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#4 from 2017: Review of Doughnut Economics – a new book you will need to know about

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https://flic.kr/p/9XqtbSOur Top Ten blog posts by readership in 2017. This post was originally posted on April 24, 2017.

My Exfam colleague Kate Raworth’s book Doughnut Economics is launched today, and I think it’s going to be big. Not sure just how big, or whether I agree with George Monbiot’s superbly OTT plug comparing it to Keynes’s General Theory. It’s really hard to tell, as a non-economist, just how paradigm-changing it will be, but I loved it, and I want everyone to read it.

Down to business – what does it say? The subtitle, ‘Seven Ways to Think Like a 21st Century Economist’, sets out the intention: the book identifies 7 major flaws in traditional economic thinking, and a chapter on each on how to fix them. The starting point is drawings – working with Kate was fun, because whereas I think almost entirely in words, she has a highly visual imagination – she was always messing around with mind maps and doodles. And she’s onto something, because it’s the diagrams that act as visual frames, shaping the way we understand the world and absorb/reject new ideas and fresh evidence. Think of the way every economist you know starts drawing supply and demand curves at the slightest encouragement.Her main target is GDP (the standard measure of national economic output), and its assumptions – an open systems approach to economics that ignores planetary boundaries as it promotes economic growth. Her breakthrough moment while at Oxfam was coming up with ‘the doughnut’ – two concentric rings representing the planetary ceiling and minimum standards for all human beings. The ‘safe and just space’ between the two rings is where our species needs to be if it wants to make poverty history without destroying the planet.

When Kate came up with the doughnut in a highly influential 2012 paper for Oxfam, my non-visual mind failed to grasp its full value. After all, wasn’t this just a restatement of the idea of sustainable development? But it went viral, especially at the UN, because it allowed activists and policy makers to visualize both the threats and how they were trying to overcome them.

#8 from 2017: Blockchain for Development: A Handy Bluffers’ Guide

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Our Top Ten blog posts by readership in 2017. This post was originally published on May 15, 2017.  

Top tip: if you’re in a meeting discussing anything to do with finance, at some point look wise and say ‘you do realize, blockchain is likely to change everything.’ Of course, there is always a terrifying chance that someone will ask what you actually mean. Worry not, because IDS has produced a handy bluffer’s guide to help you respond. Blockchain for Development – Hope or Hype?, by Kevin Hernandez, is the latest in IDS’ ‘Rapid Response Briefings’ series, (which itself is a nice example of how research institutions can work better around critical junctures/windows of opportunity). It’s only four pages, but in case even that is too onerous, here are some excerpts (aka a bluffer’s guide to the bluffer’s guide).

‘What is blockchain technology?

At its heart, the blockchain is a ledger. It is a digital ledger of transactions that is distributed, verified and monitored by multiple sources simultaneously. It may be difficult to think of something as basic as the way we keep and maintain records as a technology, but this is because record-keeping is so ingrained in daily life, albeit often invisibly. The ubiquity of ledgers is in part the reason why blockchains are held as having so much disruptive potential. Traditionally, ledgers have enabled and facilitated vital functions, with the help of trusted third parties such as financial institutions and governments. These include: ensuring us of who owns what; validating transactions; or verifying that a given piece of information is true.
 

What kind of evidence might persuade people to change their minds on refugees?

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Oxfam Humanitarian Policy Adviser Ed Cairns reflects on using evidence to influence the treatment of refugees.

Who thinks that governments decide what to do on refugees after carefully considering the evidence? Not many, I suspect. So it was an interesting to be asked to talk about that at the  ‘Evidence for Influencing’conference Duncan wrote about last week.

When I think what influences refugee policy, I’m reminded of a meeting I had in Whitehall on Friday 4 September, two days after the three-year-old Syrian boy, Alan Kurdi, had drowned.  Oxfam and other NGOs had been invited in to talk about refugees. The UK officials found out what their policy was by watching Prime Minister David Cameron on their phones, as he overturned the UK’s refusal to resettle thousands of Syrians in a press conference in Lisbon.  Even then, he and his officials refused to promise how many Syrians would be allowed. By Monday, that line had crumbled as well, and a promise of 20,000 by 2020 was announced.

The evidence of course had shown that children and other refugees had been tragically drowning in the Mediterranean for months. But it was the sheer human emotion, the public interest, and no doubt Cameron’s own compassion that made the change. Evidence and the evidence-informed discussion between officials and NGOs had nothing to do with it. More important was that a single image of a drowned boy spread to 20 million screens within 12 hours as #refugeeswelcome began trending worldwide. As research by the Visual Social Media Lab at the University of Sheffield set out, “a single image transformed the debate”.

