The politics of aid

A natural disaster is not so very far from a natural one. Tsunami occur regularly in the Pacific - 80% of all tsunami occur there. But the last time I remember hearing about a lot of tsunami deaths was in the case of the Chilean 'quake. I think it was in 1960. A lot of Chileans were killed and some Japanese too. (I remember stuff about the water being sucked out and the animals behaving strangely before it hit - but I was a kid and that's about all I remember.) Since then a warning system has been set up and you don't hear a lot about people being killed by tsunami.

Has anyone ever heard of a famine occurring in a democratic country? Sure, we have droughts, but we don't have famines. That's because the natural disaster doesn't lead to large-scale human catastrophes in democracies. Governments that respond to the people can't afford to allow people to die just because there's a natural calamity in one part of the country. People who live in drought-stricken areas get government subsidies and welfare if they lose their farms/businesses. They don't die.

Man-made disasters are more obviously man-made. They happen because of civil wars, governments that don't give a damn about the poor, siphoning of wealth out of the country and exclusion of the majority from the benefits of economic growth. While the rich get richer, the poor fight each other over access to a diminishing pool of resources.

It has been great to see the outpouring of public sympathy and contributions by people in the developed world to the victims of the tsunami. But really, we should ask ourselves if the people of Darfur are any less deserving, or the Bam earthquake victims, or the people caught up in civil wars in Sierra Leone, Liberia, the Congo, Rwanda etc., etc.. The world is full of disasters, yet we in the West apparently have 'disaster fatigue'.

Do we really have disaster fatigue? Or is it just that we don't know what to do? Is it just that we get no guidance from those who have the necessary information and the ability to pull the resources together? If our governments are not interested in the plight of Darfur - but they can spend hundreds of billions on invading Iraq (which wasn't a poor country, but is now) - how can the rest of us be expected to respond adequately?

There's no point in blaming the UN. The UN is made up of its member governments - especially the Permanent Five in the Security Council. If the governments won't act, the UN cannot act. Read Linda Polman's book, We Did Nothing.

The UN has a target: the rich countries should spend 3% of GDP on foreign aid. Only one or two countries come anywhere near it (maybe the Dutch and one or two Scandinavian countries). The US is near the bottom of the list (around 1%).

In this country, successive governments have prided themselves on the fact that 80% of the foreign aid budget is spent in Australia! Foreign aid is designed to support Australian companies! But even in that case there are benefits to the developing countries - after all, they do get roads, bridges, water supply and whatever. But it is the Australian firms that determine the aid priorities, not the poor people in the assisted countries.

That leaves the NGOs (non-governmental organizations). Ordinary individuals can support these on a continuing basis by making regular contributions (in Australia these are tax deductible). Their advantage is that they are on the ground, they listen to the voice of the poor and they do their best to promote economic and social development. Generally, they are less involved in the corruption that characterizes officialdom in most developing countries.

Their disadvantages are also manifold, however. Increasingly they rely on government funding - so they have to dovetail their programs to government priorities. The classic recent case is the Bush administration's imposition of it's "Christian" agenda on NGOs. But it goes way back. The Peace Corps, for example, was widely regarded as a tool of US imperialism in the Vietnam War era. Another case is that of CARE International, which was badly divided during the Yugoslav crisis between those (in Australia) who took a politically neutral line and those who thought they should also advocate the human rights agenda of the Canadian government. Steve Pratt, an Australian CARE worker, ended up in a Serbian prison because he spied for Canadian CARE. By supporting NGOs, however, individuals can have more say in how they operate.

Another problem of NGOs is that their resources are small. They can't build bridges and highways, yet these are also needed if economic development is to take place. What's the point of setting up a producer co-operative if the people can't get their goods to market before they're spoiled? In a lot of cases - microfinance is the classic example - NGO projects rely on continuing subsidies. The poor get some income, but the need to subsidize the project means that somebody else loses out and economic efficiency is never achieved.

Basically, the problem lies with our governments and what we, in our relatively democratic societies, can force them to do. I don't think the answer lies in anti-globalization politics. Destroying the myth that US and EU farm subsidies benefit mainly the family farmers would be a good start. We can also ask governments to meet the 3% target and, even if they spend most of the money at home there will still be benefits for the aid recipients. Ultimately, it could be a matter of life and death for us.

Satan v. IP

An interesting news item this week was about the decision of a European court against Microsoft. The judges ruled that Microsoft's refusal to divulge the source code of its operating system is anti-competitive. They have ordered Microsoft to release the code so that other companies can build software that works on the MS operating system.

MS can, of course, argue that their operating system is their Intellectual Property (IP). Hello there! The judges have said that IP is anti-competitive! So, what is it that makes IP different from other forms of property? Is there such a difference? Or should we go along with Veblen and argue that property is nothing more than a legal claim to a monopoly over what is actually the social capital of the community. Is all property 'anti-competitive'?

