Fighting Poverty with Guest Workers!

Dani Rodrik has a op-ed in NYT;

Each foreign worker in this country earns a multiple of what he would make in his home country — an extra $17,500 per year for the average Mexican worker in the United States, according to unpublished estimates by a Yale economist, Mark Rosenzweig.

Multiply this by 200,000 guest workers per year, and by the end of a decade, an income gain of $35 billion per year would be generated for workers from poor nations.

This exceeds the $23 billion the federal government spent on foreign aid last year. It is also larger than the benefits — amounting at most to $30 billion per year — that poor nations are projected to reap from the current round of multilateral trade negotiations. And unlike foreign aid and trade agreements, the benefits in this case go directly to working people.

An Index for Everything- Global Peace Index

The main findings of the Global Peace Index are:

-Peace is correlated to indicators such as income, schooling and the level of regional integration
-Peaceful countries often shared high levels of transparency of government and low corruption
-Small, stable countries which are part of regional blocs are most likely to get a higher ranking

The index takes note of internal factors—crime rates, prison population, trust between citizens—and external ones, like relations with neighbours, arms sales, foreign troop deployments. Norway's top place reflects its calm domestic atmosphere and good relations with nearby states. In the case of Israel (119th), high military spending, a huge army and unresolved local conflicts are deemed to outweigh its low level of ordinary crime. Canada comes eighth; its American neighbour a dismal 96th, strangely just above Iran

Podcast of the Day- Ockham's Razor

"In the small village of Ockham, near Woking in Surrey, stands a church. Made of grey stone, it has a pitched roof and an unassuming church tower but parts of it date back to the 13th century. This means they would have been standing when the village witnessed the birth of one of the greatest philosophers in Medieval Europe. His name was William and he became known as William of Ockham.

In the following 63 years William of Ockham managed to offend the Chancellor of Oxford University, disagree with his own ecclesiastical order and get excommunicated by the Pope; he also declared that the authority of rulers derives from the people they govern and was so brutally reductive with the theories of his colleagues that ‘Ockham’s Razor’ remains a philosophical principle today.

But why is William of Ockham significant in the history of philosophy, how did his turbulent life fit within the political dramas of his time and to what extent do we see his ideas in the work of later thinkers such as Thomas Hobbes and even Martin Luther?"

Listen to the podcast.

Public Investment and Growth

A new working paper from the Fund-Public Investment and Growth in the Eastern Caribbean;

Summary: This paper quantifies the effect of public investment on growth in the ECCU. The results, emerging from panel vector autoregressions, indicate that the return on public investment, as defined by Perreira (2000), is very likely negative. This means that the total change in real output induced by one EC dollar of public investment, due to its short-run impact on demand, or the longer-run impact on supply, is below one EC dollar. Public investment shocks also appear to appreciate the real exchange rate, suggesting that the short-run demand impact is larger than the long-run supply response

A Question for Mankiw

I came across the following comment on a post at Mankiw's;

I have a question for all you guys, I really enjoy economics and finance, both as a "sport" and a lifetime career. I graduated honors from the economics degree (3.50 of 4.00), which demonstrate that I am pretty good at the basic concepts and theory but terrible, I mean terribe, big time terrible. It as like a B on Statistics and an F and an C average on Math and Calculus. I first thought that I could be from my dylexic periods but now I see that simply I am terrible at it,

Can I still be an economist and be bad on Math? If not how can I apply my excellent knowledge on economics?

The question is the following "Is economics for me"

Michael Stastny beats Pat Buchanan

Quote of the Day;

"What's really infuriating is that we have this big line of smart people we don't let in from Europe, India and China, but instead we let in 10 times as many uneducated who have clear negative externalities--they tend to bring neighborhood schools down. [I feel like I have to apologize for that last statement, in that with free exchange how could a new person bring me down unless I'm a bat-shiat crazy ethnocentrist? Why not just not trade with him? Alas, most uneducated, poorly skilled immigrants send their uneducated, poorly tempered kids to my schools, and teachers then have to dumb-down curricula, focus on disruptions from these kids (sometimes, the anecdotes of personal experience are more powerful than the largely historical examples about how Jews and Germans were thought feeble-minded when they immigrated to the US). I would like open border proponents expose their children to a school with no tracking and significant uneducated and low-skilled immigrants."

Mauritius Economic Update

PIN of 2007 Article IV Consultation with Mauritius is out;

The loss of trade preferences in textiles in 2005, the reform to the European Union's sugar protocol for 2006-10, and higher international oil prices have brought about a permanent deterioration in Mauritius's terms of trade. The authorities have initiated broad-based reforms to address recent economic setbacks and to raise growth to levels of the previous two decades.

Real GDP growth is expected to reach over 4 percent in 2006/07 (fiscal year ending in June), owing to a strong service sector outturn and slowing job losses in the textile sector. Unemployment, however, remains close to its historic high. Inflation, after peaking in December 2006-largely because of onetime budgetary measures and a weakening rupee-fell to 9.2 percent in February 2007 (year-on-year).

The fiscal deficit target for 2006/07 (4 percent of GDP) is within reach, with the adjustment relying partly on lower capital expenditure. The external current account deficit widened to 5.3 percent of GDP in 2005/06 because of weak textile and sugar exports and higher oil prices. An aircraft import will further widen the current account deficit in 2006/07. The Bank of Mauritius has continued to intervene in the interbank foreign exchange market and has gradually raised its signaling rate to contain inflation. Foreign reserves have continued to decline but have stayed at a comfortable level. The real effective exchange rate has depreciated by over 10 percent since 2004...

Directors noted that additional improvements in external competitiveness are needed to help restore external balance. Wage restraint, productivity gains, and labor market flexibility are key to achieve this. Directors considered that the flexible exchange rate regime has served Mauritius well, with rupee depreciation softening the negative effect of the terms of trade decline. They encouraged the authorities to limit foreign exchange intervention to smoothing excess volatility.

Directors welcomed the progress made toward fiscal consolidation and better public expenditure management, aimed at lowering public debt and improving the quality of the budget. They noted that fiscal pressure in the medium term would require more decisive fiscal consolidation and further improvements in expenditure management. They encouraged the authorities to identify options for budgetary savings and to continue strengthening debt management.

I would like to see Fazeer's take on the IMF's assessment.

Artist of the Day-Georges Rouault

“Three Judges” by Georges Rouault

He was born in 1871, a child of the Paris Commune, the son of an artisan who built pianos. His grandfather, a postal worker and art collector, introduced him to pictures by Courbet. He apprenticed as a teenager to glaziers and never denied the obvious connection between the thick black outlines in his paintings and the leaded church windows of medieval stained glass that he helped to restore. Those outlines flattened and broke up his work into fissures and shards of glowing color (deep purples, reds and blues) against a generally gloomy background....

