Latest Developments, November 29

In the latest news and analysis…

Global inequality
The Overseas Development Institute’s Jonathan Glennie points out that many of Europe’s and America’s Occupy demonstrators are actually part of the global 1% and that the inequality between countries is worse than it is within countries.
“If redistribution at a national level requires a strongly interventionist state, doesn’t that imply that something similar is required globally if we hope to contain global inequality? Such a plan would be laughed at by those who know the inner workings of the UN, and who recognise the nationalist instinct of politicians and voters. It is ironic that as knowledge about and empathy with the rest of the world has increased in the 20th century, through a revolution in communications, so has global inequality. One might have hoped for the opposite.
It is hard to see how global inequality can be contained without a shift in the mindset, cemented by centuries of traditional politics and nationalism, that favours the state you are born in over the world you want to live in.”

Bush and Blair on trial
Princeton University’s Richard Falk writes about a Malaysian tribunal’s non-enforceable conviction of former US president George W. Bush and former British prime minister Tony Blair for crimes against humanity and genocide during the Iraq War.
“The world system of states and institutions was unwilling to look a particular set of facts in the eye, and respond effectively to what many qualified and concerned persons believed to be a gross injustice. In this regard, there was an intense ethical and political motivation behind these civil society initiatives that invoked the authority of law. But do these initiatives really qualify as ‘law’? A response to such a question depends on whether the formal procedures of sovereign states, and their indirect progeny – international institutions – are given a monopoly over the legal administration of justice. I would side with those that believe that people are the ultimate source of legal authority, and have the right to act on their own when governmental procedures, as in these situations, are so inhibited by geopolitics that they fail to address severe violations of international law.”

A human approach to asylum-seekers
The UN High Commissioner for Human Rights Navi Pillay has praised Australia for announcing it will no longer send all undocumented migrants arriving by boat to mandatory detention centres.
“I am pleased to see this latest shift in policy, bringing in individual assessments of asylum seekers for release into the community,” she said. “I welcome these steps towards a more human approach to asylum-seekers in Australia which can only help to strengthen the tolerance and understanding necessary in a modern multicultural society.”

Doing the cartels’ laundry
The Los Angeles Times reports on the virtual impunity with which international banks have helped Mexican drug cartels launder billions of dollars.
“‘Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” U.S. Atty. Jeffrey H. Sloman said in announcing the case last year, hailed at the time by authorities as one of the most significant in stopping dirty money from contaminating the U.S. financial system.
Wachovia paid the $160 million in what is called a deferred-prosecution agreement; no one went to prison, and the fines represented a tiny fraction of the [$420 billion] the bank had filtered. In court documents cited by the U.S. Drug Enforcement Administration, Wachovia acknowledged serious lapses.”

There will be blood
The Inter Press Service reports on an unfolding investigation in Sweden over allegations petroleum giant Lundin Oil was involved in human rights violations committed in South Sudan during the civil war that preceded independence.
“[Reverend James] Ninrew said the brutal and systematic nature of the government’s operations in advance of the oil industry was obvious to anyone in the area. The government would begin by indiscriminant bombing, driving many from their homes. This would be followed by helicopter gunships flying low in order to attack those that remained.
‘The third step was sending ground troops coming in vehicles and coming on foot to make sure no more people were there,’ said Ninrew.
Soldiers would then establish posts just beyond the area they wanted to control, he said. After that, the machinery and the surveyors would arrive. Once they were done their work, the pattern would be repeated as the oil company expanded into territory falling under its concession.”

The Millennium Villages don’t work
The Center for Global Development’s Michael Clemens writes about a new independent assessment – the first of its kind – of the Millennium Villages Project, which suggests the much-hyped experiment has had little impact on household income despite spending nearly 100 percent of local income per capita.
“While [Tilburg University’s Bernadette] Wanjala and [Radboud University’s Roldan] Muradian find that the project caused a 70% increase in agricultural productivity among the treated households, tending to increase household income, it also caused less diversification of household economic activity into profitable non-farm employment, tending to decrease household income. These countervailing effects are precisely what one might expect from a large and intensive subsidy to agricultural activity. On balance, households that received this large and intensive intervention have no more income today than households that did not receive the intervention.”

Or do they?
Yale University’s Chris Blattman takes issue with many of the statistical methods of the new study and thinks the evidence presented may in fact suggest increases in income, though he is careful to add he does not necessarily buy into the Millennium Villages Project’s basic assumption that “the whole of poverty alleviation is greater than the sum of its parts.”
“My own theory of poverty is actually the opposite: there are diminishing marginal returns to aid in a single village. I believe in the possibility of increasing returns and complementarities, but mainly through broad, national institutional and technological change. I’m personally not convinced real poverty traps exist, or can be overcome, at the household or village level.”

