Tag Archive | economy

Does malaria facilitate the development of exploitative agricultural estates? Interview with Dr. Luis Chavez

905237_334159403372948_183902807_oMy friend Luis just published a paper in PlosOne on land consolidation or the formation of “latifundia” in Spain. Latifundia were large agricultural estates owned by the Romans, often dependent on slave labor, the growth of which has been implicated in Rome’s fall.

Luis creates a mathematical model to describe the formation of these large estates. He then tests the hypothesis that malaria transmission exacerbated the situation, by forcing land owners to sell cheaply to opportunistic land owners in less malarious areas.

Luis, an ecologist who works on issues of disease transmission (and all around great guy), is somewhat unique in the world of quantitative sciences. He took a few minutes to talk to me so that you can see why.

Who are you and what’s your background?

If you ask the japanese they might say: O gata no hen na gaijinsan. As to my academic background, I studied biology/parasitology as an undergraduate, then mathematical ecology for a M.Sc. and then was granted a Ph.D. in ecology and evolutionary biology (note: at the University of Michigan).

Nevertheless, I have always been interested in the humanities, especially history since it gives the best vantage point to understand the present. I grew up in a household where mixing things/topics was usual. Both my father and grandfather went to grad school, something unusual in Latin America, and since i was child lunch time talk was heavy on the side of human rights and solidarity, science and the need for change. When Nelson Mandela died i remembered that a lovely family activity during my childhood was going to a cultural/educational event in solidarity with Nelson Mandela and the South African people to end the apartheid.

For lay people, what’s the paper about and what motivated you to explore it?

The paper presents a mathematical model that can explain the formation of latifundia (large estates) when the profitability of land varies across landowners in a landscape. The model is also used to show that when such differences are not present latifundia still can emerge if there are differences in the risk of acquiring an infectious diseases. I built the model based on historical records to show that both patterns have been observed in societies as different as “latin” Europe (Italy and Spain) and China.

What’s a “latifundium” in Spain? I dug around a bit and could find some things about Rome and Latin America, but not so much about Spain. Why choose Spain?

A latifundium is a large estate, which requires the labor of people that do not own the land. I chose Spain because a essay by Chantal Beauchamp presented a couple of striking maps showing that places where malaria was common were those where Latifundia were common during the 1930s (Fig. 2): http://www.persee.fr/web/revues/home/prescript/article/ahess_0395-2649_1988_num_43_1_283483

The pattern of association between malaria and latifundia was not new, but only Beauchamp had data amenable for a quantitative analysis.

Are you trying to say that malaria helped enable capitalist land appropriation?

It might be the case. The hypothesis that malaria helped to enable land appropriation was put forward by the great italian malariologist, Angelo Celli. He has a book on the topic [reference 8 in the paper, available at the UMICH SPH library]. Celli was probably the most advanced malaria epidemiologist at the turn of the 20th century.

Unfortunately, he and other italians [most notably Grassi] were blackbolded in the Anglo-Saxon world because they threatened the ego of Ronald Ross by saying malaria was not just due to a parasite transmitted by the bite of a mosquito [a biological fact that, nevertheless, they independently showed and published in Italian]. If you are interested just check the oldest records for malaria in the Nature archives.

Though issues of land tenure are very different in the US (given that we killed all the natives and stole it all), we did have some big and awful land plantations in the South along with a serious malaria problem. Might we also try to apply this to the United States, and, if so, how?

I think it might have helped to the consolidation of large estates in the south. Interestingly in the Midwest you never had the latifundia observed in the south, but you had malaria in Michigan (the midwest) at some point (See Humphreys M. 2001. Malaria: Poverty, Race, and Public Health in the United States. Baltimore (MD): Johns Hopkins University Press.).

Nevertheless, in the south due, for example, to Jim Crow laws there might have been a differential risk of malaria infection not observed in the Midwest. However, i found no data to go beyond speculation, well other that in the Canal Zone the Jim Crow housing organization showed the differential malaria risk: http://www.jstor.org/stable/10.1086/529265

I find these quantitative approaches to historical problems fascinating (I also started work on a paper on malaria in post-conflict Angola, maybe I should publish it). Do you think applying these methods to history as informative to present day problems? If so, how?