He said he saw his role as “the silent friend of those who labor in the barren field, the ivy of eternal misery climbing the leprous wall behind which rebellious humanity hides its virtues and its vice.” His subjects were mostly misfits and vagabonds, and his natural forebears in social commentary were Goya and Daumier. He believed in the impieties of modern art as the most effective language of the day, yet was also deeply spiritual and revered the radical Catholic writer Léon Bloy, who recognized the inherent contradiction in Rouault’s position and didn’t much like his work.

-Revisiting Rouault’s Stained-Glass World

Supply of Prostitutes Increase in Syria

Thanks to Iraq war, number of prostitutes in Syria has multiplied;

Aid workers say $50 to $70 is considered a good night’s wage for an Iraqi prostitute working in Damascus. And some of the Iraqi dancers in the crowded casinos of Damascus suburbs earn much less...

“We make sure that each girl has a minimum of 500 lira at the end of each night, no matter how bad business is,” he said, mentioning a sum of about $10. “We are sympathetic to the situation of the Iraqi people. And we try to give some extra help to the girls whose families are in special difficulties.”

Umm Hiba shook her head. “It’s true that the managers here are good, that they’re helping us and not stealing the girls’ money,” she said. “But I’m so angry.
“Do you think we’re happy that these men from the gulf are seeing our daughters’ naked bodies?”

Most so-called casinos do not appear to directly broker arrangements between prostitutes and their customers. Zafer, a waiter at the club where Hiba works, said that the club earned money through sales of food and alcohol and that the dancers were encouraged to sit with male customers and order drinks to increase revenues.

Zafer, who spoke on condition that only his first name be used, refused to discuss specific women and girls at the club, but said that most of them did sell sexual favors. “They have an hourly rate,” he said. “And they have regular customers.”

Inexpensive Iraqi prostitutes have helped to make Syria a popular destination for sex tourists from wealthier countries in the Middle East. In the club’s parking lot, nearly half of the cars had Saudi license plates.

From Damascus it is only about six hours by car, passing through Jordan, to the Saudi border. Syria, where it is relatively easy to buy alcohol and dance with women, is popular as a low-cost weekend destination for groups of Saudi men.

And though some women of other nationalities, including Russians and Moroccans, still work as prostitutes in Damascus, Abeer, a 23-year-old from Baghdad working at the same club as Hiba, explained that the arriving Iraqis had pushed many of them out of business.

“From what I’ve seen, 70 percent to 80 percent of the girls working this business in Damascus today are Iraqis,” she said. “The rents here in Syria are too expensive for their families. If they go back to Iraq they’ll be slaughtered, and this is the only work available

Explainer of the Day- How a Stroke Occurs

"Stroke is the third-leading cause of death in this country, behind heart disease and cancer, killing 150,000 Americans a year, leaving many more permanently disabled, and costing the nation $62.7 billion in direct and indirect costs, according to the American Stroke Association"- Lost Chances for Survival, Before and After Stroke (NYT)

TV kidney competition

A TV channel in the Netherlands is to broadcast a programme where a terminally ill woman will pick someone to receive her kidneys.

Pakistan 'same-sex' couple jailed

A Pakistani court has remanded a couple in custody after ruling that the husband was actually a woman and their same-sex marriage was against Islam.
The case is believed to be one of the first of its kind in the country.

The judge said the pair had lied over the husband's gender, and a sex change operation the husband had had to become a man had not been done properly.

The couple told the court that they had got married so that the wife could avoid an arranged marriage.

-Pakistan 'same-sex' couple held

Podcasts Carnival

Hanson on Health (Econtalk)
Robin Hanson, of George Mason University, argues that health care is different, but not in the usual ways people claim. He describes a set of paradoxical empirical findings in the study of health care and tries to explain these paradoxes in a unified way. One of his arguments is that the human brain evolved in ways that make it hard for us to be rational about health care. He also discusses using prediction markets as a way of designing health care policy

The Black Swan - thinking the impossible?

How Good People Turn Evil: the psychology of social influence

Limited Liability: essential protection or evasion of responsibility?

Pakistan's political battleground

The dark side of China's Las Vegas

Investigative Journalism and Chinese society

How The Working Class Went Global

Al Qaeda: Past, Present and Future
Lawrence Wright, staff writer New Yorker; author of "The Looming Tower: Al-Qaeda and the Road to 9/11"

Six Days that Changed the Middle East

Why I Went to Iraq…Three Years Later
Noriaki Imai, student environmental and peace activist

Modern Challenges in Disaster Relief Management and Response
Shaukat Fareed, Chief Executive, Board for Cooperation, United Nations; Founder, Office of Humanitarian Affairs, United Nations

Guernica, 70 years on

Armies for Hire- in Iraq and Afghanistan

Children of Zimbabwe

Sorry tale of Burma's modern history

Drugs in Sport
Rear Vision looks at the history of drug taking and drug testing in sport.

Montessori schools - centenary

Crusader Medicine
Crusader battlefields were the Emergency Wards of the medieval period of European history. Injured knights and the occasional king on horseback required medical treatment, which was provided by monks. Today's well known names, such as St John's Ambulance, have their origins in these monastic medical orders.

Shakespeare the philosopher

Music industry aesthetics: sound vs image

Daniel Mendelsohn and The Lost

The future of cities

The Gospel of Judas - Real and Imagined

FIGHTING THE GREAT PANDEMICS
Sir Richard G A Feachem

Dead Sea Scrolls at Sixty

Spiritual Classics
Kahlil Gibran's The Prophet, Martin Luther King Jr's Strength to Love, M. Scott Peck's The Road Less Travelled and Waiting for God by Simone Weil.

Equiano the African: Biography of a Self-Made Man
Equiano was a former slave who published a highly influential, best-selling autobiography in 1789 titled; "The Interesting Narrative of the Life of Olaudah Equiano, or Gustavus Vassa, the African, Written by Himself", the book made him an instant celebrity and helped transform public opinion on slavery.

Tackling obesity
Professor Sarah Stewart-Brown looks at the recent statements on the obesity gene, food supplements and lifestyle changes and asks which is the most effective for tackling obesity

Medicare Drug Negotiations: Can the Government get a Better Deal?

Hot Trends in Consumer Electronics

Is Male Circumcision the Key to Stopping the AIDS Epidemic?

The View From Palestine: A Conversation with Sari Nusseibeh

Diethylene Glycol saga continues

Nicaragua Seizes Chinese Toothpaste;

The Nicaraguan police have seized 6,000 tubes of a Chinese-made toothpaste suspected of containing a chemical that killed at least 51 people in nearby Panama last year, Health Minister Maritza Cuan said Sunday.

Imports of Chinese toothpaste were halted last week to test for the chemical, diethylene glycol, commonly used in antifreeze and brake fluid. Dr. Cuan told a television station that the seized toothpaste, labeled “Excel” and “Mr. Cool,” had been smuggled from Panama

Would you prefer Chinese or American Tourists?

Nelson H. H. Graburn, a professor of anthropology at the University of California at Berkeley, said one of his graduate students recently asked tour guides in China to rate the tourists from various Western countries.

“They told her that Israeli, French and American tourists could be the most difficult,” Professor Graburn said, “but that what distinguished Americans was that they could be loud and demanding, and then would invariably apologize and give them big tips.”

