Sound Economic Policies Benefit Africa More than Sachs’ Profligate Interventions

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Source of book image: http://images.huffingtonpost.com/2013-09-02-TheIdealist.jpg

(p. A19) Nina Munk’s new book, “The Idealist,” is about the well-known economist Jeffrey Sachs and his “quest to end poverty,” as the subtitle puts it.
. . .
The quest began in 2005, when Sachs, who directs the Earth Institute at Columbia University, started an ambitious program called the Millennium Villages Project. He and his team chose a handful of sub-Saharan African villages, where they imposed a series of “interventions” in such areas as agriculture, health and education.
. . .
With almost every intervention, she documents the chasm that exists between the villagers and those running the project. At one point, the Millennium Villages Project persuades the farmers in Ruhiira to grow maize instead of their traditional crop, called matoke. “The results were fantastic,” she reports, a bumper crop. Except there were no buyers for the maize, so some of it wound up being eaten by rats. In Dertu, Sachs’s staff decided it should set up a livestock market. It flopped. Efforts to convince villagers to start small businesses largely failed. The critical problem of getting clean water to the villages was enormously expensive.
Ultimately, reports Munk, Dertu was scaled back by the Millennium Villages Project while Ruhiira is today lauded as one of the project’s most successful villages. “There is no question the lives of people in Ruhiira have been improved,” Munk told me. “I’ve seen it.” But she is dubious about what that means — other than the fact that if you pump millions of dollars into an isolated African village, the villagers’ lives will be better.
. . .
That things in Africa are getting better is undeniable. Child mortality is down, as is the number of people living in extreme poverty. In his book, “Emerging Africa,” Steve Radelet, the former chief economist for the United States Agency for International Development, gives credit to such factors as more democratic governments, a new class of civil servants and businesspeople, and sounder economic policies. Sachs wants us to believe that the Millennium Villages Project has also helped show the way.
“The Idealist” makes it tough to believe it’s the latter.

For the full review, see:
JOE NOCERA. “Fighting Poverty, and Critics.” The New York Times (Tues., September 3, 2013): A19.
(Note: ellipses added.)
(Note: the online version of the review has the date September 2, 2013.)

The book under review is:
Munk, Nina. The Idealist: Jeffrey Sachs and the Quest to End Poverty. New York: Doubleday, 2013.

The Radelet book mentioned is:
Radelet, Steven. Emerging Africa: How 17 Countries Are Leading the Way. pb ed. Washington, D.C.: Center for Global Development, 2010.

Taxpayers Work, Save and Invest More When Taxes Are Low

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Source of book image: online version of the WSJ review quoted and cited below.

(p. 15) The 1980s boom was launched on the simple insight that, by lowering tax rates and regulatory hurdles and juicing the incentives to produce, innovate and take risks, the animal spirits of the American free-enterprise system would revive. Two seminal books hatched the supply-side revolution. The first was Jude Wanniski’s “The Way the World Works” (1978); the second, George Gilder’s “Wealth and Poverty” (1981).

Almost as influential, coming a few years later, was Lawrence Lindsey’s “The Growth Experiment” (1990). Slightly academic in nature, it was the first book to quantify the economic and revenue windfall of the 1981 Reagan across-the-board tax cuts. Mr. Lindsey’s conclusion was that Reagan’s 1981 tax act quickened the pace of production, which reduced the predicted revenue loss. His research found that although the Reagan tax cuts didn’t “pay for themselves,” the ones at the highest end of the income spectrum “did produce a revenue gain” because of “changes in taxpayer behavior.” He concluded that “the core supply-side tenet–that tax rates powerfully affect the willingness of taxpayers to work, save and invest, and thereby also affect the health of the economy–won as stunning a vindication as has been seen in at least a half-century of economics.”
He has now updated his book, taking us through the booms and busts of the past 20 years. It is a valuable project in part because Mr. Lindsey was a front-seat economic adviser to George W. Bush, serving as director of the National Economic Council and as one of the architects of the often-maligned 2001 and 2003 Bush tax cuts.
Mr. Lindsey’s central claim is that those tax changes saved the economy from the undertow of the financial meltdown at the end of the Clinton presidency.

For the full review, see:
Stephen Moore. “BOOKSHELF; Book Review: ‘The Growth Experiment Revisited’ by Lawrence Lindsey; The 25 years after Reagan’s tax cuts saw unprecedented wealth creation and progress. America’s net worth exploded by $40 trillion.” The Wall Street Journal (Tues., September 10, 2013): A15.
(Note: ellipsis added.)
(Note: the online version of the review has the date September 9, 2013, and has the title “BOOKSHELF; Book Review: ‘The Growth Experiment Revisited’ by Lawrence Lindsey; The 25 years after Reagan’s tax cuts saw unprecedented wealth creation and progress. America’s net worth exploded by $40 trillion.”)

