There is an Op-Ed in the Wall Street Journal supporting the Obama plan, but arguing that it needs to go even further. If the situation really is as bad as it is presented in this Op-Ed, than we need to drastically overhaul the banking system. The author is asking the government to use really significant resources - much more than already committed - to save the banks. If they need this much help to stay alive, then they will need lots of help (i.e. significant regulation) to prevent them from getting in this situation again.
Reading this post, you might think I did not know about the crisis. While I am well aware of the situation, this particular Op-Ed made the situation really seem dire and the banks really desperate. I feel that I am not doing a good job of articulating how this article made me feel. It sounds like the author is saying that the banks need this, this, this, this and this, in order to survive. It is appalling that banks got to this point yet feel they don't need regulation.
Maybe it is because I am writing this late at night that I am having this reaction. Or maybe my anger has finally emerged over the reckless behavior and our current situation.
Saturday, April 04, 2009
Dambisa Moyo on Development
Dambisa Moyo, a Zambian economist who has worked for the World Bank, has published Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa, a book on development that makes similar arguments as William Easterly's White Man's Burden. Both believe that government to government aid for developing countries is actually hindering development and creating dependency instead of empowerment and self-sustainability.
I had planned to attend a discussion featuring Moyo and Easterly. I did not end up going, but fortunately the organizers have posted videos of the discussion. Moyo's rhetoric is one of empowerment for Africa. She rightly criticizes how Bono and others have become spokespersons for Africa and she asks where the African leadership is. Bono's (and others) heart is in the right place. There is tremendous suffering and I think it attention to these issues is warranted. However, it is not his place to be their spokesperson. Furthermore, the tone of the celebrities and the focus only on the problems perpetuates the myth that Africans are inferior and need our help.
I remember my feeling after reading The Bottom Billion, where Paul Collier states that growth is the only answer. I felt that growth takes too long and the problems were too great and needed immediate solutions. What I am beginning to believe now is that there are no quick solutions. Growth that comes through empowerment and markets, though it may be slow, is the only way for developing countries to achieve self-sufficiency and lift their populations out of poverty. We are not Africa's saviors - Africa has to save themselves. Let's hope people start listening to Moyo.
I had planned to attend a discussion featuring Moyo and Easterly. I did not end up going, but fortunately the organizers have posted videos of the discussion. Moyo's rhetoric is one of empowerment for Africa. She rightly criticizes how Bono and others have become spokespersons for Africa and she asks where the African leadership is. Bono's (and others) heart is in the right place. There is tremendous suffering and I think it attention to these issues is warranted. However, it is not his place to be their spokesperson. Furthermore, the tone of the celebrities and the focus only on the problems perpetuates the myth that Africans are inferior and need our help.
I remember my feeling after reading The Bottom Billion, where Paul Collier states that growth is the only answer. I felt that growth takes too long and the problems were too great and needed immediate solutions. What I am beginning to believe now is that there are no quick solutions. Growth that comes through empowerment and markets, though it may be slow, is the only way for developing countries to achieve self-sufficiency and lift their populations out of poverty. We are not Africa's saviors - Africa has to save themselves. Let's hope people start listening to Moyo.
Choice is an Intrinsic Good
Much of the focus on charter schools is on whether they do or will increase performance. While performance is important, it is not the only reason for charter schools. Charters provide something for public school students that private school students already receive: the freedom to choose.
Part of what makes choices so great is the freedom it can provide. In the private school market, parents and students have the ability to choose between traditional or progressive schools, art schools or engineering schools, single sex or co-ed schools. I do not believe that one model of school is better than the other, but that each model can be effective for certain types of students. Some children may do better in a single-sex environment. Some students will do much better in a school that supports their artistic creativity. It is only fair that public school students have this same freedom.
Some of the early studies of charter schools have shown at most modest improvements in performance. But even when there was no detectable increase in performance, parental happiness over their charter schools has been high. To me, this signifies that parents are happy that they have this option.
By giving more people the ability to choose their model of education, we give them control over their (or their child's) future. We hope this will lead to better performance. But at least we are giving them the freedom to decide for themselves what type of school they want. If we ignore this, we ignore one of the biggest reasons for charter schools.
Part of what makes choices so great is the freedom it can provide. In the private school market, parents and students have the ability to choose between traditional or progressive schools, art schools or engineering schools, single sex or co-ed schools. I do not believe that one model of school is better than the other, but that each model can be effective for certain types of students. Some children may do better in a single-sex environment. Some students will do much better in a school that supports their artistic creativity. It is only fair that public school students have this same freedom.