I think so, history probably gives the best vantage point to understand the present (Rendering history a tinker damn’s is a good strategy to sell things no matter if they are useful or even safe, Henry Ford was clear about this). In theory failures can be highly educational, something the model suggests is that equity in land tenure is an unstable equilibrium that could only be maintained by an external policy as the Chinese did before the An Lushan rebellion, and that any kind of unfair land redistribution could only be expected to not work (latifundia will be eventually formed), as observed over and over in most Latin American nations.

The mix of methods is rather novel. However, in the discipline focused and partitioned environment of academia, do you find that its hard to get an audience for this kind of work? Is there a future in it?

I can tell you this stuff is only suitable for publication on the Arxiv.org or PLoS One/ Springer Plus, if you want it to be peer reviewed and you don’t sign your paper with an address in Princeton or Oxford. I think the audience does not belong in any department, though scholars working on the diverse fields of ecology, health, sociology, maths, economics and even history might find it interesting. I think there is some future, there is the emerging field of cliodynamics that looks at historical dynamics and there is even a journal for cliodynamics where they, every once on a while, publish good food for thought like this paper: http://escholarship.org/uc/item/1ks0g7dr#page-1

I thought my data was not dynamical enough, so I didn’t try there.

This work is heavily political. Do you think there is a place for politics in science?

I think everything gets embedded in politics. Otherwise there would have been no shutdown in the CDC and other US government agencies few months ago, etc. I don’t think my work is more or less political than a risk factor analysis for lung cancer and smoking. I think i might be blackbolded by some of the references I cited, but to understand Capitalism even the Catholic Church is studying Marx [Funny the leading scholar is the Munich Bishop, whose last name is Marx]:

http://www.catholicherald.co.uk/news/2012/06/01/cardinal-marx-urges-europe-to-move-beyond-capitalism/

Economics, Austerity and the Selective Use of Data

Reinhart and Rogoff

Recently, I’ve been following the “Reinhart and Rogoff Austerity Debacle.” Reinhart and Rogoff (RR) are two well know economists who penned a paper entitled “Growth in a Time of Debt.” They showed that when the debt to GDP ratio of a given country exceeds a 90% threshold, economic growth stalls. They offer that economies may even contract.

Policy makers in the US and Europe seized on the paper as proof that cutting stimulus and social programs was a good idea, and proceeded to do so with abandon. Of course, right wingers wanted to cut money to social programs anyway, and would have done so regardless, but the paper was held out as scientific proof that it was a solid plan of action.

I won’t comment on how strange it was that Republicans were interested in science at all, given recent efforts to politicize the NSF and micromanage the grant decision process.

The trouble was that the results presented in RR were shown to be based on the selective use of data. Thomas Herndon, a 28-year-old graduate student, obtained the dataset from RR themselves and couldn’t reproduce the results.

In fact, he found that the only way to accurately reproduce the results in RR’s paper that showed that high debt restrained economic growth was to exclude important cases. When including the missing data, high debt was associated with consistently positive growth, though modestly slowed.

Originally, I took the view that this was a case of sloppy science. RR had a dataset, got some results which fit the narrative they were pushing and didn’t pursue the matter any further. Reading Herndon’s paper, however, I changed my mind.

Economic growth vs. debt to GDP Ratio (1946-2010). Loess curve included to illustrate trend.

Economic growth vs. debt to GDP Ratio (1946-2010). Loess curve included to illustrate trend.

Herdon took the data and did what any analyst would do when starting exploratory analysis, he plotted it (see figure on the right). Debt to GDP ratios and growth are both continuous measures. We can do a simple scatterplot and see if there’s any evidence that would suggest that the two things are related.

To me, this is a pretty fuzzy result. Though the loess curve (an interpolation method to illustrate trend) suggest that there is *some* decline in growth overall, I’d still ding any intro stats student for trying to suggest that there’s any relationship at all. There is no way that RR, both trained PhD’s and likely having the help of a paid research assistant, didn’t produce such a plot.

Noting that the loess curve drops past approximately 120%, I calculated the median growth for each country represented. Only 7 countries have had debt to GDP ratios greater than 120% in the past 60+ years: Australia, Belgium, Canada, Japan, New Zealand, the UK and the United States. Out of these only two had (median) negative growth: Belgium (-.69%, effectively zero) and the United States (-10.94%), which has only had a debt to GDP greater than 120% one time. All other countries has positive growth under high debt, even beleaguered Japan. New Zealand can even claim a strong 9.8% growth under high debt. The US, then, is a major outlier, possibly bringing the entire curve down.

