Questions I want to know the answer to

What drives people to action?
Do people with a keen sense of network benefits really spend time(hour+) preparing for informal lunch meetings with people but not their homework? Where did they learn (and get the cultural discipline) to do that?
Does the preference to help other communities, when in fact there are communities that are physical health wise or financially less fortunate their ourselves, stem from the fact that it means not having to deal with complex problems around us and/or because we can deal with these problems in abstract, or at the very least, “non-life” way. Does the fear of being parochial, in this age of cosmopolitan, mean we have spent less time molding and thus preparing ourselves to deal with the real, messy problems that surround us?
“life got in the way” — what does that mean? As if Life were everything keeping you away from your goals. What a weird separation?

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Clandestine Catholic Women’s….recipes

Clandestine Catholic Women’s Recipes Balaka Boma, Malawi, Summer 2011 (Catholic Women’s is the name of the hostel I stayed in for 2 weeks while in Balaka)

 1.Nutty Lemoney Egglant Dish

 Ingredients:  1 eggplant  ¼ African Cabbage  Green Peppers  Carrots  Lots of Garlic (=2-3 American Cloves of Garlic)  Ground Nut Flour  Wine  ½ African Lemon  Onions  Water  4-5 table spoons Chutney

Directions: 1. Heat Lots of Garlic and Onion in Oil 2. Add Eggplant 3. Add a little bit of water to quicken Eggplant cook pace 4. Add Cabbage 5. mix 6. add rest of vegetables 7. add Ground nut flour 8. add lemon 9. Add salt 10. add chutney 11. add a bit of achaar to taste 12. after eggplant is cooked, add wine (about 3 pepto-bismo liquid tops) 13. let wine cook out 14. Stir vigorously, the way Malawians walk.

2. Fruit Curry

 Ingredients:  2 Marulas  1 Apple (can also be replaced by pineapple)  1 Banana  ¼ Papaya (if too dry, can add wine for more sauce)  ¼ Lemon  1 African Onion (smaller)  1 tablespoon Achaar  2 tablespoons Ginger Nali  Curry Powder  Raisins  Salt

Notes: Best served over Taro and followed by dessert, Custard Fruit. Also good with basmati rice.

3. Malawi Salad

Ingredients:  Pineapple or Oranges cut small  Cabbage – cut thin and small  Raw green beans  Carrots  Green Peppers  Not a large enough amount of tomato to overpower  Lemon Juice  Salt and Pepper

 4. No-Bake Peanut-Raisin Oatmeal Cookies 

Ingredients:  “Butter” ½ cup – Honey or Sugar (4 cups) – Raisins (to taste) – 1 cup NIDO (or NIDO and Rooibos) – Jungle Oats (6 cups) – Peanut butter (to taste) – sliced snicker bar on top

Directions: Melt butter, NIDO, and Sugar together When boiling, add peanut butter Then add oats Stir – when sort of hardened, make them into cookie shapes!

 5. No Power No Water (except for a quarter –full Nalgene) salad

Ingredients: inner parts of the cabbage – can of tuna – Ginger Nali (too much will make the salad difficult to eat without water) – raisins – water bottle rinsed tomato – carrot (shave off the outside) – onion

 6. Malawi Mango Cocktail –

Ingredients: Cool Rooibos tea – Mango Juice – Malawi Gin Directions: Mix to taste

