Category Archives: Global Development

The Middle Class Goes Global

Published on Feb 24, 2012

PARIS – In the twentieth century, the American dream of a middle-class life inspired the world. Now, in the twenty-first, we are moving at high speed toward a world based on a new geography of growth, with millions of people in the east and the south moving out of extreme poverty to become potentially powerful middle-class consumers. Whether the dreams of this new global middle-class are realised or turn into a nightmare depends on several factors.

In today’s shifting world, with GDP in roughly 80 developing economies rising at twice the rate of per capita growth in the OECD, the club of the world’s richest countries, middle-class citizens paradoxically complain and protest regardless of whether fortunes improve or decline. Moises Naim, a former Venezuelan minister of trade and industry, even warns of a possible ’emerging global war of the middle-classes.’

While anger over pay cuts and unemployment make sense, it is harder to understand the current protests in fast-growing countries like Thailand and Chile, where standards of living are improving. What is going on?

High growth in Asian and southern countries has meant greater export earnings and rents from natural resources. Unfortunately, this blessing can turn into a curse. In China, former Communist leader Deng Xiaoping’s vision – ‘let some people get rich first’ – has led to impressive economic growth and poverty reduction; but it has also undermined the self-proclaimed ‘harmonious society,’ as recent protests and labor conflicts indicate.

Indeed, it is telling that, in the spring of 2011, Beijing’s municipal authorities banned all outdoor luxury-goods advertisements on the grounds that they might contribute to a ‘politically unhealthy environment.’

Rising inequality, lack of civic participation, political apathy, and a dearth of good jobs, particularly for the young, comprise the Achilles heel of emerging-market countries’ current development model. A Gallup poll on subjective well-being in Tunisia and Thailand shows that, while income levels and social conditions in both countries improved between 2006 and 2010, life satisfaction dropped.

Homi Kharas, a senior fellow at the Brookings Institution in Washington, DC, defines today’s global middle class as households with daily expenditures of US$10-100 per person (at purchasing power parity). This represents approximately two billion people, split almost evenly between developed and emerging economies. In its Perspectives on Global Development 2012 – Social Cohesion in a Shifting World, the OECD forecasts that, by 2030, the global middle class could total 4.9 billion. Of these, 3.2-3.9 billion will probably live in emerging economies, representing 65-80 per cent of the global population.

These people will demand more and better services, a fairer division of growth’s benefits, and more responsive political institutions. The current wave of protests could be just the beginning of this trend.

So, what should be done? Continue reading

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The Bad Society: How much inequality is acceptable?

 protester, wearing a Guy Fawkes mask, stands among the Occupy Wall Street demonstrators. Protesters opposed income inequality among other things. — PHOTO: REUTERS

LONDON – How much inequality is acceptable? Judging by pre-recession standards, a great deal of it, especially in the United States and Britain. New Labour’s Peter Mandelson voiced the spirit of the past 30 years when he remarked that he felt intensely ‘relaxed’ about people getting ‘filthy’ rich. Getting rich was what the ‘new economy’ was all about. And the newly rich kept an increasing part of what they got, as taxes were slashed to encourage them to get still richer, and efforts to divide up the pie more fairly were abandoned.

The results were predictable. In 1970, the pre-tax pay of a top American CEO was about 30 times higher than that of the average worker; today it is 263 times higher. In Britain, the basic pay (without bonuses) of a top CEO was 47 times the average worker’s in 1970; in 2010, it was 81 times more. Since the late 1970s, the post-tax income of the richest fifth has increased five times as fast as the poorest fifth in the US, and four times as fast in the UK. Even more important has been the growing gap between average (mean) and median income: that is, the proportion of the population living on half or less of the average income in the US and Britain has been growing.

Although some countries have resisted the trend, inequality has been increasing over the last 30-40 years in the world as a whole. Inequality within countries has increased, and inequality between countries increased sharply after 1980, before leveling off in the late 1990’s and finally falling back after 2000, as catch-up growth in developing countries accelerated.