The book under review is:
Lindsey, Lawrence B. The Growth Experiment Revisited: Why Lower, Simpler Taxes Really Are America’s Best Hope for Recovery. New York: Basic Books, 2013.

For Hubbard and Kane “Institutions Explain Innovation”

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Source of book image: online version of the WSJ review quoted and cited below.

(p. A11) Messrs. Hubbard and Kane argue, as do others, that certain policies and core principles are the key: property rights, flexible work rules, open markets. For the authors, such matters explain economic growth entirely.

To those who would cite the primacy of technological breakthroughs, Messrs. Hubbard and Kane assert that inventions only spark growth if there are systems in place (such as intellectual-property rights) that enable inventions to flourish and their value to spread. “The wheel and the windmill were invented many times,” they write, “then forgotten, until finally one society had the institutional framework to implement them widely and pass them on permanently.” In short, “institutions explain innovation.”

For the full review, see:
Matthew Rees. “BOOKSHELF; How the Mighty Fall; The Roman empire eventually lost its economic vitality thanks to price controls, heavy taxes and state-sponsored debt relief..” The Wall Street Journal (Fri., June 21, 2013): A11.
(Note: the online version of the review has the date June 20, 2013.)

The book under review is:
Hubbard, Glenn, and Tim Kane. Balance: The Economics of Great Powers from Ancient Rome to Modern America. New York: Simon & Schuster, 2013.

Children of Chinese Entrepreneurs Want to Work for Government

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“Engineering student Xie Chaobo has yet to land a job.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A1) BEIJING–Xie Chaobo figures he has the credentials to land a job at one of China’s big state-owned firms. He is a graduate student at Tsinghua University, one of China’s best. His field of study is environmental engineering, one of China’s priorities. And he is experimenting with new techniques for identifying water pollutants, which should make him a valuable catch.
But he has applied to 30 companies so far and scored just four interviews, none of which has led to a job.
Although Mr. Xie’s parents are entrepreneurs who have built companies that make glasses, shoes and now water pumps, he has no interest in working at a private startup. Chinese students “have been told since we were children to focus on stability instead of risk,” the 24-year-old engineering student says.
Over the past decade, the number of new graduates from Chinese universities has increased sixfold to more than six million a year, creating an epic glut that is depressing wages, (p. A10) leaving many recent college graduates without jobs and making students fearful about their future. Two-thirds of Chinese graduates say they want to work either in the government or big state-owned firms, which are seen as recession-proof, rather than at the private companies that have powered China’s remarkable economic climb, surveys indicate. Few college students today, according to the surveys, are ready to leave the safe shores of government work and “jump into the sea,” as the Chinese expression goes, to join startups or go into business for themselves, although many of their parents did just that in the 1990s.

For the full story, see:
MIKE RAMSEY and VALERIE BAUERLEIN. “Tesla Clashes With Car Dealers; Electric-Vehicle Maker Wants to Sell Directly to Consumers; Critics Say Plan Violates Franchise Laws.” The Wall Street Journal (Tues., June 18, 2013): B1-B2.

ChineseStudentAfterGraduationPlans2013-07-23.jpgSource of table: online version of the WSJ article quoted and cited above.

Property Rights, Flexible Work Rules, Open Markets Are Keys to Economic Growth

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Source of book image: online version of the WSJ review quoted and cited below.

(p. A11) Messrs. Hubbard and Kane argue, as do others, that certain policies and core principles are the key: property rights, flexible work rules, open markets. For the authors, such matters explain economic growth entirely.

To those who would cite the primacy of technological breakthroughs, Messrs. Hubbard and Kane assert that inventions only spark growth if there are systems in place (such as intellectual-property rights) that enable inventions to flourish and their value to spread. “The wheel and the windmill were invented many times,” they write, “then forgotten, until finally one society had the institutional framework to implement them widely and pass them on permanently.” In short, “institutions explain innovation.”

For the full review, see:
Matthew Rees. “BOOKSHELF; How the Mighty Fall; The Roman empire eventually lost its economic vitality thanks to price controls, heavy taxes and state-sponsored debt relief.” The Wall Street Journal (Fri., June 21, 2013): A11.
(Note: ellipses added.)
(Note: the online version of the review has the date June 20, 2013.)

The book under review, is:
Hubbard, Glenn, and Tim Kane. Balance: The Economics of Great Powers from Ancient Rome to Modern America. New York: Simon & Schuster, 2013.

