Tuesday, December 31, 2013

The Penn Effect plays out in the BRICs: Inflation cuts into GDP gains as experienced by the people

There is a useful article in The Economist describing why the increase in the Gross Domestic Product (GDP) of a developing country overestimates the increase in purchasing power of the people of that country.

The Penn Effect: "countries with higher incomes consistently had higher prices of domestically produced goods (as measured by comparable price indices), when compared at market exchange rates."

A country can import some goods and services. However, you have to be physically present to get your hair cut, or to buy fresh bread, or to get your teeth cleaned. These are called "non-tradable". In a just country the people who perform these functions see their pay increase as the per capita GDP increases. while the cost of imported goods and services does not increase with per capita GDP. If you think about it, as the GDP of your country increases, you can buy proportionately more imported goods and services, but less than proportionately more non-tradable services. Essentially there is an inflation in the prices of some of the market basket of goods purchased by people in a country as its per capita GDP increases.

So the rise in per capita GDP overestimates the increase in real income of people. How does this work out. Here is a graph provided by The Economist:

What the founding fathers believed about the country they founded.

Monday, December 30, 2013

Most Republicans Report Not Believing in Evolution in New Study,

Republicans are less inclined than either Democrats or political independents to believe in #evolution. The gap between the parties has grown by 14 points since 2009. http://pewrsr.ch/KflcPb
The Republicans have gone from 54 percent reporting belief in evolution in 2009 to 43 percent in 2013. That difference is too great for it to be the likely result of sampling error, especially from Pew Research Center which has a great reputation for excellent survey research. How is it that more than one in ten Republicans changed their reported belief in evolution in four years? Whatever scientific evidence has come forth in that time has supported the theory of evolution. Scientists have observed evolution in the field.

It is disturbing that only two-thirds of Democrats and Independents report believing in evolution, but truly sad that fewer than half (and going down) of Republicans do. This is especially sad in that so many states are now controlled by both Republican legislatures and Republican governors.

Rules on getting information

One of the rules they teach doctors is not to order tests on patients if they will not use the results. Lets think about other rules related to the gathering of information.

Think of a patient who has either health problem A or health problem B. If he has A, then a treatment exists that will cure the problem. If he has B, the treatment will not cure the problem, but will do no harm. There is no treatment for B except what an old friend used to call "the tender elixir of time". There is a test which costs about the same as treatment which is pretty good at establishing whether the patient has condition B. Clearly, a doctor should simply prescribe the treatment and not the test.

If there is a distinction without a difference, don't bother to make the distinction.

If you need to understand something, the more direct the experience, the better the information you get is likely to be.

Reading is dangerous. Be careful getting information from books. Be especially careful getting information from books that are based on other books that are based on still other, earlier books.

When reading, remember that words change their meaning. I was thinking about the biblical word "begat". Once there was only one way an author or reader could interpret the word "begat". Now we have that traditional way, artificial insemination, in vitro insemination, and for some animals, cloning.

When reading translations, remember that words in a source language do not always carry the exact meaning that the reader of the translation infers. There are shades of meaning that can be learned with experience communicating in a new language, and that can be clarified by questioning someone who is truly bilingual, that are not conveyed in written translations.

When reading translations, remember that mistranslation is not unknown. (I loved reading "English as she is Spoke")  I remember a friend who thought it would be wrong to read Dostoyevsky translated into English, but did not read Russian. So he read Dostoyevsky translated into Italian, which he had learned as a second language. Translations of translations of translations are likely to have more errors than single translations. Old translations of translations are likely to have changes in meanings compounding mistranslations.

London Grammar - Hey Now

Sunday, December 29, 2013

Americans' Belief in the Theory of Evolution -- At the bottom just above Turkey

Frequency of Responses to the Statement:
"Human beings, as we know them, developed from earlier species of animals."

Source: National Geographic
I don't know whether to be more upset that two out of five Americans who say that that statement is false, or the one out of five who say that they are not sure. (Data from 2010)

American's should take back Lincoln's Republican Party

Our progress in degeneracy appears to me to be pretty rapid. As a nation, we began by declaring that "all men are created equal." We now practically read it, "all men are created equal except negroes." When the Know-nothings get control, it will read, "all men are created equal except negroes and foreigners and Catholics." When it comes to this, I shall prefer emigrating to some country where they make no pretense of loving liberty--to Russia, for instance, where despotism can be taken pure, and without the base alloy of hypocrisy.
ABRAHAM LINCOLN, letter to Joshua F. Speed, Aug. 24, 1855

Which is the modern party that developed the Southern Strategy to enroll southern racists after the modern Civil Rights legislation was passed by the Democrats?

In which party do you find those whose rabid opposition to President Obama is based on his Kenyan father's race?

In which party do you find the politicians who have opposed immigration reform legislation, the acceptance of Latinos who are already living peacefully in this country, and in favor of bigger walls and more armed forces to keep immigrants out?

In which party do you find the people who have said that Pope Francis is a Marxist?

Tho people who compose that fringe should not be allowed to define the policies nor rule the legislative agenda of Lincoln's party.
It is rather for us to be here dedicated to the great task remaining before us -- that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion -- that we here highly resolve that these dead shall not have died in vain -- that this nation, under God, shall have a new birth of freedom -- and that government of the people, by the people, for the people, shall not perish from the earth.
ABRAHAM LINCOLN, The Gettysburg Address, 1863

Saturday, December 28, 2013

A thought about the logic of development projects.

An African School Class
In logic a key idea is the logical "and". A statement such as "A and B" is true if and only if both A is true and B is true. This came to mind when I was listening to a Book TV interview of  M. Night Shyamalan about his book I Got Schooled: The Unlikely Story of How a Moonlighting Movie Maker Learned the Five Keys to Closing America's Education Gap. He said something like
(A)t a dinner when Penn Presbyterian Medical Center's chief medical officer explained that — if strictly adhered to — a regiment of balanced diet, good sleep, exercise, no smoking and stress management "beats every pill" when it comes to keeping patients healthy. 
The point was that the prescription worked if and only if all five elements were followed. Don't do any one of the five and the patient is no healthier than the rest of us.