To be an ugly tourist is to miss the fundamental truth in Mr. Martin’s statement. “It is to have an overall lack of understanding that there is such a thing as cultural difference,” wrote Prof. Inga Treitler, the secretary for the National Association for the Practice of Anthropology, in an e-mail message.

Valene Smith, an anthropology professor at California State University at Chico who pioneered the academic study of tourism and travel in the 1970s, said that the tourists most likely to be deplored by their hosts these days are not the euro-rich Europeans or the British or the standard ugly Americans but the Chinese.

“They have only been traveling widely in the last five years or so, but they are touring in numbers no one has seen before — by the thousands,” she said. “They behave as they would at home — there is a lot of pushing and shoving. Very few speak languages other than Chinese.”

Last summer, in an incident widely discussed among travel experts, she said, 40,000 Chinese tourists descended on the small German city of Trier to visit the birthplace of Karl Marx.

“It was quite a mess,” Professor Smith said. “No one was prepared ahead of time. The Germans were quite upset.”

-They Came, They Toured, They Offended

Free Read on Maths Formulas

Via Brian Hollar, The FE Supplied-Reference Handbook

World Bank staff don't pay taxes

A Q&A from World Bank;

Do World Bank staff pay taxes?
Just as at the UN and its related organizations, foreign nationals at the World Bank are exempt from income tax. US staff pay taxes: the Bank compensates US staff for some of their tax obligations

Improving Health with Charity

A website that purports to show scientific benefits of giving;

-Giving in high school predicts good physical and mental health in late adulthood, a time interval of over 50 years! Psychologist Paul Wink of Wellesley College studied nearly 200 individuals who have been followed closely since the 1920’s, when they were children, and found that giving protected longevity as well as mental health even half a century later.

-Giving significantly reduces mortality in later life. In this new study from Doug Oman of the University of California at Berkeley, 2,000 individuals over age 55 were studied for five years. Those who volunteered for two or more organizations had an impressive 44% lower likelihood of dying. The only activity that had a slightly higher effect was to stop smoking. And sociologist Marc Musick of the University of Texas at Austin found that individuals over 65 who volunteer are significantly less likely to die over the next eight years than those who do no volunteer work.

-Generous behavior reduces adolescent depression and suicide risk. The Institute sponsored four special studies on teens. Boys, in particular, benefit markedly from feelings of love and from generous behavior. Just as intriguing is a study from David Sloan Wilson and Mihaly Csikszentmihalyi, showing that teen girls are more giving than teen boys, and that teens who are giving, hopeful, and socially effective, are also happier, more active, involved, excited, challenged, and engaged than their teen counterparts.

-Giving quells anxiety. Neal Krause of the University of Michigan followed 976 churchgoing adults over a period of three years. Offering social support to others reduced their anxiety over their own economic situation when they were under economic stress.

-Late in life, giving to others helps facilitate self-forgiveness. Krause also found that giving is a potent trigger for forgiveness, and particularly for African-Americans. He studied nearly 1,000 older adults and found that providing emotional support to others enhanced the ease with which African-Americans forgave themselves for their own mistakes.

-Giving to others increases your longevity, although receiving the same kind of help did not. Psychologist Stephanie Brown of the University of Michigan spent five years studying 423 older couples. After adjusting for age, gender, and physical and emotional health, Brown found that those who provided significant support to others were more than twice as likely to remain alive in that five year period. These surprising findings ruled out other factors like personality, health, mental health and marital relationship variables.

-Giving is so powerful that sometimes even just ‘thinking’ charitable thoughts helps us. The simple act of praying for others, Neal Krause found, reduces the harmful impact of health difficulties in old age for those doing the praying. A new study from the National Institutes of Health shows that merely making a decision to donate to a charity increases activity in parts of the brain that release our feel-good chemicals, dopamine and serotonin. And a new Harvard University study showed that just watching a movie of helping activity boosts the immune system.

Intellectual Property and Yacht Building

Here's a story from Australia;

John Swarbrick is a prominent boatbuilder based in W.A. He designed yachts for Australia's 1987 defence of the America's Cup. He's been building boats for most of his life.

A few years ago he designed and started manufacturing a beautiful, unique yacht he christened the JS9000. By 2003 he had sold 20 of them, each for between $50,000 and $60,000.

All was going well until a group of men (some of them John's ex-employees) decided to set up a rival operation and make exact copies of the boat.

John Swarbrick said you can't do that, that's copyright infringement. They responded, No, it isn't, copyright only applies to artistic works. A yacht is a functional object, the only way you can legally protect it is by registering your design under the Designs Act system. And you didn't.

John Swarbrick took them to court. He won in the Federal court. On appeal, three judges of the Federal Court upheld his victory. But just last month the High Court unanimously overturned their ruling.

Oh Lord, won’t you buy me a Mercedes Benz ?

May be you might get in next life- above coffins from Ghana- but can Ghanaians afford such splendid funerals?

In Ghana the funereal send-off is as important as the life itself. But the costs, borne by extended families, can be punitive. Some 45% live on less than $1 a day, 79% on less than $2. Yet funerals tend to cost between $2,000 and $3,500. “Money measures the quality of the funeral and the family,” says Sjaak van der Geest, an anthropologist. The more cash spent, the higher the reputation of the deceased and the family. Mr Okai died in hospital, then spent almost three months in the morgue, at a cost of $521: the longer your body is in the fridge, the more prestigious. The Ga king, recently buried in Accra, was on ice for 18 months; the Dagbon king, in northern Ghana, for a record four years.

Mr Okai's house was repainted for the wake. His coffin cost $319, two-thirds of the average Ghanaian's annual income. Posters announcing the funeral were printed and distributed around town, beer and soft drinks bought, food prepared, the band hired, T-shirts bearing Mr Okai's picture printed, transport for mourners arranged, diesel generators rented and cameramen brought in to record the day. A funeral arranger, Joseph Akrashie Annan, reckons that $2,470 was spent sending Mr Okai to his grave.

In the 1980s Ghana's then military ruler, Jerry Rawlings, set up a commission to look at the exorbitant costs of funerals amid fears they were retarding the country's economic growth. “Every year funerals grow in size, pomp and pageantry,” says Edward Kutsoati, a Ghanaian economist at Tufts University in the United States. “They are becoming centre-stage in the life of Ghanaians. This is not an efficient allocation of resources

War on Scientific Illiteracy

Steven Pinker reviews a must read book;

In “The Canon: A Whirligig Tour of the Beautiful Basics of Science,” Natalie Angier aims to do her part for scientific literacy. Though Angier is a regular contributor to the Science Times section of this newspaper, “The Canon” departs from the usual treatment of science by journalists, who typically cover the “news,” the finding that upsets the apple cart, rather than the consensus. Though one can understand why journalists tend to report the latest word from the front — editors’ demand for news rather than pedagogy, and the desire to show that science is a fractious human activity rather than priestly revelation — this approach doesn’t always serve a widespread understanding of science. The results of isolated experiments are more ephemeral than conclusions from literature reviews (which usually don’t fit into a press release), and the discovery-du-jour approach can whipsaw readers between contradictory claims and leave them thinking, “Whatever.”