Some of the early studies of charter schools have shown at most modest improvements in performance. But even when there was no detectable increase in performance, parental happiness over their charter schools has been high. To me, this signifies that parents are happy that they have this option.
By giving more people the ability to choose their model of education, we give them control over their (or their child's) future. We hope this will lead to better performance. But at least we are giving them the freedom to decide for themselves what type of school they want. If we ignore this, we ignore one of the biggest reasons for charter schools.
Freeman Dyson
I have longed for intelligent critiques of global warming but until last week's Sunday Times cover story, had not really found anything. Last week's article was about Freeman Dyson, a relatively famous scientist who started out in physics but is now more of a generalist. He is noted for his ability to gain in-depth understanding of different complicated sciences.
Hearing his critiques, as they were explained by the author of the article, did not change my mind. Some I found a bit absurd, but others did provide some interesting questions.
One of his critiques that I found to be pretty absurd was his belief that we should focus on more important issues, like poverty, famine and war, and deal with global warming when we know more about it. The problem with this argument is that the effects of global warming, if predictions are true, will be borne most by those that are most vulnerable.
We already see that the Sahara desert is growing and the Sahel region of Africa is expanding north. This has caused scarcity of resources in these areas which will only increase as warming continues - leading to famine and conflict. Further, wet areas are projected to get wetter, which will again be borne by those most vulnerable. If we make progress now on poverty issues but not global warming, we'll likely have greater poverty issues in the future.
Furthermore, that critique assumes we can only accomplish one thing at a time, which I do not agree with at all. This argument comes up in many different policy areas, and it never makes sense to me.
Where he prompts good questions is his use of biology in global warming. He is right that the prediction models focus mainly on atmospheric changes and do not seem to incorporate how biological changes could interact with the changes (they track biological changes without incorporating them). In fact, he says that higher carbon may be better for plant and animal species. At one point he says how increases in plant and animal diversity came at times of much higher carbon levels.
Before I go on, I think we need some serious clarification about historical carbon levels. Al Gore and others claim that carbon levels now are far higher than they have been in the last 20,000 years. So is Dyson claiming that is wrong, or is he saying that carbon levels were higher but looking farther back? To me, this is probably the most important question of global warming.
Dyson also has interesting and optimistic proposals for ways to use biology to help decrease carbon levels, and it will definitely be worth learning more about that (trees that can capture carbon).
Finally, the article portrays the way that dissenters are treated. In some policy areas, those who dissent are dismissed not by debating their points on the merits, but by suggesting that their intentions are bad. This happens in policy on the Middle East, and comes up here too. I agree that in cases where oil companies are paying for shoddy research, it makes sense to question the motives. But Dyson seems to have no motivation other than to be contrarian and challenge people's assumptions. The world needs more, not less, of these people - even when they are wrong.
Hearing his critiques, as they were explained by the author of the article, did not change my mind. Some I found a bit absurd, but others did provide some interesting questions.
One of his critiques that I found to be pretty absurd was his belief that we should focus on more important issues, like poverty, famine and war, and deal with global warming when we know more about it. The problem with this argument is that the effects of global warming, if predictions are true, will be borne most by those that are most vulnerable.
We already see that the Sahara desert is growing and the Sahel region of Africa is expanding north. This has caused scarcity of resources in these areas which will only increase as warming continues - leading to famine and conflict. Further, wet areas are projected to get wetter, which will again be borne by those most vulnerable. If we make progress now on poverty issues but not global warming, we'll likely have greater poverty issues in the future.
Furthermore, that critique assumes we can only accomplish one thing at a time, which I do not agree with at all. This argument comes up in many different policy areas, and it never makes sense to me.
Where he prompts good questions is his use of biology in global warming. He is right that the prediction models focus mainly on atmospheric changes and do not seem to incorporate how biological changes could interact with the changes (they track biological changes without incorporating them). In fact, he says that higher carbon may be better for plant and animal species. At one point he says how increases in plant and animal diversity came at times of much higher carbon levels.
Before I go on, I think we need some serious clarification about historical carbon levels. Al Gore and others claim that carbon levels now are far higher than they have been in the last 20,000 years. So is Dyson claiming that is wrong, or is he saying that carbon levels were higher but looking farther back? To me, this is probably the most important question of global warming.
Dyson also has interesting and optimistic proposals for ways to use biology to help decrease carbon levels, and it will definitely be worth learning more about that (trees that can capture carbon).
Finally, the article portrays the way that dissenters are treated. In some policy areas, those who dissent are dismissed not by debating their points on the merits, but by suggesting that their intentions are bad. This happens in policy on the Middle East, and comes up here too. I agree that in cases where oil companies are paying for shoddy research, it makes sense to question the motives. But Dyson seems to have no motivation other than to be contrarian and challenge people's assumptions. The world needs more, not less, of these people - even when they are wrong.