Shyamalan thought there must be similar tenets that would restore the health of our ailing schools. His presecription: No Roadblock Teachers, The Right Balance of Leadership, Feedback, Smaller Schools and More Time in School. But he too believes that the prescription for schools works if and only if all five elements are employed together -- the "logical and".

I suppose I would provide a different set of conditions:

  • Healthy, well nourished kids who don't have serious disabilities (such as uncorrected vision problems, uncorrected hearing problems, or brains that failed to develop normally due to malnutrition and illness as infants.
  • Supportive parents, ideally educated themselves and participating in lifelong learning.
  • An appropriate curriculum. (Teach kids what they will need to excel in the world in which they will live the rest of their lives).
  • Good teachers.
  • Who have the time and resources to teach well.
I note that a lot of statistical analysis is based on the assumption that the effects of such variables are additive, but that is not true for the logical and -- in such a situation, all of the preconditions must be met for the suite to have its combined effect.

I think this situation is true in many development situations. High yield for a crop requires good soil, good seed, good weather, and good luck to avoid diseases and pests. Put all the other conditions in place, but have the crop killed by flood or drought and the yield is zip. So too a host of locusts or a deadly blight could destroy a crop. I could site other examples.

In evaluations of development projects, do we recognize all of the factors that must be present for a project to succeed? Looking at an approach, do we say that of a large number of projects, so many failed because factor A was not present, so many failed because factor B was not present, etc.?

Interesting view of drug policy by conservative Nobel Prize winner

Milton Friedman won the Nobel Prize for Economics, and is known for his very conservative economic views. I am not qualified to judge his views on the economics of U.S. drug policy, but it seems clear to me that there is something wrong with a policy that puts so many people in jail, yet leaves us with so significant a drug problem.

I do have one quibble. It seems to me that Professor Friedman does not take into account the different susceptibility to addiction in different people. As far as I know, some people will experiment with addictive substance and not become addictive, while others will experiment in the same way and become addicted. You may blame people for the experimentation, but perhaps not easily addicted people for the addiction.

Thursday, December 26, 2013

A World Hunger Map

This map is taken from a nice interactive display of food availability over the past half century, provided by The Economist. The site makes the case that while population has increased, food production has increased even more rapidly and there are more calories available per person worldwide than there used to be. That is not true however for all countries -- check the site.

In the United States, there are more than enough calories for everyone to be well fed. Hunger in America is due to our willingness to see some go hungry.

On the other hand, some countries have barely enough food to feed the population, and any failure to distribute the food evenly means that some will be very hungry.

The improvement of health in two decades

This is from the Global Burden of Disease Visualizations section of the Institute for Health Metrics and Evaluation.

Wednesday, December 25, 2013

Ingolf Dahl plays Schroeder playing the Pathetique Sonata

Ingolf Dahl, the stepfather of my friend Anthony Linick, took us and our friends hiking and camping many times during my youth. He was also a professor of music at USC, a composer, a conductor, and a fine pianist.

He is credited with recording the Pathetique Sonata for Schroeder. I think he must have enjoyed the idea of ghosting this video.

Among his friends that I know of were Igor Stravinsky, Leonard Bernstein, Michael Tilson Thomas, Benny Goodman, Edgar Bergen, Victor Borge and Gracie Fields.

Happy holidays and a happy new year!

Tuesday, December 24, 2013

Its a good investment to buy great gifts

On the news last night I saw a guy saying that gift giving at Christmas made bad economic sense. He may have been right in saying that if a husband and wife each went out with the money to buy their own gifts, they would get something that would be more useful during the following year. He seemed to feel that there should be a role for exchange of pre-loaded debit cards as X-mas gifts. Bah! Humbug!

Look at the standard supply demand curve I have posted above. The red line reflects the prices people are willing to pay for a product. Essentially, people are ordered in a list of decreasing willingness to pay. For any quantity, all the people symbolized to the left of that quantity on the red line would be willing to buy at the price identified on the y axis.

The green line in the same sense symbolizes the willingness to sell. For any specific quantity on the x axis, all the people to the left would be willing to sell at that price.

The market clearing price is that where no additional buyer is willing to pay more, and no additional seller is willing to sell for less.

Now any buyer who is willing to pay more but buys at the market clearing price gets a "consumer surplus" -- he/she is getting a product he/she values more than it costs. Similarly, any seller who is willing to sell for less but sells at the market clearing price gets a "producer surplus" -- he/she is getting more for the product than he/she is willing to sell if for.

The point is, the value someone ascribes to a product is a function of the person, not the product. That is the way that the economy works.

An Example

Think about a husband who for some reason is unable to shop for a present for his wife, but asks his adult daughter to shop for a gift that he will make to her mother. He says, I am willing so spend up to $100 for a nice gift, and I will give you $20 to do the shopping. Thus the value to him of giving a nice gift to his wife is $120. Say the daughter refuses the pay for shopping (since she likes to shop and would be shopping during the season anyway), and buys a gift for $75. Now Dad has a $75 present and a $45 consumer surplus.

Now think about the wife. Of course she might return the present for a store credit, and go buy something with the credit that she likes better. Then she gets something she values at $75 and she gets an added consumer surplus of what she would be willing to pay for that product minus the $75 -- say $30. Thus the family for a total investment of $75, gets a $75 product plus a $45 consumer surplus for the husband and a $30 consumer surplus for the wife.

Moreover, if by some chance the gift should strike a sentimental chord, and the recipient values it above any possible value for an exchange, that further increases the value to the family.

Now I enjoy shopping for my wife's Christmas present, and as far as I can see my wife just enjoys shopping. (She will go out for a morning shopping with a friend, buy one thing, and then return it in the afternoon. Why would she do that if not for entertainment?) So there might be more benefit to us for doing the shopping.