Angier’s goals are summed up in two words in her subtitle: beautiful basics. “The Canon” presents the fundamentals of science: numbers and probability, matter and energy, the origins and structure of living things, and the natural history of our planet, solar system, galaxy and universe. These are, she judges, the basics that every educated person should master, and a prerequisite to a genuine understanding of the material in any newspaper’s science coverage. And she presents these basics as beautiful: worthy of knowing for their own sake, even if they won’t help us save the planet, age successfully or compete with the Chinese.

“The Canon” begins on an engaging note, lamenting what is one of my pet peeves as well — the idea that science is something for kids. When their children turn 13, Angier notes, many parents abandon their memberships in zoos and science museums for more “mature” institutions like theaters and art museums. And who can blame them, when visiting a modern science museum, in her priceless description, consists of a “mad pinball pinging from one hands-on science exhibit to the next, pounding on knobs to make artificial earthquakes, or cranking gears to see Newton’s laws in motion, or something like that; who bothers to read the explanatory placards anyway? And, oops, hmm, hey, Mom, this thing seems to have stopped working!” Many new science museums seem to be built on the dubious theory that a person’s life interests are formed in childhood — that “just as the twig is bent, the tree’s inclined.” Instead they may be conveying the message “When I was a child ... I thought as a child: but when I became a man, I put away childish things.”

Angier’s first chapter, “Thinking Scientifically,” makes the case for scientific literacy and portrays the mind-set of scientists. Anyone who knows a boffin (as the British affectionately call the women and men in white coats) will recognize the passionate and irreverent voices of her subjects. (“Most of the time,” one of them tells her, “when you get an amazing, counterintuitive result, it means you screwed up the experiment.”) Thankfully, she does not try to render something called “the scientific method” (a phrase that never passes the lips of a real scientist) but conveys the idea that science is just the attempt to understand the world with a special effort to ensuring that the things you say about it are true.

Related;
"People who would sneer at the vulgarian . . ."

Politics of Policies in Latin America

-The Politics of Policies

Bryan Caplan asks Who's to Blame for Chavez?- compare Chile and Venezuela in the above table.

Medication Errors

Children with cancer often get the wrong dose of chemotherapy or are given the drug at the wrong time, and many require treatment because of the errors, U.S. researchers said on Friday.

The problem has a lot to do with lack of common standards for delivering these life-saving, but highly toxic, drugs, said Dr. Marlene Miller, director of quality and safety at Johns Hopkins Children's Center in Baltimore.

Miller and colleagues evaluated data on medication errors collected in a national database from 1999 to 2004.

They looked at a total of 829,492 errors reported in 29,802 patients.

Of the errors, 310 involved kids on chemotherapy. Of those mistakes, 85 percent reached the patient, and nearly 16 percent of those were serious enough to require additional care.

-Medication errors common in U.S. kids with cancer

Photo of the Day

Denni Fatiha -first woman to drive a large city bus in Algiers (NYT).

Related;
Pakistani minister tenders resignation after hug row;

Pakistan's Minister of Tourism has handed in her resignation after coming under criticism from a hardline Islamist cleric for hugging her parachute instructor after completing a jump in France, an official said on Tuesday.

Nilofar Bakhtiar, one of three women ministers in the Pakistani cabinet, made the parachute jump in March to raise money for victims of an earthquake that killed 73,000 people in Pakistan in October 2005.

Indian Judiciary Fact of the Day

As of February 2006, 33,635 cases were pending in the Supreme Court with 26 judges; 3,341,040 cases in the high courts with 670 judges; and 25,306,458 cases in the 13,204 subordinate courts. This vast backlog leads to long adjournments and prompts people to pay to speed up the process. In 1999, it was estimated: ‘At the current rate of disposal it would take another 350 years for disposal of the pending cases even if no other cases were added.’

The ratio of judges is abysmally low at 12–13 per one million persons, compared to 107 in the United States, 75 in Canada and 51 in the United Kingdom. If the number of outstanding cases were assigned to the current number of judges, caseloads would average 1,294 cases per Supreme Court judge, 4,987 per high court judge and 1,916 cases per judge in the lower courts. Vacancies compound the problem. In March 2006, there were three vacancies in the Supreme Court, 131 in the high courts and 644 in the lower courts. Judges cope with such case lists by declaring adjournments. This prompts people to pay ‘speed money’.

-Indolence in India’s judiciary, Global Corruption Report 2007, p.215

Prostitutes forced to pay bribes to police

"Although prostitution is legal in Azerbaijan, it is a stigmatised occupation. Prostitutes are vulnerable to extortion by police and are compelled to pay bribes to avoid being forcibly (and illegally) subjected to medical examination. This is because they can be charged under the law with disseminating venereal disease. The police act beyond their authority, however, because the law stipulates that they can commence investigation only when a third party makes a complaint. Knowing that young stigmatised women are unlikely to challenge such action fuels their extortionist behaviour."

Source;Global Corruption Report 2007, p.124

Debating libertarian paternalism

Richard Thaler and Mario Rizzo debate libertarian paternalism- at Econoblog.

Richard Thaler writes: Let's recapitulate. People make mistakes, so sometimes they can be helped. It is possible to help without coercion. That is libertarian paternalism. The concept can be and is used in both the public and private sectors. For example, in London, pedestrians from abroad are reminded by signs on the pavement to "look right" because their instincts from back home are to expect traffic to approach from the left. No one is forced to look right, but fewer pedestrians are hit by trucks.

Another example comes from Sweden, which launched a partial privatization of their social security system in 2000. The plan was open to any fund, which meant that participants faced 456 options. There was also a very well-designed default fund -- using private managers selected by the government -- that offered global diversification at very low fees (16 basis points). By any standard, both ex ante and ex post, the participants who selected their own portfolio of funds did worse than those who took the default plan. The main mistake the government made in designing this plan was to discourage participants from choosing the default fund, perhaps thinking, as Mario does, that choosing for oneself is always the best approach.

Mario thinks we are naïve about government. We think he is naïve about firms. Does he think that the companies that offered stock options to student loan officers to induce them to feature their loans had the "actual preferences" of the students at heart? Maximizing profits does not always mean maximizing the welfare of the customers.

Finally Mario seems to have a phobia about slippery slopes. I guess he thinks that if governments start with signs that say "look right," the next thing you know we will have Prohibition coming back. By the same logic, we should worry that if libertarians succeed in eliminating rent control that we will be soon down the slippery slope toward anarchy. Slippery slope arguments should be avoided unless there is proof that the slope is greased. In our case, by insisting, as we do, on only libertarian paternalism, the slope runs into a brick wall before it even gets started. And besides, what is the alternative? Inept neglect?

Sunlight may not be the best disinfectant

“I would be very concerned about wholesale posting of thousands of clinical trials leading to mass confusion,” - Dr. Steven Galson, director for the Center for Drug Evaluation and Research at the F.D.A.

