Archive | Economics RSS for this section

The need to look for more than just malaria

I was just reading a comment in the new Journal of the American Society of Tropical Medicine and Hygiene “After Malaria is controlled, what next?”

Fortunately for all of our jobs, there is little to worry about. Malaria, as a complex environmental/political/economic public health problem, won’t be controlled anytime soon. As there’s no indication that many sub-Saharan countries will effectively ameliorate their political problems and also no sign that, despite the “Rising Africa” narrative, African countries will develop in such a way that economic rewards will trickle down to the poorest of the poor, malaria transmission will continue unabated. This is a horribly unfortunate outcome for the people, particularly small children, who have to live with malaria in their daily lives.

In all of the places it occurs, malaria is merely a symptom of a greater political and economic failure.

Indeed, we really know less about the causes of suffering and death in the tropics than many believe. Even vital statistics of birth and death are unrecorded in many areas of the world, much less the accurate causes of disease and death. Some diagnoses, such as malaria, dengue fever, and typhoid fever, are often ascribed to patients’ illnesses without laboratory confirmation. Under the shadow of the umbrella of these diagnoses, other diseases are lurking. I have found significant incidences of spotted fever and typhus group rickettsioses and ehrlichiosis among series of diagnostic samples of patients suspected to have malaria, typhoid, and dengue in tropical geographic locations, where these rickettsial and ehrlichial diseases were previously not even considered by physicians to exist.4–8 Control of malaria or dengue would reveal the presence and magnitude of other currently hidden diseases and stimulate studies to identify the etiologic agents.

This is the problem with our public health fascination with malaria. We are missing all of the other pathogens and conditions which case untold suffering in the poorest and most isolated communities. It can’t be the case that malaria acts in a box. In fact, it could be the case, that multiple pathogens coordinate their efforts to extract as many human biological and behavioral resources as possible to obtain maximum opportunities for reproduction and sustenance. A public health system only designed to look for and treat a limited window of diseases misses the opportunity to disrupt what is probably a vast ecological complex.

First, we have a problem of poor diagnostics. Facilities traditionally treat most fevers presumptively as malaria, dispensing drugs appropriate to that condition. However, conditions like dengue fever exhibit similar symptoms. While is it extremely likely that dengue is all over the African continent, particularly in urban areas, there is little ability to identify true dengue cases in the public health sector, and thus, in addition to mistreating patients, the extent of the disease burden is unknown. We cannot tackle large public health issues without proper data.

Second, we have the problem of all of the “known unknowns,” that is, we know for a fact that there’s more out there than we have data for but we also know (or at least I do) that there is a greater disease ecology out there. We know that many pathogens interact with one another for their mutual advantage or to haplessly effect significantly worse outcomes. The awful synergy of HIV and TB is just one example.

OK, I’m going to go and deal with my own pathogenic tenant which I think I’ve identified as an enteric pathogen of the genus Pseudomonas, which might have taken hold opportunistically through an influenza infection. This is complete speculation, however. Data quality issues prevent a reliable diagnosis!

A sick mother will make a sick baby who becomes a sick adult

As much as we’d like to believe it, babies aren’t a blank slate. Babies not only bear the social and economic legacies of the families which produce the, but also the scars of a lifetime of immunological insults.

This week, a paper, “Does in utero Exposure to Illness Matter? The 1918 Influenza Epidemic in Taiwan as a Natural Experiment,” appeared in the journal of the National Bureau of Economic Research which tracks the long term effects of the 1918-1920 worldwide influenza pandemic.

Turns out that babies which were born to mothers in that period were, on average, shorter than people born in other years, had more developmental problems, and, possibly, suffered from long term problems of chronic disease.

This paper tests whether in utero conditions affect long-run developmental outcomes using the 1918 influenza pandemic in Taiwan as a natural experiment. Combining several historical and current datasets, we find that cohorts in utero during the pandemic are shorter as children/adolescents and less educated compared to other birth cohorts. We also find that they are more likely to have serious health problems including kidney disease, circulatory and respiratory problems, and diabetes in old age. Despite possible positive selection on health outcomes due to high infant mortality rates during this period (18 percent), our paper finds a strong negative impact of in utero exposure to influenza.

It’s interesting to me, in that it’s a study of health on one of Japan’s former colonies, but also because Taiwan’s indicators in 1918 were atrocious. More than a fifth of babies didn’t live to see their fifth birthday, deaths in childbirth were common and life was short. In other words, it’s a lot like a lot of African contexts today.