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A Thousand Words…or so

          For the first time 3 out of 3 of my NGO respondents cancelled on me, leaving me with the entire day free to roam the really bustling town of Balaka, in Southern Malawi. I’d heard that there was a pretty nice view if I walked past all the NGO offices and headed towards the cotton gin that had been built during the colonial era (so the buildings are probably around 60-70 years old). Unfortunately it was pretty hard to take good pictures because of how flat the land is. It was stunning. But what really piqued my aesthetic interests were the people walking around me —it wasn’t like I had never seen kids chatting in fast Chichewa, which quickly switched to mock Chinese as I passed them by (the kids seem to think that all non Africans wearing square-rimmed glasses are Chinese). Nor was it really all that new to me that women were carrying huge suitcases on their heads or men carrying huge loads that towered above them on their bycicles. It still amazes me that they can do it. I want to take the picture to capture just how capable people are as an inspiration to me when my cold, my computer crashing, or the rain gets me down at home. But I know that if I post the pictures, let’s say on a blog or my facebook, without an adequate explanation both of what is going on AND why I took the photo, it will bring to people’s minds: poverty and hardship or stereotypes.
         I think a big portion of taking pictures when living abroad or even at home is novelty or uniqueness. We want to remember something that we don’t see everyday or we don’t feel everyday. We look for novelty in beauty, in landscape, in bikes carrying huge piles of mats, coals, or women carrying huge buckets and baskets of produce on their heads while also carrying a baby on their back, or young mischievous boys carrying rustic hoes across their shoulders, or the agogo (old man) watch guard sitting on the ground in the shade eating watery nsima (maize mill) with his grandson. Too often, however, what is novel to the outsider and for the photographer or journalist who wants to bring their experience back home, is the poverty or the story of “triumph over poverty” or “abuse by poverty”.  They say that a picture is worth a thousand words, but I’m pretty sure a huge percentage of those words depends not on the picture itself but on the preconceptions of the viewer and how the picture interacts with the viewer’s preconceptions.
         Perhaps that’s what makes poverty porn so easy. People in Balaka (a district in southern Malawi) or Chilumba (a village in Northern Malawi) are poor. And many if not most of them deserve a better life, whatever that means. But emphasizing their poverty will not make them wealthier and let’s face it, money to buy more necessities (like food, soap, school fees, uniforms, a house, capital for their business, the nice sets of clothes to impress the customer, a radio and newspaper to find out about jobs) and luxuries, (a tv, an extra set of clothes, chairs, an electric stove, a car, a motorbike to get to work faster and travel for more opportunities) is what will ultimately make the individual’s life better (Religion, faith, a better attitude may also do the same but its undoubtedly a much more difficult way to get you from feeling lacking to not feeling lacking), given the infrastructure around them. Of course, infrastructure like better health care, better awareness campaigns and dissemination of health and hygiene information, better roads, etc are necessary but to pay for those things — taxes —the people need to have jobs. And to have  jobs, outsiders and insiders alike need to begin to see the opportunities the novelties that can be capitalized on to make a profit, to hold a job, to support their families. And then the new novelty created from the original can then be capitalized upon to make a profit, to hold a job, to support a family, to pay taxes.