Finally, think about the following scenario. A family has the custom of gathering together on Christmas Eve to exchange gifts. This Christmas all are present on the 24th except Dad, who is trying to get back from a business trip. He gets in to the local airport in mid afternoon, the last flight in. There is a blizzard.  It is going to be almost impossible to get home for the gift opening. The airline will, in the Christmas spirit, put him up at the airport hotel, paying the bill. Alternatively, he can get a taxi driver to make the trip home by paying a big bonus fair. How much should Dad offer? If he would pay $100, then he values the experience of exchanging gifts on Christmas Eve at that amount. That value too should be included in the valuation of the gifting. And of course, his wife will also value the experience of face to face gifting at the big event.

There is a big economic surplus to Christmas gifting in the family.

Monday, December 23, 2013

Who says the rate of invention has gone down?

Source: The App Economy

"There are roughly 827,000 apps available for iOS & 670,000 for Android". That suggests a huge number of people are using their creative efforts in this field.

Development as Urbanization and Structural Transformation

Fundamentally, development is about systematically doing things better than they were done before.   The fundamental objective of development is to establish a widely effective, indigenous process of rapid improvement in the way things are done. (From an earlier post.)
I recently posted on "Development at the Village Level". I wish to expand the thoughts expressed in that post. Think of development as institutionalizing a nationwide process in which many, many things are done better and better over time.

Village development is a theme of great importance to the poorest nations; in them subsistence agriculture employs large numbers of people and produces much of the GDP. However, as people in the rural areas increase their productivity, fewer will be needed to work the land, and a smaller and smaller portion of the national population is needed to meet the needs for food and fiber. (This is true even including the needs for agricultural exports.) With fewer people working the land, people will move from farms and villages to towns and cities. Moreover, the demand for manufactured goods and for services will increase, and jobs will be created meeting those demands.

This post is about urbanization and structural change of the economy as development processes. Both depend on cultural change, and both lead to cultural change, but I don't really understand those complex cultural processes well enough to venture to discuss them.


I recommend these three videos by Steve Holloway introducing Central Place Theory if you are not familiar with the subject:
They explain that there is a natural process by which towns and villages develop in any society. Villages and small towns will provide common goods like groceries to the people that live in and near them. Larger towns and cities will provide a more diverse variety of goods and services, including those that are in less demand and thus requiring a larger potential customer base to service. As is obvious, the stores in cities serve the residents of cities but also from smaller towns and villages around them.

What Holloway does not say is that businesses serving consumer needs tend to flock together, in part because consumers like to shop where there are a number of stores. Thus we see suburban shopping malls, and downtown business districts. Thus the catchment area for a town will be larger if it has a larger variety of goods on sale.

Think of health services. In the village in a poor country, you might find paraprofessional or traditional health workers -- say a health promoter or a midwife. People from the village might have to travel to the nearest town to find a health center, and to the nearest city to find a good hospital. University teaching hospitals would be found only in a few cities, typically the largest. While learning would take place at all these levels, technological innovations would normally come from the outside, or trickle down from the teaching hospitals, medical schools and ministry of health.

Education might be seen as similarly geographically hierarchical. Villages and urban slums might have their primary schools, but with high drop out rates, fewer children would attend secondary schools than primary, and fewer would get tertiary schooling than secondary.  Secondary schools would be located in towns rather than villages; tertiary schools would be even fewer in number and often located in still larger towns and cities. In the United States, for example, while there are thousands of colleges and universities, there are just over 100 research intensive universities that do most of the PhD training in sciences; each of these will draw even international students.  While teachers and school administrators can be expected to learn how better to do their jobs on the job, good school administration should be innovating and improving opportunities for students to learn. We also see colleges and universities providing opportunities for teacher ongoing education, and computer hardware and courseware firms providing technological innovations to the schools.

Holloway also fails to say that towns and cities are also where manufacturing takes place. Factories tend to be located where they can obtain the raw materials that they need for their production, and where the infrastructure allows; they need power and access to appropriate transportation, as well as communications. Factories also need people, but people will be drawn to move to towns offering jobs in factories when the local labor force proves too small to supply them. Thus, contrary to Holloway's simple model, towns and cities are often located both to serve the needs of both stores and factories. 

We also know that manufacturing companies tend to cluster. Bigger towns having more factories allow for positive spill-overs among them. Factories manufacturing intermediate goods sell to factories manufacturing final goods via markets for those intermediate goods. Tool makers, engineering firms and other service firms spring up to serve the factories. Trade schools prepare skilled workers to serve in the factories. Banks specializing in serving the industrial financial needs come into existence.

Government decisions influence the growth of towns. These decisions include where to build roads, whether and what kind of tax incentives to offer to companies to locate in their towns, the schools governments provide to educate people who will become workers, and the security they provide to property and citizens. But towns also grow where the natural environment is propitious, which is why one sees cities on sea coasts and large rivers, and knowledge-based industries in locations with good climates and physical beauty.

Obviously too, the decisions of individuals and of private firms also influence the growth (and decay and death) of towns and cities. Changing the ways these decisions are made on a scale to affect the rate and character of urban change clearly is a cultural change -- not simply a matter of creating a new government agency or policy.

One aspect of development then is improving the ways towns and cities are created and grow, and how they incorporate productive activities within them. That aspect of development includes improving decisions as to how towns and cities should be supported when their economies become troubled, and when and how they should be allowed to depopulate when their purposes are challenged. This urban development involves decisions made by individuals, families, communities, governments and businesses. 

Clearly many countries are concerned that things are not going well in this aspect of development. The United States is concerned about "rust belt" cities that have lost their industrial purposes and are decaying and perhaps dying.  Other countries are concerned that their largest cities have grown so large as to be unstable. Still others are concerned that the rate of urban growth, and especially the rate of growth of slums inhabited by new immigrants is unhealthy.