The growth of inequality leaves ideological defenders of capitalism unfazed. In a competitive market system, people are said to be paid what they are worth: so top CEOs add 263 times more value to the American economy than the workers they employ. But the poor, it is claimed, are still better off than they would have been had the gap been artificially narrowed by trade unions or governments. The only secure way to get ‘trickle-down’ wealth to trickle faster is by cutting marginal tax rates still further, or, alternatively, by improving the ‘human capital’ of the poor, so that they become worth more to their employers.

[observe rebuttal] This is a method of economic reasoning that is calculated to appeal to those at the top of the income pyramid. After all, there is no way whatsoever to calculate the marginal products of different individuals in cooperative productive activities. Top pay rates are simply fixed by comparing them to other top pay rates in similar jobs. Continue reading

Billions Down the Afghan Hole

BERLIN — The major donors and Afghan government officials meeting in Tokyo on Sunday to discuss future aid to Afghanistan have to face up to a bitter truth: As much as $1 billion of the $8 billion donated in the past eight years has been lost to corruption. All governments in Tokyo must show that business as usual cannot continue. An agreement worth $4 billion is at stake.

Turning off the aid taps is not an option. This would hurt the poorest, increase instability and likely lead to illicit flows taking the place of donor funding. Donors and the Afghan government need an enforceable plan to tackle the issue. They don’t need more words.

Corruption in the country is nothing new, but it is worsening. Afghanistan has had a long history of conflict, contraband and war. It falls almost at the bottom of the list of the most corrupt and poorly governed countries, including the Corruption Perceptions Index produced by Transparency International.

Estimates from local watchdog Integrity Watch Afghanistan show bribe payments — for everything from enrolling in elementary school to getting a permit — doubled between 2007 and 2009, topping $1 billion a year. Corruption and black-market trading, which is closely linked to drugs and arms trafficking, have reached over $12 billion annually, according to calculations by NATO.

Yet the Afghan government is reportedly going to the meeting without a clear plan of attack against corruption. There is a strategy — known as the National Priority Program on Transparency and Accountability — but it has not been fully endorsed by the government or international representatives. A large part of the critique is that it is not realistic or ambitious enough.

In the past, many mistakes have been made in addressing corruption, including turning a blind eye. Corruption has been used as a “currency for peace” and is interwoven with the Afghan political economy. Shifting the tide on corruption will have to start from the top down — on the part of the Afghan government and donor countries — as well as the bottom up from local communities.

At the top, there already have been some positive moves. There is now a joint Afghan-donor government body on anti-corruption. It combines a highly reputed group of Afghan and international experts, including a former French judge, Eva Joly, who work to monitor anti-corruption progress against clear goals and benchmarks.

Still greater political will and stronger leadership are needed in order to take action against those accused of state looting. This includes members of the government and their families. Continue reading

Hope springs a trap – lack of optimism locks people in poverty

The Economist, May 12, 2012

THE idea that an infusion of hope can make a big difference to the lives of wretchedly poor people sounds like something dreamed up by a well-meaning activist or a tub-thumping politician. Yet this was the central thrust of a lecture at Harvard University on May 3rd by Esther Duflo, an economist at the Massachusetts Institute of Technology known for her data-driven analysis of poverty. Ms Duflo argued that the effects of some anti-poverty programmes go beyond the direct impact of the resources they provide. These programmes also make it possible for the very poor to hope for more than mere survival.

She and her colleagues evaluated a programme in the Indian state of West Bengal, where Bandhan, an Indian microfinance institution, worked with people who lived in extreme penury. They were reckoned to be unable to handle the demands of repaying a loan. Instead, Bandhan gave each of them a small productive asset—a cow, a couple of goats or some chickens. It also provided a small stipend to reduce the temptation to eat or sell the asset immediately, as well as weekly training sessions to teach them how to tend to animals and manage their households. Bandhan hoped that there would be a small increase in income from selling the products of the farm animals provided, and that people would become more adept at managing their own finances.