           Right now, Malawi makes much of its buck off of poverty. ‘Malawi is poor, let’s send aid’: Money for this NGO, this governance “issue”, this Malaria campaign, that NGO on lifeskills training (yes life skills training, as in a combination of sex education and confidence building). The taxes from which the government builds some of its own health, roads, and governance infrastructure (although a good proportion of it) come in a large part from the large NGO personnel class. They get taxed anywhere from 20 to 40%. Based upon a couple informal conversations here in Balaka, I know that taxes also come from business owners and renters who pay a land-fee, as well as from bike taxis who pay a right-to-do-business-in-Balaka-fee. But bike taxis make maybe 800 kwacha (at most) a day (this is based on informal conversations with a couple bike taxi guys who told me they give about 8-10 rides a day and usually charge between 40 and 100 kwacha) and while most of the taxed business people include small-medium sized market stall businesses (like tailors, produce stalls, and random necessity shops), the larger tax fees come from the larger NGO offices (around 37), the few large supermarkets (maybe 6-7 in Balaka),  the large restaurants that are affordable (6)  on a daily basis only to the upper tier NGO workers and azungus (foreigners). It’s no wonder that is was the NGO sector that led the recent protests in Malawi – NGOs not the labourers, not the business class, are the key financial stakeholders in the country.
           And to keep them going, they need to both play the “I’ll be nice to donors game” as well as the “hey, you know, Malawi is so poor” game. That’s why of the 40 or so conversations I’ve had in my 7 weeks here about what I think of Malawi–
(a fairly common exchange is:
Malawi Passerby: How are you?
Me: FIne and you?
MP: Fine, Where are you coming from?
Me: Home.
MP: WHere are you going?
Me: Work.
MP: WHat do you think of Malawi?
Me: It’s beautiful. ) 
                                 — of these conversations, they’ve all ended with my conversation partner saying emphatically, “You know you might think it is beautiful, but Malawi, it is so poor. There is so much poverty here.
            So back to pictures. As I was saying: to the individual spectator, the poverty is novel. It looks different than it does in the states. You know a kid carrying a hoe around probably looks poor because we think– o man this poor kid is so dirty looking. Well of course, what 7 year old who has been outside all morning doesn’t. We’d say, oh man this poor kid has to farm all morning. Well maybe it wouldn’t be so bad if our 7 year olds had a bit more responsibility. Sarcasm aside, maybe this kid is or isn’t all that bad off –but the picture only shows you a random (black) African kid carrying a hoe around. It doesn’t tell you if he’s a happy kid with some chores or a smiling child laborer. It doesn’t tell you if his farming because his parents have died of AIDS or his parents sent him in from Lilongwe as punishment for goofing off at school.  But what it does remind the outside is “oh, Africa is so poor—at least I think Malawi must be in Africa because it looks like Africa. Black, dusty, and poor. Oh and you can see the cool safari trees in the background.” And these pictures power the NGO industry. People see the pictures, they send more money. This incoming money becomes the only certain thing in an economic situation which really is volatile and uncertain. This safe haven of relative certainty often draws the most educated individuals into the NGO sector instead of the government, businesses, engineering or medical jobs, or research, or hotel management, or tourism, or construction oversight, or architecture, or creative art and design, or myriad of other things.
        Aid money for the time being is necessary as one of the faster ways to build needed health care, roads, and education systems (not because we know it works but because we know so many other avenues seem to not work or work too slowly or work with too much corruption). But perhaps we could juxtapose the calls for aid with some other novel thing Malawi (enter a has to offer. A lot of work has been done to build profitable enterprises (that obviously pay a living wage, allow for merit-based promotion, and does not threaten the dignity of the workers) outside of the NGO sector, like selling pretty tasty bread or great chips and chicken at more locally affordable prices, or great backpacking tourism around the lake for a wider range of tourists beyond voluntourists. Poverty is not the only novel thing on which to capitalize. Nothing sustainable can be made out of the perception that there is nothing and pictures playing upon our ingrained preconceptions of poverty and Africa will only contribute to the futile attempt.  So if you’d like to see my pictures of these amazing mamas carrying huge baskets of produce on their heads and share with me the type of amazement you’d have watching the Olympics or reading the Guinness Book of Records, then I’d be happy to share them. Otherwise, I’m only leaving my one thousand six hundred odd words for you to peer at instead and the wish that you could have as great a time in Malawi as I have.