The long term outcomes of common developing world diseases have mostly been ignored. There is every reason to believe that one of the reasons African countries suffer economically is that people’s developmental trajectory is set before even exiting the womb. SO we’re fighting against not only a bleak economic past, but also against a constant legacy of infectious insults.

And to moms in the developed world…. get your flu shots.

What if Godzilla came to Kenya?

OLYMPUS DIGITAL CAMERAThis question has been bothering me for a while. While it’s obvious that Godzilla would only visit Japan and the US given that the US and Japan are the only countries which make Godzilla movies, I’ve long been puzzled as to why Godzilla would visit those two exclusively. Specifically, why doesn’t Godzilla visit poor countries? (Note: I realize that Godzilla is a good guy, but ask readers to remember that he didn’t start out that way)

Certainly, the environmental devastation in poor countries is as extensive as in wealthy countries (and perhaps moreso, given the lack of financial and political resources to measure it, let alone do anything about it), making Tanzania, for example, just as much a candidate for kaiju destruction as any other.

But what would happen? First, were Godzilla appear on the shores of the coast of Kenya, he’d (is it male?) have to plow through the port of Mombasa. Godzilla may be destructive, but he’s known to follow standard immigration procedures. He’d meet little resistance, given Kenya’s lax border protection. At the worst, he’d be asked to pay $50 to stay for three months.

Mombasa isn’t a big town, so he’d be over the island and into the country in a matter a seconds, though he might consider a pleasant break on the beach. After finally eradicating Kenya’s terror problem and quashing any ideas of Mombasan separatism, he’d stroll to the Mombasa highway and lumber up to Nairobi, where the real action could start.

In contrast to Japan and the US, Godzilla would find the response by the local military to be tepid at best. A few planes might buzz around aimlessly and a couple of tanks might lob some rounds at his legs, but the military, lacking any incentive to loot cell phones or liquor would probably simply slink away in short order. Response from the African Union or the UN would be slow coming, as they’d have to wait to see if the media reacted with sufficient outrage to warrant action. The US would most certainly refuse to be involved in anything other than a support role.

Godzilla would plod through Nairobi and lay waste to the City Centre in a matter of seconds. It would be like a child stepping through a grandmothers flower garden. He’d probably quickly become bored, lacking much to topple over outside of a few unfinished apartment buildings and maybe a mall here and there. If he were after human destruction, he might take a few steps through Kibera, where he’d certainly kill a half a million people in the space of a single Godzilla breath.

After an anti-climactic fight in Nairobi, he’d have to take a break in Karen to consider what to do next. Maybe he’d move on to Kampala? Or regret his decision and move back to India? It’s hard to say.

The human costs would be incredible. A couple of million people would likely die immediately, the majority of which would be poor given the incredible density in slums like Kibera and their inability to properly evacuate from the city. The sleep inducing traffic jams are unavoidable even under normal circumstances. A manic run for the countryside by all of Nairobi would only make things worse but squatter settlements and slums would reappear within days.

In the long term, however, Godzilla’s destruction of Kenya might pay off. Massive amounts of funding would appear from a number of international sources to rebuild Nairobi’s devastated infrastructure. The Chinese would appear and immediately start rebuilding the highway system from scratch using cheap imported labor. The Americans would set about reconstructing Kenya’s likely devastated military and ports. The British would dump money into overhauling Nairobi’s failing sanitation system, long due for replacement. Kenya would get an infrastructural reboot.

On the other hand, real estate speculators would flow in like flies on roadkill, hoping for a payoff once Kenya’s economy got back on track. Where real estate prices would have crashed immediately following the destruction of Nairobi, leading to a cheap scramble for land, the current real estate boom soon again be underway. Domestic investors would now have even less incentive to develop Kenya’s manufacturing sector and the economy would hobble along as it did before.

Given the political chaos following Godzilla’s destruction of the central government, Chinese investors would grab as much agricultural land as possible, citing “gifts” of highways and football stadiums further entrenching China’s increasingly overbearing presence in the country.

In essence, Kenya, as independent state, would cease to exist.

It might be the case, however, that the destruction of Kenya’s cities might finally sway the Kenyan citizenry away from tribal politics and toward a truly democratic state. People can, and do, often surprise us, but this would be a hard, hard road given that most of the reconstruction would not be democratically determined, but rather orchestrated by World Bank and UN technocrats and Chinese land grabs. It’s clear that Kenya’s self interested leaders would do nothing to stop it.

So, conclusion? Kenya would win big in improved infrastructure, but lose big given the resultant political weakness. In the long term, Kenya might regain some of it’s political footing given improvements in the domestic economy, but it would take decades and a lot of political will to make this happen.

