Results for “south africa”
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Procurement and compliance costs (from the comments)

From my time in both the military and healthcare I can say that the biggest problem are the compliance costs.

For example, I have a phone app that allows me to send texts. We pay very good money to have said app. It does nothing that my phone cannot innately do – except be HIPAA compliant. EMR software is clunky, an active time suck, and adds little or no value … but we are required by law to use it. In each case there are scads of less specific programs out there which are insanely cheaper and more functional, but those programs cannot justify the costs of becoming compliant for a small niche of their business.

In the military we had similar difficulties. If you want systems to be secure, you need to pay extra as the marketplace does not do real security for consumer goods. Likewise, if you worry about logistical tails, building in assured access drastically increases costs.

And I fully suspect that prices will continue to diverge. As ever more of the internet ends up in a giant interconnected mess there will be fewer people able to code in a secure fashion. There will be fewer parts of the ecosystem that can be used by security conscious actors.

Then we get to actual procurement itself. People worry that arcane institutions will somehow make off with lots of money and spend it either poorly or nefariously. Absent easily observed price and cost data in both sectors we began developing rules. These rules drive firms out of the market (e.g. we needed some light interior remodeling to comply with a regulation that specified inches between things, the contractor who has been most affordable and highest quality refused to bid because the hassle on his side was too great). Eventually the rules become too complicated and you start needing specialists to interpret them. Costs skyrocket and firms abuse rules to pad profits. Then the lawyers get involved and things get more expensive. Again, medical and military consumers become a captive market facing greater monopoly as fewer firms can navigate the thicket of rules to even try to make money.

Then we have the problem that people look at these sectors and say that it is public money. All public money should help with goal X (e.g. going “green”, affirmative action, boycotting South Africa/Israel, patriotism, “America first”) and then we become even more overly constrained. Find vendors who meet one hurdle is hard, finding ones that meet 30 is nigh unto impossible unless the vendor is engineering the firm to market solely to this niche – and charging monopoly rates as his reward.

Any single thing would not be too bad for prices, but the marketplace in general is diverging from military and healthcare. Even education is diverging with mandates in FERPA and political business constraints. We have pretty effectively restricted supply, why exactly would we not expect an increase in cost?

That is from “Sure.”

Envy and status in politics

2. People will oppose policies that benefit themselves and their community if they think it will lower their within-group status. 

McClendon uses survey data from South Africa and the United States to show that status motivations change the way that people think about redistributive economic policies. This is even true within ethnic groups, including marginalized ethnic groups like African Americans. As McClendon notes:

“The worse off people are than their coethnic neighbors, the more supportive they are of greater redistribution (regardless of how personally costly this support is); the better off people are than their coethnic neighbors, the less supportive they are of redistribution.”

In other words, even when a policy might make someone materially better off (by, say, improving their housing conditions), they are likely to oppose it if the government doing so for everyone in their community would harm their relative status position.

That is from Laura Seay at The Washington Post, drawing on work from the new Envy in Politics, by Gwyneth H. McClendon.  I have just ordered that book.

*Divided: Why We’re Living in an Age of Walls*

That is the new book by Tim Marshall, yes Trump and Israel and the like, but it goes much further than that.  Here is one excerpt:

Since 1971, Assam’s population has more than doubled, from 14.6 million to over 30 million, much of which is due to illegal immigration.  Hindu nationalists have argued that the area might have a Muslim majority by 2060.  In 2015 there were 19 million Hindus and 11 million Muslims, nine of the twenty-seven districts being Muslim majority.  Equally importantly, the 2017 census showed that people who are ethnically Assamese are now a minority in the state as a whole, and as people continue to arrive their proportions will continue to drop.

This is a depressing but thought-provoking book.  Bangladesh, by the way, is smaller than the state of Florida, but has 165 million people.  And I had not known there are about 800,000 Nigerians in South Africa.  You can order the book here.

The safety net in Ethiopia

They are participants in Ethiopia’s Urban Productive Safety Net Project, which was launched in 2017 and is among the largest social programmes in sub-Saharan Africa (outside South Africa) designed specifically for urban areas. About 400,000 poor Ethiopians in 11 cities are already enrolled. The government hopes it will eventually help 4.7m people in almost 1,000 towns. Beneficiaries are selected by a neighbourhood committee based on how poor and vulnerable they are. In addition to the paid work, they also receive training. Those who want to start their own businesses are given grants.