As this doesn’t fit their story, RR’s solution was to categorize debt to GDP ratios into five rough classifications, and calculate the mean growth within each group. This is a common trick to extract results from bad data. It’s highly tempting for researchers (and epidemiologists do it far too often), but a bad idea to present it without all the caveats and warnings that should go with it.

I’m not surprised that ideologues such as RR would be so keen to produce the result they did. After all, they published the popular economics work “This Time Is Different: Eight Centuries of Financial Folly” where they try to suggest that budget policy of the US in 2013 should somehow be informed by the economy of 14th century Spain.

I am, however, surprised that reviewers let this pass. If I would have been a reviewer, I would have:

1) pointed out the problems of categorization, where data doesn’t require it
2) noted that categorizing the data (or even plotting it) tears out temporal correlation. For example, one data point from 2008 (stimulus) may be put in the high debt category, but another from 2007 (crash) in the low debt category. While budgets of one year may have little to do with the budget of another, the economy of one year is likely related to the economy of the previous year.
3) questioned the causal mechanisms behind debt and growth. This is obviously a deep question for economists (and not epidemiologists), but of particular import. When does the economy start to react to debt? I’m pretty sure that there is a lag effect as spending bills tend to space disbursements over the course of the fiscal year.

The RR debacle should be a lesson, not only to economists, but to all scientists. While we may always be under pressure to produce results and hope that those results fit and support whatever position we take, shoddy methods don’t get us off the hook. In RR’s case, I would call this fabrication. A good many studies are merely guilty of wishful thinking, but the chance always exists that someone will come out of the woodwork and expose our flaws. After all, that’s what science is all about.

More on Financialization of Food Commodities

I’ve written at length on the issue of the issue of financialization of food and price volatilities. Yet, when I bark about the subject, few around me seem convinced (and that’s ok, I’m never very convincing).

I found a cool video that sort of lays the issue out and explains the mechanics behind the world food trade system, and why the increased role of speculators is wreaking havoc on the world’s food prices. The common narrative is that issues of supply (droughts) and demand (bio-fuels, China) are the culprits.

Intuition might confirm this, and it is logical to assume that pressures on a limited supply of goods would lead to increases in price, but intuition is only as good as the amount of information possessed. The trouble with narratives that involved financial markets is that some knowledge of finance is required. Finance usually bores people to tears. Videos like this are a great step.

Supply and demand factors can explain gradual increases but can’t explain volatility in food prices. Rich people like us have no problem absorbing even a 200% increase in food prices. People living on a dollar a day have to make some pretty dire choices, and children end up malnourished.

The video gets a few things wrong. Namely, it states that speculators began seeking new investment areas and sources of growth after the bursting of the property bubble in the late 00’s. This is untrue. Speculators began trading in food commodities after a relaxing of rules during Clinton and the bursting of the tech equity bubble of 2000.

To me, this and the commoditization of water is the most important issue of our time and will have grave implications for the world’s future security.

Anyway, check out the video:

Phony Economic “Uncertainty”

I’ll take an aside from Kenya to write on an excellent article I found on Bloomberg on the subject of economic “uncertainty.” During the run up to the 2012 election and the subsequent debates on the now almost forgotten “fiscal cliff,” Republicans and their faithful believers spread wacky ideas that American business was crippled by not knowing what their tax rate would be in 2013.

Caroline Baum on Bloomberg claims, rightly, that this was a manufactured panic, though I would argue that our academically challenged politicians seriously believed what they were peddling.

Republicans in Congress claimed that businesses were sitting on cash, unwilling to invest until they knew what their tax rate would be next year (as if tax rates are ever set in stone). What’s more, raising taxes on “job creators” would bring the U.S. economy to its knees.

The premise behind this is fantastical. If businesses are sure that they’ll make a profit, they’ll invest the money today. I think it’s ridiculous to assume that single digit tax increases will somehow get in the way of moving ahead with business.

She points out, though, that the whole thing was fantasy:

— The private sector added 675,000 jobs, making it the second-best quarter since the recession ended in June 2009.
— Business spending on equipment and software rose 12.4 percent annualized, the biggest increase since the third
quarter of 2011.
— Business sales rose an annualized 4.2 percent (assuming no change for December), the strongest quarter of 2012.

