Better Socrates Satisfied?

As Andrew Sullivan has chronicled, it has been a couple of exciting weeks for those who hope technology will unleash a wave of democratization.  Texts, tweets and technorati have surely played a role.  At the same time, Marx predicted the railroad would lead to the dictatorship of the proletariat, and we all know how that ended.

Another factor that has clearly influenced events is the spread of education –in particular the number of college students.  This recent paper suggests that educated people (Socrates aside) are far more likely to support democracy.  But again, that may not be the full story.  This paper suggests that there is no link between growing education rates and transition to democracy.  Given the rapid global advance in school enrollments, alongside growth in access to communications technologies, that suggests we may see more and more dissatisfied democrats living in authoritarian regimes.  And falling sales of hemlock.

AIG: The Fifth Horseman?

The recent global financial crisis has added 100 million more to the ranks of the world’s undernourished, according to the FAO.  Doubtless Paul Ehrlich is saying “I told you so.”  But it may be a little soon to dust off your copy of Malthus.  The trend remains towards the tubby.  There are as many people overweight as malnourished (around one billion) and 300 million of them classify as obese.  Many of those overweight live in the same household as an undernourished child.  Within such homes as on a global scale, the problem is one of distribution, not absolute shortages. 

Furthermore, the good Reverend Malthus’ model just doesn’t fit the facts.  No country worldwide exhibits the characteristics that Malthus suggested –stagnant output, rising populations leading to income decline and rising income fostering population growth.   Only one country in the World has seen domestic product grow more slowly than 0.5 percent a year since the 1960s.  Fertility rates are declining and health is improving almost everywhere.   And populations have expanded in counties slow and fast-growing alike.  The global spread of a range of technologies and innovations, fostered by an unprecedented rollout of education, has broken the link between land area and limits to output as much as it has improved the quality of life worldwide.

And in rich countries, a little bit of recession can actually be good for the health, as people eat better and substitute cheap entertainments like a walk in the park for expensive entertainments like drag racing.  Maybe Bernie Madoff is just a misunderstood miracle worker.

Estonia’s Neck Goes Into A Latvian-style Noose

Well, today is the 30 of June, and still no news from the IMF on releasing the next tranche of the Latvian loan. Perhaps this is one of the reasons why (via Ott Umelas at Bloomberg).

Estonia’s fiscal deficit under European Union terms more than doubled in the first quarter from a year earlier, indicating the Baltic country may not be able to adopt the euro in January 2011. The deficit, including social security and state and municipal spending, rose to 5.57 billion krooni ($502 million) from 2.06 billion krooni a year earlier, according to data published on the statistics office’s Web site today. The gap corresponds to 2.5 percent of gross domestic product, according to Bloomberg calculations based on the Finance Ministry’s forecast for Estonian GDP for 2009.

The first-quarter figure means the government will have to keep the deficit at 0.5 percent of GDP for the rest of the year to meet euro-entry criteria. Finance Minister Jurgen Ligi has said he sees no improvement in the economy before the third quarter. The minority Cabinet of Prime Minister Andrus Ansip has cut the 2009 budget deficit by 16 billion krooni, or 7.3 percent of GDP, in recent months to avoid depleting state reserves and keep the fiscal deficit at last year’s level of 3 percent of GDP, the same as the EU’s budget-deficit threshold. This would allow Estonia to adopt the euro in January 2011, the government’s main economic goal.

So why a “Latvian-style” noose? Because these countries have built for themselves a sort of “paradox of fiscal thrift” connundrum, whereby the more you cut, the more GDP falls, the more revenue rises, the more spending grows, the more the fiscal deficit goes up, the more you have to cut, and so on. In the end, as Kenneth Rogoff said yesterday, it simply becomes too painful. There seems no way Estonia can achieve a 3 percent deficit this year at this point. And remember what IMF First Deputy Managing Director John Lipsky said last week.

“If there is a solution it begins with macro policies,” Lipsky said. “No single exchange rates solution, or exchange regime represents a solution to these kinds of problems. What is important is that the currency regime is credible and coherent”.

Estonia now has no exit strategy, at least not to join the euro in 2011 it doesn’t And then we have Lithuania and Bulgaria to think about. Basically, the ECB and the European Commission should never have drawn a line in the sand across the original Maastricht criteria. But it’s too late for that now. Continue reading

Life is Cheap

The WHO has declared swine flu a pandemic and the US is considering a vaccination program involving 600 million doses. 

So far, the CDC estimates that there have been a million infections and 127 deaths in the US.  That’s a pretty low death rate, of around one per ten thousand.  The US rate for measles in the 1970s was almost ten times as high.  In turn, that suggests a comparatively low benefit-cost ratio compared to other vaccine programs.