Safety-nets, in one form or another, have proliferated across Africa in recent years. Spending on them in sub-Saharan Africa now amounts to about 1.5% of GDP (see chart). In Tanzania 10% of the population is covered by its safety-net (at a cost of just 0.3% of GDP)…

Ethiopia’s programme is a step towards building a national social-security system that will, in time, replace a hotch-potch of small ones. It builds on Ethiopia’s flagship rural safety-net, which is the largest of its kind on the continent and covers some 10m poor people in the countryside (out of a total population of about 102m). The government has committed $150m to fund the new scheme and the World Bank has stumped up the remaining $300m needed for the first five years. Ethiopia hopes that within ten years it will no longer need help financing the programme.

Here is more from The Economist.  You can think of this as further evidence of state capacity in Ethiopia.

Why isn’t the Indian caste system more protested in the United States?

About one-sixth of India is Dalits, or “Untouchables.”  And while Western criticisms of caste segregation are a long-standing observation about India, I hardly hear serious complaints over the last two decades or so.  In contrast, the apartheid system of South Africa met with demonstrations, boycotts, campus activism, frequent dialogue, and so on.  Why don’t we see some modified version of the same for the Indian caste system?  No matter how you compare its relative oppression to that of South Africa, it still seems like a massive system of unjust and opportunity-destroying segregation, and an efficiency-loser as well.  Here are a few hypotheses, not intended as endorsements but rather speculations:

1. The caste system is simply too difficult for most Americans to understand, whereas apartheid could be represented more readily in what I dare not call simple black and white terms.

2. Most of the Indians who migrate to the United States are higher caste or at least middling caste, and they sway American opinions of India in a way that South African migrants to the USA never did.

3. Libertarians don’t want to focus on the caste system because it persists without active government support being the main driver.  Democrats don’t want to focus on the caste system because Indian-Americans are often leading supporters and donors.  It doesn’t feel like a Republican issue either.  So who is there to push this one for domestic ideological reasons?

4. Talking about the caste system makes harder the (justified, I should add) program of raising the status of non-minority whites in America.

5. Talking about the caste system would focus light on caste-based discrimination in the United States, and distract attention from other domestic issues.

What else?  Overall I find this a disappointing topic to ponder.  Perhaps all politics, like envy, really is local after all.

I am indebted to Sujatha Gidla for a useful conversation on this topic.  My formal Conversation with her will be up in a bit, I still recommend her book on caste, Ants Among Elephants: An Untouchable Family and the Making of Modern India.

Ghana-Gandhi sentences of the day

Ghana has said it will remove a statue of Mahatma Gandhi from a university campus in the nation’s capital where it had sparked protests over the leader’s allegedly racist attitudes.

The statue, which was unveiled by Indian President Pranab Mukherjee during his visit to Ghana in June, was meant to symbolize friendship between the two countries, according to Ghana’s Ministry of Foreign Affairs. But professors and students at the University of Ghana called the statue “a slap in the face” because of Gandhi’s “racist identity.” They started an online petition calling for the statue’s removal.

The petition, which had more than 1,700 supporters on Thursday, cited letters Gandhi wrote during his time in South Africa as evidence that he advocated for the superiority of Indians over black Africans. It also took issue with his use of the derogatory term kaffir to refer to native Africans and criticized the lack of statues of African heroes and heroines on campus.

Here is the full story, noisy video at the link, via the excellent Samir Varma.

India, Modernity, and the Great Divergence

India, Modernity, and the Great Divergence: Mysore and Gujarat (17th to 19th C.) is exactly what the title promises.  This 700 pp. or so book by Kaveh Yazdani, teaching in South Africa, is not published within the traditional network of outlets.  Yet from my perusal of the first 100 pp. or so it seemed quite promising, plus it has excellent endorsements, for instance:

“Yazdani has made a great addition to scholarship on the Great Divergence. His analysis of military, economic, technical, and political advances in Mysore and Gujarat – two of the most commercially advanced areas of 17th and 18th century India – sheds new light on the nature and complexity of the differences between contemporary Indian and European states. No analysis of the Great Divergence will be credible without taking Yazdani’s research, and Indian developments, into account.”
– Jack A. Goldstone, Hazel Professor of Public Policy, George Mason University, Fairfax

Recommended, to some of you, let’s hope it gets a broader circulation.  We do indeed live in a golden age for economic history.