The famous “aho/baka” map of Japan.

ahobaka1Japan, despite the refined image it traditionally likes to present to the world, has no shortage of words with which to call people stupid.

These words are mostly regional and the uses and nuances of calling people stupid also vary by place.

Over dinner, I was reminded of an episode of Tante Night Scoop, an investigative television program which ran throughout the 90’s. They did an exhaustive survey and mapped the locations of the common ways of calling people stupid throughout Japan.

Of interest is the centrality of the word “aho,” commonly used throughout the Kansai region of Japan (and denoted in red) and the radial spread of “baka” (denoted in blue), a word mostly associated with Tokyo and commonly found in Kanto-centric anime programs.

The map was intended as entertainment, but it has serious historical significance.

When people move, they take words with them. It would appear that people in Kansai, historically the political and economic center of Japan, had little reason to leave the region, which would explain “aho”‘s limited spread. Baka, however, can be found on both sides of Kanto, indicating that there were strong connections between the two sides, despite the distance between them.

Oddly, the other words for “stupid” occupy the same radii from Kansai indicating that certain groups of people had peculiar spatial advantages in trade, where as others did not. Though I really have no idea, I’m thinking that particular perishable products traded with Kansai might have different spoiling times necessitating particular proximities. It’s important also to note that the extreme peripheries might have been trading non-perishable resources like coal, which, though heavy, doesn’t rot.

Economics, trade and language have deep links. English wouldn’t exist without it, and the many forms of English spoken throughout the world have been influenced by the multitude of groups of people who chose to speak it to facilitate trade.

OK, enough for now and back to Kenya.

Thomas Piketty in Nairobi

IMG_1814-e1394200875155I just got back from Bookstop in the Yaya Centre shopping mall in Nairobi, one of my favorite bookstores in the world. It’s an Africanist’s paradise. My bank account is always a bit lighter and my suitcase a bit heavier after I visit.

Today, a customer was coming in to pick up Thomas Piketty’s Capital in the Twenty-First Century, a 700 page economics tome which has been topping the best seller lists everywhere and probably one the best economics books to appear in the past 50 years. The gentleman looked a bit intimidated by its size.

A bit later, a younger Kenyan woman came in with a bag full of books that she was hoping to trade for her copy. The book costs the equivalent of about $70 in Kenya.

The owner apparently ordered 100 copies, but was only able to get 25. He says he has orders for all 100 copies, many from Kenyan college students which he sees as an encouraging sign. I have to agree.

Today is World Malaria Day

Kenya (23 of 26)I was supposed to give a presentation, but instead I’m in the Delta SkyClub writing a blog post.

I’m not exactly sure what we’re all supposed to be doing on World Malaria Day that we shouldn’t be doing every day, but at least we have a day! There’s no such thing as “World Helminth Day,” unfortunately.

What I think we should be doing on World Malaria Day:

1. Reducing ridiculous bureaucracy in developing countries which inflates the price of goods at the border.
2. Eliminate ridiculous protectionist policies in wealthy countries which selectively hobbles imports from developing countries.
3. Encourage true democracy in African States (where it doesn’t already exist) and eliminate unproductive authoritarian dead weight.
4. Guarantee rights to representation, legal fairness, political expression and property.
5. Create a global tax on capital and reinvest monies fairly in locally developed infrastructure projects in developing countries.
6. Encourage deep state investments in health care and health delivery in malarious countries while creating conditions favorable for the private sector to meet health needs.
7. Invest in the development of new pharmaceutical tools to prepare for the day when ACTs are no longer effective.

Wait, only points 6 and 7 had anything to do with malaria, you say, but I say they all do. Malaria is a complex disease, the root cause of which is poverty, the root cause of which is politics and economics. We will never be able to eliminate malaria unless we take care of all of the other problems which create the context that allows it to exist.

OECD social indicator report: not much in the way of good news

FoodSecurityThe new OECD “Society at a glance” (paywall) report came out today. It’s part of a series of policy papers assessing the social implications of the economic crisis and its aftermath, and offers a list of policy recommendations on a yearly basis.

The picture is never good.

The financial upheaval of 2007-08 created not just an economic and fiscal crisis but also a social crisis. Countries that experienced the deepest and longest downturns are seeing profound knock-on effects on people’s job prospects, incomes and living arrangements. Some 48 million people in OECD countries are looking for a job – 15 million more than in September 2007 – and millions more are in financial distress. The numbers living in households without any income from work have doubled in Greece, Ireland and Spain. Low-income groups have been hit hardest as have young people and families with children.

The financial crash was one of the most important events that occurred within my lifetime, but still some people don’t seem to get how far reaching its impacts have been. The American Republican Party seemed to mostly bury its collective head in the sand, perfectly willing to sacrifice the welfare of poor people for the sake of a few narrow political goals.