The results were far more dramatic. Well after the financial help and hand-holding had stopped, the families of those who had been randomly chosen for the Bandhan programme were eating 15% more, earning 20% more each month and skipping fewer meals than people in a comparison group. They were also saving a lot. The effects were so large and persistent that they could not be attributed to the direct effects of the grants: people could not have sold enough milk, eggs or meat to explain the income gains. Nor were they simply selling the assets (although some did). Continue reading

Why China Won’t Rule

Will China surge forward and be the next Superpower as the rest of the developed world is mired in recession or near-recession?

Robert Skidelsky, Project Syndicate 

LONDON – Is China poised to become the world’s next superpower? This question is increasingly asked as China’s economic growth surges ahead at more than 8 per cent a year, while the developed world remains mired in recession or near-recession. China is already the world’s second largest economy, and will be the largest in 2017. And its military spending is racing ahead of its GDP growth.

The question is reasonable enough if we don’t give it an American twist. To the American mind, there can be only one superpower, so China’s rise will automatically be at the expense of the United States. Indeed, for many in the US, China represents an existential challenge.

This is way over the top. In fact, the existence of a single superpower is highly abnormal, and was brought about only by the unexpected collapse of the Soviet Union in 1991. The normal situation is one of coexistence, sometimes peaceful sometimes warlike, between several great powers.

For example, Great Britain, whose place the US is often said to have taken, was never a ‘superpower’ in the American sense. Despite its far-flung empire and naval supremacy, nineteenth-century Britain could never have won a war against France, Germany, or Russia without allies. Britain was, rather, a world power – one of many historical empires distinguished from lesser powers by the geographic scope of their influence and interests.

The sensible question, then, is not whether China will replace the US, but whether it will start to acquire some of the attributes of a world power, particularly a sense of responsibility for global order. Continue reading

We will always have the poor with us?

The poor are just people without enough money. But a ‘culture of poverty’ gives the affluent a reason to blame them for it

Barbara Enrenreich, Guardian Comment Network, 15 Mar 2012

It’s been exactly 50 years since Americans, or at least the non-poor among them, “discovered” poverty, thanks to Michael Harrington’s engaging book The Other America. If this discovery now seems a little overstated, like Columbus’s “discovery” of America, it was because the poor, according to Harrington, were so “hidden” and “invisible” that it took a crusading leftwing journalist to ferret them out.

Harrington’s book jolted a nation that then prided itself on its classlessness and even fretted about the spirit-sapping effects of “too much affluence”. He estimated that one quarter of the population lived in poverty – inner-city blacks, Appalachian whites, farm workers, and elderly Americans among them. We could no longer boast, as President Nixon had done in his “kitchen debate” with Soviet Premier Nikita Khrushchev in Moscow just three years earlier, about the splendors of American capitalism.

At the same time that it delivered its gut punch, The Other America also offered a view of poverty that seemed designed to comfort the already comfortable. The poor were different from the rest of us, it argued, radically different, and not just in the sense that they were deprived, disadvantaged, poorly housed, or poorly fed. They felt different, too, thought differently, and pursued lifestyles characterized by shortsightedness and intemperance. As Harrington wrote:

“There is … a language of the poor, a psychology of the poor, a worldview of the poor. To be impoverished is to be an internal alien, to grow up in a culture that is radically different from the one that dominates the society.”

Harrington did such a good job of making the poor seem “other” that when I read his book in 1963, I did not recognize my own forbears and extended family in it. All right, some of them did lead disorderly lives by middle-class standards, involving drinking, brawling, and out-of-wedlock babies. But they were also hardworking and, in some cases, fiercely ambitious – qualities that Harrington seemed to reserve for the economically privileged. Continue reading

The doomsday clock: Countdown to the man-made apocalypse?