Amish “Are Big Boosters of Genetically Modified Corn”

(p. 222) The Amish use disposable diapers (why not?), chemical fertilizers, and pesticides, and they are big boosters of genetically modified corn. In Europe this corn is called Frankenfood. I asked a few of the Amish elders about that last one. Why do they plant GMOs? Well, they reply, corn is susceptible to the corn borer, which nibbles away at the bottom of the stem and occasionally topples the stalk. Modern 500-horsepower harvesters don’t notice this fall; they just suck up all the material and spit out the corn into a bin. The Amish harvest their corn semimanually. It’s cut by a chopper device and then pitched into a thresher. But if there are a lot of stalks that are broken, they have to be pitched by hand. That is a lot of very hard, sweaty work. So they plant Bt corn. This genetic mutant carries the genes of the corn borer’s enemy, Bacillus thuringiensis, which produces a toxin deadly to the corn borer. Fewer stalks are broken and the harvest can be aided with machines, so yields are up. One elder Amish man whose sons run his farm said he was too old to be pitching heavy, broken cornstalks, and he told his sons that he’d only help them with the harvest if they planted Bt corn. The alternative was to purchase expensive, modern harvesting equipment, which none of them wanted. So the technology of genetically modified crops allowed the Amish to continue using old, well-proven, debt-free equipment, which accomplished their main goal of keeping the family farm together. They did not use these words, but they made it clear that they considered genetically modified crops appropriate technology for family farms.

Source:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.
(Note: italics in original.)

Cities Provide Children “Options for Their Future”

(p. 85) As Suketu Mehta, author of Maximum City (about Mumbai), says, “Why would anyone leave a brick house in the village with its two mango trees and its view of small hills in the East to come here?” Then he answers: “So that someday the eldest son can buy two rooms in Mira Road, at the northern edges of the city. And the younger one can move beyond that, to New Jersey. Discomfort is an investment.”
Then Mehta continues: “For the young person in an Indian village, the call of Mumbai isn’t just about money. It’s also about freedom.” Stewart Brand recounts this summation of the magnetic pull of cities by activist Kavita Ramdas: “In the village, all there is for a woman is to obey her husband and relatives, pound millet, and sing. If she moves to town, she can get a job, start a business, and get education for her children.” The Bedouin of Arabia were once seemingly the freest people on Earth, roaming the great Empty Quarter at will, under a tent of stars and no one’s thumb. But they are rapidly quitting their nomadic life and (p. 86) hustling into drab, concrete-block apartments in exploding Gulf-state ghettos. As reported by Donovan Webster in National Geographic, they stable their camels and goats in their ancestral village, because the bounty and attraction of the herder’s life still remain for them. The Bedouin are lured, not pushed, to the city because, in their own words: “We can always go into the desert to taste the old life. But this [new] life is better than the old way. Before there was no medical care, no schools for our children.” An eighty-year-old Bedouin chief sums it up better than I could: “The children will have more options for their future.”

Source:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.
(Note: italics, an bracketed “new,” in original.)

Modern Cities Are “Successful Former Slums” that Allowed “Vibrant Economic Activity”

(p. 82) Babylon, London, and New York all had teeming ghettos of unwanted settlers erecting shoddy shelters with inadequate hygiene and engaging in dodgy dealings. Historian Bronislaw Geremek states that “slums constituted a large part of the urban landscape” of Paris in the Middle Ages. Even by the 1780s, when Paris was at its peak, nearly 20 percent of its residents did not have a “fixed abode”–that is, they lived in shacks. In a familiar complaint about medieval French cities, a gentleman from that time noted: “Several families inhabit one house. A (p. 83) weaver’s family may be crowded into a single room, where they huddle around a fireplace.” That refrain is repeated throughout history. A century ago Manhattan was home to 20,000 squatters in self-made housing. Slab City alone, in Brooklyn (named after the use of planks stolen from lumber mills), contained 10,000 residents in its slum at its peak in the 1880s. In the New York slums, reported the New York Times in 1858, “nine out of ten of the shanties have only one room, which does not average over twelve feet square, and this serves all the purposes of the family.”
San Francisco was built by squatters. As Rob Neuwirth recounts in his eye-opening book Shadow Cities, one survey in 1855 estimated that “95 percent of the property holders in [San Francisco] would not be able to produce a bona fide legal title to their land.” Squatters were everywhere, in the marshes, sand dunes, military bases. One eyewitness said, “Where there was a vacant piece of ground one day, the next saw it covered with half a dozen tents or shanties.” Philadelphia was largely settled by what local papers called “squatlers.” As late as 1940, one in five citizens in Shanghai was a squatter. Those one million squatters stayed and kept upgrading their slum so that within one generation their shantytown became one of the first twenty-first-century cities.
That’s how it works. This is how all technology works. A gadget begins as a junky prototype and then progresses to something that barely works. The ad hoc shelters in slums are upgraded over time, infrastructure is extended, and eventually makeshift services become official. What was once the home of poor hustlers becomes, over the span of generations, the home of rich hustlers. Propagating slums is what cities do, and living in slums is how cities grow. The majority of neighborhoods in almost every modern city are merely successful former slums. The squatter cities of today will become the blue-blood neighborhoods of tomorrow. This is already happening in Rio and Mumbai today.
Slums of the past and slums of today follow the same description. The first impression is and was one of filth and overcrowding. In a ghetto a thousand years ago and in a slum today shelters are haphazard and dilapidated. The smells are overwhelming. But there is vibrant economic activity.

