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Public Sector and Governance

Is the New York Times Ethicist a Better Economist than…..The Economist?

Jishnu Das's picture

The Sunday before last I woke up to a couple of articles in the New York Times Magazine and The Economist. In the first article, the New York Times ethicist was asked a question about Halloween candy: Are dentists who purchase candy from kids (thus protecting their teeth) and donate it to poor families engaging in “thoughtless, unethical and unprofessional” behavior?  The Economist article summarized research on cash transfers to the poor, concluding that “Giving money to poor people works surprisingly well. But it cannot deal with the deeper causes of poverty”. In both articles, the fundamental question is how we measure and judge improvements in welfare based on what people consume. But while the ethicist takes the question head on, The Economist does not even get the question right.

A dentist examines a young child's teeth To see this, recall that in welfare economics there are two rationales for government interventions to make people better off. First, governments fix market failures. If the market does not produce efficient outcomes, the government can use taxes and subsidies to make things better. Externalities are classic examples. I don’t worry that my pollution makes others worse off and therefore “over pollute”. But the government can tax that pollution to the point where I behave “as if” I care about others.

Second, governments redistribute income by giving cash to the poor. If, in society’s judgment, an alternate distribution of consumption is better, government could achieve that distribution by redistributing “endowments” or cash from one party to another.

Can a Good Thing Eventually Become Bad?

Aurelien Kruse's picture

Can a good thing eventually become bad and is there such a point when it becomes too much? Thinking about Nepal’s development, remittances appear to be precisely such an ambiguous driver. Strikingly, despite the growing importance of remittances worldwide and its increasingly high level recognition, we are missing a consistent narrative of growth and development for highly remittance dependent countries (HRDCs – a new acronym, for once, may be needed) like Nepal.

Bicyclist on city street in NepalWhile remittances have an unambiguous direct impact on household welfare, the evidence on how they affect macroeconomic variables is mixed. Moreover, their contribution to national well-being is often under-acknowledged in those very countries they support and mixed with a sense of collective shame and fear of dependence. Here, we deliberately leave aside the thorny issue of migrant rights, recently highlighted by a feature story in the Guardian (Qatar’s World Cup ‘Slaves’), and focus on the economic impact of remittance inflows.

Nepal is an interesting case study. It is part of a small league of countries that receive a significant proportion of their income via private transfers (equivalent to 25% of GDP) and the world leader among the ones with over 10 million people.

Pushing on String – Can Multilaterals Set Priorities?

Liesbet Steer's picture

Recent reforms in multilateral agencies, including those under implementation at the World Bank, have focused on the key question of how institutions can implement global priorities in organizations driven by country level decision making. A recent report on basic education financing, by the Center for Universal Education at Brookings and the UNESCO-Education for All Global Monitoring Report (EFA GMR), takes a closer look at the extent to which the global development goal of universal access to primary education has been supported by multilateral action.

Reading togetherThe challenge is substantial. Despite good progress over the past decade and a reduction of 45 million in the number of out-of-school children, there are still 57 million children out-of-school, and 250 million children who are in school but who are not learning. Most of these are from marginalized and disadvantaged groups. Keeping the global promise of universal access for all children will require more money, as part of the solution.  After taking account of available domestic resources, the EFA GMR estimates that an additional $26 billion will be needed per year to make sure all children receive a basic education by 2015. This gap will need to be filled by domestic as well as international resources.

Let Them Eat Cash

Shanta Devarajan's picture

The Economist this week has an excellent article on giving cash transfers, conditionally or unconditionally, to poor people to alleviate their poverty.  Calling it “possibly the single best piece of journalism on cash transfers that I’ve seen so far,” Chris Blattman—one of the scholars whose research has provided grist for this mill—laments that such writing “tends to make the Pulitzer committee fall asleep in bed.”  Maybe so, but the idea is potentially transformative.

Cash Transfers

That cash conditional on sending your children to school or taking them for a medical checkup improves health and education outcomes has been established for some time now.  More recently, some studies show that unconditional cash transfers could have the same effect.  Chris’s work demonstrates that giving cash to idle young people leads to higher business earnings than if the money were used to run vocational training courses for these people.

In parallel, Todd Moss at the Center for Global Development and my colleague Marcelo Giugale and I (along with several others) have been exploring the idea of transferring oil revenues to citizens as cash transfers, as a way of reducing the resource curse that afflicts many resource-rich countries, especially in Africa.  Gabon for instance, with a per-capital income of $10,000 has the second-lowest child immunization rate in Africa.  Marcelo and I show that, with just 10 percent of resource revenues’ being transferred directly to citizens (in equal amounts), poverty can largely be eliminated in the smaller resource-rich African countries.

