Swine flu pandemic

The WHO has now declared the swine flu a global pandemic. There are 27,737 cases confirmed worldwide and the number is growing fast. However, only 141 deaths are confirmed, which gives the swine flu a mortality rate of 0.5%. Compared with the Spanish flu which killed about 10% of those infected it might be seen as a lot less severe.

However, focussing on the mortality rate would be misleading. If the swine flu were as infectious as the Spanish flu, but had a mortality rate of only 0.5%, it could still kill 6,500 New Zealanders or over 11 million people worldwide. That’s a LOT of people and really reinforces how important the spread of the disease is.

On the other hand, 18 million people die every year from poverty-related causes. Is the response to the pandemic proportionate to our response to global poverty? I guess my point is twofold: first, it’s important to put percentages and proportions in context to understand them but, secondly, once you’ve put them in proportion in throws into relief the lack of effort we put into similarly severe problems.

What good is a right to life?

William Easterly has a strong series of posts on his blog arguing that a dialogue in terms of rights doesn’t help the poor:

The only useful definition of human rights is one where a human rights crusader could identify WHOSE rights are being violated and WHO is the violator. …
Poverty does not fit this definition of rights. Who is depriving the poor of their right to an adequate income?

I don’t agree with Easterly’s definition of a right, but I do agree with him that rights are not enough to spur action. Few would disagree that, if there are rights, there is a right to life. Who violates that right when people die of starvation and malnutrition? It is hard to point to a person or institution responsible, but that doesn’t mean that the right doesn’t exist.

Wherever there is scarcity of resources there will be a problem upholding people’s rights, as defined in the Universal Declaration of Human Rights. The problem is that the existence of a right doesn’t guarantee the means or resources to exercise the right. That’s what Easterly is driving at here: if we focus on whether people are accorded rights, we lose sight of how to provide the means to allow people to exercise them. Read more

Kiva: Individual microlending

When looking at Questionable Content (it is a webcomic – I’m addicted to watching the guy develop his drawing style!) I saw a link for a site named Kiva. To explain what this is I will leave it up to the Kiva about page.

Kiva is the world’s first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs in the developing world.

It is so incredibly cool – it lets you loan money to individual entreprenuers in developing countries. Instead of giving money to a charity as a black hole you are giving money directly to someone who you believe will make good use of it – furthermore, you are pretty likely to get you money back!

This is a great way to incentivise capital transfers and charity – seriously cool.

Is anyone keen to join a TVHE Kiva group – I’m sure I can rope at least the other authors into it 😉

Slavery and growth

Many writers have noted that colonisation contribute to the sad state of many African economies today. Now Nathan Nunn claims that the slave trade may also have had a long-term impact on economies. The author

…find[s] a robust negative relationship between the number of slaves exported from a country and current economic performance. To better understand if the relationship is causal, I examine the historical evidence on selection into the slave trades, and use instrumental variables.

This analysis indicates that “…it was actually the most developed areas of Africa that tended to select into the slave trades”, which points to a causal relationship running from slavery to poor economiic performance. The author suggests that the reason might be that “…procurement of slaves through internal warfare, raiding, and kidnapping resulted in subsequent state collapse and ethnic fractionalization.”

Yet another reason why the West is morally required to help African nations out of their current strife?

The new SAP in Iraq

A commenter on the ‘Democracy and Growth’ post below said that he didn’t think “…growth was ever a putative justification for the invasion of Iraq”. While that may be the case, it didn’t stop the US from using post-war Iraq as a playground for a few ideologically driven economists. Using a regime that reminds one of the IMF’s widely criticised Structural Adjustment Programs (just Google it if you think I’m being selective in my link choice here), the US has drastically reformed Iraq’s economic policy.

Dismantling the public service, privatising much of the public sector and removing any bias towards Iraqi companies in the granting of contracts has resulted in massive unemployment and poverty in the formerly wealthy nation. Dani Rodrik links a couple of other interesting article in this post.

Admittedly, there is debate over how well the Iraqi economy is doing these days. However, whatever the goals of the invasion, they could have done better in the aftermath than pursue policies that even the IMF is now moving on from. Development economics has come a long way since the inception of SAPs and the reconstruction of Iraq was a great opportunity to show what can be done.

Democracy and growth

One of my favourite development economists, Daron Acemoglu, has a new paper out. Acemoglu is generally of the view that a country’s level of wealth can be traced back to the country’s institutional development. In a fascinating earlier paper he argued that the institutions set up by European colonists are a major predictor of the current wealth of colonised nations. His new paper proposes that the wealth of a nation is not correlated with the level of democracy in that country, nor is it correlated with regime change towards democracy in the country.

It seems that a trend among Western democracies is to promote democracy as the way forward for developing nations. This has particularly been the case with the US’s recent foreign policy under the Bush/Cheney regime. Does this paper suggest that efforts to ‘nation build’ and push countries towards democracy does little for their economic well-being? Hopefully, it will force nation-builders to be more rigorous about the way that they justify intervention in favour of democracy in developing countries. Suggesting that it’s the one, true path to economic growth will no longer be enough.