As the graph (taken from an article in The Economist) shows, comparable societies have different patterns of urbanization. The United States has bigger cities than does the Euro zone, even though both have similar total populations. The article further states:
Differences in metropolitan populations may help explain gaps in productivity and incomes. Western Europe’s per-person GDP is 72% of America’s, on a purchasing-power-parity basis. A recent study by the McKinsey Global Institute, the consultancy’s research arm, reckons that some three-quarters of this gap can be chalked up to Europe’s relatively diminutive cities. More Americans than Europeans live in big cities. 
Structural Change

Traditionally we divided the economy into primary industries (farming, mining, forestry, fishing), secondary industries (e.g. manufacturing) and service industries (e.g. financial services, retail and wholesale trade, education, health). I recently posted graphs showing how the U.S. GDP has evolved since World War II, with primary industries greatly declining in relative importance, as service industries increased greatly in importance.

The graph above shows how U.S. employment has evolved since 1972., as the portion of the workforce employed in manufacturing has been significantly reduced (both by automation, and by a shift toward more capital intensive and less labor intensive manufacturing), while employment in the service sector has become dominant.

Note that the GDP has grown fairly consistently since World War II (with the exception of the recent Great Recession), but median household income has not grown greatly in recent decades, with the greatest part of the increase in GDP captured by the most affluent.

The graph above, using that same tripartite classification, shows that some regions are still dominated by the primary sector (green, notably in Africa), others by services (blue, notably North America, western Europe, and Australia), while a few areas (notably China)  have redder coloring indicating their economies' greater industrial dependence.

A more recent taxonomy divides workers into four groups
  • Agricultural
  • Working, including all blue-collar physical work, including construction, transportation and maintenance
  • Creative -- workers in science and technology, arts, culture and entertainment, healthcare, law and management, whose occupations are based on mental or creative labor
  • Service -- people who prepare and serve food, carry out routine clerical and administrative tasks, provide home and personal health assistance, do janitorial work, and the like.
The following graph gives an estimate of the evolution of the proportions of U.S. workers in each of these four groups since 1800.

Thus development is seen as a process in which the economy turns from extracting things from nature, to making things, to providing services, and perhaps more recently, to creating ideas and conceptual products. Development can be seen as a nation first satisfying its needs for food and shelter, to then also satisfying its needs for goods (better clothing, housing, transportation), and then to improving health, educational and government services and making it easier to obtain goods and services, to finally entertaining itself.

How does a nation move through this progression? Clearly its workers must become more productive in the tasks that that nation is already carrying out, while new enterprises must be created to accomplish things new to this specific society. For poor countries, the new enterprises will often be created by transferring technology from abroad, perhaps with green field financing and foreign managers and technical experts. Even then, such enterprises will benefit from related experience within the country, and may be located in clusters of related enterprises (with their supporting educational, training, financial and other services). Countries already at the forefront of technology will emphasize invention. Sometimes, of course, even in poor countries, nationals will invent their own new products and processes, and create their own enterprises to utilize the processes to produce the products. However they arise, people will have to learn to carry out the tasks in these new enterprises, and to find ways to perform the tasks better over time.

Of course, society will have to create the welcoming environment to encourage appropriate evolutionary transformation of the economy. It will have to accept a process of creative destruction, allowing outdated economic activities to end, and encouraging new ones to start. It will have to be agile in dealing with change. Corruption is destructive to the process, as is rent seeking by those in power. A dynamic society -- one that is quickly developing through the transformation of its economy -- should expect frequent failure of new enterprises and enterprise zones, and learn from them. It should help the members of the society accommodate to the dislocations that the changes will involve on the individual, household and community level.

Several things seem obvious. Economic transformation and economic growth are intimately connected, and indeed a nation that successfully manages the process of economic transformation for decades has almost by definition improved per capita GDP. However, the process of developing new industries that take full advantage of the resource endowment of the nation is complex and people differ greatly on how it should be done. Moreover, economic transformation also involves unsuccessful experiments and destruction of once useful industries when they have lost their competitive advantage -- both processes in which some people lose. The best way to institutionalize the destructive aspects of economic transformation is the subject of uncertainty and controversy.

Monitoring and Evaluation

I began this short series on development thinking about monitoring and evaluation, and especially about the use of randomized controlled trials (RCTs).  I started my career in international development as a Peace Corps volunteer, and I recall disasters. One such disaster was a community that was convinced to make thousands of cement reinforced adobe bricks and then found out that the residents could not get financing to build homes from those bricks because they would not survive in the local climate. People have too often been encouraged to adopt the wrong technology, and RCTs can help to reduce that problems.

However, RCTs would seem to have little place in monitoring the processes of urbanization and structural transformation. Those seem to me to be complex, specific to individual regions and countries and dependent on historical and cultural details. Moreover, urbanization and structural transformation are related to each other and fundamental to development. How then would one include appropriate monitoring and evaluation of these processes so fundamental to development?

Clearly, M&E should be data based/ There should be data on urbanization, not only from census records, but perhaps also from new technologies -- perhaps drone based remote sensing and computerized geographic information systems. There should be data on production and employment in the economy, with finely disaggragated classification of the productive enterprises, linked to the same geographic information system.

Clearly, M&E should be based on historical data and trend analysis. It should also be based on projection of trends of urbanization and economic transitions into the future. I would hope that the projections of these trends in urbanization and transformation of the economy would involve well developed models, based strongly on theory, and incorporating current and historical data.

Do benchmarks have a use? I guess so. Still, deviation from a benchmark would need to be interpreted, and appropriate responses developed.

My preference for judgments related to the monitoring and evaluation of these development processes would be a two part effort:
  • professional appraisal done by economists, industrial development experts, demographers and others with strong theoretical foundations and analytic interests, and
  • political appraisal done by legitimate decision makers from government, the private sector and civil society.

Sunday, December 22, 2013

A thought on computer models

I find people responding to news articles about inferences that people have drawn from large scale computer models, and worry. I have debugged models, and it is hard to do. It is very easy for errors to creep in. Indeed, I spent time early in my career checking a linear programming package that had been supplied to our computer center, finding errors in the code. It is hard enough to check that a large system of equations adequately describes the situation of interest, and that the parameters have been correctly estimated, and correctly entered, without worrying that the solution software will enter its own errors.