A recent article from NYT covered the Avandia case-For Drug Makers, a Downside to Full Disclosure;

When GlaxoSmithKline settled a lawsuit three years ago with the State of New York over the antidepressant medication Paxil, the company agreed to take an unusual step: publicly disclosing the results of its clinical trials for Paxil and other drugs.

The company, which was criticized at the time for failing to publicize all pediatric trials of Paxil, not just the positive ones, made good on its promise. The first posting on a new Web site was about 65 studies involving its popular diabetes drug, Avandia.

This week, GlaxoSmithKline learned what that greater disclosure could mean.

A cardiologist at the Cleveland Clinic, Dr. Steven Nissen, stumbled onto the Glaxo Web site while researching Avandia last April. He and a colleague quickly analyzed the data, and on Monday, The New England Journal of Medicine released its finding that Avandia posed a heightened cardiac risk.

The Number’s Guy covered the statistics behind the study;

In a meta-analysis, researchers pool results from different studies — in this case, Cleveland Clinic cardiologist Steven Nissen and statistician Kathy Wolski analyzed 42 studies. Those studies were done by many different people, and as you might expect, there was wide variation between them. Sometimes Avandia was compared with a placebo and sometimes with alternate treatments. Adverse events — namely heart attacks shown to occur with higher frequency among Avandia users — may not have been identified consistently across the different trials. And if they weren’t, Dr. Nissen would have no way to know, because he was looking at study summaries and not patient-level data. The limitations of this “study of studies” filled a lengthy third paragraph in an accompanying New England Journal of Medicine editorial.

So why, then, use meta-analysis at all? Because for drug dangers that are rare enough, even studies of thousands of patients might not suffice to separate a real risk from random statistical variation. Combining tens of thousands of patients who underwent the treatment separately, under different protocols and supervision, may be the only way to clear thresholds for statistical significance.

Whether a result is significant is determined by the value of a statistical variable called p, which depends on the magnitude of the effect, the consistency of that effect and the number of observations. Researchers can’t control the first two factors, which, in a drug trial, ought to be governed by biochemistry. They can, however, add more observations by wrapping together multiple studies, which can lower the value of p, which is a good thing. A value below 0.05 — commonly chosen as a threshold — means there is less than a 5% probability that an observed effect arose purely by chance.

To see the power of that approach, consider one Avandia trial, known as Dream (Diabetes REduction Assessment with Ramipril and Rosiglitazone Medication), whose results were reported in the Lancet last year. This study alarmed Dr. Nissen, because, as he wrote in a letter to the Lancet, patients taking Avandia had a 37% greater risk of adverse heart outcomes compared with a placebo, which he found “very disturbing.” And for every cardiac problem studied — such as angina, stroke and heart failure — the pattern was the same: The rate was higher among people taking Avandia. But because the events were so rare (for example, just 15 heart attacks in the Avandia group, compared with nine in the control group), the overall findings weren’t statistically significant. Indeed, Avandia maker GlaxoSmithKline’s asserted in its response yesterday to the NEJM study that the drug’s users “showed no increase in cardiovascular risk when compared to placebo” in the Dream trial.

Dr. Nissen’s meta-analysis, which included the Dream study, found a similar elevation of risk for heart attacks — 43% higher among Avandia users — and, thanks to the addition of 41 other studies, managed to nudge p just below the 0.05 threshold, to 0.03.

I asked Dr. Nissen why he did a meta-analysis. He replied, “If you have a question you want to ask, and no single clinical trial is large enough to answer the question, then you have no answer at all. But if you can carefully combine the results of several trials, then you can answer the question you otherwise cannot. And that was exactly the situation we faced with Avandia.” About the technique of meta-analysis, he added, “It’s not as statistically powerful as a single large trial, and should never be a substitute. But in the absence of a single large trial, it can be quite helpful.”

Related;
The Avandia meta-analysis: critical appraisal versus hype
Bootstrapping
Avandia Heart Risks and a World Which Never Sleeps
FDA Issues Safety Alert on Avandia

Clinical Trials
Relatively Small Number of Deaths Have Big Impact in Pfizer Drug Trial
Filed under F (for forgotten);

If a drug firm funds three studies and only one shows that its product works, which finding ends up published in the Journal of the American Medical Association? And which studies go unpublished?

Eight years ago, Kabi Pharmacia, now called Pharmacia, decided the answer was the successful study. And last year, that same study, together with three later research trials that it gave birth to, were the sole sources for federal guidelines on the success rates of nicotine inhalers in helping smokers.

Researchers call it the "file drawer effect" — the quiet filing away of disappointing medical experiments. Perhaps one medical study in five enrolls thousands of patient volunteers, continues for years, then disappears, delayed indefinitely or never published.

Meta-Analysis and the Filedrawer Effect
Disclosing clinical trials;

This effort is an attempt to deal with the age old problem of publication bias, a problem supposedly identified by the ancient Greeks, as described in a letter to the editor of Lancet by Mark Pettigrew;

Diagoras was the original atheist and free thinker. He mocked the Eleusinian mysteries, an autumnal fertility festival which involved psychogenic drug-taking, and was outlawed from Athens for hurling the wooden statue of a god into a fire and sarcastically urging it to perform a miracle to save itself. In the context of publication bias, his contribution is shown in a story of his visit to a votive temple on the Aegean island of Samothrace. Those who escaped from shipwrecks or were saved from drowning at sea would display portraits of themselves here in thanks to the great sea god Neptune. "Surely", Diagoras was challenged by a believer, "these portraits are proof that the gods really do intervene in human affairs?" Diagoras' reply cements his claim to be the "father of publication bias": "yea, but . . . where are they painted that are drowned?"

The Mo Way

The Economist has a profile of Dr Mo Ibrahim, founder of Celtel International;

IN 1998, as the telecoms boom was under way, Mo Ibrahim was amazed that big companies were rushing into the mobile-phone business around the world, yet not in Africa. There they saw only problems: poverty, unrest and corruption. Mr Ibrahim, a veteran of the telecoms industry in Britain and Sudan, was at the time running a consultancy he had founded in London. Amid the cigar smoke and snifters that followed its directors' dinners, an idea formed. Might it be possible to set up a pan-African mobile operator—and to do so without paying bribes?

This was the genesis of Celtel, which is now one of Africa's largest mobile operators, with some 20m subscribers in 15 countries.When Mr Ibrahim sold Celtel in 2005 to MTC, a Kuwaiti operator, for $3.4 billion, it demonstrated that the continent was open for business. Rather than charity, he insists, “the way forward for Africa is investment.”

Building businesses in Africa is important to Mr Ibrahim, who had to leave the continent as a young man in order to pursue his career. Born in Sudan and raised and educated in Egypt, he started off as an engineer at Sudan's national phone company. After further study in Britain he went on to become technical director at Cellnet, the wireless arm of BT, Britain's biggest telecoms operator. (Cellnet was subsequently sold, renamed O2 and is now owned by Telefónica of Spain.) He left in 1989 to set up an engineering consultancy that designed mobile networks, and sold the firm for just over $900m to Marconi in 2000.

