Thursday, July 07, 2005

The Home Front

Via David Adesnik a Sebastian Mallaby opinion piece* in the Washington Post pointing to research by Rajan et. al. that notices that major factors harming development are in the North: farm subsidies mainly, but also chasing scarce resources and doing so untransparently, fostering corruption; plus others.

Locating hindrances to development externally as opposed to internally is interesting. Just on the rhetorical level it manages to talk about development without invoking the white man's burden (a good thing). It goes against the typical view that development is something that "we" need to do to "them." That development is necessary because of their suffering (unpleasant because suffering implies powerlessness which implies a white man's burden view of development) or lack of something important(incorrect: being in Senegal I can assure you that individualist universal humanist claims that humans are all capable of getting by are correct).

What this does instead is say: Africans are capable, it's just that the deck is stacked against them. Let's not have domestic policies that actively hurt African countries. At least in our domestic politics we can be neutral. We don't need to go into hijinks about sending aid and aid workers, simply don't do things that make it even harder for Africans to go about their business. Do development in a hands-off, changing the environment, kind of way. Let things run "naturally," but make it easier. The main policy area that leaps out at me is farm subsidies.

Farm subsidies in the U.S. and Europe are insidious and do terrible things to African economies. The one comparative advantage these poor countries potentially have is in labor intensive agriculture (more than half the population works in agriculture, often at subsistence levels). It is the one sector where there is a sufficient concentration of people that if you had an export market with slightly higher prices there would be huge incentives to adopt new technology and improve productivity which would have a huge impact on GDP, and maybe boost savings etc.

But farm subsidies in the U.S. and Europe increase production here and lower prices, making African crops not only not competitive here, but often not competitive in Africa either. Remove farm subsidies, and you might have a dynamic agricultural sector.

As opposed to the two-sector model of Lewis where you try to shift people out of agriculture to "modern" manufacturing, you could let the market work and modernize agriculture. This wouldn't happen immediately, but it would happen in an organic, sustainable sort of way (because it would be individuals responding to market incentives as opposed to deus ex machina interventions of the Jeffrey Sachs variety). Sure there would be odd problems -- government marketing boards would intervene and scrape off export cash -- but nothing worse than the current corruption.

The argument of Live 8 that we need to help "starving" Africans is total bullshit. Famine is political, not economic. If that much energy had been directed towards trying to reduce farm subsidies and price supports rather than -- what exactly was the point of Live 8? that Africa is poor? -- you might have actually made some progress.

Clearly I ought to learn more about this kind of stuff....But, at this point, it seems like the one unequivocally good thing you could do for African countries is abolish farm subsidies in the North and let Africa have export led growth(basically any other program is either ineffective or else creates bizarre dynamic incentives). Fight on the home front of domestic politics, don't condescend internationally.

*Why do we call it an op-ed, when there is a clear difference between the editorial page and the opinion page?)

**This post has been revised, ummm, several times. For clarity, then for coherency.


Blogger henry said...

The term Op-Ed is actually derived from the fact that Op-Ed page is typically opposite the editorial page. At least according to the Times: "The inaugural Op-Ed page appeared on Sept. 21, 1970. It was named for its geography — opposite the editorial page — and not because opinions would be expressed in its columns." At some point the term must have made a semantic switch, however, because Op-Art is clearly "Opinion Art."

2:25 PM  
Anonymous Anonymous said...

Dropping farm subsidies would be a good thing, but what I think those who advocate it have to recognize that if it's not quite a zero-sum step, it nevertheless is a case of transfer-seeking of sorts--that there are people who will be hurt by that step here in the US just as it assists others elsewhere (In the short term, I think it's most likely to assist farmers in underdeveloped nations outside of Africa, though, for a bunch of complicated reasons.) This is fine, but it takes some political will--it's not a "win-win" policy that is in everyone's interests.

Tim Burke

2:38 PM  
Anonymous Anonymous said...

From what I have heard vis-a-vis Live 8 (mostly Bono being interviewed) is that a prime wish is to erradicate Malaria, and also deal with HIV.. Live 8 was hoping to influence western (northern?) powers to be more attentive to Africa ills in general. How can people ever deal with self-improvement when they are sick and hungry?

About productivity .. aren't these things in conflict? ie.. create more demand for African ag products to raise labor wages... and... bring in technology to increase productivity which would then REDUCE the need for labor and thus the field-worker wages. Bring a combine into the field and fire 50 workers.

Of course, if the combine can be manufactured in Africa, then those 50 workers will have a job in town. Seems to me that when ag technology is fostered, that tech and manufacturing etc. must (will) be expanded.

And, by the way, feeding the famished is important TODAY. Dollars for that are as important to the hungry as dollars are for the long term. Economists tend to deal with the tomorrow of things and perhaps need to get their fingers in the dirt to see the today of things. Combining Economics studies with social and cultural sciences is not a bad idea.


10:30 AM  

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