Why Only Darfur?
This book review in the Times really struck a chord with me. If I understand it, the author of the book takes exception to the public's obsession with the genocide in Darfur. He believes that it is based on a lack of real understanding of the history and dimensions in Sudan, and maybe also based on racism.
I do not disagree that the public often latches on to some issues, while ignoring other equally or more troubling situations. We rally around Darfur but pay little attention to the major tragedies in Somalia and the Congo. Actually, while the world watches Darfur, it pays little attention to the conflict in southern Sudan.
While I do think there is something particularly damaging to the fabric of humanity when one group attempts to eliminate another group, that cannot be our benchmark for when we choose to show concern. And our analysis of those situations should be done objectively, where instead we have a history of bias towards whichever side we supported.
I do not disagree that the public often latches on to some issues, while ignoring other equally or more troubling situations. We rally around Darfur but pay little attention to the major tragedies in Somalia and the Congo. Actually, while the world watches Darfur, it pays little attention to the conflict in southern Sudan.
While I do think there is something particularly damaging to the fabric of humanity when one group attempts to eliminate another group, that cannot be our benchmark for when we choose to show concern. And our analysis of those situations should be done objectively, where instead we have a history of bias towards whichever side we supported.
Book Report: The End of Poverty
I posted my review of Jeffery Sach's book The End of Poverty January of 2008 at a short-lived Human Rights blog I tried to start. Here is what I said about his book:
More recently I read The End of Poverty by Jeffrey Sachs. Although he also recommends increasing growth, Sachs is inspiring and impatient. He thinks we can end extreme poverty in our generation as long as we actually follow through on promises we have already made - namely 0.7% of GDP for foreign assistance.If you have read my book report on Easterly's book, you'll notice that my position has changed. I am much less enamored with Sach's position, especially his lack of humility and his belief that he / we can save Africa.
His proscriptions are extremely thorough, and you only wish the world would follow through. Looking at the landscape of current development movements, it seems as though at least two of his biggest recommendations are being acted on; help fighting malaria (including work on vaccines, increasing availability of bed nets, and better access to treatment), AIDS, and tropical diseases as well as debt forgiveness (he does a great job of showing why this is so important) are big issues right now. With any luck, two of his other big recommendations - drastically improving infrastructure so that landlocked countries can have access to ports and increasing agriculture production - are hopefully not far behind (and this article on Malawi shows how one country has made strides on this last point).
Overall, his analysis is even more convincing than Collier's. The countries that still experience extreme poverty do so because of tropical diseases, food scarcity caused by low agriculture output, and lack of access to ports. Each of these things can be corrected. And he really reinforces the reality that in a world with as much wealth as there is, extreme poverty is unacceptable.
Eat Less or None at All?
Someone suggested I read this article from Audubon Magazine about the effects of meat eating on global warming. The article describes the parts of the meat-raising process that increases green-house gasses. It also compares free-range and caged meat, and finds that free-range is not better for mitigating global warming (an interesting finding, but not the reason people turn to free-range).
In light of the significant effects on global warming, the author concludes that vegetarianism is the solution. But he allows that eating less meat would help. Here are the last two paragraphs from the article:
A few friends have followed similar plans as mine to eat less meat. They have each decided to cut back to meat once a day and then to cut back to less than once a day. None of those people would have given up meat. This movement will gain a lot more momentum focusing first on eating less meat.
In light of the significant effects on global warming, the author concludes that vegetarianism is the solution. But he allows that eating less meat would help. Here are the last two paragraphs from the article:
We could also, as a nation, just eat a lot less meat as an alternative to full vegetarianism. Anthony McMichael, a leading Australia-based expert on climate change and health issues, has crunched the numbers. He estimates that per capita daily meat consumption would need to drop from about 12 ounces per day in America to 3.1 ounces (with less than half of it red meat) in order to protect the climate.While I can understand his decision, I don't think being a vegetarian is easier to explain or defend. And although he does not get to this point, it certainly is not easier to encourage people to become vegetarians then to encourage them to eat less meat.
I suppose I could measure out 3.1 ounces of meat per day, cook it, eat it, and still feel morally okay. But frankly I’d rather just go without. I’d rather be a vegetarian. It’s easier to explain. It’s easier to defend. And I just plain like it.
A few friends have followed similar plans as mine to eat less meat. They have each decided to cut back to meat once a day and then to cut back to less than once a day. None of those people would have given up meat. This movement will gain a lot more momentum focusing first on eating less meat.
