedy and the b) philosophical disputes on the nature of the polis that echoed in the works of Plato and Aristotle and later on in the work of Karl Popper. (I am most sympathetic to the views of the playwrights and Popper.) Read the rest of this entry »

Filed under: World

livestock versus gold on $2 a day

Last March, the Monitor Group published Emerging Markets, Emerging Models, an analysis of the opportunities and challenges to apply market-based models to better serve the world’s poor as suppliers and customers. I have discussed the failure of supply-side aid economics in the past, and the Monitor Group’s findings illustrate the danger of assuming that your outside opinion of a low-income group’s needs matches their wants.

“We want gold on credit. Everyone in our village does,” Monitor Focus Group, Andhra Pradesh, India Read the rest of this entry »

Filed under: World

development is local

The World Bank is slowly publishing a series of books on the subject of “Moving Out of Poverty;” while the subject isn’t novel, the incredibly rich data set that underpins the series certainly is. The World Bank study included 60,000 interviews in 15 countries, with the purpose of explaining how and why households move out (and in to) poverty. I am working through the online samples while waiting for the price to come down on “Moving Out of Poverty, Volume 2: Success from the Bottom Up,” by Deepa Narayan, Lant Pritchett, and Soumya Kapoor. For a rundown of the book, check out Duncan Green’s post from last year.

The breadth and depth of the data set powers some startling factoids. Read the rest of this entry »

Filed under: General Welfare, World

development without aid in Somaliland

In “Peace-Building without External Assistance: Lessons from Somaliland,” Nicholas Eubank explores the second-order effects of state-directed foreign aid on political and economic development. Because foreign aid has worked its way into nearly ever corner of sub-Saharan Africa, there are few controls available to estimate these effects. Eubank isolates one such control in Somaliland, which has remained untouched due to the international community’s decision to make the state ineligible for aid after its unapproved secession from Somalia in 1991.

Eubank posits that because the Somaliland government did not benefit from aid revenues, it had greater incentive to reconcile with the local commercial interests, which, in turn, had a vested interest in peace and stability that served the country well. Somaliland indeed appears to have taken major steps forward since its decimation by civil war, rebuilding cities and towns, and increasing schooling and commercial activity. A UNDP/World Bank survey finds that Somaliland has significantly higher average income than Somalia proper, a reversal of the prewar distribution, with superior health statistics as well. Read the rest of this entry »

Filed under: General Welfare, World

why the welfare state needs foreign labor

Continuing on the Breaking the Gridlock kick, foreign labor opponents are keen to depict foreigners as a threat to the host nation’s economic self-interest. At their most beneficent, opponents argue against an influx of unskilled labor, which would hurt unskilled labor currently in the country. In theory, this argument is valid. As Lant Pritchett notes, however, evidence suggests the impact is marginal:

The evidence of the Mariel boatlift of a huge influx of workers into a single labor market (Miami) shows little impact on employment or wages (Card 1990). Even Borjas’s (1999) regression evidence that the labor movement of nationals is affected by the patterns of migration and hence the impact on the national labor market needs to be considered shows that only 4 percent of the decline in the real wage of high-school-educated workers can be attributed (and the cross-state regression evidence was apparently driven by the experience of California).

Given that national legislation involving a similarly “huge influx of workers” is politically impossible, the economic fate of low-skilled nationals will not be much affected by foreign labor for the foreseeable future. For those whose concerns stand unabated, Pritchett takes another tact:

The economists’ usual response to distributional arguments against efficient policies is “instruments to targets,” and for economists to resist migration on this ground while advocating free trade is intellectually inconsistent.

For fear of some anti-free traders remaining unimpressed, I would add that we also don’t allow distributional considerations to take precedence over more efficient technological innovations.  I don’t expect this counter-argument to impress anti-free traders in isolation, but free labor has the advantage over free trade in that the direct benefits accrue to those most in need; folks against an unskilled labor influx out of a concern for distributional effects would do well to consider Pritchett’s points in the previous post on the morality of labor mobility.

It would do the case for labor mobility a disservice, however, to simply argue that it wont harm national interests. I won’t waste kilobytes on the obvious benefits of allowing in more labor that firms want to pay to create products, but Pritchett does offer useful clarity on foreign labor as a way to address the problems facing aging industrial countries:

The populations of Germany, Japan, and Italy have already begun to shrink and, for Italy and Japan, are projected to be only 60 percent of their 2000 size by 2050. France and the United Kingdom will remain roughly the same size during the next fifty years. Among large industrial countries, only the United States is expected to continue to experience sizable population growth (these projections already assume some level of migration).