Ji Haan, Minister

One of the unfortunate legacies of British colonial rule in India is a permanent civil service that tends to subvert any change that it deems against its interests, even when such change is promoted by elected officials. This is one reason why change in India is often two steps forward, 1.9 steps back. A case in point is India’s newly passed Goods and Service Tax (GST).

The GST was supposed to solve a long-standing problem of Indian intra-national trade. Unlike say the US common market, Indian states erect tariff and non-tariff barriers against the products of other states. As a result, production is allocated inefficiently–Indian firms with high costs hide behind barriers and produce too much while Indian firms with low costs can’t expand sales to other states and so produce too little.

(Canada, by the way, also has this problem. It’s often cheaper for a Canadian firm to ship to the US than to another province in Canada. You can find similar problems in Southern Africa where it is cheaper for South Africa to import produce from South America than from Zambia, as this excellent video discusses.)

trucksIn addition to the inefficient allocation of production, barriers to internal trade have also raised India’s transportation and logistics costs.

At the Walayar checkpoint in southern India, lines of idle trucks stretch as far as the eye can see in both directions along the tree-lined interstate highway, waiting for clearance from tax inspectors that can take days to complete.

Delays are so bad that textile entrepreneur D. Bala Sundaram has stopped sending his trucks to the international container terminal at nearby Cochin, instead diverting them hundreds of kilometres to a smaller regional port and onwards via Sri Lanka…

Overall:

Two-thirds of India’s freight travels by road. But only 40% of the travel time is consumed by driving, according to the World Bank. The rest is spent on waiting at state border checkpoints, paying state government levies and dealing with regulatory bureaucracies that vary from state to state.

The sad irony is that India spends billions improving its roads only to force its trucks to stop at state border checkpoints, sometimes for days, undermining the gains from the investment in roads.

The GST was going to simplify all this with a single umbrella tax creating one-tax, one-nation. Alas, the dream is being subverted. The law created a GST council of federal and state ministers and through this council the GST is rapidly becoming more complex and convoluted. First, one-tax was changed into four and with numerous exemptions the final number may end up being more like seven or eight.

Second, as I witnessed traveling between Uttar Pradesh and Rajasthan recently, the trucks are still lining up and may continue to do so:

The revolution the proposed goods and services tax (GST) promised might not be all that rosy because it would be hobbled by the need for an e-permit to be flashed at inter-state borders as the states insisted the old analogue practises continue.

The states seem to have gotten their way and will continue with the old ‘permit raj’ system, undermining one the biggest gains of GST.

The E-permit, by the way, sounds modern but don’t be fooled. Like India’s e-visa there is really nothing e about it–it’s just modern labeling for an old system.

Eventually the GST will be beneficial to India but it’s two steps forward, 1.9 steps back.

China wage fact of the day

Average hourly wages in China’s manufacturing sector trebled between 2005 and 2016 to $3.60, according to Euromonitor, while during the same period manufacturing wages fell from $2.90 an hour to $2.70 in Brazil, from $2.20 to $2.10 in Mexico, and from $4.30 to $3.60 in South Africa.

Chinese wages also outstripped Argentina, Colombia and Thailand during the same time, as the country integrated more closely into the global economy after its 2001 admission into the World Trade Organisation.

…Manufacturing wages in Portugal have plunged from $6.30 an hour to $4.50 last year, bringing wage levels below those in parts of eastern Europe and only leaving them 25 per cent higher than in China.

That is from Steve Johnson at the FT.

Tuesday assorted links

1. “Gambia will become just the fourth country to return to the Commonwealth after leaving it, following South Africa, Pakistan and Fiji.”

2. “Ironically, every person who complained about how the party was too focused on attacking Trump in 2016 also tried to out-do the other candidates in promising to go after the new president.

3. “The move was announced by Playboy’s new chief creative officer Cooper Hefner, who said the decision to remove nudity entirely “was a mistake”.

4. New movie about the young Karl Marx.

5. Only the Russians can charge $120 for private library admittance.

6. After Trump’s election, are conservatives dating more and liberals dating less?

San Francisco dining

Mandalay was the best Burmese food I’ve had, probably ever (NB: I’ve never been to Myanmar).  Get the noodle dishes and soups, not the meat-based curries.  In the Richmond neighborhood.

