Thoughts for Food

Writing in Dissent Magazine, Thomas Pogge takes on the complex issue of international economic growth and inequality. His main aim is to take issue with the idea that 'first we've got to grow the cake before we share it out' and the assumption that the best way to reduce poverty is through all-out economic growth that will benefit all through trickle-down processes. Instead he suggests that more equitable economic growth may be of much greater benefit to the poorest, even if it's a little slower, at a very small opportunity cost to the richest.

Pogge's starting point is one of nifty dynamic graphs of international GDP per capita (at purchasing power parity) along the lines of those developed by and displayed on the
Gapminder website. This one was displayed in the March 2004 issue of the Economist as a piece of one-upmanship on market globalisation critics. Charted at country level, poorer countries have grown more slowly over the last twenty years than rich countries. However, when you account for each country's population (changing the size of the dots on the graph) , the slope of the trend is reversed, thanks to the success of China and India.

All very well, says Pogge. But this considers only one of the dimensions of inequality -- between countries. Also relevant is inequality within countries. Little can be inferred about the poverty-reducing effect of a country's growth in average wealth if all the extra income is going to the richest. For example, survey data indicates that the income of the bottom decile in the United States is not much more than that of the bottom decile in Hungary, and only half that of the bottom decile of Japan or Norway.

Pogge makes what I agree is the important point that the relative income share is also important to consider, because "many things money can buy are positional or competitive: political influence, for instance, and access to education and even health care depend not merely on how much money one has to spend but also on how much others are willing and able to spend on those same goods".

That is a point that can be disputed at an ideological level, and then we get into complicated debates about rewards and incentives. But even if we just stick to differences in absolute income levels, the situation is a lot more extreme when developing countries are considered. For example, the income of the poorest decile in Turkey is nearly three times that of Colombia's poorest (although the two countries have a similar GDP per capita at PPP), and the lowest decile in Colombia earns only 7.4% of the average national income. Even more strikingly, in Vietnam, which is only half as rich as Colombia, the poorest decile has an income more than twice as high as the poorest decile in Colombia.

Pogge goes on to consider China, the great poster child for development through maket globaisation. While he acknowledges that there have been large gains for Chinese, including the poorest, he wonders whether even greater reductions in poverty could have been possible with more equitable growth. Between 1990 and 2005, the national per capita Chinese income grew by 236 percent, but that of the bottom decile just 77 percent, while their relative share declined from 30 to 16 percent of the average. Had the relativities been retained, suggests Pogge, even at the expense of a couple of percentage points of growth per annum, the poorest 40 percent of Chinese would all be better off in absolute terms than they are today.

Finally, he considers inequality between human beings world wide. Here he suggests that China's success may have been at the expense of the global poor elsewhere. With only a limited amount of access possible to the still-protected markets of the rich and powerful nations, could China have crowded out the gains of other developing nations by winning the race to the bottom in terms of labor and environmental standards? It's a provocative thesis, but if valid, would be a caution against supposing that other nations can simply follow China's path.

Overall, comparing humans to other humans paints the most dramatic picture of all. Sticking to PPP terms, the poorest quintile of humanity controls just 0.4 percent of the world's wealth, while the richest 1 percent controls 31.6 percent. Doubling the wealth of the bottom two quintiles (40 percent) of the world's population would take just 1.5 percent of the wealth of the top 1 percent. Pogge concludes:

Most of the massive severe poverty persisting in the world today is avoidable through more equitable institutions that would entail minuscule opportunity costs for the affluent. It is for the sake of trivial economic gains that national and global elites are keeping billions of human beings in life-threatening poverty with all its attendant evils such as hunger and communicable diseases, child labor and prostitution, trafficking, and premature death. Considering this situation from a moral standpoint, we must now assess growth—both globally and within most countries—in terms of its effect on the economic position of the poor.

It's a good argument that helps cut through some of the ideological fog in all the contradictory statistics. But it still leaves the massive question of just how you do engineer economic growth with less inequality. If it requires 'more equitable institutions', what are these equitable institutions, and how should they work?

Categories: development, Latin America

Modernisation, Shmodernisation

Excuse the potted summaries of my development studies lectures. They are part of my 'diary', which will contribute to a portion of my course work grade.

A couple of weeks into the lectures, we got to Modernization Theory, the starting point for any discussion of development theories. This comes from the period around the end of the Second World War, when there was a surge of interest in how the poor benighted masses of the world could improve their lives by becoming much more like us in the West.