These experiences paved the way for Celtel's emergence. The consultancy enabled Mr Ibrahim to peer into the business models of dozens of mobile operators, from which he concluded that an African operator would work. His time at BT was also informative: big companies, he says, teach a fellow everything he ought not to do in order to be successful. “Later on in life I was not worried about taking on the big guys, because you know they are not efficient,” he says. And Mr Ibrahim's previous success meant that the motivation behind Celtel's establishment was not solely commercial. He and his co-founders had already made their fortunes and regarded Celtel as a political and intellectual test. That is why they happily ventured into risky African markets and refused to pay bribes.

Now that mobile telephony is booming in Africa, Mr Ibrahim has other plans. Not for him the typical rush into private equity. Instead he set up a foundation last year with the novel (and, say critics, utopian) mission of promoting good governance in Africa. It plans to award an annual prize of $5m to retired African leaders who rule well and then stand down, rather than trying to cling to power. The foundation is working with Harvard University to establish a scoring system with which to assess potential candidates. The prize committee is chaired by Kofi Annan, former secretary-general of the United Nations. The first award will be presented in October, though the prize will be presented only in years when a worthy winner can be found. By that point Mr Ibrahim plans to have stepped down as the chairman of Celtel to avoid any possible conflict of interest.

Related;
The Ibrahim Index of African Governance
Mo Ibrahim Prize;

Worth US$5 million dollars over 10 years and US$200,000 annually for life thereafter, the Prize is open to former heads of state or government from sub-Saharan Africa who have left office in the last three years and demonstrated exemplary leadership.

The Bush and Dollar Curve

Daniel Gross asks;
Quick quiz: Is the dollar weak because Americans think President Bush is a miserable failure?

Estonia under attack

Recently Estonia was targetted for cyberattacks;

That is why the world's richest countries and their military planners are now studying intensively the attacks on Estonia that started four weeks ago, amid that country's row with Russia about moving a Soviet-era war memorial...

Even at their crudest, the assaults broke new ground. For the first time, a state faced a frontal, anonymous attack that swamped the websites of banks, ministries, newspapers and broadcasters; that hobbled Estonia's efforts to make its case abroad. Previous bouts of cyberwarfare have been far more limited by comparison: probing another country's internet defences, rather as a reconnaissance plane tests air defences.

At full tilt, the onslaught on Estonia was also of a sophistication not seen before, with tactics shifting as weaknesses emerged. “Particular 'ports' of particular mission-critical computers in, for example, the telephone exchanges were targeted. Packet 'bombs' of hundreds of megabytes in size would be sent first to one address, then another,” says Linnar Viik, Estonia's top internet guru. Such efforts exceed the skills of individual activists or even organised crime; they require the co-operation of a state and a large telecoms firm, he says. The effects could have been life-threatening. The emergency number used to call ambulances and the fire service was out of action for more than an hour.

National security experts used to dealing with high-explosives and body counts find cyberwarfare a baffling new theatre of operations. In Estonia's case, “botnets” (swarms of computers hijacked by surreptitiously placed code, usually spread by spam) swamped sites by deluging them with bogus requests for information. Called a “distributed denial of service” (DDOS) attack, this at its peak involved more than 1m computers, creating traffic equivalent to 5,000 clicks per second on some targets. Some parts were highly co-ordinated—stopping precisely at midnight, for example. Frank Cilluffo, an expert formerly at the White House, says that the attack's signature suggests that more than one group was at work, with small-time hackers following the initial huge sorties.

Related;
What the attacks on Estonia have taught us about online combat
When Do Cyberattacks Become Acts of War?
NATO Nations Send Cyber Reinforcements to Estonia

Sovereign-wealth funds

"WITH $1.2 trillion in foreign-exchange reserves and the pool growing by more than $1 billion every day, China casts a giant's shadow over the global financial markets, even if it has mostly used the money to pile up American Treasury...

The top 12 each have anything from $20 billion to hundreds of billions of dollars to invest (see table). Recently, Japan, Russia and India have reportedly been considering setting up funds along similar lines. Some estimates put the size of the funds at $2.5 trillion by the end of this year (in contrast, hedge funds are thought to have a mere $1.6 trillion), with another $450 billion in transfers from reserves being added annually. Including capital appreciation, the amount could swell to $12 trillion by 2015...

That process may have started inadvertently in 1956 when the British administration of the Gilbert Islands in Micronesia put a levy on the export of phosphates—bird manure—used in fertiliser. The manure has long since been depleted. However, a once-tiny set-aside of money has become the Kiribati Revenue Equalisation Reserve Fund, a $520m investment portfolio that has grown to about nine times the tiny atoll's GDP."

-The world's most expensive club

Related;
Norway Keeps Nest Egg From Some U.S. Companies ;

Norway has amassed a fortune of more than $300 billion over the last decade, thanks to its profits from oil exports. Yet few countries are more ambivalent about their vast wealth than this modest, socially conscious society of less than five million people...

Among the first companies to run afoul of Norway’s standards were makers of cluster bombs and nuclear weapons or related components — a list that includes General Dynamics and Northrop Grumman, in addition to Boeing and Lockheed Martin.

Then last June, Norway added Wal-Mart Stores to its blacklist, alleging that the retailer was guilty of tolerating child-labor violations by its suppliers in the developing world and obstructing unions at home. The fund sold off more than $400 million worth of Wal-Mart shares.

Economists Without Borders?

There is the Doctors Without Borders, Architects Without Borders, and now MBAs Without Borders;

Engaged in the field of international development, our mission is to contribute to the business and social development of upcoming nations through work rotations of MBA professionals.

Moving forward, we are very excited for 2007 as we expect to send 20 to 25 MBAs from around the globe (North & South) to over 15 new countries on projects that will bring light to new communities in India, bring better health care to locals in Pakistan, Zimbabwe and South Africa, build up fair trade markets in Rwanda and Ethiopia and our MBAs will continue to help build up micro finance institutions across Africa…all this and more as we continuing to…develop people and nations!

In general, we develop projects within five industries: Healthcare, Agriculture, Financial, Income-Generation and Climate Change. Within these industries, we partner MBAs with local businesses, international businesses and NGOs working to not only develop businesses, but also…people and nations!

Maybe Tyler Cowen should start Economists Without Borders!

Economy in Pictures- Hungary

-From The Economist

Hungary―2007 Article IV Consultation Concluding Statement;

The authorities must act to retain the confidence of markets and counteract the possibility of a low growth trap. The fortuitous parallel improvement in global markets' risk appetite has helped. Another adverse shift in sentiment and surprises in Hungary's fiscal and external accounts could reverse the markets' reprieve. Importantly, despite vibrant exports, Hungary's overall growth relative to the rest of Europe deteriorated in early 2005 and that divergence was accentuated in 2006. The policy challenge is to lower domestic and external vulnerabilities and to ensure a strong recovery from the current adjustment process.

