In 2004, Jeff Sachs and co-authors revived an old theory to explain Africa’s failure to develop, the poverty trap, and an old solution, the big push.
Our explanation is that tropical Africa, even the well-governed parts, is stuck in a poverty trap, too poor to achieve robust, high levels of economic growth and, in many places, simply too poor to grow at all. More policy or governance reform, by itself, will not be sufficient to over-come this trap. Specifically, Africa’s extreme poverty leads to low national saving rates, which in turn lead to low or negative economic growth rates. Low domestic saving is not offset by large inflows of private foreign capital, for example foreign direct investment, because Africa’s poor infrastructure and weak human capital discourage such inflows. With very low domestic saving and low rates of market-based foreign capital inflows, there is little in Africa’s current dynamics that promotes an escape from poverty. Something new is needed.
We argue that what is needed is a “big push” in public investments to produce a rapid “step” increase in Africa’s underlying productivity, both rural and urban.
As the title of the blog might suggest, I was skeptical. But even if a big push wasn’t exactly the right idea, I’m all in favor of Big Ideas and Sachs pursued his Big Idea with tremendous skill and media savvy. Pilot programs were soon up and running and then quickly expanded into full programs. In June 2010, the Millennium Villages Project released its first public evaluation and that is when things started to fall apart.
The initial MVP evaluation claimed great success but simply compared some development indicators before and after in the treated villages without comparing to trends elsewhere. In 2010 such a study was completely out of step with contemporary practices in impact evaluation. Red flag! Clemens and Demombynes showed that comparing to trends elsewhere significantly moderated the impact. A second MVP paper was published in the Lancet but then was quickly retracted when Bump, Clemens, Demombynes and Haddad demonstrated that it had significant errors. Clemens and Demombynes wrote a summary piece on the controversy then in an astounding and under-reported scandal the MVP tried to stifle Clemens and Demombynes. The MVP, with Jeff Sachs at the head, also sicced their lawyers on Nina Munk and her book, The Idealist: Jeffrey Sachs and the Quest to End Poverty. More red flags.
Yet, despite all of this controversy and bad behavior, the MVP project continued to move ahead and in 2012, the UK Department for International Development (DFID) funded US $11 million into an MVP in Northern Ghana that ran until December 2016. Under the auspices of the DFID, we now finally have the first in-depth, independent evaluation of one MVP project and it doesn’t look great. The project did some good but the big push failed and the good that was done could have been done at lower cost.
Overall, the MVP in northern Ghana did not achieve the overall MDG target to reduce extreme poverty and hunger at the local level. Where there are attributable changes to the MDG targets, these tended to be the more limited changes than those that will fundamentally improve people’s health, educational and other outcomes. For instance, the project did increase attendance at primary school (Goal 2) but did not go beyond this MDG and improve the learning outcomes of children; the project did increase the proportion of births attended by professionals and women said to be using contraceptive methods (MDG indicators), but it is not possible to assess the effect on maternal health (Goal 5); and the project did increase the number of toilets (a target under Goal 7), but not beyond this MDG in terms of hygiene and sanitation practices. There are, however, exceptions. The project had a remarkable impact on stunting, which is a long-term health indicator and a predictor of socioeconomic outcomes in adulthood.
So the MVP had some good effects on some indicators:
But is this impact sufficient given the size of the investment? And, by doing everything together, is there a synergistic effect that offers greater value for money than would arise through implementing individual sector-based interventions? In our cost-effectiveness analysis, we demonstrate that the project has so far not yielded sufficiently positive results, and what has been achieved could have been attained at a substantially lower cost (even when we take account of investments made for future usage). As such, the project seems to have fallen short of producing a synergistic effect; and the impact is not large enough for the project to be regarded as cost-effective, even when each sector is assessed independently of the others. Of course, in the longer run, the MVP may produce welfare gains. Importantly the investments in improving the health care service may enhance health outcomes later on; or other considerable investments in infrastructure (roads, health and school facilities) may have an impact on future outcomes.
Perhaps then, the most concerning findings are the early indications that the MVP approach will be difficult to be sustained by district institutions and at the community level; and there are signs that any gains made under the project are already being undermined.
Dispensaries selling various strains of marijuana and high-potency extracts, called budder and shatter, have opened on main streets. Regular pop-up markets like the one in Hamilton have sprouted, to the point vendors can attend five a week in the Toronto area.