Today software packages are more reliable than they were in the bad old days, but I suspect that many of the packages are also far more complex than they were in those days.

Essentially mathematical models extrapolate from basic assumptions. If one assumption is wrong, the extrapolation may well be wrong. A way to protect against wrong assumptions is to do sensitivity analysis, checking to see how sensitive the important results are to each assumption. If the accuracy of specific assumptions is especially important to the credibility of the result, those assumptions can be double and triple checked. But for that to be effective, the modeler has to be aware of all the assumptions in the model, and that is not always true.

Ideally one wants the theory on which a model is based to be correct. Unfortunately, correct theories are not always easy to come by. One possible use of modeling is to extrapolate from known conditions as if the theory is true, and look for situations in which the extrapolation is inaccurate.

An example that bothered me today is from an article in ScienceDaily: Scientists Discover Tipping Point for the Spread of Ideas. The article begins:h
Scientists at Rensselaer Polytechnic Institute have found that when just 10 percent of the population holds an unshakable belief, their belief will always be adopted by the majority of the society.
I would want a very good model, built on very strong theory with at most very modest assumptions, to justify such a sweeping generalization.  I would also want to be sure that the details were right. In this case, however, I doubt on the face of it that the statement is true.

Lets do a  thought experiment. I have been reading The Reformation by Diarmaid MacCulloch, so lets assume that 10 percent of the population has an unshakable belief that the teaching of the Catholic Church is right about the correct practice of Christianity. Let us also assume that 10 percent of the population has an unshakable belief that the position of Martin Luther is right about the correct practice of Christianity.  As the Pope and Luther would both affirm, it is not possible to believe both are correct simultaneously. Thus in this example, the prediction of the ScienceDaily article will not hold; but the article says it will always hold. Woops!

Friday, December 20, 2013

Two illuminating maps about education

High School Completion Rate by County

Bachelor Degree Holders by County

These two map come from an article in The Atlantic.

The light areas in the top map show what the article calls the southern dropout belt, where too many people don't graduate from even high school. Do you believe that it is just coincidence that these are areas with lots of poor blacks and Hispanics? I perceive that our national heritage of prejudice results in lack of incentives to minority kids in the dropout belt and lack of resources for their schooling. I suspect that these regions are economically as well as culturally poorer because they don't have as many educated people.

People with college degrees cluster in cities, especially the large cities on the coasts and in Colorado. I suppose part of the effect is due to their moving to places where there are jobs taking advantage of their educations, and thus paying more. Of course, employers of degree holders tend to locate in places where the amenities help them to attract college graduates.

Diana Krall - All or Nothing at All

USA is Number 6.

Countries by 2011 GDP (PPP) per capita
Wikipedia: List of countries by GDP (PPP) per capita

Thursday, December 19, 2013

US GDP 1947-2011

These two graphs were published in Roger Pielke Jr.'s Blog today.

Clearly there has been a great deal of economic development in the United States since 1947. The population is much larger now, but it also lives better. That development has been marked by a major transformation of the structure of the economy. Extractive industries have dwindled to invisibility in the statistics. Manufacturing is a smaller portion of the economy, while finance and retail trade have grown.

Pielke provides us with data on the proportion of GDP by sector.

  • Government in 1960: 13.2%; in 2011: 13.2%
  • Agriculture & manufacturing in 1950: 34%; in 2011: 13%
  • Finance & services in 1950: 26%; in 2011: 52%

The newest UN World Economic Situation and Prospects is out.

"Gross domestic product in the United States was expected to increase to 2.5 per cent in 2014, while Western Europe was expected to grow by 1.5 per cent as it emerged from its recession.  Expansionary policies in Japan seemed effective, although forthcoming structural reforms were less certain.  Growth in Japan was projected at 1.5 per cent for 2014."

Read the press release.

Here is the report website.

The United States Economy is Very Unequal

This is data from the Organization of Economic Development and Cooperation, the rich country club. It is limited to data on OECD members.

While the United States is 10th most unequal in income before transfer payments, it is second only to Chile after those payments. That is, our safety net is not working as well as other developed nations.

Chile is in fact a much poorer nation than the rest. It was under the right wing Pinochet dictatorship from 1973 to 1990, Michelle Bachelet was recently elected President of Chile, and apparently she will try to overhaul the Constitution dating back to Pinochet. Her economic policies will apparently seek to maintain economic growth while improving health and education services.

Wednesday, December 18, 2013

Thinking About Development at the Village Level

Development: The process of doing many things better and better.

Several days ago I posted some thoughts on the (limited) use of randomized controlled trials (RCTs) in testing the values of innovations in the context of international development. The basic point was that in my opinion, social and economic development is a process which produces many changes, and only some of those changes are suitable for analysis by randomized controlled trials. The development process itself is advanced by cultural change, and I don't see how the factors that bring about and enhance that cultural change can be studied through randomized controlled trials.

In the recent past there was some controversy over the application of randomized controlled trials to the Millennium Village Pjoject. According to the project website:
With the help of new advances in science and technology, project personnel work with villages to create and facilitate sustainable, community-led action plans that are tailored to the villages’ specific needs and designed to achieve the Millennium Development Goals. Simple solutions like providing high-yield seeds, fertilizers, medicines, drinking wells, and materials to build school rooms and clinics are effectively combating extreme poverty and nourishing communities into a new age of health and opportunity. Improved science and technology such as agroforestry, insecticide-treated malaria bed nets, antiretroviral drugs, the Internet, remote sensing, and geographic information systems enriches this progress. 
Over a 5-year period, community committees and local governments build capacity to continue these initiatives and develop a solid foundation for sustainable growth.