Angor Borei is very good Cambodian, I enjoyed the pumpkin curry.  Then you can walk down Mission and spot dozens of other interesting ethnic places.  Along that stretch is Prubechu, the first Guam restaurant I’ve seen (NB: I’ve never been to Guam).

Banana House, Thai food at Kearny and Bush, surprisingly good for such an unfruitful part of town; get the duck salad.

Al’s Place, expensive with one Michelin star, is the best and most original set of vegetables I can recall eating in this country.  But when they tell you to eat the salad with your fingers, is that a sign of pretension or lack of pretension?  If you have to ask, the answer is pretension.  Still, on both the tastiness and originality scale this place ranks highly.

Amawele’s South African Kitchen, serves Durban food more than anything else.  Right in the heart of downtown, charming, imperfect, but where else in this country can you get Bunny Chow (NB: not made of bunnies)?

Making America Great Again–Term Limits

President-elect Trump wants to impose term limits on Congress–that would take a highly unlikely constitutional amendment but highly unlikely things do happen occasionally. Even if not imposed, the renewed demand for term limits provides further evidence for the conflict theory of term limits (and here).

Imagine that there are two rival coalitions in a region and that each fears the other will gain and hold on to power for an extended period of time. This fear can be motivated by two factors. First, the longer a coalition expects to be in power the more likely it is to exploit another coalition. Or, to put the issue the other way, the greater the expected rotation of power the less likely the presently ruling coalition is to exploit other coalitions. Until May of 1994 South African blacks had little legal political power. Nevertheless, as the prospect of future black political power increased the South African government became constrained in its actions towards South African blacks. The prospect of black power in the future moderated white power today. Second, if coalitions are risk averse they will prefer to rotate power with rival coalitions, and in this way share the spoils of governing rather than gamble upon winning or losing all political power for a lengthy period of time. Term limits are one method of increasing the rotation of political power.

When a politician’s term is over the election for the open seat is more competitive than it would be if an incumbent were running. By increasing the number of open-seat elections term limits increase the rotation of power….The probability of a rotation of power is five times more likely in the House and nearly three times more likely in the Senate in an open election than in an election with an incumbent. Thus, incumbency advantage has an enormous impact on party rotation. Term limits, in fact, were historically referred to as the “rotary system” or the principle of “rotation in office” (Benton 1854, Petracca 1992). From this perspective the benefit of term limits is not the termination or limitation of current politicians but rather the expectation that new politicians will rotate into power. The conflict theory does not connect support for term limits with dissatisfaction with current politicians and, in the conflict theory, voting against current politicians is not a substitute for term limits.

…The conflict theory implies that the more political conflict there is in a region the greater the demand for term limits.

Making America Great Again–Infrastructure

In this post I put aside the negatives of a Trump presidency and focus on some of the positive things that President Trump could do that are still consistent with his stated goals and ideology.

First, and most obviously, infrastructure development. Trump has said he wants to invest a trillion dollars in infrastructure, mostly through public-private partnerships (PPP). As I said in Launching the Innovation Renaissance we need more and better airports, for example. Ironically, New York Governor Andrew Cuomo’s $4 billion PPP to replace LaGuardia’s Terminal B which has as a leading partner Swedish multinational Skansa, is an important model. Around the world there are a number of other successful examples of airport PPPs including in India, Australia, New Zealand, Canada and South Africa.

Fortunately, the FAA already has an airport privatization program. To date, the program has had only limited success but the tools are in place if Trump wants to push.

Governments eager for cash sometimes structure PPPs with big up front payments and low future payments. Trump could find such a bargain tempting as it would let him raise cash and encourage building today while pushing low future revenues decades into the future. Bear in mind, however, that when someone such as Paul Krugman says that now is the time to invest because interest rates are low, a corollary is that is now is the time to sell because asset prices are high.

Speaking of air travel, Trump seems like just the person to Make America Boom Again and he could do it with a small directive to the FAA to drop the ban on supersonic aircraft and replace it with a reasonable noise standard.

We also desperately need an update to our electricity grid. We have more blackouts than any other developed nation. It is a national embarrassment when millions of US residents our thrown into the dark by grid failures.