Cairns 2


Two years later, a new Observatory of Public Attitudes to Migration has just been launched by the Florence-based Migration Policy Centreand its partners, including IPSOS Mori in the UK.  It aims to be the ‘go-to centre for researchers and practitioners’, and has sobering news for anyone who thinks that evidence has a huge influence on this issue.  Anti-migrant views, it shows, are far more driven by the values of tradition, conformity and security, and within the UK in particular, according to an IPSOS Mori study, by a distrust of experts, alongside suspicion of diversity, human rights and “political correctness”.

Book Review: How China Escaped the Poverty Trap, by Yuen Yuen Ang

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Following on from yesterday’s book review on an account of Bangladesh’s success, here’s a great book on another developmental superstar – China.

The macro-story on China is well known, but always bears repetition. Emerging from the carnage of the Mao era, China in 1980 had a GDP of $193 per capita, lower than Bangladesh, Chad or Malawi. It’s now the world’s second largest economy, with a thirty fold increase in GDP per capita, based on a textbook-defying combination of one party Communist state and capitalism – in the words of one tongue in cheek official ‘no capitalist state can match our devotion to the capitalist sector.’

Success on this scale inevitably finds many intellectual fathers claiming paternity – China is variously portrayed as a victory for a strong state; free markets; experimentation and for central planning. How China Escaped the Poverty Trap blows the conventional explanations away, drilling down into what actually happened, reconstructing the history of different cities and provinces through years of diligent research.

This book is a triumph, opening a window onto the political economy of China’s astonishing rise that takes as its starting point systems and complexity. Its lessons apply far beyond China’s borders. The author, Yuen Yuen Ang (originally from Singapore) is Associate Professor of Political Science at the University of Michigan.

Ang starts with a classic developmental chicken and egg problem – which comes first, good institutions or economic prosperity? Different camps within academia and the aid business urge developing countries either to ‘first, get the institutions right’ or ‘first, get growth going’ – and then the rest will follow.

Book review- The Aid Lab: Understanding Bangladesh’s Unexpected Success by Naomi Hossain

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Over the summer I read a few absolutely brilliant books – hence the spate of book reviews. This week I will cover two new studies on development’s biggest recent success stories – China, but first Bangladesh.

How did Bangladesh go from being a ‘basket case’ (though ‘not necessarily our basket case’ – Henry Kissinger, 1971) to a development success story, claimed by numerous would-be fathers (aid donors, NGOs, feminists, microfinanciers, low cost solution finders)? That’s the subject of an excellent new book by Naomi Hossain.

The success is undeniable. Per capita income is up to $2780 from $890 in 1991 (PPP terms). Today, that economic progess is built on 3 pillars: garments (80% of exports, 3m largely female jobs), migration (remittances = 7-10% GDP, about 9m workers overseas, mainly men) and microfinance (which has been used by about half of all households).

But perhaps even more interesting, social progress has outstripped economic growth. Infant mortality down from 258/1,000 in 1961 to 47 in 2011; women were having 7 kids in 1961 and are now having 2. In Hossain’s words (she writes well) ‘Bangladesh is the smiling, more often than not sweetly female, face of global capitalist development. Better yet – she often wears a headscarf as she goes about enjoying her new economic and political freedoms, signalling that moderate Islam can couple with global capitalism.’ (And yes, she does acknowledge that there is still a lot of hunger and deprivation).

The ‘how’ of Bangladesh’s transformation is reasonably well known. What interests Hossain is the ‘why’. It certainly isn’t down to good governance – ‘it has never been obvious why an elite known best for corruption and violent winner-takes-all politics should have committed its country to a progressive, inclusive development pathway.’

Why rethinking how we work on market systems and the private sector is really hard

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Whatever your ideological biases about ‘the private sector’ (often weirdly conflated with transnational corporations in NGO-land), markets really matter to poor people (feeding families, earning a living, that kind of thing).  But ‘making markets work for the poor’ turns out to be really difficult and, just as with attempts to tackle corruption or improve institutions, there is a rethink going on in the aid business. Critics of conventional approaches (of which I am one) argue that systems thinking and complexity both explain why a lot of previous approaches haven’t worked that well, and suggest some new ways to tackle the problem.

To catch up on some new research on all this, I spent a fascinating afternoon at DFID last week. The ‘knowledge hub’ BEAM Exchange (they don’t like to be called a thinktank) presented a discussion paper and technical paper on ‘rethinking systemic change’, along with a warts-and-all case study from Palladium on the difficulty of trying to put this into practice in a large market development programme in Uganda. Some highlights.

The discussion and technical papers reviewed the lessons from the 3 elements of New Economic Thinking: evolutionary economics, new institutional economics and complex adaptive systems. Eric Beinhocker’s influence much in evidence. The papers draw some useful and pretty challenging conclusions:

‘The aim of development must be to enhance the evolutionary process in an economy and create access to this process for all levels of the society, both politically and economically.’