On the one hand, getting the starving natives to the point of having a refrigerator and a car in the driveway would make them less susceptible to the Red Peril. On the other hand, if you were a communist, modernisation had to be part of the glorious dialectical march of history.

According to the standard view, modernisation happens along a number of different dimensions. To the uninitiated, a lot of this will look less like a theory than the set of assumptions we still go by most of the time.

Population -- high birth and death rates give way to a period of rapid population growth, then finally to a stabilising population with both birth and death rates low.

Economy -- subsistence agriculture with little specialisation and exchange through reciprocity eventually sees production removed from consumption, a high degree of specialisation, and exchange through money rather than reciprocity.

Society -- tribal societies where kinship networks dominate and social status is inherited give way to meritocractic societies based on the nuclear family and a secular, scientific education. Class becomes a key organising factor of society.

Politics -- tribal groups with local control and close association between political and religious leaders give way to the modern democractic state with mass participation in politics based on political parties, separation of church and state, and mass communication through the media.

Geography -- modernisation diffuses through space, with transport, trade and urban centres hastening the process of modernisaton and vice versa. The spread of modernisation can be measured by things like kms of roads, telephone connections, kids in school, and newspaper circulation (and nowadays mobile phones and internet connections).

Although we are about to learn about all the critiques of modernization theory and how it has been superceded by theories that are more sophisticated or diametrically opposed, much of it clearly still drives how we think about the world. For example, a lot of people might have had deep reservations about the likelihood of the neoconservative dream of turning Iraq into a 'modern, secular liberal democracy' and thereby 'transforming the Middle East'. More people still rejected the means by which it was to be achieved. But there was certainly a general sense that it was a desirable goal.

Joe Stiglitz and His Discontents

Friday evening we went to see Nobel prize winner, former Clinton adminstration and World Bank honcho and best selling author Jospeh Stiglitz 'chat' with NZ-domiciled economic journalist Rod Oram as part of Readers and Writers week at the Wellington International Festival.

In the course of the hour or so of discussion we got for the $25 entry fee, Stiglitz:

--reiterated that 'there needs to be a balance' between the responsibilities of markets and government. He cited his own work on information asymmetries as demonstrating why markets aren't always efficient, and pulled out what was no doubt a favoured quote that 'the reason why the invisible hand is invisible is that in many cases it isn't actually there' .

-- heaped special praise on the the Scandinavian countries as having effectively struck that balance and having succeeded through 'investing in their young people' and being prepared to pragmatically review and revise policies.

-- stressed that governments need to implement redistributive policies to compensate those who lose out under international trade and globalisation. He (to my moderate surprise) slightly favoured Obama to achieve this in the US, but said that 'the policy differences between the two [Democratic candidates] are much less than those with McCain'.

-- argued that central banks should not be restricted to narrow inflation-only targets, but should also have economic growth and employment as objectives. He suggested that former Federal Reserver chairman Alan Greenspan bore some of the blame for the current credit crisis, by encouraging people to take out variable-rate mortagages.

-- in response to the inevitable 'but is economic growth sustainable' audience question, agreed that better measures of economic wellbeing and progress than simple GDP need to be developed, factoring in environmental degradation, resource depletion and so forth (check out the work of Partha Dasgupta for what these might look like).

When asked about whether he preferred a cap-and-trade system or carbon tax, he said that the two were near enough to equivalent if emission credits are auctioned. Giving away the emissions allowances -- as is set to happen in New Zealand -- he thought would 'give scope for corruption'. Ideally, said Stigliz, there should be a fully international auction of emissons permits.

Stiglitz came across as the atchetype sensible progressive, spontaneuously applauded on occasions by the 1,500 or so right-on middle class Wellingtonians. With his friendly-bear demeanour and softly gruff tones, he reminded me of another maverick New England academic, philosopher Daniel Dennett. As was the case when I watched Dennett tear apart creationists in front of a group of atheist or agnostic philosophy students, I thought it might be more fun to see Stiglitz put his well-reasoned messages to a crowded town hall in rural Texas, or maybe Te Kuiti.