Should the “Doomsday Clock” be moved ahead because of threats from biotechnology?

The Bulletin of Atomic Scientist's 'Doomsday Clock' reads seven minutes to midnight.

The Bulletin of Atomic Scientist's 'Doomsday Clock' reads seven minutes to midnight after being adjusted two minutes closer 27 February, 2002 in Chicago, IL.
SCOTT OLSON/AFP/Getty Images

Shortly after the end of World War II, Albert Einstein, referring to the new global danger of nuclear weapons, uttered his now famous warning: “Everything has changed, save the way we think.” Accordingly, he and Robert Oppenheimer established the Bulletin of the Atomic Scientists to help warn the public about the dangers of nuclear war.

Perhaps the most visible face of the bulletin—for which I am currently co-chair of the board of sponsors—is the “Doomsday Clock.”  Created in 1947, the clock graphically reflects how close humanity might be to human-induced apocalypse, in terms of the “number of minutes to midnight”—at which time, presumably, time itself will no longer matter.

In total, the clock has been adjusted 20 times, moving as close to two minutes to midnight in 1953, after the United States and Soviet Union each first tested thermonuclear devices, and as far as 17 minutes to midnight in 1991, after the United States and Soviet Union signed the Strategic Arms Reduction Treaty. Currently, it is set at five minutes to midnight.

Nuclear weapons continue to be the most urgent global threat to humanity: Recent developments in Iran, the continued tension between Pakistan and India, and the United States’ consideration of developing a new generation of nuclear weapons are all cause for great concern. But in the 60-odd years since the creation of the Doomsday Clock, the world has changed, in no small part to technological and scientific advance, making it even more dangerous. Unfortunately, there is no great evidence that our way of thinking about global catastrophes has evolved for the 21st century. That’s why the bulletin decided, in 2007, to factor other threats to humanity into the Doomsday Clock.

Since then, we have run three “Doomsday Symposia,” during which key scientists and policymakers assess ongoing global threats to humanity in three areas: nuclear proliferation and nuclear weapons, climate change, and biotechnology and bioterrorism. The last issue has raised a lot of heat in the media in recent years, and the specter of new lethal viruses that might wipe out populations suggested to us that there might be compelling new reasons to move the clock forward again.

Indeed, as biotechnology has undergone in the past 35 years the same explosive growth that physics technology underwent in the previous period, the emerging possibility of biologically induced weapons has increased. We now have the ability to artificially recreate genetic sequences, including viruses. DNA “hacking” has become a pastime at institutions such as MIT, among the same kind of people who used to be so enamored with computer hacking. Finally, the holy grail of genetic manipulation now involves the frontiers of synthetic biology, wherein researchers are attempting not merely to build up genetic sequences base-pair by base-pair, but also to explore the possibility of building novel life forms from scratch.

These developments are thrilling for scientists and technologists who love to take things apart and put them back together. But there remains the terrifying prospect that smart pranksters, DIYers, a laboratory, or more sinister groups could, either by accident or intentionally, accidentally create a new supervirus with the potential to wipe out all other life on Earth.  (Hence the furious debate that has surrounded experiments into artificially developing forms of the avian flu virus H5N1 that is transmittable between mammals.) Indeed, just this week, a host of external watchdog organizations have called this week for a moratorium on synthetic biology.

We should encourage the vigilance and rigorous discussion that has accompanied these developments. Happily, however, the bulletin’s experts, including Harvard biologistMatthew Meselson and human genome pioneer and synthetic biologist Craig Venter, suggest the above scenarios are in the near term unlikely at best, pure fiction at worst.

In the first place, the synthetic-biology industry is well-aware of the dangers of unmonitored genetic hacking and is responding on its own. Appeased by the group’s self-policing thus far, the Presidential Commission for the Study of Bioethical Issuesdetermined in 2010 that “there is no reason to endorse additional federal regulations or a moratorium on work in this field at this time.”