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Rule #7

Foreign Affairs has an article (linked to by Chris Blattmann) on how the real issue for poor consumers is not food price volatility but high food prices and that politicians mainly talk about and try to address the former and rarely think about tackling the latter (Remember Rule # 7 of the Guidebook for Interpreting Populist Politics: If something helps the poor, it will inevitably be blamed for hurting the poor, and vice versa):

…But high food price levels and high food price volatility are not the same things. Food price levels are at historic highs, but food price volatility, although high these past few years, is not out of line with historical experience and is generally lower than it was in the 1970s. This means that the world does not necessarily face a price volatility problem. It faces a high food price problem.

The effects of each phenomenon on the well-being of the poor differ. Throughout the world but especially in low-income countries, the poor are overwhelmingly net food consumers, while farmers are generally better-off net sellers. Rising prices hurt consumers by reducing their purchasing power but benefit producers by increasing their profits. By contrast, volatility does not necessarily hurt consumers, because different food staples are often substitutable.

…The way in which leaders cast the food price problem matters because it shapes policy responses. Policies aimed at curbing food price volatility, such as export bans, price stabilization schemes, and subsidies for farmers are misguided if policymakers aim to increase the welfare of the poor, or avert political unrest in developing countries. Instead, policymakers should consider measures that prevent increases in food prices, such as removing barriers to international agricultural trade and increasing investment in scientific research on crop productivity improvement, soil and water conservation, and renewable energy that does not compete with food for land. Policymakers should also focus on innovative ways to reduce post-harvest losses, which run to nearly 50 percent in many low-income countries, often due to insufficient or sub-standard storage, refrigeration, and processing facilities. 

To summarize this in practical terms, what the poor need is more Walmart (efficient processsing, refrigeration and supply chains), more free trade and more research into things like genetically modified seeds – these are the things that would make their lives better. At the same time, there are many allegedly compassionate organizations and politicains campaigning against all of these things and blaming them for hurting the poor. No surprise there.

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Minding the Gap

I am always surprised at how quickly mentioning the minimum wage causes people to dig up all sorts of strange pseudo-economic concepts to justify their gut feeling that the poor people would be screwed over by “the system” without it. Let me note some very simple things.

The important thing about the minimum wage is that, in theory, there might be some people whose current value in the labor market is less than minimum wage. Having a job would mean that they could feel better about themselves, make at least some money and also have the option of gaining some useful skills and experience that will allow them to earn more money later as they ascend in the work hierarchy. Especially the last point should seem obvious to every student who has ever done an unpaid internship: even working for free can be a valuable investment in the future. What a minimum wage does, is telling these individuals that society would prefer them to be bored, poor, government transfer-dependent and unemployed with deteriorating job skills rather than letting them decide for themselves. But do these people exist? Some think not:

Are there jobs where it’s profitable to hire at $4.75 but not at $7.25? Well, there must be some, but we’re talking about such low skill levels here that there very well might not be many.

This seems just wrong to me. After all, we can definitely agree that in any job requiring no extensive training it would be profitable for an employer to hire someone at $0.01 an hour. If you disagree, I would love to hire you at that rate to hold doors open for me and carry my bag to work. Moreover, it is a safe assumption that many of the 7 million unemployed cannot find a job at minimum wage as evidenced by their status. Thus, it must be true that there are several million people for whom it would be profitable to hire them at below minimum wage and who could thus potentially find employment if minimum wage were abolished/lowered. I think this is a pretty strong case and it would take some pretty strong evidence to the contrary to advocate for raising the minimum wage instead, as Congress did during the financial crisis.

But what about those workers who have minimum wage job and might receive less money once the minimum wage is lowered? Who will protect them from the mean capitalists? Note the assumptions in this thinking: Firstly, there will be downward pressure on wages from labor competition once the minimum wage goes. This implies that there is workers who could be profitably hired at below minimum wages but who couldn’t compete beforehand because they were not allowed to. This confirms that the minimum wage lowers employment. The new market equilibrium will be at lower wages for some workers but higher employment. Whether this is good or bad in welfare terms is not clear. Previously employed workers might lose a little, newly employed workers gain some dignity, a job and a livelihood. In the long run, efficiency gains from market-based wages and positive social externalities from lowering the number of frustrated unemployed people might matter as well.

Secondly, the concern over a drop in wages for minimum wage workers assumes that so far the employer had been tricked into employing some workers at above their market wage by the benevolent sovereign force. In anything other than the very short run, it is not clear why the employer would not change tactics to avoid making a loss on that worker. As only the nominal amount of money is fixed by the minimum wage, the employer could simply start cutting other perks that are part of the implicit salary of a job (this idea is from someone in the blogosphere, but I don’t remember from whom) like the air-conditioning and the free coffee. Moreover, getting rid of the worker is the easiest way to avoid paying him more than he produces. Thus, it is not clear that the minimum wage can keep anyone employed in the long run who wouldn’t be employed otherwise.

But there is usually a last line of defense here: What if the worker does “deserve” above minimum wage due to his productivity but something in the system makes employers able to cheat them out of that “surplus” (Welcome back Karl M.!) by simply lowering wages due to their awesome bargaining power? Wouldn’t the consequence of dropping the minimum wage just be the following (same source as above)?:

It would increase corporate profits and dramatically reduce the wages of the poorest workers, and that’s about it. Employment would probably be affected only marginally, and nothing would take the place of that lost income.

This just makes me cringe. Where is the historical evidence that companies are able to just pay some random low wage to their workers in the long run? After all, America is one of the wealthiest places in the world because its most of its workers earn so much. Secondly, if the issue is poverty, why would forcing employers to overpay for work activity be a good way of redistributing wealth? You could also force all theaters to hand out free tickets to poor workers and then have a person on stage throw paper planes made from money at the workers in the audience…except for the fact that this seems really silly. What is wrong with lump sum transfers? If you want to redistribute money to the poor, why choose the one way to do it that distorts labor markets along the way and thereby…hurts the poor?

But don’t get distracted by these details. What matters is that employment and economic efficiency (also known as “more for everyone”) are negatively affected by the minimum wage. Given that the minimum wage exists and Congress keeps raising it, the burden should be on supporters to come up with a really strong case why this increases the welfare of poor people.

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Asking is good, theory is better

In discussions with friends who from other social science disciplines, we often get into disagreements about the relative importance, and role, of theory and quantitative or qualitative data in finding the answer to a question. Most discussions come to the conclusion that anecdotal or informally gathered data (from surveys, observations, conversations etc.) can serve as the basis for developing new hypotheses. In the next step, theoretical models from psychology, economics, anthropology etc. are useful to develop a strong hypothesis for the mechanism underlying the observed phenomenon and identify parameters and predictions that can be tested to verify the applicability of the model. Finally, well-designed empirical studies (eg randomized controlled trials) should test the validity of the model in contexts other than the one that originally inspired the model.

As an economist with some interest in theory and empirical methods, I get especially frustrated by some ethnographic studies, often several decades old, where the researchers simply asked the individuals involved about why they exhibit strange social behavior X. Then, tallying up the answers, they proclaimed that the “reason” for the behavior must be X, because the people said so. Often the “reason” would involve religious prescriptions or “tradition” or some other question-begging concept.  As the severity and nature  of religious prescription is usually strongly adapted to local needs (just ask any Christian why they don’t think women have to cover their hair in a religious service, as Paul clearly demands in his letters in the bible) and thus endogenous to social mechanisms, the answer is basically useless, because it just says that locally observed behavior is due to local inclinations to promote the locally observed behavior.

One good example of this rule never to trust individuals to know the reasons for common behaviors or rules of their group is given by Robert Wyman in an online lecture:

There’s many taboos on sexual relations, especially after birth. In many cultures, as I said, a prescribed period of nursing. There’s also a postpartum taboo against having sexual relations, and again, [this is] another obvious mechanism for birth spacing…If you ask a member of a society that has a taboo they report for instance that sex at that time is very dangerous, a life and death matter.

It is dangerous to mix the man’s blood with the woman’s, and the man’s blood is transmitted through semen…If man’s blood gets into the woman through his semen then it also gets into her milk, and then the man’s blood goes back into the baby through the mother’s milk and this is poison for the baby. That’s their version of why they shouldn’t–why they have this taboo.

Note that the issue with this justification of a fertility practice is not that it is biologically inaccurate, but rather that it should quickly have become obvious that the predicted outcome (death of the child) was rarely associated with intercourse beforehand. The persistence of such an empirically untenable belief suggests that it is merely a conscious rationalization of a more deeply rooted mechanism, that is, the need to limit group fertility in order ensure survival.

But inventing “reasons” to justify deep-seated beliefs is not limited to developing countries. I think we can all find instances in our own lives, especially related to issues of identity, where there is a group norm and we make the “reason” for it up on the fly. Why is it bad to have a government-regulated market for kidneys? Well, you know, it is dangerous, a life and death matter, to mix the man’s money with…

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First steps on the ladder

Tyler Cowen links to the story of a booming Peruvian town that faces labor shortages due to to its phenomenal success at industrializing modern agriculture:

Ica, in southern Peru, is known as a city of zero unemployment…Work is so plentiful that men with megaphones ply the city’s neighborhoods offering jobs. Thousands of mostly indigenous Peruvians from the central Andes have flooded the coastal community, attracted by radio ads and word of mouth, successfully joining the ranks of the employed.

International workers’ rights groups and globalization critics often suggest that while entering an upward spiral of increases in productivity and wages was the way all developed countries got wealthy, the mean multinational corporations will somehow keep their factory workers in poverty even while there is a shortage of labor. But supply and demand seem to hold at least in this Peruvian town, so that increased demand for labor raises the offered benefits for workers:

At Chlimper’s Ica farms, about 4,500 employees help grow and export 1.4 million 11-pound crates of asparagus and more than 8,000 tons of table grapes annually. Chlimper pays bonuses for extra production, and over the years his company has improved meals and transportation for employees…It’s all designed to keep workers happy and to attract more, Chlimper says.

Wow. This sounds like the self-interest of the capitalist and the use of modern technology lead to more jobs and higher wages – somehow the appeals to international charity and leftist critiques of globalization always get the signs of those effects wrong, claiming them to go in the opposite direction. Similarly, the author of the article can’t really let that kind of cold-hearted capitalist-led development stand and tries to find out what’s wrong with it:

In fact, there has paradoxically been an increase in disease and decline in education going hand in hand with the proliferation of jobs…Yet there is also an ugly side to Ica’s full employment. Although the city now has two huge shopping malls and a third is under construction, poverty remains a nagging problem, especially among those who have traveled from the Andean highland regions of Ayacucho, Huancavelica and others, areas devastated by political violence in the 1990s.

The paradox is probably just a consequence of migrants from more destitute areas moving in and thereby impacting the disease and education statistics of the area without actually lowering the living standard of previous residents. Even if education declined and disease levels increases due to the migration, the continued influx should be evidence enough that the quality of life for migrants is still higher in Ica than where they are coming from.

Let me try and understand the second part of the quote: These migrants used to live in abject poverty and threatened by violence in the highlands. Then they voluntarily moved to Ica, found work there, and now they earn more money than before, but there is inequality of wealth because some people benefited even more from the boom. That doesn’t sound ugly, but rather like the first chapters of a stunning development success story to me. What did the author expect? That they move from the slums straight into mansions with cars without any transitional period in between? One interviewed woman summarizes it well:

Nelida Mendoza, 20, joined her father in the fields picking onions after the family fled the desperation of Ayacucho. She lives under tarps and a bit of corrugated tin with her parents, a couple of siblings and her two small children, whom she must leave behind during the long days digging in the soil. The alternative would be worse, she says. “I wouldn’t have money for anything,” she said.

For a real paradox, consider what the policy change was that led to these improvements in the lives of the workers:

Agribusiness really took off in the Ica Valley after a law was enacted in 2000 encouraging outside investment and limiting workers’ rights.

To summarize figuratively, when poor people are taking the first steps on the ladder to prosperity, well-meaning rich people like us should refrain from kicking over their ladder while complaining that there is no express elevator available.

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