Improving the grid is not just an economic issue it’s an issue of national security. Our grid is under constant low-level attack, and some of these attacks are likely probes for an attack similar to that which brought down the Ukrainian power grid.

Electricity infrastructure, it’s worth noting, is less amenable to PPPs than airports because it’s more difficult to monetize quality improvements and the grid by its nature involves many externalities so I think Trump is relying too much on PPPs. Newt Gingrich, however, is a big proponent of improving the grid and he may help convince Trump to invest public funds.

An important byproduct of improving our electricity grid would be to improve the prospects for solar and wind power. Solar and wind are intermittent and cost effective in only some parts of the country. The better our transmission lines, however, the more useful these sources of energy become. Indeed, it might be time to begin work on a global super-grid. I could see Trump going for this (just don’t call it a hemispheric open market).

Trump also seems like just the guy to support nuclear energy. Molten salt reactors are very safe and can be much smaller than traditional reactors. These types of reactors were invented in the United States but China is rapidly developing the technology. President Trump don’t let China drink our milkshake! By the way, these types of nuclear reactors pair well with renewables because they can ramp up or down to fill in the intermittent nature of  solar and wind. Nuclear power also pairs beautifully with hydrogen.

The first new nuclear plant in decades just started producing power for commercial use last month. Trump should cut the ribbon at an opening ceremony. It would be a great signal that America is not afraid of technology, that we can still build, and that we can responsibly deal with climate change while increasing the power that drives American civilization.

Don’t assume ongoing democratization is the default

Authoritarian leaders are seen as far more trustworthy than politicians in more openly democratic countries across the emerging world, according to data compiled by the World Economic Forum.

Leaders in Singapore, the Gulf states and Rwanda are rated as having the highest ethical standards in the emerging markets, closely followed by their Chinese and central Asian counterparts.

In contrast, politicians in democracies such as Brazil, Paraguay, Nigeria, Mexico and Romania are seen as exhibiting the lowest ethical standards.

“It does look counterintuitive,” says Thierry Geiger, head of analytics and quantitative research at the WEF, which has polled local and expatriate business communities in 138 countries on the issue since 2007 as part of its annual Global Competitiveness Report.

One of the biggest losers in the WEF’s “trust in politicians” ranking over this period has been Tunisia, widely regarded as the sole success story of the 2011 Arab uprisings. Its politicians were ranked as the 15th most trustworthy in the world in 2010, before the overthrow of President Zein al-Abidine Ben Ali. Under democratic rule, the country has fallen to 63rd.

Other countries that saw sharp falls in the ranking include the democracies of South Africa, Barbados, South Korea, Iceland, Cyprus and Spain.

Overall, among the 20 emerging market countries rated as having the most trustworthy politicians in the 2016 survey, 13 are rated as “not free” by Freedom House, a US government-funded non-governmental organisation, with three classed as partly free and just four classed as free.

Among the 20 emerging markets whose politicians are seen as having the lowest ethical standards, not one is classed by Freedom House as not free, with six free and 14 partly free.

That is from Steve Johnson at the FT.

The rich are also different from one another

That is my latest Bloomberg column, here is the introductory section:

The richest Americans are much less likely to have inherited their wealth than their counterparts in many supposedly more egalitarian countries. They’re not remarkably rich in degrees from elite universities. Rich Democrats have more social connections than rich Republicans.

These are some surprising insights from a new study of the very wealthy by Jonathan Wai of Duke University and David Lincoln of Wealth-X, based on data on 18,245 individuals with a net worth of $30 million or more.

The study portrays high-net-worth individuals as a more idiosyncratic and diverse group than reductionist cliches about “the 1 percent” might suggest.

Looking globally, extreme wealth is most closely connected to elite education in South Korea, Chile, and South Africa, and least so in Ukraine and Qatar. The U.S. is near the bottom of the top third of the country rankings for the tightness of this connection. Germany is close to the bottom, reflecting how German paths to riches run through forms of manufacturing and medium-sized business that are not so closely tied to elite higher education.

And:

For all the talk of Sweden and Austria as relatively egalitarian societies, they are also the countries where the greatest proportion of high-net-worth individuals inherited their wealth: 43.8 percent and 49.6 percent, respectively. In the U.S., inherited wealth accounts for only 12.6 percent of the very wealthy individuals in the study’s sample.

There is much more at the link.