The good news is that even more expensive vaccine programs are amongst the most cost effective health interventions.  The flu vaccine only costs between $5-9 a dose, for example.  And they are comparatively easy to roll out.  Not least, thanks to vaccinations sold at a dollar a pop, almost no one gets measles in the US any more.  In the first half of this year, there were only 25 cases in the whole country. 

The even better news is that, thanks to expanded vaccination coverage, dramatically fewer people die of measles the world over.  Measles deaths in Africa fell by 91% between 2000 and 2006 alone, from an estimated 396,000 to 36,000.  Keep on going at this rate, and measles might be the next smallpox. 

Other simple health solutions that have saved millions include hand-washing and antibiotics.  Their spread lies behind a dramatic global convergence in health outcomes discussed in this book I’m plugging.  And there’s still scope for cheap solutions to make a big difference to global health outcomes.  One third of the remaining ten million child deaths each year could be prevented if parents worldwide breast fed, used sugar-salt solutions to treat cases of diarrhea and put their children to sleep under insecticide-treated bed nets.  Breast feeding is free, sugar-salt packages cost pennies, and bednets perhaps $5. 

The big problem now is to create demand –informed parents who understand what to do when their child has diarrhea, for example.  In the Indian state of West Bengal, fifty percent of parents think you should give a child less to drink –absolutely the wrong thing to do.  Child mortality in the state is three times higher than in the state of Kerala, where only five percent of parents suggest that response.   And not all parents understand the importance of a vaccination program, especially when their state governors are telling them it is part of a plot to sterilize their children, as it might be –this particular piece of insanity helped delay the global eradication of polio. 

Of course, as the recent flap over MMR in the UK demonstrates, the demand side isn’t just a Third World problem.  Let’s hope we don’t face the same issues with swine flu vaccination.

Are The IMF and The ECB Lining Up Against The EU Commission Over Latvia?

There was a very interesting and revealing press conference given by IMF First Deputy Managing Director John Lipsky and European Central Bank governing council member Christian Noyer in Paris on Thursday. Christian Noyer said that, in his opinion, Baltic countries like Latvia would not be helped by joining the single currency (the euro) prematurely.

“It’s in the interest of candidate countries not to enter too early because it risks making the economic situation unbearable,” Noyer said.

Lipsky, for his part stressed the region could not depend on any particular foreign exchange regime to shield it from the effects of the financial market crisis:

“If there is a solution it begins with macro policies,” Lipsky said. “No single exchange rates solution, or exchange regime represents a solution to these kinds of problems. What is important is that the currency regime is credible and coherent”.

Do I detect a shift in emphasis here? Certainly Latvia’s currency regime is not credible (most external observers now consider devaluation inevitable), nor is it – in my opinion – coherent. And there has only been a deafening silence coming out from the IMF in recent days on the topic. Continue reading

Africa (and Aid): Not Dead Yet

Dambisa Moyo  is one of Time’s 100 most influential people alongside the women of The View and ahead of Vladimir Putin (influential last year.  This year, meh).  She continues to attract attention and stir acrimonious debate.  But one thing her critics and supporters agree about is that Africa is in a mess.   

I’ve just finished a book (free online, for a bit) that paints a more positive picture.  It is true that the region’s performance in terms of GDP per capita has been pretty dismal –many countries are as poor as economies in Medieval Europe.  But that’s a pretty narrow measure of success or failure.  If you look at measures of health, or education, or civil and political rights, Africa has seen real progress.  Even as parts of the continent are mired in civil war and famine, the average African born today is far more likely to survive childhood, to go to school and to have some modicum of civil and political rights than their parents or grandparents.  Progress in the quality of life has continued at a historically unprecedented pace in large parts of the continent. 

The book discusses how economic stagnation and broader development have coexisted even over the long term –a subject for a later post.  Regardless, these measures of broader success suggest that it is premature to write off the region as a failure –and perhaps even to declare the death of aid.

A bit of Balkan kabuki

The Bulgarians arrested Agim Ceku last week! But then, after a couple of days, they let him go. Serbia is upset.

Who is Agim Ceku, and why should you care?

Well, Agim Ceku is a very important Kosovar Albanian. He was an officer in the Yugoslav army and then, after 1991, he was a commander in the Croatian Army during their war against the Serbs. Then, after that, he was chief of staff of the Kosovar Liberation Army during the 1999 Kosovo War. Later, he was Prime Minister of Kosovo. He’s sort of retired now, or at least politically in eclipse, but he’s still one of the most important political figures in Kosovo.