There are two mixed approaches here.
  • One is working with the village to create an action plan. If done well, that might help to institutionalize a process in the village of planning for cooperative efforts to overcome development problems.
  • The second it technology transfer of solutions to the specific problems identified.
I rather like the idea of developing village self governance to foster a proactive policy of identifying and solving problems. Certainly I like the idea of using improved technology to improve agricultural productivity and health.

Perhaps more importantly, sometimes such an approach can be used to help a village out of a poverty trap. A village that creates a dirt road to the nearest highway may make it possible to get crops to market, and get to the local market town for a variety of purposes. A village that gets telephone connectivity that it had not had before may similarly get lots of benefits that help it break out of poverty. Such in innovation may lead to a number of positive developments which eventually change the culture of the village, leading people to be less fatalistic and more active in problem solving.

I doubt that RCTs would work to evaluate either the effort to build local planning capacity, nor to evaluate the specific innovations chosen by the individual villages. That is not to say that quality in those respects would not matter, but qualitative evaluative approaches might better be applied than RCTs.

I think a fundamental basis for village development is learning.  People should be learning how to do new things and especially how to do better the things that they are already doing. Farmers should be learning how to grow better crops and to grow their crops better; builders should learn how to build better buildings and to better build buildings.

I rather like the idea put forth in the Positive Deviance Initiative. This organization surveys people in a village to find those who perform some function best, and then encourage others to learn from them. For example, they can survey young children in a village and see which ones are healthiest and best nourished (often the better nourished are the healthiest). It has turned out that the mothers of these "positive deviant" children are better at raising the kids -- perhaps finding more protein in the village to improve their diets, or maintaining a more hygienic environment. Those mothers have proven more than willing to share their approaches, and neighboring mothers have proven willing to learn from them.

Note that learning in a village does not just mean individual learning, nor school learning. It has been shown in hundreds of studies that when a new cultivar of an important crop is introduced in a village, some early acceptors try the cultivar first. Often such a cultivar doesn't serve local needs -- it doesn't grow in the local conditions, or it proves vulnerable to local diseases or pests, or the folk simply don't like the product. If it proves good, cultivation of such a cultivar can spread quickly as other farmers copy the early acceptors. Thus the village learns collectively whether or not a new cultivar works, and farmers learn together to grow the useful ones.

In some villages, people will form cooperatives. For example, a growers cooperative might be formed to save money through bulk purchase of farm inputs (seed, fertilizer, pesticides, fuel), to share farm equipment, to provide storage for produce, or to market produce. All of the learning techniques used by organizations can them come into play, including hiring needed expertise, moving employees to where their skills are more needed, or obtaining training for key employees.

One of the more important forms of community learning will be in institutionalizing contacts between the village and others. Presumably the Millennium Villages Project helps the people in the villages to improve contacts with local government, with sources of technical assistance, and perhaps with markets for the things produce in and sold out of the village. Here I am talking about institutionalizing new ways for members of the village and people outside to deal with each other.

Ideally, a village culture will change through such experiences. People in the village will become more proactive in identifying problems, more accurate in identifying important problems that will yield to their efforts, and better at solving those problems. They will become more active in learning to do more things better and better.

The purpose of this post is not to support any specific project, but rather to describe my view of development, as it plays out at the village level in poor countries. In those countries, a large number of people still live in rural areas practicing subsistence agriculture. Economic development will depend on the productivity increasing in the villages so that a smaller portion of the national population can provide the food and fiber needed by the rest of the country. As we know, that change will also lead to people moving from the villages to towns and cities, both because they are no longer needed on the farms and because they can be more productive elsewhere.

Bill Moyers Essay: The End Game for Democracy

Moyers is an old fashioned liberal. I don't always agree with his view of the world. But I think he is right here in saying that the people with influence in Washington are too often concerned with things other than the welfare of the nation, and that the news media don't provide us with the information we need to assure that the public interest is paramount in legislation and regulation.

Monday, December 16, 2013

Eisenhower Warned About the Military Industrial Complex

Veteran's Benefits are not military spending.
Nuclear Bombs are in the Energy Department Budget.
Spy satellites are in the NASA Budget.
State Department hiring mercenaries is in the Government Budget.
Department of Homeland Security and Coast Guard are in the Government Budget.
Treasury Department pays pensions to military retirees and widows and their families.
Interest on borrowing for past Military Spending is not part of the Military Budget.
When everything is included, the $1.4 Trillion on Military Spending exceeds what America gets from Individual Income Tax!

Pete Bobb

John Coltrane and Johnny Hartman - My One and Only love

Look at the two maps

How Much Do Teachers Get Paid?

There seems to be some relation between paying teachers well and high SAT scores. What I think of as the northern mid-western states have both good teacher salaries and high SAT scores.

 Of course, salaries are relative, and some states with low costs of living and relatively lower pay in alternative jobs make lower salaries more acceptable to teachers.

If a smaller portion of kids in a state apply to schools requiring SATs, then the average SAT score might be higher. That would be true if the smaller portion were the more academically gifted students in the state.

Correlation is not causation. It may be that some factor causes kids to score well and teachers to be paid well. For example, communities that value education highly might be willing to pay more to teachers and encourage kids more to excel in school.

Sunday, December 15, 2013


Even a stopped clock is right once and a while.

"There is nothing so easy as to persuade people that they are poorly governed. Take happy and comfortable people and talk to them with art of the Evil One, and they can soon be made discontented with their government, with their rulers, with everything around them, and even with themselves. This is one of the weaknesses of human nature of which factious orators make use of to serve their purposes." Thomas Hutchinson
Thomas Hutchinson
Hutchinson was the scion of an old Massachusetts family who was the Governor of the Colony as the Revolutionary war was being created. He sided with the Parliament and King George, and was forced to end his days in England.

I recently came across this polling result:
An AP-GfK poll conducted last month found that Americans are suspicious of each other in everyday encounters. Less than one-third expressed a lot of trust in clerks who swipe their credit cards, drivers on the road, or people they meet when traveling.
 Americans' Trust in Government
As the graph shows, Americans have lost trust in government. A part of the loss in trust is probably due to the phenomenon noted by Hutchinson -- factious orators on television and radio are working to make us discontent with government, and lack of trust in it and ourselves follows.