Source:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.
(Note: italics, and bracketed “San Francisco” in original.)

Technology Brings Choices and Control, Which Brings Happiness

(p. 78) For the past 30 years the conventional wisdom has been that once a person achieves a minimal standard of living, more money does not bring more happiness. If you live below a certain income threshold, increased money makes a difference, but after that, it doesn’t buy happiness. That was the conclusion of a now-classic study by Richard Easterlin in 1974. However, recent research from the Wharton School at the University of Pennsylvania shows that worldwide, affluence brings increased satisfaction. Higher income earners are happier. Citizens in higher-earning countries tend to be more satisfied on average.
My interpretation of this newest research–which also matches our intuitive impressions–is that what money brings is increased choices, rather than merely increased stuff (although more stuff comes with the territory). We don’t find happiness in more gadgets and experiences. We do find happiness in having some control of our time and work, a chance for real leisure, in the escape from the uncertainties of war, poverty, and corruption, and in a chance to pursue individual freedoms–all of which come with increased affluence.
I’ve been to many places in the world, the poorest and the richest spots, the oldest and the newest cities, the fastest and the slowest cultures, and it is my observation that when given a chance, people who walk will buy a bicycle, people who ride a bike will get a scooter, people riding a scooter will upgrade to a car, and those with a car dream of a plane. Farmers everywhere trade their ox plows for tractors, their gourd bowls for tin ones, their sandals for shoes. Always. Insignificantly few ever go back. The exceptions such as the well-known Amish are not so exceptional when examined closely, for even their communities adopt selected technology without retreat.

Source:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.
(Note: italics in original.)

Wealth from Innovation Is Nobler than Wealth from Litigation

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Source of book image: http://ww4.hdnux.com/photos/15/60/06/3604871/3/628×471.jpg

(p. C7) In business, Green routinely sued her competitors. . . .
. . .
It was precisely Green’s vision of life as a zero-sum game, a match between enemies, that proved her flaw. She appreciated the idea that dollars compound, but she never seemed to grasp that the compounding of ideas, innovation, is just as important, that in certain, non-litigious, environments ideas “fructify,” to use a period verb. Litigation like Green’s prevented the kind of innovation in which she might have wanted to invest. Wealth is created when Apple beats Samsung, but more wealth is created when Apple comes up with a new phone.

For the full review, see:
AMITY SHLAES. “Quarrelsome Queen of the Gilded Age.” The Wall Street Journal (Sat., September 29, 2012): C7.
(Note: ellipses added.)
(Note: the online version of the review has the date September 28, 2012.)

The book under review, is:
Wallach, Janet. The Richest Woman in America: Hetty Green in the Gilded Age. New York: Nan A. Talese, 2012.

“Lowest-Paid Burger Flipper” Is “Better Off than King Henry”

(p. 76) After going from room to room, skipping none except the garage (that would be a project in itself), we arrived at a total of 6,000 varieties of things in our house. Since we have multiple examples of some varieties, such as books, CDs, paper plates, spoons, socks, on so on, I estimate the total number of objects in our home, including the garage, to be close to 10,000.
Without trying very hard, our typical modern house holds a king’s ransom. But in fact, we are wealthier than King Henry. In fact, the lowest-paid burger flipper working at McDonald’s is in many respects (p. 77) better off than King Henry or any of the richest people living not too long ago. Although the burger flipper barely makes enough to pay the rent, he or she can afford many things that King Henry could not. King Henry’s wealth–the entire treasure of England–could not have purchased an indoor flush toilet or air-conditioning or secured a comfortable ride for 500 kilometers. Any taxicab driver can afford these today. Only 100 years ago, John Rockefeller’s vast fortune as the world’s richest man could not have gotten him the cell phone that any untouchable street sweeper in Bombay now uses. In the first half of the 19th century Nathan Rothschild was the richest man in the world. His millions were not enough to buy an antibiotic. Rothschild died of an infected abscess that could have been cured with a three-dollar tube of neomycin today. Although King Henry had some fine clothes and a lot of servants, you could not pay people today to live as he did, without plumbing, in dark, drafty rooms, isolated from the world by impassable roads and few communication connections. A poor university student living in a dingy dorm room in Jakarta lives better in most ways than King Henry.

Source:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.