Veblen's discussion of social capital in fact specifically referred to what is known these days as IP. He talked about a tribe of indigenous Americans and their manufacture of equipment. Apparently the knowledge about how to manufacture this equipment was passed down by tradition through the women of the tribe. Nobody in the tribe placed any value at all on the things themselves. They were manufactured quickly out of materials available at any location, but if the women were lost the knowledge went with them and no more of this necessary equipment could be made. Anthropologists have made similar observations about Australian Aborigines. If these observations are so common place in anthropology, one wonders why the majority of economists have so steadfastly ignored them. Instead, the economists not only argue that it is the things themselves that have value, but that markets and competition are only possible when these things are somebody's private property.

About 100 years after Veblen, economics has come again close to the view that capital is knowledge rather than things - although it has not entirely given up the idea of capital as 'things'. The 'new' discovery of economics is that something known as 'human capital' contributes a lot more to economic growth than we hitherto thought. Well, to be fair, tests of Solow's growth model, which was developed way back in the '50s, tended to show that 'technical progress' contributed about half of all growth in the US economy, but 'technical progress' could not be quantified in the same way as labour and capital inputs could be (don't let me start here on how 'capital' can possibly be quantified). Technical progress comes out of people's imaginations and that isn't economics. OK, so some half century after Solow we have got around to acknowledging that what people know is the most important contributor to economic growth and we have named it 'human capital'.

Human capital is not to be confused with Marx's concept of labour power (which is a person's capacity to work - and naturally includes the person's skills and intelligence). Modern economics requires the division of labour's contribution into two parts - that contributed by 'basic' labour and that contributed by 'human capital'. Each unit of 'basic labour' receives its marginal product in wages as does each unit of 'human capital'. This 'explains' why a manual labourer receives less than a computer engineer.*

'Human capital' is what we or our parents have invested in improving our knowledge and capabilities. It is a commodity that has been paid for and is therefore our private property. Whatever we come up with, by applying our human capital, that nobody else has come up with is our IP. Unless, that is, we have been hired by Microsoft in which case the product of our brains is owned by the company. The problem, as with any manufactured thing, is where we draw the line between our dependence on the knowledge and work of others (past and present) and what is really, truly our own.

It is true that markets and competition cannot exist without private property. It is private property that makes resources scarce so that people have to compete for them. This existence of property has such momentous implications for society that governments have had to expand tremendously over the past couple of centuries in order to regulate the acquisition and use of property. Anti-trust laws came into existence, not in order to promote competition, but in order to ameliorate the effects of competition. Bill Gates, for example, is a highly successful competitor. He has managed to privatise one slab of social capital (knowledge) that we all need to use. He has established what any competitor would try to do in order to succeed in their chosen field - barriers to entry.

While private property originally arose through gift (inheritance) and seizure, I'm not suggesting that's how Gates has done it. He got lucky because IBM used his software to run their computers and at the time they dominated the market. Other people adopted his operating system and other programs because of compatibility issues (need for computers to talk to each other).

He has been supported by a governmental and legal framework that protects property. But property has never been absolute. States have always limited property rights in order to maintain their legitimacy and prevent a descent into chaos. (Want examples? I can give plenty.)

IP is an interesting category of property, however. Compelling Microsoft to release its source code doesn't mean that there will be 2 operating systems or twenty (as would be the case if a manufacturing monopoly was broken up). In theory, once the knowledge is out, anybody at all can get hold of it - all they need is to understand programming (so count me out!). Same thing with atom bombs and other WMD. Which, by the way, is why we had to invade Iraq so that the knowledge would stop leaking. Somebody may have convinced George W. Bush that Satan was hiding in Fallujah, but the preservation of or access gained to certain kinds of IP are what the capitalist economy is really all about these days.


* If we are trying to explain the wages of David Beckham, on the other hand, we need a far more robust theory than this!

more on Ayaan Hirsi Ali

from the blog of Yule Heibel

Political economy of farm fragmentation in Vietnam

The average number of non-contiguous plots held by a single farm household in the Red River delta is 7-8. In the Mekong delta the number is only 2. So fragmentation, if it is a problem, is a northern problem, especially when you consider that many of these plots are only 200 or 500 square metres (for non-metric readers, 500 m2 is about 1/8 acres). Average total farm size in the RR delta is 2,500 m2 and in the Mekong delta it is 1.2 ha.

Fragmentation has disadvantages - chiefly that you lose land on account of the numerous boundaries (wet rice fields are usually surrounded by a small bund). you sometimes have to travel longish distances between plots, adding to your workload, and it is non-conducive to the use of farm machinery and some other new technologies. The advantages are that poor farmers can minimize risk by growing different crops on different plots - one of the reasons for fragmentation is that distribution was carried out in such a way as to equalize access to different soil types. So basically each household has access to some fairly good flat rice land and some other soil qualities (for example, hillside, flood-prone, rocky, near the road, far from the road, sandy, etc - whatever the locality happens to have).