The Serbs say he’s a war criminal. They have indictments against him for various horrible acts, including genocide. They tried him in absentia for some of them, back in 2002, and convicted him to 20 years in prison. They’ve managed to get an Interpol warrant for his arrest. So, Interpol member states are supposed to assist in capturing Ceku and, if necessary, extradite him to Serbia.

There have been several attempts to do this. None have yet succeeded. The most recent was last week, when Ceku visited Bulgaria. He was stopped at the border, then detained, while a Bulgarian court considered whether to hand him over to Serbia. After a couple of days the Bulgarians decided no, they weren’t going to do that, and Ceku went free. The Serbian government has expressed outrage, outrage! Ceku is still in Bulgaria but should be heading back to Serbia soon.

So why should anyone care? Continue reading

Health Care Reform: A Bull in China’s Apothecary Shop?

As the healthcare debate continues raging in the US, universally covered Europeans look on smugly from the sidelines.  (Well, not all Europeans.    Tim Worstall argues that high US health spending is the successful application of the will of the market.) 

Meanwhile, President Obama has been telling his staff to read Atul Gawande on the weak relationship between spending and the quality of health provision across the US.  Gawande argues that high costs are driven by unnecessary treatment rather than better care. 

There’s a similar story to tell across the Pacific.  In the 1970s, China had a cooperative medical system that provided coverage to 90 percent of the rural population.  A series of reforms since then have introduced fee for service and health insurance schemes.  These reforms have increased costs, but it is hard to see much impact on improved levels of health.  Per capita health spending increased seven-fold in rural areas over the period 1990-2002, but rates of progress in health outcomes have dramatically slowed. 

That’s in part because the quality of care provided can be pretty grim, not least because of the incentives of the fee for service model.  Over-prescription of drugs is a particularly big problem.  In 1999, a study of eight village clinics in Chongquing and Gansu provinces found less than 0.06% of prescriptions handed out were deemed reasonable by the doctors in the survey team.  

China isn’t the United States, of course.  But it does provide stark evidence that health care reform can have a dramatic impact on the efficiency of provision –for good or ill.

Ingushetia, boom

So someone tried to blow up Yunus-Bek Yevkorov last week. Almost got him, too: they seem to have killed several members of his entourage, including his cousin, and Yevkorov himself is currently in a Moscow hospital with burns and a ruptured liver. He’s expected to live, though.

We wrote about Mr. Yevkorov a few months ago:

Yevkurov was appointed by Moscow late last year to replace the notoriously corrupt, unpopular, and none-too-competent incumbent. The timing was interesting: just a couple of months after the Georgia conflict. Ingushetia is next door to South Ossetia and just a short drive from Georgia. In retrospect it looks like Moscow decided it could no longer afford to have a loyal-but-hated tool running things in this strategic region, and decided to appoint the most plausible possible Ingush instead.

It’s damnably difficult to get straight news out of Ingushetia — the Russian authorities don’t encourage foreign journalists, while the local government is oppressive and pretty paranoid — but it looks like Yevkurov is trying to make a go of it. He’s much more popular than his predecessor (not hard), and he seems to be peripatetically competent.

Other than the President getting blown up? Not a lot has changed since then. Until last week, Yevkurov was still trying to set things right. And he was still severely handicapped by a moribund local economy — Ingushetia is the poorest republic in Russia; it produces, basically, nothing — and Moscow’s insistence on using federal security forces, who are universally feared and loathed, to “help” the situation there. Continue reading

Senegal: Islam, democracy, sexy

Not Iran this time!

I’ve been in Senegal the last couple of weeks. And, you know? Senegal is (1) 90% Muslim, and (2) a vibrant democracy.

The opposition won the last couple of elections. The press is free — sometimes obnoxiously so. Human rights violations are relatively rare. (Nonexistent, really, by African standards.) Senegal has never had a military dictatorship, a civil war, or a coup. Okay, the first couple of Presidents ruled for twenty years each, but they seem to be past that — the current President won a free and fair election. He’s also term limited, and everyone is already looking forward to a gloriously democratic free-for-all in a couple of years when he steps down.

I don’t want to overstate here. Senegal has all the usual African problems. It’s desperately poor. About a third of the population is still illiterate. There’s spectacular corruption. The President is clearly grooming his son for the succession; this involves putting Junior in the path of some rather large business opportunities. And while Senegal is a democracy, I might hesitate to call it a fully functional liberal democracy. Media that criticize the President too sharply may get hassled or shut down, government money is poured out like water to win elections, and many Ministers and members of Parliament are pretty openly for sale.

On the other-other hand, the opposition won the midterm elections last year, sweeping the President’s party out of almost every local government. To his obvious irritation and dismay. You don’t see that happening in Turkmenistan or Belarus.

So why doesn’t Senegal get any respect? Continue reading