Chagos islanders win right to return

Families forced to leave the Chagos Islands, a British territory in the Indian Ocean, to make way for a U.S. military base at Diego Garcia during the Cold War have won a key legal victory in their long struggle to return.

The Court of Appeal in London ruled in favor of the islanders Wednesday and criticized the British government for "abuse of power." All 2,000 or so inhabitants were evicted from the archipelago in the 1960s and 1970s and have never been allowed back

The largest of the 65 islands is Diego Garcia, an atoll where the United States operates a large military base under lease from Britain. The base has been used to launch bombing missions in Iraq and Afghanistan.

Under the court decision, the islanders are to be permitted to return to any of the islands except Diego Garcia. The British Foreign Office said it had 30 days to decide whether to file a final appeal to the House of Lords.

In the past, U.S. officials have opposed allowing people to live on any of the Chagos Islands, arguing that their presence could lead to electronic jamming and surveillance of military operations.

Edgar Vasquez, a State Department spokesman, declined Thursday to comment on the ruling, calling it "an ongoing legal battle for British courts." Vasquez added that "Diego Garcia is an important base of operations in maintaining regional stability and in the war on terror."

In his ruling, appellate judge Stephen Sedley said that "few things are more important to a social group than its sense of belonging, not only to each other but to a place. What has sustained people in exile, from Babylon onwards, has been the possibility of one day returning home."

-Court Rules for Islanders Evicted in U.S. Base Deal

Related;
The Chagossian Diaspora
Back to BIOT
Chagos redux

Quote of the Day- Clash of anti-corruption efforts & development

"Let me make a bolder claim. A development strategy that focused on anti-corruption in China would not have produced anything like the growth rate that this country has experienced since 1978, nor would it have resulted in 400 million plus fewer people in extreme poverty."-Dani Rodrik

Do you agree?

Related;
More on corruption in China
Hold the World Bank to Account
China and the knowledge economy : challenges and opportunities
To Get Rich Is Unprofessional: Chinese Military Corruption in the Jiang Era
China's productivity leaves its neighbours gasping

Friday Photo- from Senegal

"Students who want to be sure to have a place to study line up outside the library before it opens at 8 a.m. Cheikh Anta Diop University was built in the 1960s to accommodate about 5,000 students but now enrolls close to 60,000."

IMF responds to Action Aid

IMF responds to the recent Action Aid report- highlights below;

"We believe that our responsibility lies primarily in helping these governments achieve faster growth; increase their capacity to absorb aid; raise revenues; and encourage pro-poor spending. All of this must be achieved while trying to preserve the hard-fought gains provided by macroeconomic stability. To do so, scrutinizing public sector wage bills in many of these countries is simply unavoidable. These bills have too often been a source of macroeconomic imbalances because of unplanned, excess spending, and poor expenditure control...

We have described the many reasons for including wage bill ceilings in a paper that you often quote, Aid Scaling Up: Do Wage Bill Ceilings Stand in the Way?. We concluded that, based on country case studies for 2003-05, wage bill ceilings have not restricted the use of available donor funds, and offered a number of suggestions for increasing the flexibility of wage bill conditionality in PRGF-supported programs to respond to higher aid flows. But the paper also described how ceilings are not the best way to solve the underlying problems of a poor country's total wage bill. This is one of the reasons why, as we mentioned in our meeting (and as detailed in this recent article in the IMF Survey) the Fund is committed to use ceilings more selectively and transparently..

Going ahead, we are focusing more on working with governments and development partners to address the underlying issue of civil service reform...

Your paper also addressed other key questions, such as the Fund's policy advice on aid absorption. The recent IEO report on aid to SSA found that for countries with low reserves (below 2.5 months of imports), incremental aid is on average used for strengthening the reserve position, and that when inflation exceeds 5-7 percent, programmed aid-based spending had on average been limited. The IMF does not have a specific policy threshold on aid absorption and does not apply rigid rules or one-size-fits-all: no across-the-board rule for using aid could do justice to the many aspects involved, and be appropriate for all countries. The Fund's analysis of the scope for using aid takes into account many factors, not just inflation and reserves: important considerations are aid volatility, the incidence of shocks, debt sustainability concerns, export competitiveness, the domestic debt burden and microeconomic capacity constraints to higher spending to ensure the aid can be effectively spent.

We are currently drafting two papers that look at the implications of scaling up on Fund program design and on fiscal policies."

Some of the critics seem to forget that a lot of these countries are already in trouble when they call on the Fund.

Related;
Is Africa a Failure?
Crowds of Pupils but Little Else in African Schools
African Growth To Edge Higher in 2007
Africa’s Storied Colleges, Jammed and Crumbling

The role of luck in the space race

The Economist correspondent vists Greenland Space Science Symposium;

"Breakfast teaches me that the Apollo missions were incredibly lucky. Almost every time an Apollo astronaut took a walk far away from the Earth he missed a dangerous spike in space weather by the skin of his well-maintained teeth. One of the attendees has kindly e-mailed his wife to send me a graph (see below). Imagine, he says, if some of the Apollo astronauts had been fried to a crisp by one of these spikes; surely the space race would have taken a different direction. NASA will have to improve its space weather predictions if it is going to avoid what the law of averages has in store.

Over lunch I learn about the compass. That instrument was supposedly introduced to Europe in the 15th century, explains my lunch-mate. His research suggests that this interpretation of history is wrong. Churches built in Denmark during the 12th century were oriented in an east-to-west direction, with the altar in the east. But they are all skewed 18 degrees away from a perfect alignment. This suggests their architects had compasses, because the Earth’s shifting magnetic north pole was exactly 18 degrees away from its geographical pole at that time.

Rodrik wants advice on a laptop

Rodrik is planning on buying a laptop and he needs advice on the model. How about the following from HP;

The Pavilion HDX, which will start at $2,999 and is expected July 25, includes an HD DVD reader and DVD burner as well as a 5-in-1 media card reader, 802.11n wireless, Bluetooth and surround-sound speakers. The screen tilts slightly for easier viewing. The included HDTV tuner allows you to pull in HD channels over the air.

This configuration also includes 2 gigabytes of memory and a 240-gigabyte hard drive, enough for movies and games galore. There is even a removable remote control that lets you pick shows to watch and record as well as skip through music and video. The built-in battery will last about two hours on one charge

.

Though I don't think it's ultra-portable.

Author Podcast- The Reluctant Fundamentalist

Dani Rodrik recommended the book;

I just finished reading The Reluctant Fundamentalist, a splendid little book by Mohsin Hamid. It is about a young Pakistani, a Princeton graduate, who works as an investment analyst in New York. After September 11, he discovers that neither he nor America is what he thought they were. It is a great book for all of us expats in America who went through a renewed culture shock in the aftermath of that momentous event.

And did I say the book had nothing to do with economics? The "Fundamentalist" in the title is actually a play on words. The narrator's job consists of evaluating companies based on their fundamentals

Listen to an interview with author.