Saturday, December 14, 2013

The Place of Randomized Controlled Trials in Development


A recent article in The Economist was devoted to randomized controlled trials (RCTs):
(I)n 2003, RCTs were regarded as wacky. Critics said that doing a trial was like putting people in a cage and experimenting on them. They pointed out that you cannot conduct randomised trials for big macroeconomic questions (“What happens if we devalue the currency by 50%?”) because there can be no control group. They conceded RCTs might generate useful nuggets of evidence (raising teachers’ wages in India, for example, did surprisingly little to improve learning). But they argued that evidence from such trials would always remain small-scale, tied to a specific context and not be useful beyond it. 
Ten years on, few of those criticisms have stood up to scrutiny. RCTs have entered the mainstream.
The idea of a RCT is to test a treatment by applying it to one group and not to a second group, and seeing which group does better. They are seen as the gold standard in testing new drugs for safety and efficacy. The two groups should be as similar in characteristics as possible, and thus random assignment of members is a key characteristic of RCTs.  In medical trials, the control group may receive a placebo if there is no accepted drug for the condition, or the best alternative if one does exist. Ideally, RCTs when possible are blinded, so that preconceptions of those delivering the treatment, receiving it, or evaluating results do not bias the results.

Of course, RCTs were used in the context of developing nations more than ten years ago. Drug trials for preventive and curative treatments of tropical diseases specific to developing countries go back many, many years. What is new is the extension of the RCT approach to other fields. Thus The Economist lists
  • whether boosting teachers’ pay improved educational outcomes
  • whether identity cards would improve the delivery of subsidized rice to the poor
  • whether job-training encouraged employment growth overall or just boosted the prospects of trainees at the expense of the untrained
  • the effect of remedial classes
  • what happens if you double the number of teachers
  • what are the effects on micro loans on recipients entrepreneurship and well being
  • what are the effects of small charges in acceptance of bednets treated to combat malaria or water purification tablets

The characteristic of all these applications of RCT is that a single "thing" is tested to see if it is better than the alternative, which is previous practice. That is all to the good.

The Limitations of RCT

Do we always need to do a full scale RCT to figure the better alternative. I doubt it. When a vaccine or antibiotic has already been proven safe, efficacious, and effective in many countries, it may be applied in a new country on the basis of the existing foreign data (with some careful monitoring).

Moreover, a lot of improvements are made step by step, improving what is being done by small, conservative innovations. Workers improve the use of equipment on the shop floor; Managers improve the allocation of staff to functions or business processes. Buyers and sellers figure ways to improve the function of the market in which they transact their business. Farmers switch from a less to a more profitable crop. Teachers find a better way to help students to learn. It happens all the time! And it is a key to development. RCT doesn't work well for monitoring such incremental change.

And of course RCT doesn't work on all interventions. You can't try an approach to reduce global warming on 50 planets with 50 more as controls. You can't ethically impose sanctions on 50 countries for stockpiling WMDs and not on 50 others committing the same infraction, and wait for wars to break out to see which group kills fewer people. But that does not mean that they are not a useful tool where they work.

Beyond RCT

Fundamentally, development is about systematically doing things better than they were done before.   The fundamental objective of development is to establish a widely effective, indigenous process of rapid improvement in the way things are done.

Many years ago I took a course in community development from Jack Donoghue. He told us of an experience he had in which community leaders had invited him to help their small town community which was not functioning at all well. He spent a few days in the town, talking to people and came to the conclusion that the problem was simply that they were so divided that they would not negotiate constructively among themselves to solve local problems. His solution? He gathered the town leaders together and refused the job, explaining that they were acting like jerks; if they continued to act as they were, he couldn't do any good, and if they changed their behavior and acted more reasonably they didn't need him. The shock treatment worked, and behavior changed. Something similar seems recently to have happened with the House of Representatives; members received a storm of criticism when they shut down the government in October, leading them to agree to an appropriations bill last week. These may be seen as examples of changing the culture to achieve a development goal.

Steve Jobs is credited with turning Apple around when he returned to the company as CEO in the late 1990s. The company stock price increased, attesting to his success. Was what he did suitable for analysis using RCT approaches? I doubt it. I suspect that he changed the culture of the organization so that it began to do many things better, especially the development of new products.

We have been celebrating Nelson Mandela this month. South Africa was a mess in the early 1990s. People were rioting and the Apartheid government was reacting violently -- violence begat violence! The GDP was declining; South Africa was becoming a pariah state. Mandela, representing the ANC, and de Klerk, the President of South Africa, agreed that democratic elections would be held. When they were, majority rule was established in South Africa with Mandela as President, apartheid policies were ended, violence greatly reduced, and growth was restored to the economy. Under the truth and reconciliation policies, racial tensions were reduced. A single event, combined with great leadership, led to a cultural change which greatly enhanced national social and economic development.

More generally, I doubt that we will often find "magic bullets" to change cultures in ways the significantly enhance the rate at which improvements are made in the ways things are done. I suspect development is more like herding cats, putting one thing after another back on track. Thus one might make a country's government a little more capable, a little more responsive to the people. One might then help the farmers to be a little more productive, and the agricultural research and extension service to be a little more efficient and effective. That might be followed by making some improvements in economic policy and strengthening some domestic markets. The process might go on and on until the culture changed and the process of development maintained by the people, their own policies, and their institutions.

RCTs would have a place, but a relatively small place, in such a process of development. One might also evaluate the efficiency and impact of each separate initiative, but especially the sustainability of each effort after the external stimulus was applied. Perhaps more important still would be a big picture evaluation of whether the culture was changing in the right direction, and whether social and economic indicators were suggesting progress.

"Robots" use the Internet more than people do.

A thought for the day

Average life expectancy in the United States is 79. In Japan and Switzerland it is 83. Thus the 300 million or so of us are giving up 1,200,000,000 years of life that we might have, if only we treated ourselves as well as the Swiss and Japanese do.