Powerless in Kanpur

Sheoli Pargal's picture

Katiyabaaz - master of illegal connections
Documentary on the power crisis in Kanpur, a North Indian city.

Kaatiyabaaz” is a compelling documentary film that highlights the power crisis in Kanpur, a city of three million people in north India. 

It has all the elements of a steamy Hindi movie: 45-degree Celsius heat, power outages that last 12-15 hours, and illegal connections that come up every night and disappear in the morning. The everyday characters are gripping too. There’s a Robin-Hood-like street electrician who “provides power” by hooking to transmission lines. An upright bureaucrat (a woman, imagine that!) trying to get people to pay their bills and prevent theft. A city full of tired, angry citizens fed up with poor service provided.  The film underlines how people will do whatever it takes to get some juice in their wires so that they can get lights, fans, water…the basic necessities of 20th century life.
 

Good Practices for Engaging with Citizens for Greater Development Impact

Vinay Bhargava's picture

Last week I was a panelist at a civil society organization seminar during the World Bank Annual Meetings on the topic of “Engaging with Citizens for Greater Development Impact.” The task for the panel was to discuss good practices in citizen engagement to make governments and service providers (including the private sector) more accountable so that policies and project interventions have greater impact for all citizens. The other panelists included representatives from Civicus, Plan International, and the Bank and International Finance Corporation.

The invitation to this event made me reflect on a fundamental question: Is it realistic to expect citizens to hold service providers accountable given the huge asymmetry of power between the two, or are we setting unrealistic expectations that citizen engagement interventions can improve development outcomes?

As I searched for answers, I was reminded of the story of the mighty warrior, Goliath, and the shepherd boy, David, who stepped up to fight him when no one else dared. No one in his or her right mind would have given David a chance against Goliath. However, we all know how the story ends — David hurls a stone from his sling with all his might and hits Goliath in the center of his forehead, causing the mighty to fall. Can we have similar happy endings in citizens vs. almighty service providers?

Disrupting Low-level Political Equilibria

Shanta Devarajan's picture

Absentee teachers, negligent doctors, high transport costs, missing fertilizers, and elite-captured industrial policy all stand in the way of poor people’s escaping poverty.  While the proximate reason for these obstacles may be a lack of resources or an erroneous policy, the underlying reason is politics. Lawmakers meet during a session of Parliament in Accra

- In many developing countries, teachers run the political campaigns of local politicians, in return for which they are given jobs from which they can be absent.  The situation can be described as an equilibrium, where the candidate gets elected and re-elected, and teachers continue to be absent.  The losers are the poor children who aren’t getting an education.  The equilibrium has no intrinsic force for change, especially if, as in Uttar Pradesh, India, 17 percent of the legislature are teachers.

 - High transport costs in Africa are due not to poor-quality roads (vehicle operating costs are comparable to those in France) but to high prices charged by trucking companies, who enjoy monopoly power thanks to regulations that prohibit entry into the trucking industry.  High transport prices and monopoly trucking profits are an equilibrium. In one country, the President’s brother owns the trucking company, so prospects for deregulation there are grim.

- Several countries subsidize fertilizer, sometimes to the tune of several percentage points of GDP, only to find that it fails to reach poor farmers.  Thinking that the problem is the public distribution system, some governments have tried to use the market to allocate fertilizer, by giving farmers vouchers that they can redeem with private sellers.  A scheme in Tanzania found that 60 percent of the vouchers went to households of elected officials. When subsidies are captured to this extent by political elites, their reform will be resisted—another equilibrium.

Catalyzing Open Government in Afghanistan: Focusing on Poverty Reduction and Shared Prosperity

Gazbiah Rahaman's picture

What does open data and development mean for Afghanistan?

Last November, the first open data mission revealed Afghans’ interest and commitment to foster knowledge sharing, collaboration and openness for a broader and targeted engagement in Afghanistan. In my blog, Afghanistan’s First Open Data Dialogue Delivers, I described my first-hand experience on Afghans enthusiasm about improving data dissemination, national dialogue and partnership between users and producers of statistics, and the drive for more effective aid and technical assistance through better coordination and alignment to the agreed National Statistical Plans.


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