Latest Developments, October 19

In the latest news and analysis…

The truth about tax agreements
The Tax Justice Network writes that the Cayman News Service “has blown the lid on one of the biggest lies of recent years about tax havens/secrecy jurisdiction” that tax information exchange agreements (TIEAs) bring transparency to tax havens.
“On the face of them TIEAs appeared “fearsome” with one tax authority forcing another to disclose information on foreign nationals, [Mourant Ozannes’s Robert] Shepherd noted, but actually there was a good deal that trust professionals could do to protect beneficiaries and honour obligations of confidentiality, citing a number of hoops that tax authorities needed to go through to extract information. For example, the onshore authority must initially identify the tax payer in question about whom they require the information and equally they must have exhausted all local powers to gain information first.

Ziva Robertson from Withers said that there was a big difference between the political will to be seen to be creating TIEAs and the actual economic effect of their implementation.”

Inclusive growth and inequality
The International Monetary Fund’s new economic outlook for Sub-Saharan Africa predicts continued high growth for the region and disputes the apparent disconnect between growth and poverty reduction, while conceding that inequality is rising.
“First, for the region as a whole, the link between poverty and growth is generally weak. But this relationship is considerably stronger for the region’s high-growth countries.
Second, there is evidence of growth having been fairly inclusive in the region’s high-growth countries. We find, for example, that the lowest quartile in three out of the four case studies (Ghana, Tanzania, Uganda) has enjoyed fairly high increases in consumption. But there are signs that in many of these countries higher-income households have enjoyed still higher growth in consumption. This implies some increase in inequality, broadly in line with patterns observed in a number of high-growth Asian countries.”

Malaria vaccine agnosticism
New York University’s Karen Grépin urges caution over the news of a possible malaria vaccine that set off so much excitement earlier this week.
“But as a public health professional, I just don’t think that enough new evidence has been presented for us to think that we found a “game changer” when it comes to malaria prevention and control. The real question, at least in my mind, that is relevant in this discussion is: does this vaccine provide any real lasting immunological protection in the target populations? The interim study was not set up to address this question. The actual full study was but, and I am not entirely sure why, the interim results were published anyway years before the real results of this study are going to be known. I am not the only one who questions the merits of this approach, in the accompanying editorial in the [New England Journal of Medicine] by Nicolas Witte, a true expert in this area, said “there does not seem to be a clear scientific reason why this trial has been reported with less than half the efficacy results available”. But of course we all know it is not always just science that drives most scientific discussions.”

GM food politics
IRIN reports on the ongoing debate over genetically modified food in Africa which finds itself in the middle of an ideological and commercial rivalry between the US and EU.
“A deep mistrust also prevails in Africa, given the fact that two power blocs – the EU and the USA remain divided over GM.
Only one strain of GM maize, Monsanto 810, and one modified potato, have been approved in the EU, and most countries grow neither commercially. Spain accounts for about 80 percent of GMO grown in the EU in terms of land under cultivation, but Austria, France, Greece, Hungary, Germany and Luxembourg have banned all GMO cultivation.
On the other hand, in the USA, where 70 percent of maize is GM, GM food need not be labelled. Some food experts say both the EU and the USA have vested interests in promoting their respective views in Africa, which is seen as a potential market and supplier of either GM or non-GM products.”

The Overseas Development Institute’s Jonathan Glennie questions the common claim that poor countries will suffer too unless Europe recovers quickly from its current economic crisis.
“But growth in some parts of the world and not others is just as plausible as growth all over the place. Plenty of economists view the rapid growth of Europe and the US in the past two centuries as a cause of impoverishment in other countries, rather than an unrelated consequence of sound economic management and hard work.
While income per capita has grown rapidly in the rich world for the past three decades, from about $14,000 (constant 2000) to about $26,000, it declined in sub-Saharan Africa (from $571 to $507) and stagnated in all low-income countries (at around $240) until things started to get marginally better in the first decade of this century. It is simply not the case that western prosperity is necessarily associated with prosperity elsewhere.”

Commodity bonds
Harvard University’s Jeffrey Frankel argues poor countries that depend heavily on resource exports are vulnerable to market volatility and could benefit from issuing commodity bonds rather than borrowing in dollars.
“The advantage of such bonds is that in the event of a decline in the world price of the underlying commodity, the debt-to-export ratio need not rise. The cost of debt service adjusts automatically, without the severe disruption that results from loss of confidence, crisis, debt restructuring, and so forth.”

Millennium Villages Project transparency
The Center for Global Development’s Michael Clemens and the World Bank’s Gabriel Demombynes argue that the Millennium Villages Project uses evaluation methods that make it impossible to judge whether or not it is having the desired (and claimed) results.
“A critical element of persuasive impact evaluation is that it is independent and transparent. An independent and transparent analysis of its data could make the MVP evaluation more persuasive. The MVP has told us, however, that it will only consider making data available to outside researchers after it has completed publishing all of its work on data collected through 2016. This suggests the MVP will not share any of the data it has collected until roughly 2020, 15 years after the project began.”