Happy Holidays

The USAF Band Holiday Flash Mob at the National Air and Space Museum plays "Jesu, Joy of Man's Desiring/Joy to the World."

Friday, December 13, 2013

Bill Gates on why we should invest in health

It's good for people AND the economy: http://b-gat.es/ISslU1

Religious Diversity and Homogeneity in the USA

An interesting article in the Washington Post describes the geography of religion in the United States. The following map comes from the article:

The blue counties are the least diverse. Thus Utah, with its Mormon majority and counties that are large in area, comes out a big blue spot in the west. The South and the prairie states also show up in cool colors -- blue and green, showing low diversity.

The greatest religious diversity is found in the west, the north-east, Alaska, Hawaii and Florida.

The following map shows the religious group with the largest population per country:

The Southern Baptist Convention shows up red, and red counties cover the south. Blue counties have Catholics as the most numerous, and much of the country shows up blue. The tan area corresponding to the Lutheran Evangelical Church, perhaps corresponds to the area that drew Scandinavian immigrants, and the grey counties in the Great Basin have Mormon pluralities.

The divides that show up in our politics have rather deep cultural roots.

Wednesday, December 11, 2013

Woolies and Soweto Gospel Choir: Madiba Tribute

Good News on World Health

Prevalence of Malaria

I quote from The Guardian:
The number of children under the age of five dying from malaria has halved since 2000 and is predicted to fall still further over the next two years, according to the World Health Organisation's flagship report on the disease. 
Between 2000 and 2012, malaria deaths among under-fives fell by 51%, says the 2013 world malaria report, published on Wednesday. Across all age groups, global deaths fell by an estimated 45%. If the trend continues, deaths will fall by 63% for children under five and by 56% for all ages by 2015, big steps towards meeting global targets to reduce malaria cases and mortality rates. 
The report estimates that 3.3m malaria deaths have been averted since 2001, more than two-thirds in the 10 countries with the highest number of malaria cases in 2000. About 3m of those deaths would have been among children under five living in sub-Saharan Africa.
After World War II it was thought that malaria could be eradicated. I think that might have been technically feasible, although the long term persistence of a species of the agent of the disease had not been realized. The greater problem was probably the ability to manage effective programs by weak governments and the ability to sustain the political will to finance and support the effort for many years.

The effort failed, and the fall back position of control of malaria allowed for millions upon millions of deaths over the decades. Some fairly large areas of the world suffered hyperendemic malaria for decades.

It was also noted that the vertical campaign organizational structure seemed inefficient, and more integrated primary health services might control malaria while also attacking other major killers.

We still await a malaria vaccine and the development of backup drugs against the disease if those now in use prove ineffective. Still, the news is good!

Check out WHO's World Malaria Report 2013.

What Does the PISA Report Tell Us About U.S. Education?

The statement of the problem seems correct, but the video doesn/t follow through.

Schools filled with poor kids have kids that do poorly on the PISA tests. In other countries, these are the schools and kids that get the most help. In the USA, these schools are concentrated in the South and West (see my earlier post), and get fewer resources than in more affluent areas. The local control of schools, gives local communities scarred by a history of racism, the responsibility for providing well financed good schools and good teachers to their minority communities. Guess what happens.

The good news is that a lot of the country that is more affluent and better educated provides good education for its kids, and those kids show up pretty well on the PISA test comparisons.

By the way, some cultures teach more intensively for tests, and I remain unsure that tests are good enough to measure what is needed for a good life and a good society. 

Tuesday, December 10, 2013

The Safety Net Helps, but where is the inclusive economic growth?

I quote from an article in The Washington Post:
Government programs such as food stamps and unemployment insurance have made significant progress in easing the plight of the poor in the half-century since the launch of the war on poverty, according to a major new study........ 
According to the new research, the safety net helped reduce the percentage of Americans in poverty from 26 percent in 1967 to 16 percent in 2012. The results were especially striking during the most recent economic downturn, when the poverty rate barely budged despite a massive increase in unemployment. 
While the government has helped keep poverty at bay, the economy by itself has failed to improve the lives of the very poor over the past 50 years. Without taking into account the role of government policy, more Americans — 29 percent — would be in poverty today, compared with 27 percent in 1967............ 
Among the researchers’ discoveries was that deep poverty — incomes below 50 percent of the poverty line — has been stable at 5 percent of the population for about 40 years and that the safety net has grown especially powerful in protecting children from poverty.
The safety net seems to be helping quite a bit, although one person in six in poverty, and one in 20 deep poverty seems unacceptable to me. Perhaps we need to do more for those living rough on the streets and those with mental illness that keep them in poverty.

It is good that the number of children in poverty is lower, but the rate is not nearly low enough.

The problem is that our economy and our economic policies are making the rich much richer, giving the people with the highest incomes sky high incomes, while leaving the poor in poverty (and as recent posts showed, the middle class stagnating). Trickle down is not working and we need what Obama has been calling for -- a middle class led economic boom, with long term growth based on innovation and supported by government investment in infrastructure, human resources, and science and technology.

Luka Bloom & Sinead O'Connor - view to Golden Gate

This is what Luka Bloom posted on Facebook:
On the day the world gathers to remember Nelson Mandela, this song comes to mind. To walk from prison after 27 years, your heart full of forgiveness, love and hope, is so inspiring. Never underestimate the power of love. Sweet dreams great man.

The American Public Knows Less About the World than You May Realize.

1000 people in the United States were asked ten questions. Here are the results for a couple of them:

If we assume that people are less educated than they really are, will we expect less of them in other ways? If so, that is a dangerous ignorance.

If we fail to understand that poverty has been alleviated to a historically unprecedented degree, will we lose faith in poverty alleviation? If so, that is a dangerous ignorance.

A couple of graphs say it all.

Robert Reich suggested defining middle class as those with income levels 50 percent above and below the median income.

Source: The Washington Post
Source: The Washington Post