Current projections show support [to retiree] ratios falling in Germany from 4 to 2, and in the more dramatic cases of Italy and Japan they fall to about 1.5—only 1.5 workers for every retiree. The systems of social transfers in Europe can be sustained only with very high tax rates even at current support ratios and program design parameters (which include a combination of tax rates, ages, benefits, and so on). But if support ratios fall to anything like projected levels, then it is not clear that there are politically feasible combinations of design parameters that can make the systems solvent—either tax rates need to be too high or retirement benefits drastically curtailed.

This country-specific focus foretells of Pritchett’s final recommendations for bilateral labor agreements, which I’ll explore soon. More generally, it stirs a hope that the industrial nations will soon understand that it is in their economic interest to allow in young, tax-paying workers to correct their demographic imbalances.

Filed under: General Welfare, World,

help people, not plots of land

Returning for another round (first round: the illiberal global labor market) of Breaking the Gridlock, Lant Pritchett attacks international organizations’ assumption that economic development should focus on the nation-state, rather than the national, as the primary unit of interest. This nation-centric perspective pervades most international institutions and frustrates support of labor mobility. If you didn’t know any better, you might believe that the primary objective is to increase the productive capacity of low-yield geographic areas rather than the economic well-being of the inhabitants. Still the perception of economic development as a national phenomena would be of little concern if it wasn’t often at odds with the interests of the nationals themselves. For example, the de facto measure of development progress, GDP, presents the migration of a productive national to another country for a better paying job as a loss. The real benefits of labor mobility are only apparent when development is centered on people, not arbitrary lines. Read the rest of this entry »

Filed under: General Welfare, World, ,

the right charter city analogy

Chris Blattman and Paul Romer provide a productive back-and-forth on Romer’s charter cities idea. Blattman posted a question of particular interest, “How is this different than Chicago’s notorious housing authority, and the failure that was Cabrini-Green?” He later adds, “Singapore stumbled upon a successful model, Chicago did not. Ex-ante, I think it may have been hard to predict which would succeed.

“A trial-and-error process would, without doubt, produce dozens of successful charter cities around the world. But the error and trial could have a very heavy human cost. A half century after its birth, Cabrini-Green and the Robert Taylor homes have been razed.”
Read the rest of this entry »

Filed under: World

violence and social orders, ch. 1

D North, J Wallis, and B Weingast (NWW) offer a “conceptual framework for interpreting recorded human history” in their new work Violence and Social Orders. As a fan of North’s defining institutional economics work, as well as Weingast’s papers on China, I was pleased that Arnold Kling found so much to like about the new book, and decided to pick it up myself. I am happy to say that Violence lives up to its potential, crystallizing NWW’s earlier work in a simple and useful framework and clearly explaining its application. I found so much to like about the book, that I’ve decided to write up a post on each of the seven chapters. (Will I have the endurance? We’ll see.)
Read the rest of this entry »

Filed under: World,

vacationing in orhan’s istanbul

Istanbul always maintained a special status on my long list of world cities to visit. Not only did it have a storied past as a hub of conflict and collaboration between East and West, but it was an ancient city that actually maintained a certain relevance in modern times as the third largest city in the world. And while I treasured the ruins of Rome and other bygone civilizations, Istanbul held the promise of something more. I hoped there to find an eternal city, one that had not lost its creative spark. Read the rest of this entry »

Filed under: World

odds and ends for development assistance

In what will be my final post (for more, see: the failure of supply-side (aid) economics, no wal-marts in malawi, the great quality of life convergence) based on selections from Charles Kenny’s draft of “The Success of Development,”  below are some of my favorite nuggets and takeaways from his work:

Sachs‘ Millennium Project produced a report Investing in Development, based on such ideas. New York University Economist Bill Easterly was outraged on reading Sachs‘ report and demanded that we―discard the Planners‘ patronizing confidence that the Planners know how to solve other peoples‘ problems better than the people themselves do. He contrasted the planning approach to that of a ‘searcher‘ who ―admits he doesn‘t know the answers in advance… believes that poverty is a complicated tangle of political, social, historical, institutional, and technological factors and ―only hopes to find answers to individual problems by trial and error experimentation.

If rich countries increased the size of their labor forces by only three percent through reduced restrictions on migrant labor, Lant Pritchett estimates that this would add $300 billion to the welfare of citizens of poor countries –roughly four times the magnitude of foreign aid flows. Read the rest of this entry »

Filed under: Economic Policy, General Welfare, World,