The paper is filled with interesting data and charts, but the are some other gems here. Food security:

While federal food assistance programmes in the United States now support roughly twice as many households as in 2007, the number with inadequate access to food at some time in the year has nonetheless climbed from 13 million (11% of all households) in 2007 to 17.6 million (15%) in 2012. Rates of food insecurity were substantially higher among households with children (20% in 2012) and lone-parent families were particularly affected (35%). Forty-one percent of all food-insecure households received no support through federal food assistance programmes.

As someone who grew up in a food insecure household, I take this quite seriously. Right wingers who have a stocked fridge don’t get what it’s like to have an empty fridge. It’s easy to say that SNAP benefits foster “a culture of dependence” with a bulging stomach. Perhaps they don’t know that in food insecure households, the last people to eat are the kids. Of course, they don’t care.

To “crisis-proof” social policies and to maintain effective support throughout the economic cycle, governments must look beyond the recent downturn. First, they need to find ways to build up savings during upswings to ensure they can meet rising costs during downturns. On the spending side, they should link support more to labour market conditions – for example, by credibly reducing benefit spending during the recovery, and by shifting resources from benefits to active labour market policies. On the revenue side, they should work to broaden tax bases, reduce their reliance on labour taxes and adjust tax systems to account for rising income inequality. Second, governments need to continue the structural reforms of social protection systems begun before the crisis. Indeed, the crisis has accelerated the need for these. In the area of pensions, for example, some future retirees risk greater income insecurity as a result of long periods of joblessness during working age. In health care, structural measures that strip out unnecessary services and score efficiency gains are preferable to untargeted cuts that limit health care access for the most vulnerable.

If GWB 1 is any indication, the Republican Party dislikes savings and when they get a surplus they seem to squander it. There’s no reason to believe that the future will be any better. I’m thinking about the dichotomy of labor taxation versus capital taxation. Republicans have made it quite clear that they dislike capital taxation and prefer labor taxation. But what this does is create a gated community of capital holders, who exert vast political control without having to take responsibility for, well, much at all.

While I do advocate for a national sales tax to pay for transfers to create an income floor for American wage earners, we also need to tax the hell out of inheritances. There’s no reason that Bill Gates’ son (does he have one?) deserves a leg up any higher than he’s already got it. If America wants to foster innovation, it has to start by bolstering it’s labor classes. Forcing them to go without meals and scramble around to meet basic health needs only creates a dog eat dog culture of basic survival, and leaves little room for good ideas.

Alright, happy zombie day.

Capital and inequality

Joseph Joyce, professor of economics at Wellesley College wrote and interesting piece to day on capital liberalization and inequality.

I’m glad to see that so much attention is being fawned on Piketty’s most excellent book, “Capital in the 21sr Century.” It’s sure to go down as a classic in the economics literature, but the debate and discussion surrounding the book couldn’t come at a better time.

I don’t think it’s an accident that Piketty’s book, would top the NYT best seller list just a week after appearing, that a sitting President of the US would mention that inequality is one of the most important issues of our time, or that Christine LaGarde, head of the IMF would make a case that we need to address inequality at a global level.

They (Florence Jaumotte, Subir Lall and Chris Papageorgiou) analyzed the effect of financial globalization and trade as well as technology on income inequality in 51 countries over the period of 1981 to 2003. They reported that technology played a larger role in increasing inequality than globalization. But while trade actually reduced inequality through increased exports of agricultural goods from developing countries, foreign direct investment played a different role. Inward FDI (like technology) favored workers with relatively higher skills and education, while outward FDI reduced employment in lower skill sectors. Consequently, the authors concluded, while financial deepening has been associated with higher growth, a disproportionate share of the gains may go to those who already have higher incomes.

This is a scenario we’re all mostly familiar with, though the broad effects are still debatable. Increasing investment by giants like the US in overseas manufacturing push down wages on domestic unskilled labor, but it’s hard to say whether this had a major effect on overall employment. Unemployment remained steady even after Clinton signed NAFTA, and continues to remain well under European levels today, though the lowest level of workers feel the worst pain. I’m not sure if I can really advocate for protectionist measures to keep capital at home or dissuade foreign investment on principle alone, but it is true that the worst effect of foreign competition has been the erosion of labor’s political power.

Jayati Ghosh of Jawaharlal Nehru University of New Delhi has examined the role of capital inflows in developing countries. She maintains that the inflows appreciate the real exchange rate and encourage investment in non-tradable sectors and domestic asset markets. The resulting rise in asset prices pulls funds away from the financing of agriculture and small firms, hurting farmers and workers in traditional sectors. Eventually, the asset bubbles break, and the poor are usually those most vulnerable to the ensuing crisis.