Cannabis lounges have expanded, offering not just a place to smoke and take hits, but classes on growing cannabis at home and making cannabis creams. Cannabis-infused catering has gone so mainstream that the national association of food service businesses, Restaurants Canada, is hosting a seminar on it. Cannabis tour companies have opened, as have cannabis “bud-and-breakfasts.”
Newspapers, which have hired full-time cannabis reporters, have published cannabis sections, filled with editorial ads by government-licensed producers advertising lines of cannabis-infused beverages, coffee and dog chew toys they are developing for when such products become legal.
…Ms. Roach see cannabis becoming almost like corn in its derivative form, threaded through everyday Canadian consumer products. Although people eat a minimal amount of corn each day, she said, “there’s corn syrup in everything.”
That is from Catherine Porter at the NYT. I increasingly believe that decriminalization will prove a more stable solution than outright legalization.
Does living in a communist regime make a person more concerned about immigration? This paper argues conceptually and demonstrates empirically that people’s attitudes toward immigration are affected by their country’s politico-economic legacy. Exploiting a quasi-natural experiment arising from the historic division of Germany into East and West, I show that former East Germans, because of their exposure to communism, are notably more likely to be very concerned about immigration than former West Germans. Opposite of what existing literature finds, higher educational attainment in East Germany actually increases concerns. Further, I find that the effect of living in East Germany is driven by former East Germans who were born during, and not before, the communist rule and that differences in attitudes persist even after Germany’s reunification. People’s trust in strangers and contact with foreigners represent two salient channels through which communism affects people’s preferences toward immigration.
Consumer DNA testing — and the mountain of data it has generated — has become pervasive enough that it’s possible to identify about six of every 10 people in the U.S. who are of European descent, even if they’ve never given a sample.
Many people think that “innocent until proven guilty” implies that everyone should be let loose on their own recognizance before trial. A moment’s thought reveals that this is idiotic. The white supremacist Dylann Roof killed nine people on June 17, 2015 at the Emanuel African Methodist Episcopal Church. His image was captured on security cameras and he was arrested the next day. Roof’s trial, however, didn’t start until more than a year later, December 7, 2016, and he wasn’t convicted of anything until December 15, 2016. Should Roof have been released before trial because he was “innocent until proven guilty”? Of course not. I stand second to none in demanding high standards before the state can deprive a person of their liberty but high standards do not demand binary divisions. Tradeoffs are everywhere and when the evidence against the accused is strong and the danger to the public is high, it’s not unreasonable to deprive the legally innocent of some liberty prior to trial. The tradeoffs are ugly, as they always are when trading off two sacred values, but the tradeoffs cannot be avoided.
Consider now the issue of bail reform. In the days when the default was that every accused person was held before trial, the idea of money bail was seen as a liberal, progressive measure that allowed more people to get out of jail. Today the natural default is seen as release until trial and bail is therefore perceived as a conservative, regressive measure that unjustly and unfairly keep poor people in jail. As a result, reformers are trying to reduce or eliminate money bail but they are doing so without thought for the ugly tradeoffs.
The bail reformers frame the issue in a way that I think is misleading. Anytime someone can’t pay for bail they call that “unaffordable bail”. Well that’s literally true but it also gives an incorrect impression of destitute people being denied their freedom because they don’t have a buck. To be sure that does happen but here’s an open secret of the judicial process. Judges sometimes set bail expecting and indeed hoping that it won’t be affordable. Everyone knows this but the bail reformers don’t like to acknowledge it because it brings up the ugly tradeoffs. Consider the following, from Chicago, where the bail reform movement is very active:
…there are about 2,700 people being held in jail because they can’t afford bail but [the Chicago court official noted] 87 percent had a current violent or weapons-related charge, a risk assessment recommending “maximum conditions” if released, an assessment flagging them for violence, and/or an active probation or parole case.
In other words, the judges set a high bail amount for a reason. Under orders from the Chief Judge, however, Chicago has been trying to reduce bail:
Chicago and its surrounding county was supposed to be a beacon of bail reform. After Cook County Chief Judge Timothy C. Evans imposed new rules and made sweeping changes to the bench, advocates hoped that virtually no one would be jailed because they didn’t have the money to make bail.