Under the 1993 Land Law, households were given use rights to these plots. Each household was assigned an area of land based on the number of people in it. The land can be transferred (a euphemism for 'sold'), inherited, mortgaged, rented in or out, during the lifetime of the household's tenure (20 years for annual crop land, 50 years for perennial crop land). The state retains ownership of the land and has the right to redistribute plots upon the expiry of tenure (this is an ancient Vietnamese tradition). Periodic redistribution is necessitated, either for egalitarian reasons or in order to maintain social peace, by the fact that, over time, many people become landless. People born since the first distribution in 1993, for example, and women who marry into a village were not in the headcount at the time the land was distributed. On the other hand, people die or move away and those who inherit their land tend to have more than the rest.

Interestingly, according to a study I read yesterday,* these tiny fragmented farms are no less productive than larger farms. The only significant difference between these and the larger farms is that they absorb a lot more labour. If more people move out of farming so that labour to work these plots becomes scarce, then they will certainly become a lot less productive. As it is, many of these workers are underemployed for much of the year. There isn't a huge amount to do a lot of the time, but the demand for labour is round-the-clock at peak times like harvest.

The government has a policy of land consolidation. This was in fact one of the basic rationales for collectivization in the first place - the idea that working larger plots of land would be more efficient. Households are encouraged to swap plots in order to increase the size of individual plots. The process is fraught with difficulty, however, and not a lot has happened. Farmers find, for now, that fragmentation is more advantageous than disadvantageous. It encourages crop diversification and risk reduction. But there's also a major political problem related to who is going to get the lion's share of the good land and whether some families are going to end up growing less profitable rice, while others have more profitable cash crops. On the other hand, fragmentation discourages entrepreneurship (read emergence of capitalist farmers).

Women, as usual, get the worst end of the stick. This is not mentioned in the paper I read. But each household is supposed to have a Red Book detailing the plots of land allocated to it. The law says that the two names of husband and wife should be registered as owners of the usufruct. This is a socialist ideal that is out of sync with village reality. Mostly only husbands have their names in the Red Book. The reason is that Vietnam is traditionally patrilocal and patrilineal. Women move into their husband's family's household and land when they marry. If a couple become farmers, it is very often on land given to the son by his parents. If the son meets with an accident, or gets divorced, there is no way those parents want the land becoming the property of their daughter-in-law! Back in her home village, the wife's family was allocated some land in 1993, but since she has left the village and cannot farm there, the land remains under the control of her father.

This is why divorce in the rural areas is extremely rare. A woman who initiates a divorce is likely to end up with nothing. She'll be thrown off her in-laws' land and, even if she goes home she's unlikely to be welcome as her brothers and their families will have taken over the farming of her share of the land.

One last point about the lack of entrepreneurship. While it prevents the development of capitalist agriculture in the normal sense of emerging family-based businesses run for profit (as distinct from farming for subsistence), it does not prevent the emergence of capitalism in agriculture. Fragmentation makes land consolidation difficult, so it encourages the intensive application of labour to the fields. But this self-exploitation by the labourers is actually highly productive. Enough is produced that a portion of the crop may be sold to the market. The market, however, is monopsonistic - meaning that there are few buyers, mainly state-owned trading companies, and prices paid to farmers are low, while profit margins of the traders are high. In other words, the instensive labour of the farmers (notably the women) is lining the pockets of urban trading companies.

*Pham Van Hung, T. Gordon MacAulay and Sally P. Marsh, 'The Economics of Land Fragmentation in the North of Vietnam', 48th Annual Conference of the Australian Agricultural and Resource Economics Society, Melbourne, February 2004.

The murder in Amsterdam

Here is some information about Ayaan Hirsi Ali, scriptwriter for the film Sumbission. The director of the film was Theo Van Gogh who was murdered in Amsterdam the other day. The murderer left a long letter addressed to Ms Ali on the dead man's body.

The abortion debate once more!

Tony Abbott, the newly reappointed Minister for Health, and some other Liberal Party males have ressurected the abortion issue. Of course there was no mention of it during the campaign, but here it is again now that they have control of the senate.

These father-figures of the nation believe (1) that there is an epidemic of abortion caused by the fact that it's available on Medicare and it should, therefore, be removed from Medicare and (2) that late-term abortions should be stopped altogether.

The supposed 'epidemic' consists of the fact that approximately one quarter of all pregnancies are terminated. This is no higher than in several other western countries (including the US and Canada), but higher than in some others. However the data also ignore the fact that not all abortions are deliberately induced. Comparisons with countries that allegedly have lower rates obscure several other possibilities - that reporting is better in countries where abortion is quite legal; that the data are not directly comparable; that abortion rates are higher in countries where women have more equality and control over their lives.