Apples to apples
Oxfam’s Duncan Green has posted a World Bank list of the world’s 100 largest economies, which includes countries, companies and cities, thereby prompting a number of apples-to-oranges comments and a subsequent update to the original post.
“Fascinating comment from [the Bretton Woods Project’s] Peter Chowla, pointing out that a better comparison is between government tax revenue and corporate revenue, and when he crunched the numbers (he didn’t include cities), he got only 29 countries in the top 100 – the rest were corporates.”

Latest Developments, October 13

In the latest news and analysis…

The instability of inequality
New York University economist Nouriel Roubini argues this year’s wave of protests, from Cairo to New York, are the result of the world’s growing economic and political inequality.
“Any economic model that does not properly address inequality will eventually face a crisis of legitimacy. Unless the relative economic roles of the market and the state are rebalanced, the protests of 2011 will become more severe, with social and political instability eventually harming long-term economic growth and welfare.”

Shifting European priorities
Agence France-Presse reports the EU, the world’s biggest donor, has announced changes to its aid program that will shift attention from major emerging nations like China and India toward agriculture and energy in the poorest countries.
“With 75 percent of the world’s poor live in middle-income countries, ActionAid called the changes an ‘alarming shift’ that moves ‘EU aid away from supporting poor people to end poverty and towards promoting economic growth.’
Laura Sullivan, EU development policy expert at ActionAid, said the reform ‘assumes money from economic growth will trickle down to the world’s poor but this has been tried before and it doesn’t work.’”

Band-aid solutions
The Tuvalu Faith Based Youth network’s Redina Auina says emergency assistance for the current water crisis is appreciated but what the Pacific island nation really needs is for rich countries to help over the long term by reducing their emission levels.
“It’s like they are applying one sticking plaster at a time, which is not going to solve the issue. While much more can be done in terms of improving Tuvalu’s water security and water conservation measures, there is not much more the island can do to increase its resilience to climate change.”

A call for humility
Howard Buffett, philanthropist and son of billionaire Warren Buffett, has called for more nuanced and humble thinking when it comes to finding solutions for improved agriculture in Africa.
“Stop thinking that what we know how to do is going to work for somebody else,” Buffett said. “We need to be intelligent enough and humble enough to admit that we don’t know everything and that we certainly don’t know some things in other parts of the world that need to happen.”

Rotten aid
Tales from the Hood’s J. gives the impression the international aid industry is almost (but not quite) completely irredeemable.
“The hardest part of this job is not seeing awful things in the field. It’s not repeatedly witnessing the suffering of others and being able to offer little as a remedy, dealing with corrupt district officials, getting sick, or spending too long away from one’s family too often (hard as those things truly can be). The hardest part of this job is simply dealing with the crushing dumbassery of a system that fundamentally lacks real incentives for getting right what it claims as its core purpose.”

Defending Millennium Villages
In the wake of a recent Guardian piece laying out some of the criticisms levelled at the Millennium Villages Project, Columbia economist Jeffrey Sachs offers a defence of his brainchild.
“Contrary to the loose talk of critics, this project is not throwing “gazillions” of dollars at poverty. The project spent $60 on each villager every year between 2006 and 2011 to build the capital of the community. That prompted further contributions from the government itself and in-kind contributions from the community. This is a replicable and scalable budget model, well within the official development assistance amounts donors have long promised. It’s nonsense to suggest otherwise, or to change the game now this amount has been shown to work so powerfully.”

Unconstitutional IP rules?
US Democratic senator Ron Wyden has challenged the Obama administration’s right to sign the Anti-Counterfeiting Trade Agreement without Congress’s approval.
“Wyden demanded that the administration either declare that ACTA does not create any international obligations for the US and therefore is ‘non-binding,’ or provide a legal rationale to the Congress and the public as to why ACTA should not be considered by Congress.”

Full and unlimited democracy
Author Dan Hind draws on history to suggest the world’s current problems, in rich and poor countries, are due primarily to a lack of democracy.
“In the late 1840s, typhus fever broke out in Upper Silesia, a Prussian province in what is now Poland. The education ministry sent a physician called Rudolf Virchow to investigate. While Virchow identified insanitary working conditions as the immediate cause of the epidemic, he traced its origins to the region’s lack of political liberty. In the absence of free institutions the inhabitants were ‘poor, ignorant and apathetic’. In order to prevent a recurrence of the disease Virchow recommended a remedy that he summarised in a few words: ‘full and unlimited democracy’.”