Development and Dependence

One of the recommended books to consult in our Development Studies course is a text of sorts called The Companion to Development Studies, edited by Vandan Desai and Robert Potter,

Heading straight for the bits on Latin America, I found confirmation that Eduardo Galeano's poetically fist-shaking The Open Veins of Latin America had its intellectual foundations in a body of work called dependency theory

As described in my review of Open Veins, Galeano describes an exploiting 'core', which dominates industrial production (and makes the decisions), and an exploited 'periphery', which provides raw materials and cheap labour. Core-periphery relations can exist between continents (eg, Europe--Latin America), between countries (eg, Brazil--Paraguay) and within countries (eg, Lima--Andean Peru)

Dependency theory originated with a group of Latin American economists who worked with the United Nations in the aftermath of World War 2 and came to present a peculiarly Latin American perspective on development. Dependency theory was notable in being the first body of thought on these issues that actually originated in the 'developing' world. It's easy to spot its origins in Marxism -- for many dependency theorists, the 'underdevelopment' of the third world periphery is a necessary correlation of the development of the rich countries. Exploitation is seen as inherent in the very nature of capitalism.

A brief glance through the short articles in Desai and Potter told me that dependency theory has been critiqued from several quarters. There have been technical criticisms from within Marxism, which made me glaze over a little even in the one-paragraph versions. There have also been arguments that dependency theory requires excessive ad hoc adjustment to fit the very diverse kinds of economic relations that exist at different places and times.

With a bit more reading, I'm likely to agree with the latter views. However, as I noted in the review, it doesn't need to be a grand theory, and you don't need to be a Marxist, to find Open Veins a compelling historical account of Latin America's economic and political history that strikes to the root of the continent's problems.

As also noted, the book ends in the mid-70s, amidst a dark wave of miltary dictatorships but before the numerous economic crises of the 80s and 90s. The controversies resulting from these events suggest that the debate about dependency theory is far from dead. As I read further, I expect to hear more about how, as colonialism has ended and local democracy has strengthened, the power relations of core and perpiphery have been perpetuated through mechanisms such as debt and trade rules. I might even try to contribute some such thoughts myself.

History Marching On?

One of the advantages of two-hour lectures is that you get potted summaries of frighteningly dense academic texts, which you later recall as actually having read.

Tonight we were introduced to the work of two historians called M P Cowen and R W Shenton, who, in a work of apparently monumental difficulty, tease out the difference between what they call 'immanent' and 'intentional' development.

According to the authors, 'immanent development' is the organic, undirected, potentially chaotic process exemplified by the Industrial Revolution. It involves rapid technological change, massive urbanisation, and the overthrow of old values and institutions, destroying while it creates.

'Intentional development' is the intervention of governments and other institutions to control and direct development. It aims to slow down urbanisation through favouring rural development, and preserving some parts of existing customs and institutions. Most of what we think of as 'development projects', by government agencies and NGOs, would fall into this category.

It helps to learn that Cowen and Shenton are Marxists, disapproving of 'intentional development' as a reactionary impediment to the glorious march of history. Seen in this light, their characterisation of 'intentional development' sounds similar to the attitudes of magazine Spiked, whose contributors like Frank Furedi and Brendan O'Neill are cuttingly scornful of the concept of 'sustainable' development and lambast the 'eco-miserabilists' that are pessimistic about human progress.

Spiked writers are contemptuous of the patronising do-gooding of western agencies who set African villagers' sights on a donkey-powered well, rather than a modern reticulated water system. O'Neill has launched an attack on the practice of offsetting carbon emissions by discouraging third-world farmers from using energy-intensive technologies -- something he calls 'eco-enslavement'.

The description of intentional development also sounded to me like Alan Garcia's slogan of 'responsible change' with which he carved out his position in the 2006 Peruvian elections. But if you look closely, here the concept described by Cowen and Shenton is flipped on its head. In Garcia's case, the 'change' didn't refer to development, but to redistributive policies and more help for the poor. 'Responsible' referred to not trying to regulate and redistribute too much -- i.e. not doing anything radical that might frighten investors and financial markets.

This suggests that, since the late 1980s, the dynamic march of global capitalism has come to be seen as the orthodox state of affairs, and upholding it is in effect the conservative position.
The 'immanent', grassroots tendency in many countries is to seek stability and security, and to oppose or put conditions on the unsettling flux of capitalism. This is now seen as radical.

Garcia's actual behaviour in government has been rather different from promised, with less 'change' and rather more 'responsibility' to the business elites that the likes of La Republica columnist Humberto Campodónico claim are his taskmasters. He has declared certain major mining projects as 'in the national interest' and called those who oppose them 'old communists'.