According to the medical professionals, late-term abortions are rare, and scarcely ever carried out for reasons other than danger to the life of either mother or foetus.

To his credit, the leader of the opposition refused to comment. He said it is a question for the women concerned and their medical advisers to decide. He would be presumptuous to express a view on something in which he is unqualified to speak. Unfortunately, Messrs Abbott and co., recognize neither the competence of the women nor the qualification of the medical profession to make a good decision. This is really the crux of the matter. It is the implied assumption that women are irresponsible.

If you look at things without the usual coating of sentiment, a human foetus is actually a parasite. It cannot survive independently of its host (that which we term 'mother') unless there is massive technological intervention. It may have the potential to survive as an independent entity, but under normal circumstances this only happens after 9 months of absolute dependence and several years more of gradually diminishing dependence. Supposing the mother aborts this foetus (with or without intention), medical science can - at huge expense - keep it alive until it reaches that stage of relative independence. By spending very large amounts of money, we are now capable of keeping the parasite alive after only 12 weeks of natural incubation.* In such cases, however, the foetus inevitably becomes so damaged as to have significantly impaired future potential for independence. In other words its parasitical dependence on the host (mother) is likely to be hugely prolonged.

Of course the foetus-parasite is invested by us with special qualities since it is comprised of our own DNA and arouses our emotions. But it is, nevertheless, a parasite and will remain so to a gradually lessening degree for many years.

Women are usually abandoned to raise this parasite alone. Three quarters of women reporting domestic violence say that it first happened during their first pregnancy. Even if that doesn't happen to them, they are treated as invalids - their careers are interrupted as they have to leave work and lose promotion opportunities. They are expected not only to conform to biological imperatives such as breastfeeding (though they often have to hide away and not carry on with normal activities in case somebody is "offended" by the sight of an infant eating food), but to non-biological ones such as doing 90% of the housework.

While fathers often continue to provide money, they equally often consider it to be their own money to be distributed (or not) to mother and child as they see fit. I cannot remember how many times I have seen a father, totally besotted with his baby, hand it over to mother at the first sign of trouble. Whether it's pooh, vomit, a tantrum or just boredom, it's mum's responsibility not dad's.

In short, mothers are the ones who have their lives taken over by kids. Normally, it is only the fathers who have the choice to walk away from the whole problem. Indeed it could be taken as an indication of just how responsibly women act that more of them don't just walk away. Currently, however, women do have the option to terminate the parasite in cases where they will not be able to give it the attention and resources that a growing child deserves. Abbott & co. want to remove this right.

* I got this figure from Lord David Steel, the former British Liberal leader who also wants to curb the rights of women.

Advertisement

A recent publication of mine can be found here.

Cambodia: democratization

I began reading Caroline Hughes' The Political Economy of Cambodia's Transition, 1991-2001 last night.

The introduction is about 'democratization' which seems relevant to certain other exercises in progress around the world today. Her basic argument is that "the development of the Cambodian economy over the course of the 1990s has erected barriers to the emergence of substantive democracy in Cambodia".

We have, she argues, two views of democratization predominant in the Western and donor agency discourse. These are called 'habituation' and 'culturalism'. Culturalism says that cultures have been fixed for all time and democracy is not possible until they change. Major echoes here of the 1950s modernization theory, but apparently enjoying continued respectability in some circles. The habituation theory, on the other hand, says that if you install the institutions of regular elections, independent legal system, etc, people will eventually become accustomed to behaving in a democratic fashion. Thus the last two Cambodian elections were carried out in a peaceful and relatively fair fashion and this therefore demonstrates the country's 'progress' towards democracy.

Hughes herself adopts a definition of democracy in which "a more complex economy permits the capture and mobilization of economic resources by non-state actors. These resources may be used to force the state to concede terrain - public forums, free media - in which political debate can take place". In other words, democracy has to be wrested from the state in such a way that the political agenda is set, not by the state or by international donors, but by the people themselves. There has to be a three way balance, between the classes, between state and society and between the society and the transnational power structures. By contrast, the habituation approach, puts more emphasis on embedding the legitimacy of certain procedures than on the initial motivation for erecting those procedures or actual public participation in decision making.

The following passage struck me as a particularly accurate description of what takes place in Cambodia:
"international democracy promotion tends to substitute the provision of international resources to non-state actors, for the democratizing activities of non-state actors engaged in wresting resources from the state. This can lead to the substitution of international political forums - meetings of bilateral donors, or UN committees - for the emergence of a local sphere in which participation in agenda-setting is possible."

Still reading, but I can see where it is taking me. The economic development that has taken place in the last decade has so severely disadvantaged the rural areas that, although they go to vote every 3 years, the country's farm population has no role at all in setting any political agenda.