Stiglitz: Not Just a Globalization Expert
I have tended to trust the Obama administration when it comes to plans to fix the financial crisis. It has been hard for me to evaluate the crisis since I do not fully understand Wall Street. I assume many of our politicians are having the same problem. Fortunately though, economists like Paul Krugman and Joseph Stiglitz are providing thoughtful critiques from a liberal perspective. In fact, Joseph Stiglitz's column in the NY Times may have convinced me that the Obama administration's most recent plan for the banks is a bad idea.
The plan will allow investors to buy up troubled assets with most of the money backed by the government. Here is Stiglitz's critique in his own words:
The plan will allow investors to buy up troubled assets with most of the money backed by the government. Here is Stiglitz's critique in his own words:
Paying fair market values for the assets will not work. Only by overpaying for the assets will the banks be adequately recapitalized. But overpaying for the assets simply shifts the losses to the government. In other words, the Geithner plan works only if and when the taxpayer loses big time.My first reaction to my lack of understanding was to blame myself instead of the industry. But that was wrong; it is a major problem when the public cannot fully understand how an industry works and worse, how a solution is going to work. Without public understanding, we cannot have good policies that prevent further meltdowns. We need plans that make sense, and we need to make sure that in the future we can understand what Wall Street is doing.
[Edit]
So what is the appeal of a proposal like this? Perhaps it’s the kind of Rube Goldberg device that Wall Street loves — clever, complex and nontransparent, allowing huge transfers of wealth to the financial markets. It has allowed the administration to avoid going back to Congress to ask for the money needed to fix our banks, and it provided a way to avoid nationalization.
Tuesday, March 31, 2009
Pork as a Symbol
When I posted recently about the bonuses at AIG, I did not spend any time talking about how the outrage over that issue was over the symbolic gesture of the bonuses and that the actual cost of the bonuses were low compared to the government bailout. The point I would have made is that symbols can be important, even if they are not in proportion to the actual issue itself.
Pork barrel spending is another example of this, and can be even more salient when you consider the difficult times governments are facing. Take New York State for example. The state budget just agreed on by the only three people who matter was $131.8 billion, or $79.2 billion of state operating funds (not counting federal funds). The deficit before the new budget was announced was $17 billion. Total pork spending in the budget was $170 million. Therefore, total pork spending was one-tenth of one percent (0.1%) of the total budget, or two-tenths of one percent (0.2%) of the state funded budget, or just one percent (1%) of the previous deficit. Even though the pork spending is such a small share of overall budget numbers, it seems appalling that the state legislature would choose to allocate limited funds to special projects in their districts, and allocated there because of their power not because of need.
John McCain recognizes this at the federal level, which is why he focuses on it so much. However, one can go far, and make a symbolic issue appear to be more than a symbol. McCain seemed to present eliminating pork as a way to significantly cut government spending. As you can see in the above example, cutting the pork spending would not have helped the state get close to dealing with its budget gap, and the ratios are similar at the federal level.
The point is that symbolic issues are important in the messages they send about priorities. But exaggerating them can backfire, because people see that dealing with that issue will not solve the underlying problem. The state's pork spending is absurd, but not as big a deal as the way the budget was made (behind closed doors) and the appearance that they avoided tough choices.
Pork barrel spending is another example of this, and can be even more salient when you consider the difficult times governments are facing. Take New York State for example. The state budget just agreed on by the only three people who matter was $131.8 billion, or $79.2 billion of state operating funds (not counting federal funds). The deficit before the new budget was announced was $17 billion. Total pork spending in the budget was $170 million. Therefore, total pork spending was one-tenth of one percent (0.1%) of the total budget, or two-tenths of one percent (0.2%) of the state funded budget, or just one percent (1%) of the previous deficit. Even though the pork spending is such a small share of overall budget numbers, it seems appalling that the state legislature would choose to allocate limited funds to special projects in their districts, and allocated there because of their power not because of need.
John McCain recognizes this at the federal level, which is why he focuses on it so much. However, one can go far, and make a symbolic issue appear to be more than a symbol. McCain seemed to present eliminating pork as a way to significantly cut government spending. As you can see in the above example, cutting the pork spending would not have helped the state get close to dealing with its budget gap, and the ratios are similar at the federal level.
The point is that symbolic issues are important in the messages they send about priorities. But exaggerating them can backfire, because people see that dealing with that issue will not solve the underlying problem. The state's pork spending is absurd, but not as big a deal as the way the budget was made (behind closed doors) and the appearance that they avoided tough choices.
Subscribe to:
Posts (Atom)