Pondering these paradoxes led me to wonder whether there aren't two conflicting kinds of 'intentional development'. Sure, the NGOs are squirreling away, trying to promote productive rural communities, just as Cowen and Stenton say. But they're overshadowed by the alliance between business elites and government, which pushes more rapid economic transformation than would occur naturally.

There's a name for this -- corporatism. It's at the heart of what Noami Klein is critiquing (in a sometimes overblown, but broadly effective style) in her book The Shock Doctrine. The 'creative destruction' of unfettered capitalism might have originally been an 'immanent' process driven by new technologies and organic social changes. But as Klein and others have argued, in recent times it has often been imposed from the top down.

Why Do I Care?

One of the assignments in the Master of Development Studies programme is to keep a 'journal' of our own 'ideas on development theories and issues' You can imagine that I hardly greeted this task with too much trepidation, given that my amateur musings on trade, energy, poverty reduction, labour rights, economic growth, government policy etc have themselves formed a kind of intermittent journal over the last couple of years.

Indeed, it will be an excellent excuse to follow through with a number of ideas for posts that I had shelved or never started, as priorities such as work, other projects, and generally having a life have intruded.

The suggested starting point for our 'journals' is to bring it all back to our raison d'etre for being interested in development.

So here is my two cents' worth.

Those of us in the handful of 'first world' countries roughly defined by OECD membership are among the few materially luckiest people to have ever lived. About two hundred years ago, things started changing for our forebears in Northern Europe. Whether through the dynamism of the new industrial economies, rapacious exploitation of raw materials from recently 'discovered' colonies, or the unprecedentedly cheap energy delivered by fossil fuels, economic growth started to accelerate. This allowed the production and adoption of a range of new technologies that have literally transformed the world.

We've ended up with longer, healthier, more comfortable lives, and individual freedoms unthinkable even a couple of of generations ago.

Greater material wealth hardly brings utopia. There is some evidence that the contribution of wealth to happiness tops out at between $15,000--20,000 USD per capita. Humans seem to have an in-built status anxiety that means relative wealth differences create stress even when everyone is better off.

Nevertheless, you'd have to be quite perverse to wish yourself into a different place and time. Apart from a very, very few people who really want to live in mud huts, most people who completely reject the 'system' in which they were born and grew up, do so in bad faith. From a personal perspective, having the freedom to travel, and being able to afford effective laser eye surgery, are two things I remain eternally grateful for.
In my view, working out how the rest of the world can have the same opportunities is at least a very interesting puzzle. Ensuring that they do, has at least some moral weight.

There are other, more pragmatic reasons for supporting global development. Increasing prosperity is what writer Robert Wright calls a 'non-zero sum game'. People are just as naturally greedy and conniving when they're rich as when they're poor -- but when there are more riches to go around, there's less of an imperative to grab someone else's share. Greater prosperity gives people more time and space to learn to tame their more venal impulses. If we care about reducing the number of people getting shot or blown up, supporting sustainable material wellbeing is a necessary -- though probably not sufficient -- condition.

It also appears that there may be a tipping point of prosperity when societies begin to see the natural environment as something precious that needs to be cared for, rather than an adversary to be exploited. Again, material prosperity allows us to care about more than where the next meal is coming from.

That's the potted summary of my overall philosophy. My detailed views, and my obsessions and prejudices, mostly derive from my personal experiences living and travelling in Latin America.
Before I ever made it to the continent, I thought I knew something about its history and politics. It's hardly a surprise that my instintctive sympathies were firmly left-wing. I'd been inspired by seeing a film sympathetic to the Sandinista revolutionaries in Nicaragua, and stirred by stories of CIA conspiracies to undermine democratic progress at the behest of neocolonial corporations like United Fruit. On the other hand, reluctant readings of excerpts from the Economist had partially eroded any faith in romantically socialist alternatives.

I was aware that a common way of engaging in these countries -- and a good way to get to stay around -- was working in some kind of aid or development project. But the more I travelled, the more I wondered how I could offer 'assistance' to anyone. For a clumsy gringo with a bright backpack and not even much money, it seemed far more likely to be the other way around. The young guys manouvering dilapidated chicken buses around impossible mountain bends; the women handweaving elaborate and colourful textiles; the peasant farmers raising corn and chickens on difficult patches of land: all were far more capable than I of meeting life's practical challenges.