The most perplexing part of the whole “kowtow to the American economic elite or else you’ll be unemployed” idea is the notion that somehow CEO’s hand out jobs like candy. “Job creators” don’t create jobs unless there is demand for products, either domestically or abroad (don’t forget that the US is an export giant). Republicans, so opposed to handouts, imply that somehow it is the responsibility of business to provide jobs without the expectation of return.

This is, of course, the government’s responsibility! It is exactly why we continue to invest in infrastructure improvement, have unemployment insurance, provide food stamps and bolster national defense. These expenditures are made knowing that returns are unlikely, but the infusing of cash into the economy keeps important sectors afloat and reduces overall volatility.

It’s ironic, given the anti-Keynesian bent of the Republican Party that prevents them from admitting it, that the US’s economic contraction in the last quarter of 2012 was due to defense cuts and had nothing to do with any type of fantastical “uncertainty.”

OK, back to bednets and Kenya.

Readings 1/19/2013

  1. Timeline of the Saharan Crisis (NYT)
  2. To little fanfare, the United States recognizes the Goverment of Somalia for the first time since 1991. (NYT)
  3. The free market at work: Cerberus is having trouble dumping gun maker Freedom Group. No one wants to tarnish their image by owning the company. Looks like a fire sale is about to happen. I still maintain that Bloomberg should buy it and shut it down. (Bloomberg)
  4. Another noble call to treat firearm injuries as a public health problem, comparing firearms to tobacco. As they note, firearms are not tobacco, which is unsafe at any level of consumption. To help reduce injury and death, we need a broad based approach. Of course, they wrote this article with no health from the NIH. (JAMA)
  5. The Fed failed to predict the Great Recession. Someone at the Fed had to see it coming, though. This uncovers a major structural flaw in the Fed. Designed to mitigate crises, it in’t incentivized to act when times are good. (Bloomberg)
  6. The lessons of past slavery need to inform present day business owners, policy maker and slavers to improve working conditions. (History News Network)
  7. Bio-fuels and world hunger(food prices). This guy has the right idea, but misses a couple of important points. First, though the share of corn going to ethanol has been increasing, corn production as a whole has been increasing. Second, he misses that food price increases and volatility have been following the general trends of stock market since 2000, discounting the role of bio-fuels as a cause. Trading food like oil explains the oil like patterns in food. A good article though. (Conservable Economist)
  8. Developing countries are trading with each other more than they are exporting goods to wealthy countries. Mutual trade and accountability could do much for creating regional stability and stable governments. (Economist)
  9. Japan and China need to end this petty bickering before it becomes the end of us all. How far will they take this silly game? (Economist)

And to round this up, a graphic of US troop deployments which presents a picture vastly different from what some of my liberal comrades would like to believe. The Obama admin would do well to advertise this reduction more forcefully.:

US Troop Deployment for FY 2009 and FY 2013

US Troop Deployment for FY 2009 and FY 2013

Today’s Readings 1/18/2013

Happy Friday all! Ten readings for today. What are y’all checking out?

  1. Japan is likely so addicted to deflation that their economy will depressed for the long haul. Inflation is a necessity, particularly in a country that relies on exports. The Japanese, both the government and its overly careful populace, have to finally move out of the managed, fixed currency economy of the past and enter the developed world. (Bloomberg)
  2. Brazilian waxing has had the unexpected, though logical, benefit of reducing incidence of pubic lice. (Bloomberg
  3. Climate change is kicking us in the ass. Congress members may be earning political points (and exposing their own ignorance) by denying it, but the US Global Change Research Program isn’t. (Mother Jones) and here’s the portal for the 170 page report.
  4. The climate change debate isn’t a debate at all. A list of groups on both “sides” (reality vs. fantasy). The disbelievers are, of course, mostly made up of petroleum and coal producers, construction companies and “The Astroturfing Consortium”. (Big Picture)
  5. With the attacks in Mali and Algeria, the situation on the African continent gets worse and worse, and will do future economic growth no favors. (Bloomberg)
  6. Why I should sever my internet connection. Even 3 seconds of interruption at work significantly increases the likelihood of mistakes. (Fiscal Times)
  7. The deficit is NOT our biggest problem, but screaming calamity 24/7 scores political points for right wingers hell bent on eliminating social and entitlement programs. (Krugman NYT)
  8. The IMF’s Christine Lagarde lectures the Americans and the Europeans to get their political houses together or the world economic growth will remain stagnant. (NYT)
  9. Ideology as cognitive bias. It doesn’t pay to be an optimist. (Stumbling and Mumbling)
  10. Ethiopian kids on the way to becoming autodidacts (self taught), through a healthy dose of free tablet computers, but no teachers. (Africa Report)

Ben Bernanke Comes to the University of Michigan

546859_10100757898173084_1611899042_nBen Bernanke, Chairman of the Federal Reserve, came and spoke at the University of Michigan today. Of course, I make sure never to miss an opportunity to check out high ranking government offices ask when they come and speak.