…At first, it seemed to have the intended effect: In the first month after the order, the number of people who had to post money bonds dropped by more than half, while the number of people who were released on their own recognizance—allowed to leave upon promising to return for trial—doubled. Bail amounts also decreased, as did the number of people in jail.
So what happened when bail reform met reality? Under the new system, judges that set a lot of “unaffordable” bail looked bad but most of the people who can’t pay their bail can’t pay not because they are especially poor but because the judge thought that they were a danger to the public. Judges continue to believe that many defendants are dangerous but now rather than setting bail they simply deny bail altogether. In fact, under the new system the rate of denying bail has risen fourfold. In addition, judges soon discovered that the cost of releasing defendants in terms of crime, failure to appear, and perhaps bad publicity was too high so they started to ignore the demands of the Chief Judge.
…But a year later, [the Coalition to End Money Bond] found that not only are judges still setting bail amounts that defendants can’t afford—meaning that more than 2,700 people are in Cook County Jail because they don’t have enough money [recall these are the 2,700 with serious records, AT] —but that things are getting worse. The initial gains “have steadily evaporated and bond court outcomes are now approaching pre-Order levels,” the report states. The authors note that if judges were sticking to the order, there would be no bail amounts set at levels that defendants can’t afford; instead, it says, nearly 30 percent of bail amounts were unaffordable. Between November 2017 and June 2018, judges set unaffordable bail amounts for more than 1,350 people.
Bail reformers are blind to the tradeoffs that must be made between public safety and the rights of defendants. Since the reformers are blind to these tradeoffs they can’t see that money bail actually helps to alleviate these tradeoffs. Reformers think that money bail simply keeps the poor in jail but in fact money bail is a half-way house between release on own recognizance and hold until trial. Money bail lets judges release more people. Bail reformers assume that if they eliminate money bail then judges will release everyone. In fact, as the Dylann Roof case illustrates, that is never going to happen. And when the public realizes that judges are releasing lots of defendants who subsequently commit more crimes there will be a backlash, as is already evident in Chicago. By eliminating the half-way house of money bail, bail reformers force judges to either release or hold until trial. Some people who under the current system are released on bail will, under the new system, be held until trial. Indeed, the unintended consequence of bail reform may be that more people are held until trial with no possibility of release.
Sometimes poor people are unfairly held until trial. Eliminating money bail, however, is a crude and dangerous approach to this problem. Instead we should deal with it directly by flagging and reevaluating jailed, non-violent offenders with low bail amounts, use alternative release measures such as ankle bracelets and most importantly, we should look to the constitution. The founders understood the ugly tradeoffs which is why the constitution guarantees the right to a “speedy trial.” Unfortunately, that right today is widely ignored. My route to reform would begin by putting teeth back into the constitutional right to a speedy trial.
Addendum: Illinois doesn’t allow commercial bail so I haven’t mentioned bounty hunters but in other parts of the country their role in the criminal justice system is important, even if widely misunderstood and disparaged. My paper (with Eric Helland) shows that bounty hunters are more effective than the police at recapturing escaped defendants. More specifically, compared to similar defendants released using other methods, defendants released on commercial bail are much more likely to show up at trial and are much more likely to be recaptured should they flee. See also my adventures as a bounty hunter.
Here we arrive at one of the least appreciated factors in the equation that led to the Union victory: the military service of immigrants. Foreign-born recruits provided the Union army with the advantage it needed over its Confederate rival. An estimated 25 percent of the soldiers in the Union army (some 543,000) and more than 40 percent of the seamen in the navy (84,000) were foreign-born. If one includes soldiers with at least one immigrant parent, the overall figure climbs to 43 percent of the Union army…
The demands of war meant that Union officials needed to appeal to immigrants. Military recruitment placards were printed in foreign languages; Union officials presented the war as part of a transnational struggle for republican government, thereby decoupling the idea of the nation from Anglo-Saxon Protestantism…
The military service of the foreign-born did more than enhance the Union’s advantage in the field. It also transformed the politics of nativism in the United States. From the nativism of the 1850s, exemplified by Know-Nothingism and bigoted anti-Catholicism, the Union now moved in the direction of welcoming — indeed, encouraging — foreign arrivals.
That is all from the new book by Jay Sexton, A Nation Forged by Crisis: A New American History.