Blockchain for Development: A Handy Bluffers’ Guide

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Top tip: if you’re in a meeting discussing anything to do with finance, at some point look wise and say ‘you do realize, blockchain is likely to change everything.’ Of course, there is always a terrifying chance that someone will ask what you actually mean. Worry not, because IDS has produced a handy bluffer’s guide to help you respond. Blockchain for Development – Hope or Hype?, by Kevin Hernandez, is the latest in IDS’ ‘Rapid Response Briefings’ series, (which itself is a nice example of how research institutions can work better around critical junctures/windows of opportunity). It’s only four pages, but in case even that is too onerous, here are some excerpts (aka a bluffer’s guide to the bluffer’s guide).

‘What is blockchain technology?

At its heart, the blockchain is a ledger. It is a digital ledger of transactions that is distributed, verified and monitored by multiple sources simultaneously. It may be difficult to think of something as basic as the way we keep and maintain records as a technology, but this is because record-keeping is so ingrained in daily life, albeit often invisibly. The ubiquity of ledgers is in part the reason why blockchains are held as having so much disruptive potential. Traditionally, ledgers have enabled and facilitated vital functions, with the help of trusted third parties such as financial institutions and governments. These include: ensuring us of who owns what; validating transactions; or verifying that a given piece of information is true.

Review of Doughnut Economics – a new book you will need to know about

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https://flic.kr/p/9XqtbSMy Exfam colleague Kate Raworth’s book Doughnut Economics is launched today, and I think it’s going to be big. Not sure just how big, or whether I agree with George Monbiot’s superbly OTT plug comparing it to Keynes’s General Theory. It’s really hard to tell, as a non-economist, just how paradigm-changing it will be, but I loved it, and I want everyone to read it.

Down to business – what does it say? The subtitle, ‘Seven Ways to Think Like a 21st Century Economist’, sets out the intention: the book identifies 7 major flaws in traditional economic thinking, and a chapter on each on how to fix them. The starting point is drawings – working with Kate was fun, because whereas I think almost entirely in words, she has a highly visual imagination – she was always messing around with mind maps and doodles. And she’s onto something, because it’s the diagrams that act as visual frames, shaping the way we understand the world and absorb/reject new ideas and fresh evidence. Think of the way every economist you know starts drawing supply and demand curves at the slightest encouragement.

Building State Capability: Review of an important (and practical) new book

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Jetlag is a book reviewer’s best friend. In the bleary small hours in NZ and now Australia, I have been catching up on my reading. The latest was ‘Building State Capability’, by Matt Andrews, Lant Pritchett and Michael Woolcock, which builds brilliantly on Matt’s 2013 book and the subsequent work of all 3 authors in trying to find practical ways to help reform state systems in dozens of developing countries (see the BSC website for more). Building State Capability is published by OUP, who agreed to make it available as an Open Access pdf, in part because of the good results with How Change Happens (so you all owe me….).

But jetlag was also poor preparation for the first half of this book, which after a promising start, rapidly gets bogged down in some extraordinarily dense academese. I nearly gave up during the particularly impenetrable chapter 4: sample ‘We are defining capability relative to normative objectives. This is not a reprisal of the “functionalist” approach, in which an organization’s capability would be defined relative to the function it actually served in the overall system.’ Try reading that on two hours’ sleep.

Luckily I stuck with it, because the second half of the book is an excellent (and much more accessible) manual on how to do Problem Driven Iterative Adaptation – the approach to institutional reform that lies at the heart of the BSC programme.

A masterclass on cash transfers and how to use High Level Panels to influence Policy

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One of the things I do in my day-a-week role at LSE is bring in guest lecturers from different aid and development organizations to add a whiff of real life to the student diet of theory and academia. One of the best is Owen Barder, who recently delivered a mesmerizing talk on cash transfers and the theory of change used by his organization, the Center for Global Development, which is one of the most effective think tanks around (although I don’t always share its politics….). Here’s the summary (and here are his powerpoint slides, if you want to nick them).

Owen chaired a recent high level panel on humanitarian cash transfers and presented its work in his talk. The traditional aid response is ‘people are hungry due to drought, flood, conflict etc → there isn’t enough food → we need to ship in loads of food’. Both arrows are wrong: Amartya Sen showed that the problem in famine is not lack of food, but lack of purchasing power among the affected populations – in nearly all of Ethiopia’s famines, the country has produced enough food to feed its people. The second arrow is wrong because giving people cash is usually a much more effective response than shipping food over from the US or wherever: the food often arrives too late, just when local farmers are recovering, and a flood of free food promptly destroys local markets. The evidence is now substantial:

  • Cash transfers are 25-30% cheaper than in kind aid (so more food per dollar)
  • When people are given in kind aid, they typically sell 30-50% of it to get the cash they need, at roughly 30% of the actual cost of the aid – a massive level of waste
  • When you ask refugees, they invariably say cash is better than stuff (eg 80% of Syrian refugees in Lebanon)

Plus it’s good politics – cash stimulates the local economy, so local people are less resentful of the influx of refugees, and is more respectful – refugees don’t all want the same thing; cash respects their right to make decisions about their lives.

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