It's true that their were deep inequalities and horrible injustices on view. But I found that many of my preconceptions were undermined or turned on their head. Some of the charming, educated people that I met and were treated kindly by could probably be characterised as part of the 'oligarchy'. On the other hand, I felt it difficult to engage with the working people and campesinos, except occasionally after a bottle of aguardiente. The villains of some of my reading, the 'oppressive' police and military, were staffed by guys from the same working class, mestizo background as the workers and farmers. And I had to acknowledge that as a vulnerable lone traveller, it was sometimes a comfort to see them around.

I also began to see ways in which people's problems were in part due to simple things that they themselves could change.

Most people were eager to see tourism -- yet couldn't see that the tendency to harass, rip off and otherwise squeeze out every last penny from visitors was the quickest way to ensure they didn't stay around and spend more money. Worse was the tendency to behave the same way towards each other.

I was also surprised by the prevalence of nationalism. While it seems clear to an outsider that the ordinary people of Latin American countries have far more in common with each other than with their local elites, it was depressingly common to see people with unexamined hostility towards a neighbouring nation based on the territorial squabbles of a hundred years ago. Attitudes about race and ethnicity could charitably be described as unreconstructed.

After more time spent in Peru in particular, and study of its history, politics and culture, I started to better understand the underlying reasons for these things -- but continued to believe they could be different.

If I've ended up with any strong belief about development, it would be a kind of militant pragmatism. To take advantage of the potential of the modern economy, there are probably some sine qua nons relating to containing inflation and keeping a relatively stable currency. Beyond that, what works for a particular country will depend very much on that country's people, culture, history, and even physical geography.

I'm sceptical about the simplistic narratives that blame all Latin America's problems on outside exploitation. But I'm far more irritated by those neoliberals who would remake countries in the image of their textbook, based on highly ideologised theories, without any appreciation of the realities of individual societies, or even of their own countries' histories.

One thing I believe firmly is that the countries of Latin America -- and by extension other 'developing ' countries -- ought to be able to work out their own priorities and the mix of policies that will best meet the needs of their citizens.

At the same time, I would call into question any notion of some kind of Hegelian pathway to a 'state of development' that more or less resembles how we live. For all the difficulties of Latin America, there are many aspects of life there that are preferable to New Zealand.

Latin America retains many traditions, languages, skills and cultural memories that have been steamrolled over in many industrialised societies. People have much warmer and more regular contact with their families and neighbours, and those who have visited western countries are often horrified at the neglect sometimes suffered by elderly parents. Children may in my view be over-indulged, but Latin Americans would be rather shocked that what has most stirred New Zealanders to political action in the last couple of years has been defending the right to hit their kids.

Life is intense, exciting, passionate. Romance exists -- though gender politics are often fraught. Music and dancing are part of everyday life. Middle class people like my friends Hugo and Lizbeth have lives that are a little less comfortable and more chaotic than New Zealand suburbanites, but enjoy less commuting and better parties They get to eat a homecooked meal around the kitchen table at lunchtime.

It may sound like a pious cliche, but for me international development is about an exchange of experiences and perspectives, ideally for mutual benefit.

Categories: development, Latin America

The Academic Life

Well, I've finally gone and done it. Gone back to school, that is. From next week, I'll be formally enrolled in a Master of Development Studies at Victoria University here in Wellington.

Development studies is based in the department of geography, but is an 'interdiscplinary' programme, straying into economics, political science, environmental science, and others. This appeals to a dilettante like me. Professionally, it appears to be a pathway into all kinds of international do-goodery in the institutional or NGO sectors, as well as good background for further academic study or the kind of serious journalism that I'd love to do on a fulltime basis.

I understand from the teaching staff that students are expected to become especially interested in development issues in a particular region of the world. That's fine, since for me Latin America is a no-brainer. For those who are either interested or bored silly by the regular musings here on development issues in Latin America, it's hard to know yet whether there will be more or less blogging on these topics as the essays and assignments cut in.

In any case, I've done the natural thing for someone with an obsessive interest in Latin American issues -- pay large sums of money to carry on reading and writing about them.

No, wait...

The downside is that with the need to work a little less to fit in the study, finance may not permit the yearly visit to South America, meaning that I risk losing some of my personal connections with the place. The upside is that when I do make it back, there, I'll have sound academic reasons for staying around for a while.