Thou Shalt Not- IMF conditions on wage bills

Related to earlier post about Action Aid report on African education and the Fund, the following are some of the conditions related to wage bills on PRGF Programs;

Measures to improve payroll management

• Develop a payroll and civil service roster based on a civil service census or update the registry of staff records (Chad). Complete a census of the wage bill for all budgetarysector employees (Albania).

• Transfer of the budgetary and administrative oversight on the pay, and transfer of paymasters to, the Treasury (Democratic Republic of Congo).

• Cabinet to approve the final plan for the civil service reform covering human resource policy, reviewing the organization and structure of the civil service and addressing wage policy and payroll management (Ghana).

• Establish public service remuneration board (Malawi).

• Completion of a financial audit of the wage bill (Niger).

• Introduce photo verification system for civil servants and teachers (Sierra Leone).

• Submission to cabinet of a timetable for the design of a comprehensive medium-term civil service reform (Azerbaijan).

Measures to streamline the computation of wages
• Determine new mechanism to determine salaries of public officials (Kenya).

• Consolidate all allowance into the salary structure (Malawi).

• Reorganize procedures for paying civil servants based on the recommendations of the external audit of the payroll system (Democratic Republic of Congo).

• Develop detailed schedule of wage adjustments by grade (Malawi).

• Issue regulations to integrate supplementary benefits into the overall salary (Honduras).

Measures to rationalize employment levels
• Eliminate identified ghost workers (Democratic Republic of Congo).

• Implement plan to eliminate vacancies (Nepal).

• Reduce the number of employees in the education sector by 5 percent (Tajikistan).

• Outline the process for reducing the wage bill by 5 percent through retrenchment
(Dominica).

Handbooks and Toolkits

Centre for Good Governance based in Hyderabad is a leading Think Tank in India- some of their publications on management below;

Handbook on General Management for Public Managers

Training Needs Assessment Methodology - A Toolkit

Handbook on Communication Skills

Handbook on Conflict Managment Skills

Handbook on Problem Solving Skills

Handbook on Stress Management Skills

Handbook on Time Management Skills

Handbook on Service Excellence for Public Managers

Why did the lights go out in California?

A premier on the issue from Centre for Civil Society-California Electricity Experience: How and why lights went out in the Golden State

Inflation Targeting and Asset Bubbles

A recent op-ed by Christopher Linglein in the Jakarta Post;

A second flaw in the notion that stable and predictable price increases can be "neutral" with respect to the real economy is in ignoring "bracket creep" for tax liabilities. When incomes rise to compensate for lost purchasing power from a rising price level, individuals may face higher marginal tax rates.

Predictable, consistently-rising ("stable") prices can lead to "phantom" capital gains that reflect rising prices rather than a change in real scarcity. Actions taken to avoid higher tax liabilities tend to reduce the availability of capital. And higher marginal tax rates weaken work incentives that tend to reduce overall labor supply.

Unfortunately, most central bankers think of inflation in the narrow terms of rising consumer prices as measured by an arbitrary indicator like a consumer price index (CPI). But a rising CPI is just one of several possible results of rapid growth in the money supply. Asset bubbles, an increased trade deficit and a depreciating currency are others. All are caused by an inflated money supply, even when the target for a "stable" CPI is hit.

And so a failure of inflation targeting is that it does not and cannot halt asset bubbles. Increased liquidity during the 1990s allowed asset prices to rise without pushing up consumer prices significantly since global competition weakened corporate pricing power. More recently, commodity prices have been rising rapidly even though consumer price rises have remained relatively tame.

Inflation targets guide central bankers on how to implement monetary policy to stabilize prices rather than to minimize the effect of changing relative prices on the real economy. Despite its promise, inflation targeting has contributed to financial instability and asset price bubbles. It would be better for central banks to put tighter controls on monetary indicators such as money growth and credit growth.

Turks the world leader in extra marital affairs

Chart of the Day from The Economist;

"Turks are the least faithful to their partners while Israelis are the least likely to stray. On average, around the world, one-in-five people has affairs, with Americans (deterred by the film Fatal Attraction?) and Britons slightly less likely to cheat and the French and the Nordics more likely to do so."

Should we thank Ataturk?

Is IMF causing problems for African Education?

Action Aid has released a report on African education and the IMF-Confronting the Contradictions-The case against the IMF on education.

The report makes the following major recommendations:

-The IMF should stop attaching specific policy conditions to their lending and surveillance programmes.

-Any advice they give must provide a range of policy options to enable governments and other stakeholders – including parliaments and civil society – to make informed choices about macroeconomic policies, wage bills and the level of social spending.

-Governments should place education and development goals at the centre of their macro-economic planning. They should develop long-term and costed education plans detailing the actual need for teachers and resources for training in order to provide quality learning for all.

-Donors need to keep their promises by committing to close the annual US$15bn financing gap needed to achieve education for all with increased and predictable aid over the long term. There is an urgent need to front-load increases in aid to education.

-Civil society organisations need to develop their own economic literacy so they can better scrutinise government budgets, increase the sensitivity of budgets to the needs of girls, poor people and other excluded groups, and engage in discussions about alternative macroeconomic policies

The report also cites IMF's sister organisation World Bank in support of its conclusions “…the search for macro stability, narrowly defined, may in some cases have actually been inimical to growth. Preoccupation with reducing inflation quickly induced some countries to adopt exchange rate regimes that ultimately conflicted with the goal of outcomes-based stability. Others pursued macro stability at the expense of growth enhancing policies such as adequate provision of public goods, as well as of social investments that might have both increased the growth payoff and made stability more durable”

The Siege of Orleans

History Podcast of the Day- The Siege of Orleans;

Charles VI, a madman and the King of France, was dead and his kingdom hung in the balance. The French aristocracy were at war with each other, English soldiers occupied Paris and Charles’ crown was up for grabs, contested by his own son, the Dauphin, and the seven-year-old King of England, Henry VI. But as the English army pressed down through France, the only thing that seemed to stand between the English King and the French Crown was the city of Orleans.

Looking back on the events that followed, the Duke of Bedford wrote to King Henry VI and declared “all things prospered for you till the time of the siege of Orleans, taken in hand God knoweth by what advice”.

But what happened at the siege of Orleans, did Joan of Arc really rescue the city and how significant was the battle in changing the course of the 100 Years' War and the subsequent histories of England and France?

Pity the American Democracy

Democrats drop Iraq pull-out plan;

"Democrats have finally conceded defeat in their effort to include mandatory surrender dates in a funding bill for the troops, so forward progress has been made for the first time in four months," said John Boehner, the House Republican leader.

See the Special Comment by Keith Olbermann;

Our politics... is now about the answer to one briefly-worded question.
Mr. Bush has failed.
Mr. Warner has failed.
Mr. Reid has failed.
So.
Who among us will stop this war—this War of Lies?
To he or she, fall the figurative keys to the nation.
To all the others—presidents and majority leaders and candidates and rank-and-file Congressmen and Senators of either party—there is only blame… for this shameful, and bi-partisan, betrayal.