Here is the audio and transcript, here is part of the summary:
Tyler sat down with Krugman at his office in New York to discuss what’s grabbing him at the moment, including antitrust, Supreme Court term limits, the best ways to fight inequality, why he’s a YIMBY, inflation targets, congestion taxes, trade (both global and interstellar), his favorite living science fiction writer, immigration policy, how to write well for a smart audience, new directions for economic research, and more.
Here is one excerpt:
COWEN: In your view, how well run is New York City as an entity?
KRUGMAN: Not very. Compared to what? Actually, I like de Blasio. I actually think he’s done some really good things. What he’s done on education, and even on affordable housing, is actually quite substantial. But the city is so big and the problems are so large that people may not get it.
I will say, it is crazy that you have a city that is so dependent on public transportation, and yet the public transportation is not actually under the city’s control and has clearly been massively neglected. I don’t suffer the full woes of the subway, but I suffer some of them, even myself.
The city could be run better than it is, but it’s certainly not among the worst-managed political entities in the United States, let alone in the world.
COWEN: Will there ever be interstellar trade in intellectual property? You send your technology to a planet far away. It arrives much later, of course. Or you trade Beethoven to the aliens in return for a transporter beam? Can this work? You’ve written a paper that seems to indicate it can work.
KRUGMAN: I wrote a paper on the theory of interstellar trade when I was an unhappy assistant professor. Are there any happy assistant professors? [laughs] I was just blowing off steam. But it’s an interesting question.
COWEN: It could become your most important paper, right? [laughs]
KRUGMAN: We could imagine that there would be some way. We’d have to find somebody to trade with, although it’s the kind of thing — if you try to imagine interstellar trade for real in intellectual property — it’s probably the kind of thing that would be more like government-to-government exchanges.
It sounds like it would be really, really hard, although some science fiction writers are imagining that something like Bitcoin would make it possible to do these long-range . . . I don’t think something like Bitcoin is even going to work here.
Krugman also gives his opinions on Star Wars and Star Trek and Big Tech and many other matters. Interesting throughout…
Airport police in India are being instructed to smile less.
This is over concerns cheerfulness could lead to a perception of lax security and a threat of terror attacks.
The country’s Central Industrial Security Force, which is in charge of aviation safety, wants its staff to be “more vigilant than friendly”.
They will move from a “broad smile system” to a “sufficient smile system”, the Indian Express says.
Officials are said to believe that excessive friendliness puts airports at risk of terrorist attacks.
The organisation’s director general, Rajesh Ranjan even said the 9/11 attacks had taken place because of “an excessive reliance on passenger-friendly features”.
Monopsony models generally imply they should, and that is part of the argument why minimum wage hikes might be good for workers, wages, and yes even employment. But the data don’t seem to support the claim of more search behavior:
Labor market search-and-matching models posit supply-side responses to minimum wage increases that may lead to improved matches and lessen or even reverse negative employment effects. Yet there is no empirical evidence on this crucial assumption. Using event study analysis of recent minimum wage increases, we find that increases to minimum wage do not increase the likelihood of searching, but do lead to large yet very transitory spikes in search effort by individuals already looking for work. The results are not driven by changes in the composition of searchers.
That is from a new NBER Working Paper by Camilla Adams, Jonathan Meer, and Carly Will Sloan.
Child care tax credits are intended to relieve the financial burden of child care for working families, yet the benefit incidence may fall on child care providers if they increase prices in response to credit generosity. Using policy-induced variation in the Child and Dependent Care Credit, this paper presents evidence of substantial pass-through: over half of every dollar is passed through to providers in the form of higher prices and wages. Increased non-refundable credit generosity may have the unintended effect of making child care less affordable for low-income families, a result with distributional and spatial implications due to income sorting of families within an urban area.
New rules barring public bodies from putting Shetland in a box on official documents have come into force.
Islands MSP Tavish Scott had sought to change the law to ban the “geographical mistake” which “irks” locals, by amending the Islands (Scotland) Bill.
The bill’s “mapping requirement” has now come into force, although it does give bodies a get-out clause if they provide reasons why a box must be used.
Mapmakers argue that boxes help avoid “publishing maps which are mostly sea”.
The Islands Bill, which aims to offer greater protections and powers to Scotland’s island communities, was unanimously passed in May.