Well, this is somewhat more interesting. Foreign investment in developing countries appreciates the exchange rate, leading domestic investors to put their money into, say, real estate assets. This is certainly the case all over Africa. Land and building developments are occurring at a breakneck pace, with the hopes that expensive properties will be bought up by foreign companies and individuals. It’s certainly the case that no common African could ever afford some of these places (or would even want to buy them if they could). Nairobi, Dar es Salaam and Luanda, Angola are all in the middle of a real estate bubble. The problem, of course, is that domestic investors are hoping to make a quick buck, rather than attempting to create long term, profitable industries. No wonder Africa imports the lion’s share of it’s manufactured goods. No local will invest in the infrastructure to create it locally since urban real estate is so absurdly profitable right now. This, of course, means that money flows directly into the pockets of the urban elite and then sent back out to bank accounts and retailers in France and England, further entrenching the poorest of the poor.

Without the development of local industries, domestic economies can’t function and opportunities for revenue collections are missed. and countries like Tanzania and Kenya, for example, will continue to be beggar economies which depend on the good graces of the international community to support domestic social programs.

Articles I liked 4/12/2014

Here’s a few articles I’ve been reading this morning that I liked.

Intellectual Property Rights, the Pool of Knowledge, and Innovation by Joe Stiglitz (National Bureau of Economic Research)

We began by noting that some observers of innovation have claimed that a more important determinant of the levels of investment in R & D and the pace of
innovation than the intellectual property regime is the “opportunity set,” the knowledge pool from which applied researchers can draw. Knowledge, it is has long been recognized, is a public good—a
common resource from which all can draw (see, e.g., Stiglitz 1987).32 Intellectual property provides a way of appropriating the returns to investments in knowledge, but in doing so, effectively privatizes a public good. But every innovation draws upon prior knowledge, and the boundaries of “new” knowledge are inherently imprecise. Patents inevitably enclose what would otherwise have been in the
public domain. In doing so, not only do they impede the efficient use of knowledge, but because knowledge itself is the most important input into the production of further knowledge (innovations),
they may even impede the flow of innovations.

Democracy does cause growth (National Bureau of Economic Research)

Our baseline results use a linear model for GDP dynamics estimated using either a standard within estimator or various different Generalized Method of Moments estimators, and show that democratizations increase GDP per capita by about 20% in the long run. These results are confirmed when we use a semiparametric propensity score matching estimator to control for GDP dynamics. We also obtain similar results using regional waves of democratizations and reversals to instrument for country democracy. Our results suggest that democracy increases future GDP by encouraging investment, increasing schooling, inducing economic reforms, improving public good provision, and reducing social unrest. We find little support for the view that democracy is a constraint on economic growth for less developed economies.

Abe’s Law: Domestic Dimensions of Japan’s Collective Self-Defense Debate (HERE)

The Edutainment Industrial Complex (Africa is a country)

So this is their strategy? Ask a bunch of relatively wealthy, globally-mobile pop superstars to tell rural youth to not participate in the flashy urban lifestyle they (the artists) usually promote–to stay in the countryside and participate in the resource extraction side of global capitalism? As Sean pointed out to me over email, the video isn’t unlike the type campaign some dictatorship (South Africa’s racist regime was fond of it) might use as a tool of “national development” or to fight crime or build national morale.

Is this a surprise? Western liberals have long romanticized rural poverty and encouraged Africans to simply do nothing about their developmental problems. Sorry, I had to put on my curmudgeon hat for a while.

I really don’t want the US to go back to 19th century monetary policy

But Ron Paul did.

I’m checking out the graphic below, and, first, wondering why anyone ever thought that gold was the only investment to make given it’s bubblish nature, and second, wondering what it must have been like to have investments in the 19th century. Granted, most people didn’t, and some people were even the targets of investment themselves. The wide volatility in the inflation rate must have driven people nuts.

If you owed money, one year, you’d make out like gangbusters, watching inflation obliterate your debt obligations, the next year, you’d watch your world crumble as the currency became worthless. If people owed you money, you’d be in the opposite pinch. Either way, you were screwed and had little ability to plan for the future. By the time you rode out the constant rough spots, though, you’d end up with the same amount of money you started with decades earlier. I’ll take steady inflation and reasonable economic certainty over crazyland, but Ron Paul might be into it, I guess.


Get every new post delivered to your Inbox.

Join 1,574 other followers

%d bloggers like this: