Development as disaster insurance

Matthew Kahn's new paper, via MR:
While richer nations do not experience fewer natural disaster events than poorer nations, richer nations do suffer less death from disaster. Economic development provides implicit insurance against nature’s shocks. Democracies and nations with higher quality institutions suffer less death from natural disaster.
This is intuitive to many, such as the MR reader who asked, "Which earthquake killed more people today?", FP Passport in its initial assessment of the Chilean earthquake, and the NYT's David Brooks in a prescient January column:
On Oct. 17, 1989, a major earthquake with a magnitude of 7.0 struck the Bay Area in Northern California. Sixty-three people were killed. This week, a major earthquake, also measuring a magnitude of 7.0, struck near Port-au-Prince, Haiti. The Red Cross estimates that between 45,000 and 50,000 people have died. [Note: latest estimates are up to 300,000, or 3% of Haiti's population]
Now, if only we knew more about what works in development...

Update: "Less death from natural disaster" should not be confused with lack of devastation:

Photos from, via Ben Casnocha who describes his firsthand experience of the temblor.

WWID: Recognizing high dimensionality

In Chapter 6 of What Works in Development, Ricardo Hausmann makes, in commentator Ross Levine’s words, an “imaginative, provocative, and substantive” argument that much work on economic growth willfully ignores the complexity inherent in the classical development formula (“peace, easy taxes, and justice” in Adam Smith’s words, or trade openness, sound finances, and property rights, to paraphrase Larry Summers). Providing the right public inputs, particularly regulation, to enable a nation to develop new productive capabilities is a very “high dimensional” problem, which Hausmann compellingly illustrates with the myriad policy elements required to enable an efficient real estate market.

The necessary information to determine optimal policies is highly dispersed, Hausmann continues, and in such a context central planning is bound to fail. Unlike a product market, the market for public inputs lacks mechanisms to aggregate information (prices), incentivize action (profits), and allocate resources (capital markets). Hausmann then hypothesizes that in the United States, the open political architecture allows lobbyists may play a market-making role in the provision of public inputs. (Not without some rent-seeking, of course, but this is a necessary tension “in the absence of an omniscient and benevolent social planner.”)

How, then, to incorporate broad input into the provision of public inputs in developing countries? He doesn’t have all of the answers, and neither do commentators Nava Ashraf (who suggests looking to social enterprise for systems) and Levine (who uses the example of racism to argue that institutions themselves evolve in response to underlying incentives, and their change cannot be mandated independently of those incentives). But I find the question alone quite profound.

Very interesting stuff… I will have to let it marinate for a while, and hope to have further reflections at some point.

WWID: An Experimental Approach

In Chapter 2 of What Works in Development, Dani Rodrik (who has sadly stopped blogging) argues that 1), we shouldn't consider RCTs superior to other types of studies, because while they have strong internal validity they often have weak (and unacknowledgedly so) external validity (and other studies can be stronger on external validity), and 2), there is a philosophical convergence on "experimentalism" between micro development economists (e.g. the randomistas) and macro development economists, who now think much more in terms of diagnostics and testing to find binding constraints on economic growth than the previous worldview which came with an a priori vision of what works (e.g. the Washington Consensus).

Then there are two short commentaries:
  • Sendhil Mullainathan sees a divergence instead of a convergence (with the macro guys willing to make sweeping recs, and the micro guys only willing to make "guarded statements" about very specific interventions)

  • Martin Ravaillon argues that the internal validity of RCTs is less ironclad than advertised because of omitted variables like selective participation, other actors (e.g. gov't shifts resources toward control villages, etc.)

(Interim) book review: What Works in Development

I am almost finished reading What Works in Development; it is not light reading, but quite interesting and worthwhile. The format with two commentaries on each essay made each discussion much richer. So far I have particularly enjoyed two chapters.

Chapter 2, The New Development Economics: We Shall Experiment, But How Shall We Learn? (Dani Rodrik)

Chapter 6, The Other Invisible Hand: High Bandwidth Development Policy (Ricardo Hausmann)

Update: Chapter 7, Big Answers for Big Questions: The Presumption of Growth Policy (Abhijit Banerjee) is also worth a synopsis. Overall I found the volume quite good - Todd Moss's African Development remains my favorite synthesis of the history, issues and actors in development, but this gets the reader much closer to the leading minds in and cutting edge of development research (and the "civil war" allegedly engulfing them).

The Christian case for fighting hunger

Roger Thurow, co-author of Enough, makes the Christian case for fighting hunger through agricultural development.
There's the political side of hunger and a policy prism. But there is this moral imperative to solving hunger. It's the right thing to do. Churches are extremely important for pushing the moral importance of the issue of hunger. It is something appreciated and understood in churches, since one of the main precepts of all religions is to feed the hungry. And for Christians, Matthew 25:35, there it is: "I was hungry and you gave me food … What you did to the least of these my brethren, you did unto me" (v. 40).

Bono referred to that passage when he was at Wheaton College on his Heart of America tour. Francis Pelekamoyo, the head of Opportunity International in Malawi, searched the Bible and wondered: What should I do after my years as central bank governor? That's the passage he kept coming back to. This is what we should do. This is what Jesus wants us to do.

Duncan Green on resource curse

Oxfam’s Duncan Green reviews two new papers on natural resources and development, one by the World Bank and one by his own shop. He is harsh on the World Bank:
‘High oil and mineral prices mostly have a negative impact on long-run growth in exporting countries with bad governance. They have a significant positive impact on growth in exporters with good governance. This finding suggests that continued high commodity prices in the next few years could provide valuable resources to accelerate economic and social development in commodity exporting countries with good policies and governance.’

At this point alarm bells started to ring for me. Natural resources and governance are not independent variables – the interesting question is the impact of natural resources on governance itself. Countries are not born with either good or bad governance, they evolve, not least because of the influence of ‘money coming out of the ground’.

But that is nothing compared to this paper’s blind spot on environmental constraints. An entire paper on commodities, including agriculture, in which the only reference to climate is ‘investment climate’ is really quite an achievement... And nothing on natural resource exhaustion either... Other bits of the Bank are doing good work on climate change, but it doesn’t seem to have reached the authors.
His best point, responding to the Oxfam paper, is that the necessary domestic checks and balances and monitoring can become a much bigger tent than just the generic panacea of “civil society”:
At a national level, Lifting the Resource Curse argues, unsurprisingly, that the active involvement of civil society is essential both to increase the public pressure on governments to make the most of natural resource endowments and to act as watchdogs, tracking both the origins and uses of revenues from extractive exploitation. It is also of crucial importance to have public institutions that can support this process of participation and which are efficient in their control, monitoring, and enforcement of it.

But I think the paper could have gone a bit further with its power analysis on this – what other influential domestic groups have an interest in harnessing extractive industries for the national good? Answer, virtually all of them – business sectors (manufacturing, exporters, agriculture, finance), trade unions, media, national parliaments and local governments. Where and how have these kinds of coalitions formed and had an impact? There’s a lot more to life (and change) than CSOs.
This is particularly important for countries in which civil society, for whatever reason, struggles to punch at the same weight as powerful political and business interests.

P.S. Duncan is picky with his language, which is an excellent quality in a writer. Here’s him abolishing “human capital” and “political will”, respectively, from his vocabulary.

Harmful emission trade-offs

How much CO2 is a ton of SO2 worth?
Valero's Benicia, Calif., refinery releases an additional 16,000 metric tons of carbon dioxide because of the extra energy needed to operate the ULSD unit for a year, while the "corresponding reduction in tailpipe emissions expressed as reduced SO2 [sulfur dioxide] is about 200 tons" for that fuel, Cuffel said.
A question for ecologists, environmental economists, and the broader public to contemplate together…

Speculation is not manipulation

In the fine tradition of Thomas Malthus, famous Stanford finance professor Darrell Duffie has penned an op ed entitled "In Defense of Financial Speculation: It is not the same thing as market manipulation." He has a sharp mind and makes the case well.

First, speculators perform valuable market functions by taking risk and disseminating information (remember Enron?).
Speculators earn a profit by absorbing risk that others don't want. Without speculators, investors would find it difficult to quickly hedge or sell their positions.

Speculators also provide us with information about the fundamental values of investments. When the fundamentals appear favorable, they buy. Otherwise, they sell. If their forecasts are correct, they profit. This causes prices to more accurately forecast an investment's value, spreading useful information. For example, the clearest evidence that Greece has a serious debt problem was the run-up of the price for buying CDS protection against the country's default.

Is this sort of speculation wrong? I have not heard why.
The distinction between "speculation" and "manipulation" is important.
Those who call for stamping out speculation may be confused between speculation and market manipulation. Manipulation occurs when investors "attack'' a financial market in order to profit by changing the value of an investment. Profitable speculation occurs when investors accurately forecast an investment's fundamental strength or weakness.
Manipulation is much harder to pull off than making a simple directional bet.
Market manipulation for profit is not easily done... Simply driving up the price, as speculators are alleged to have done in the oil market in 2008, is not enough. To make a profit, a manipulator needs to obtain monopolistic control of the supply. Given the size of the oil market, that seems implausible, absent a major and sustained conspiracy.
As long as speculators do not crash and destabilize financial markets with them, they are not where regulatory attention should lie.
It would be better for our economy to enforce anti-manipulation laws, and require that speculators have enough capital to cover their risks, than to attempt to squash speculation.
Worth keeping in mind the next time someone starts ranting about "reckless speculation."

India's invincible fertilizer subsidies

Long but fascinating WSJ article on the history of fertilizer subsidies in India. A few choice quotes (and apologies for the lack of synthesis and commentary):
In 1967, then-Prime Minister Indira Gandhi imported 18,000 tons of hybrid wheat seeds from Mexico. The effect was miraculous. The wheat harvest that year was so bountiful that grain overflowed storage facilities. Those seeds required chemical fertilizers to maximize yield. The challenge was to make fertilizers affordable to farmers who lacked the cash to pay for even the basics—food, clothing and shelter. Back then, giving cash or vouchers to millions of farmers living all over India seemed like an impossible task fraught with the potential for corruption. So the government paid subsidies to fertilizer companies, who agreed to sell for less than the cost of production, at prices set by the government.

In budget crunches, subsidies on those fertilizers have been reduced or cut, but urea's subsidy has survived. That's because urea manufacturers form a powerful lobby, and farmers are most heavily reliant on this fertilizer, making it a political hot potato to raise the price.

With urea selling for a fraction of the price of other fertilizers, farmers began using substantially more of the nitrogen-rich material than more expensive potassium and phosphorus products.

In the state of Haryana, farmers used 32 times more nitrogen than potassium in the fiscal year ended March 2009, much more than the recommended 4-to-1 ratio, according to the Indian Journal of Fertilizers, a trade publication. In Punjab state, they used 24 times more nitrogen than potassium, the figures show.

Under the new plan, the government will offer subsidies to fertilizer companies on the nutrients, such as sulphur, phosphorus and potassium, from which their products are made, rather than the fertilizer products themselves. The idea is to provide incentives for farmers to apply a better mix of nutrients. But in a major compromise, the government left in place the old subsidy on urea—meaning farmers will still have a big incentive to use too much of it.

Hat tip to a colleague who first passed this on to me.

Where China’s investing

Statistics shmutistics... while the research apparently says China doesn’t invest disproportionately in resource-rich African countries, a top four of DR Congo (minerals), South Africa (coal and iron ore), Nigeria (oil) and Niger (uranium, and a fresh coup) makes me dubious.

Note also that Australia is number one overall (e.g. here, here, here).

By the way, critical mass has inspired me to add a new label for China in Africa.

Update: OK, on second thought... how is "aid" defined here? If narrowly, then perhaps I buy that Chinese aid specifically is not targeted toward resource-rich Africa countries... but who's to say where building a road, a railroad, a port, an airport becomes investment rather than aid? Building infrastructure frankly has more economic impact than most other foreign aid anyway, in all likelihood.

Update 2: Speaking of Niger, cannot help but pass on this outstanding haiku:
Another colonel
Thinks it’s his turn to spring clean
The big boss – hi coup!

Quick-and-dirty calculation of ag footprint

Following a comment discussion on resource footprints over at Greed, Green and Grains, I felt the urge to do a very rough calculation of the relative per capita agricultural footprints of a few countries (U.S., China, India, and Brazil). Here’s what came out:

Caloric consumption
Ag footprint
Relative ag footprint
(U.S. to country)
Relative oil footprint
(U.S. to country)

I’m not surprised by this result – back-of-the-envelope is that U.S. eats ~70% more calories, gets 23% of calories from meat/dairy compared to 6% in India, and uses 3.4 kg of feed per calorie of animal product vs. 1.8 kg since U.S. is more heavily weighted toward meat. Add these factors up and the overall gap not much bigger than double.

I didn’t include waste because while consumer waste is much lower in developing countries, harvest and post-harvest waste is much higher. Even if we do assume the U.S. wastes 40% and India only 10% of food production, the ratio only jumps to 3.3x – still an order of magnitude less than the oil consumption differential of ~30x.

India is about as extreme an example as you can get – not only low average caloric intake (people tend to forget that India has worse malnourishment than Sub-Saharan Africa), but abnormally low meat consumption when adjusted for income level due to cultural/religious factors. So unless my calculations are totally off (and I’ll lay out the details below, so someone can point out if they are), we can say with confidence that rich-poor differential in per capita agricultural footprint is an order of magnitude smaller than the rich-poor differential in energy footprint.

(If you adjust calories consumed for local yields, the gap will be even smaller due to low agricultural productivity in many developing countries… but that's an entirely different topic.)

Calculation details
To simplify I made the assumption that a calorie of grain has a fixed “agricultural footprint.” I used FAOStat data on per capita caloric consumption and FAPRI data on per capita meat and dairy consumption. Conversions for calories/kg and feed conversion are from internet and personal knowledge – please let me know where they’re wrong.

Animal productKcal/kgkg feed/kg product
Mutton/Goat meat2,0704.0

I’m missing fish and eggs. There are probably other errors as well – tell me!

Oil footprint, by the way, is based on barrels of oil consumed per capita per day.

Update: How convenient - the FAO's 2009 State of Food and Agriculture report (entitled "Livestock in the balance") has a chart showing calories of livestock products consumed by region. My estimates were within 100 calories for each, which gives me incremental confidence in my answer above.

Fraccing videos

Speaking of unconventional gas, here are some good videos from API illustrated the hydraulic fraccing process. Via Geoff Styles, who explains why we shouldn't worry about fraccing contaminating our drinking water.

More money on unconventional gas

Schlumberger’s $11bn acquisition of Smith International is big news in the oilfield services sector, and Cyrus Sanati thinks it’s all about unconventional gas:
“There is I don’t think any doubt that long-term shale gas is going to be one of the big new energy sources both in the U.S. and overseas,” Andrew Gould, Schlumberger’s chief executive, said in a conference call with analysts on Monday. “Smith’s capacity to serve that market in North America is of great interest to me.”
Like Exxon’s purchase of XTO, I suspect that the real long-term value here is in exporting unconventional gas technology outside North America, where its potential has barely been tapped. And as a service provider, Schlumberger may be even better positioned than an oil major like Exxon, given the increasing clout of national oil companies, resource nationalism and the increasing difficulty of acquiring underlying resource rights in many countries.

Reassessing brain drain

Aid Watch compiles "four ways brain drain out of Africa is a good thing":
1. Gains to migrants themselves. Why is this often ignored in brain drain discussions? Perhaps it reflects a neglect of the rights and well-being of individuals and an overemphasis on the nation-state as the object of development. The migrant is better off with higher living standards, not to mention satisfying her revealed preference to live in a country other than where she was born.

2. Gains to migrants’ families. Remittances is the most obvious and commonly-cited benefit of the brain drain. Even using official figures, which likely far undercount the value of remittances by excluding informal channels, remittances sent back by Africans abroad outweigh the cost of educating them at home. Why pass up a high return opportunity (Africans earning high incomes abroad and remitting) and insist on a low return activity (educated Africans underemployed at home)? Not to mention that families also get satisfaction from seeing their offspring realize their dreams.

3. Brain circulation. Brains don’t just leave Africa, never to return. Africans who have been educated or worked abroad do come back to their home countries to visit, to establish dual residence, to start businesses and universities, and, sometimes, to stay. These people bring back new ideas and skills—crucial ingredients to economic growth. Similar processes brought enormous benefits already to Asia and Latin America, so why would donors want to shut down this motor of opportunity only for Africa?

4. Stimulation of skill accumulation (“brain gain”). The possibility of migration and the example of role models who find success abroad (the Kofi Annan factor) provide incentives for young students to work hard and gain skills that will help them overcome the hurdles to migration. The authors argue that the new human capital created through these incentives offsets the loss of skilled people who do eventually leave.
These are all plausible positives, and I'm unsympathetic to most efforts to keep talented and/or educated residents of poor countries from emigrating. It remains to be shown, though, that these benefits outweigh the shorter-term, acute in-country capacity challenges to which brain drain contributes.

Haiti and agriculture

Michael Roberts points out that one, U.S. import quotas support a domestic price well above the world price (see below), and two, the Dominican Republic's U.S. sugar import quota is twenty times that of Haiti.

I remember first reading about the stark gap (economic, political, and environmental) between the Dominican Republic and Haiti in Jared Diamond's Collapse; there are obviously a host of causes that go far beyond U.S. policy. Here is a satellite photo of the Haiti-DR border; note the severe deforestation on the Haitian (left) side.

Tyler Cowen suggests that the Haitian quota be repealed in the light of Haiti's recent tragedy. I agree with Michael that the impact now is likely small - what would have really mattered would have been lifting the quota fifty years ago.

In other Haiti news, Roger Thurow laments that the agricultural component of Haiti's recovery aid is being largely ignored
The UN’s Food and Agriculture Organization says its part of the appeal - $23 million to help revive Haiti’s food production – is being largely ignored. Only 8% has been funded.
Hopefully the recent return to prominence of agriculture on the broader aid scene will facilitate this being remedied by the time the Haitian growing season starts in March,

Julian Simon got lucky (or not)

Paul Kedrosky re-analyzes the famous Simon-Ehrlich bet on commodity prices, and concludes that Simon (who won) got lucky.
It will surprise no-one that the bet’s payoff was highly dependent on its start date...

Simon was right but fairly lucky. There is nothing wrong with being lucky, of course, but compulsive Simon/Ehrlich-citers need to be reminded that it is no law of nature (let alone of rickety old economics) that commodity prices (inflation-adjusted or otherwise) trend inexorably downward, even over a decade.
Here's how the bet would have turned out since:

Via MR, and by the way, I am a bit confused by Alex Tabarrok's take - he seems to say that Ehrlich was betting on "scarcity", but instead the "value" of commodities has since gone up as developing countries got richer, increasing demand. He is the economics professor, but isn't the cardinal precept of economics that scarcity and value are fundamentally linked?

Update: Or not... Mark Perry responds:
I'm not so sure that Simon was just lucky. If Simon's position was that natural resources and commodities become generally more abundant over long periods time, reflected in falling real prices, I think he was more right than lucky, as the graph above demonstrates.

Stated differently, if Simon was really betting that inflation-adjusted prices of a basket of commodity prices have a significantly negative slope over long periods of time, and Ehrlich was betting that the slope of that line was significantly positive, I think Simon wins the bet.

Does the oil curse exist?

The oil curse is a generally accepted truth - there are is no shortage of anecdotes from countries with oil (e.g. Brazil, Nigeria) and concern from those who might discover it (e.g. Greenland). The comparative growth trajectories of Latin America and China/India draw a striking (if not statistically rigorous) contrast between natural resource wealth and economic growth.

But at Aid Watch, Adam Martin questions whether the curse does in fact stand up to analytical scrutiny. He argues that empirical work on the oil curse confuses abundance with dependence and cites three recent papers that show that "even natural resource dependence does not undermine democratization." He later clarifies for commenters:
- I’m not claiming there are no ill effects associated with natural resources. I’m saying these studies failed to find evidence that resources systematically effect democracy, growth, or development, and most of the popular studies that do have fundamental flaws.

- It’s also not the case that these studies (or I) claim that there are NO countries that fit the Curse story, but that it’s not the systemic phenomenon other studies had argued for.
It's quite an interesting and counterintuitive finding. I am inherently skeptical of cross-country regressions, especially when they run counter to things that so many people have seen firsthand in practice. But it is good to keep an open mind, and I applaud Martin for arguing the other side of the story.

David Roodman on blogging

On his blogiversary, David Roodman shares some blogging advice that I like:
I can only advise on my kind of blogging. I have the luxury of taking intellectual journeys for a living. I am funded in return for sharing what I learn, under the expectation that it have practical value. And I am committed to the discipline of saying things plainly in order to reach to more people. My tone may be personal but I put my prose through a fair amount of editing (if often not enough). If you see yourself in that description, if you are in a position to think aloud and you care how you say it, then I would say, yes, blog your intellectual journey. Keep your posts organized. Cut words, but not necessarily ideas. Tell stories. My longest post is also by far the most read. Figure out why. Read other blogs and analyze what works for you and what doesn’t.
Roodman, incidentally, has an unusual background for an emerging heavyweight at the Center for Global Development - he studied theoretical math, never went to grad school and “has never taken a course in economics or statistics.”

Whole Foods vs. Walmart

Chris Blattman asks, does Walmart win?
I started looking into how and why Walmart could be plausibly competing with Whole Foods, and found that its produce-buying had evolved beyond organics, to a virtually unknown program—one that could do more to encourage small and medium-size American farms than any number of well-meaning nonprofits, or the U.S. Department of Agriculture, with its new Know Your Farmer, Know Your Food campaign. Not even Fishman, who has been closely tracking Walmart’s sustainability efforts, had heard of it. “They do a lot of good things they don’t talk about,” he offered.

The program, which Walmart calls Heritage Agriculture, will encourage farms within a day’s drive of one of its warehouses to grow crops that now take days to arrive in trucks from states like Florida and California. In many cases the crops once flourished in the places where Walmart is encouraging their revival, but vanished because of Big Agriculture competition.
Corby Kummer (who wrote the above) also does a blind taste test, and the results are mixed (which is frankly a win for Walmart).
As I had been in my own kitchen, the tasters were surprised when the results were unblinded at the end of the meal and they learned that in a number of instances they had adamantly preferred Walmart produce. And they weren’t entirely happy.
Food, Inc. also features Walmart, and against a general backdrop of anti-corporate sentiment, the retail giant comes off looking OK.

Yara buys Terra

Remember the never-ending CF-Terra-Agrium three-way fertilizer takeover saga? One of the protagonists has fallen to an unexpected outside bidder, Norway’s Yara. The rationale is interesting:
Energy-intensive fertilizer producers in North America have become increasingly attractive, Yara said, because of “structural changes” in American energy markets as a boom in unconventional gas output curbs natural gas prices in the United States.
Yes for now... the question is for how long that trend holds up.

Update: And CF swoops in to outbid Yara and claim the prize... going to show that it ain't over til it's over.

China and African resources

Apparently lots of folks (me included) are guilty of parroting the conventional wisdom on China's actions in Africa... which turns out not to stand up to scrutiny.
A few examples of China myths and partial truths:

1) China targets aid to African states with abundant natural resources and bad governments

Actually, China gives money to almost every single country in Sub-Saharan Africa, excluding only those that don’t acknowledge the One China policy. There is little evidence that China gives more aid to countries with more natural resources or specifically targets countries with worse governance. [emphasis mine] China is not alone in its interest in natural resources in Africa, and natural resources are not the primary motivating factor for Chinese aid: like all donors, US definitely included, China is motivated to give aid by a mix of political, commercial, and social/ideological factors.
Via Aid Watch.

Update: Or not?

Cosan and Shell hook up

From the department of long overdue business news... Cosan and Shell have decided to merge their fuel retail businesses in Brazil in a deal worth $12 billion, and the market liked it:
Shares of Cosan jumped more than 6 percent in Sao Paulo, while Shell rose nearly 1 percent in London.
Cosan, a leading Brazilian sugar conglomerate, also bought Exxon's fuel retail business in Brazil a few years back, surprising industry watchers who expected an oil and gas player to come out atop the bidding. Brazil's energy story is more nuanced than the simple triumph of biofuels, but nevertheless the ascent of a sugar company to prominent status in the country's fuel retail industry is striking and has no analogy worldwide, as far as I know.

Finally saw Food, Inc.

So I finally watched Food, Inc. (long overdue); I came in with a somewhat skeptical attitude and felt similarly afterward (perhaps that says more about me than about the film). It makes some good points – for example, Kevin’s Law should pass, and much of industrial livestock production looks gross. I don’t object at all to the muckraking style (in the fine tradition of Upton Sinclair). But I felt much of the movie was grafting broader populist themes like “corporations are bad” and “our political system is broken” onto the agriculture and food world, rather than making nuanced and well-argued points that are specific to the latter.

Monsanto might be crossing the line when they attack someone like Moe Parr with litigation (emphasis on "might" - Monsanto has its own side of the story). But the broader argument that “farmers have saved seed for thousands of years” is specious given the importance of intellectual property to spurring innovation. Monsanto’s Roundup Ready soybeans could not have gone from 2% market share in 1996 to 96% market share in 2007 without offering really substantial benefits to farmers, benefits that could never in a million years have been developed through traditional seed selection and breeding. So while wrongful prosecution is not OK, enforcing the contract farmers who use Roundup Ready seed sign to not save their seed is fine with me.

My biggest disagreement with Michael Pollan et al is with how they disparage “efficiency” and are blasé about food prices (“good food costs more”). In the movie they even show a poor Hispanic family that wants to buy broccoli and pears, but they’re too expensive, so they get Big Macs instead. Michael Pollan’s response is “we need a system in which the bad food costs more than the good food.” I am all for ending ag subsidies (dare we hope the word is moving in that direction?), which are one weight that tilts the playing field. But moving to less efficient staple crop production methods will only increase prices and take up more land, resulting eventually in more deforestation and environmental degradation (particularly in the developing world), not to mention more malnourished people. And it won’t even bring broccoli within the purchasing power of the Gonzalez family. In fact, it’s easy to imagine a more extensive production system increasing the value of land and thus the price of all food crops, healthy or not.

Does aid cause Dutch disease?

Owen Barder considers whether foreign aid recipients are hurt by Dutch disease, and concludes that the effect is existent, but negligible.

Owen also suggests a list of readings on foreign aid; with all due respect, I think Rachel Strohm’s is better.

Readings on Somalia

This isn’t exactly on topic, but I can’t help but be interested in the neighborhood in which I’m working, and furthermore I recently visited the Somali region of Ethiopia, upriver from Mogadishu (fascinating). So in that vein, here are a series of interesting recent reads on Somalia, al-Shabaab and piracy.
  • Chilling NY Times profile of "The Jihadist Next Door", a good ol' Alabama kid cum al-Shabaab guerrilla leader and recruiting rock star.
    Despite the name he acquired from his father, an immigrant from Syria, Hammami was every bit as Alabaman as his mother, a warm, plain-spoken woman who sprinkles her conversation with blandishments like “sugar” and “darlin’.” Brought up a Southern Baptist, Omar went to Bible camp as a boy and sang “Away in a Manger” on Christmas Eve. As a teenager, his passions veered between Shakespeare and Kurt Cobain, soccer and Nintendo. In the thick of his adolescence, he was fearless, raucously funny, rebellious, contrarian. “It felt cool just to be with him,” his best friend at the time, Trey Gunter, said recently. “You knew he was going to be a leader.”
  • The hypothesized link between al-Shabaab and Somali pirates is confirmed - the Islamic militants are training pirates in exchange for a share of the booty.

  • In "capital markets everywhere" news, pirate capital Haradheere now has a thriving stock exchange.
    Piracy investor Sahra Ibrahim, a 22-year-old divorcee, was lined up with others waiting for her cut of a ransom pay-out after one of the gangs freed a Spanish tuna fishing vessel.

    "I am waiting for my share after I contributed a rocket-propelled grenade for the operation," she said, adding that she got the weapon from her ex-husband in alimony.

    "I am really happy and lucky. I have made $75,000 in only 38 days since I joined the 'company'."
  • Somali pirates are driving up Kenyan real estate prices.

  • In breaking news, Al-Shabaab has declared war on Kenya.

  • I was also surprised and interested to learn from National Geographic that Somaliland is its own unrecognized but largely functioning state.

  • Finally, on the fiction side, I will leave the reams of Ethiopia books I’ve been plowing through for another post, but I have to mention The Zanzibar Chest here. A non-fiction novel/memoir by war correspondent Aidan Hartley, it is harrowing and compelling. The man was truly in the middle of some historical happenings in Africa. My favorite line from his account of seeing the overthrow of Somali dictator Siad Barre in Mogadishu in 1991:
    As a correspondent, I suppose my job was to excite the sympathy of the world for this forgotten and reviled people [the Somalis], but all I can say now is that I have felt it a privilege to observe a people who shot themselves in the foot with such accuracy and tumbled into the abyss in such style.