Here is the full story, via Glenn Mercer. You can’t call it “racist,”or “sexist,” might someone coin a future term for the objectionable act of…”putting my islands into a box”?
When I see USMCA, I also think of “United States Marine Corps,” a connection Donald Trump himself has noted. Of course the Marines have nothing to do with international trade policy, but given the public’s longstanding confidence in the military, the association is unlikely to hurt politically. Other people may confuse USMCA with USCMA, or the United States Catholic Mission Association, another positive connotation.
This next point may sound slightly cynical, but here goes: Perhaps being so easy to say and remember has been part of Nafta’s problem. The sad reality is that voters do not love the idea of free trade once it is made concrete to them, and both Barack Obama and Trump campaigned against Nafta in its current form. So maybe every time people heard the name Nafta, they were reminded of how much they disliked it.
I recall, more than a decade ago, hearing talk of a supposed “Nafta superhighway,” a series of roads that would supposedly bring the three Nafta countries under some kind of joint, conspiratorial rule, enforced by the movement of vehicles on these connector roads and sometimes in league with Satan himself. The alternative phrase — “USMCA Superhighway” — doesn’t roll off the tongue as easily, so maybe it will be harder to drum up fake news about the new deal.
Here is the rest of my Bloomberg column on the topic. And this:
Looking back, the General Agreement on Tariffs and Trade (Gatt) had a pretty good name for its time. It conveyed that there was in fact a general agreement, and that branding sold well enough in an earlier, more multilateral era. It might have sounded dull and technocratic, but that was OK for policies which were … dull and technocratic. Much worse, however, was the 1995 relabeling into the World Trade Organization, a name which to many people sounds globalist, faceless and sinister. They might as well have called it SPECTRE, the name of the criminal group in many James Bond novels and films.
I even quote a Canadian quoting Shakespeare…
China will be less severe with its smog curbs this winter as it grapples with slower economic growth and a trade war with the United States, according to a government plan released on Thursday.
Instead of imposing blanket bans on industrial production in the Beijing-Tianjin-Hebei area as it did last winter, the Ministry of Ecology and Environment said it would let steel plants continue production as long as their emissions met standards.
Targets for overall emissions cuts have also been revised down. In the next six months, 28 cities in northern China are required to cut levels of PM2.5 – the tiny airborne particles that are most harmful to human health – by about 3 per cent from a year ago.
That is less than the 5 per cent cut proposed in an initial plan seen by the South China Morning Post last month.
Meanwhile, the new plan stipulates that the number of days of severe air pollution should be reduced by about 3 per cent, also revised down from 5 per cent in last month’s draft.
Here is more from Orange Wang at SCMP. As I am sure you all know, air pollution (and I don’t just mean carbon emissions) is one of the great underrated problems in the world today. The trade war with China is making it worse.
A reduction in the corporate income tax burden encourages adoption of the C corporation legal form, which reduces capital constraints on firms. Improved capital reallocation increases overall productive efficiency in the economy and therefore expands the labor market. Relative to the benchmark economy, a corporate income tax cut can reduce the non-employment rate by up to 7 percent.
That is from the new AEJ: Macroeconomics, by Daphne Chen, Shi Qi, and Don Schlagenhauf.
That is the theme of my latest Bloomberg column, here is one bit:
There is an asymmetry between male and female perceptions.
Most men are not abusers, yet very large numbers of women have been abused. So if a man is an abuser, there is a good chance he has abused a fair number of women.
That means many well-meaning men experience sexual abuse as a relatively rare phenomenon. They haven’t done it, and most of their male friends haven’t either. At the same time, most women have abuse, rape or #MeToo stories, and they experience these phenomena as relatively common and often life-altering. Probably they also have heard multiple such stories from their female friends. This structural asymmetry of perspectives is crucial to understanding the discourse and the often fundamental differences in opinion.
Our criminal justice system isn’t very good.
Whether you think Kavanaugh is innocent or guilty, we can all agree there are large numbers of intelligent people on both sides of the debate, and even after a week of intense national scrutiny there is no resolution. The reality is that ordinary accused people, who are basically presumed guilty by the criminal justice system, don’t receive very fair judgments. And if Kavanaugh is innocent, might we hope that this experience will make him more sympathetic to the plight of the unjustly imprisoned and accused?
But perhaps now we can move on to talking about the renegotiation of the trade agreement formerly known as NAFTA…