Bernanke addressed what one would expect, fiscal cliff issues, the debt ceiling and the role of the Federal Reserve itself.

The fiscal cliff: He started by reiterating the position that Obama took at his noon press conference. Namely, that Congress has no choice but to approve a raise of the debt ceiling as it has nothing to do with future spending, but rather covers spending that has already been approved by Congress. To not approve an increase in the debt ceiling would lead the US to default of its financial obligations and create chaos in the world economy.

This is, of course, completely true. People are basically suggesting that the government should save money by not paying the light bill. Shutting down the government may sound like a revolutionary affair, but the results would be disastrous, and as the interest on these bills would continue to accrue, we’d just end up losing money in the end.

The role of government in mitigating financial disasters: Bernanke discussed parallels of monetary policy between the Great Depression and the Great Recession, pointing out that efforts to reign in the depression were too cautious and conservative. Government may not do very well in times where the markets do well (since it doesn’t really have to do anything), but has much to do during a financial crisis.

Though a personal observation, the response to the Great Recession was far too conservative. We needed more stimulus, not less and the notoriously slow reaction of The United States Congress held us back in the end. Petty bickering and political brinksmanship shot us in the foot. We’ve certainly seen economic growth since, but unemployment gains have been anemic.

Global economic issues: Though Americans seem to be under the mistaken impression that the united States lives in a bubble, the truth is that we live in an interconnected world. Though the US has seen comparatively impressive gains compared with the rest of the world since the crash, continued problems in Europe and slowed growth in the emerging economies has held us back.

I’m not sure how one gets around China’s slowing pace of growth. Some of that is the result of intentional policy changes to cool down exports in order to create a stronger domestic market there. The Europeans, at the very least, are working to create a unified central bank, which should help mitigate problems in the future. How all the individual political players work this out, will remain to be seen.

Move to require auditing of the Fed: He mentioned the recent movement by House Republicans to require full auditing of the Federal Reserve. Bernanke argued that the Fed is already subject to an independent private sector reviewer. The GAO is also able to examine the Fed’s books and evaluate the inner workings of the at agency. What the GAO cannot do is evaluate specific monetary policy of the Fed. The reason for this, is that the Fed is an independent agency and a unique private-public mixture. If the GAO, or any other government body were able to say, audit and evaluate the implications of raising or lowering interest rates, the Fed would then become less than independent and be subject to the short term political interests of Congress.

Given the batshit nature of this particular Congress, we can be assured that this would result in chaos for the world economy. For proof, one would consider the policy roots of the financial crisis itself. Governments are not incentivized to reign things in when people are profiting. A politically compromised Fed would be even less likely to attempt to control an asset bubble. I’m not sure where I stand on this issue, but an independent central bank is not unique. The Bank of Japan also operates outside the political sphere of the Diet.

I’m pretty sure House Republicans knew all too well that the Senate wouldn’t approve the Bill. They had nothing to lose by signing it.

As Bernanke kept repeating, the “dual mandate” of the Fed is to manage price stability and maximize employment. It can be offered that the Fed, in fact, serves only the interest of the very wealthy. This may certainly be true. It has been my experience, however, that the intentions of policy makers are manifold and often what appears to be self-serving, is actually intended to serve the greater good. Knowing this, I tend to give policy makers the benefit of the doubt and at least listen to what they have to say (rather than have Ron Paul do all the talking for them).

I feel that Bernanke is no exception. I am definitely not stating that I trust him implicitly, or that I think that the policies of the Fed, or any other economic policy, are flawless. On the contrary, the brunt of the financial crisis can be attributed to poor policy making. However, it is irresponsible to disregard agencies such as the Federal Reserve. But it’s worthwhile to hear a man out.

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