In the second place, while manufacturing dangerous biological compounds may be possible, weaponizing them is not so easy. While it might be possible to inflict significant terror locally, dispersing biological agents over broad regions to create global crises is far more challenging.

Next, there is the difficulty of reproducing appropriate technology. The field is as much an art as a science, and it is difficult to reliably reproduce results in a field where the financial benefits are likely to be so great that proprietary technology is not readily shared.

We can all (at least those of us who, unlike some of the dominant presidential candidates, accept the reality of both evolution and an old earth) take solace in the robustness of life itself, evolved over 4.5 billion years in the presence of remarkably ingenious viruses, which have also competed for survival. It is unlikely that a new organism, without the benefit of all of this “learned experience,” could outmaneuver all the mechanisms that life has developed to outwit constant biological invaders.

All of this suggested to those of us who have the unenviable task of regularly revisiting the possibility of Doomsday in order to help humanity adjust its thinking appropriately, that the current revolution in biotechnology is, for the moment, more likely to benefit humankind than destroy it.

The world’s fertility implosion

Art by YEN YOK

By David Brooks, sourced from TODAYONLINE/NYT, 16 Mar 2012

When you look at pictures from the Arab Spring, you see these gigantic crowds of young men and it confirms the impression that the Muslim Middle East has a gigantic youth bulge – hundreds of millions of young people with little to do. But that view is becoming obsolete.

As Mr Nicholas Eberstadt and Mr Apoorva Shah of the American Enterprise Institute point out, over the past three decades, the Arab world has undergone a little-noticed demographic implosion. Arab adults are having much fewer kids.

Usually, high religious observance and low income go along with high birth rates. But, according to the United States Census Bureau, Iran now has a similar birth rate to New England – which is the least fertile region in the US.

The speed of the change is breathtaking. A woman in Oman today has 5.6 fewer babies than a woman in Oman 30 years ago. Morocco, Syria and Saudi Arabia have seen fertility-rate declines of nearly 60 per cent, and in Iran it’s more than 70 per cent.

These are among the fastest declines in recorded history.

The Iranian regime is aware of how the rapidly-ageing population and the lack of young people entering the workforce could lead to long-term decline. But there’s not much they have been able to do about it. Maybe Iranians are pessimistic about the future. Maybe Iranian parents just want smaller families.

THE GREY TSUNAMI Continue reading

Joseph Kony is not in Uganda (and other complicated things)

By Joshua Keating, Foreign Policy, March 7, 2012

Click here to see photos of the evolution of the LRA.

Thanks to an incredibly effective social media effort, #StopKony is trending on Twitter today. The campaign coincides with a new awareness-raising documentary by the group Invisible Children. Former FP intern Michael Wilkerson, now a freelance journalist and grad student at Oxford — who has lived and reported from Uganda — contributed this guest post on the campaign. -JK

By Michael Wilkerson:

“Joseph Kony is basically Adolf Hitler. He has an army of 30 000 mindless children who slaughter innocent people in Uganda.”

Have you seen something like that fly across your Twitter or Facebook feed today? Or perhapsthis?:

“#TweetToSave the Invisible Children of Uganda! #Kony2012 Make Joseph Kony Famous!!”

Kony 2012,” a video posted by advocacy group Invisible Children to raise awareness about the pernicious evil of Lord’s Risistance Army (LRA) leader Joseph Kony,  has already been viewed over8 million times on Vimeo and more than 9 million times on YouTube (and surely more by the time you read this) since its release this week.

It would be great to get rid of Kony.  He and his forces have left a path of abductions and mass murder in their wake for over 20 years.  But let’s get two things straight: 1) Joseph Kony is not in Uganda and hasn’t been for 6 years; 2) the LRA now numbers at most in the hundreds, and while it is still causing immense suffering, it is unclear how millions of well-meaning but misinformed people are going to help deal with the more complicated reality.

Continue reading

The real battle in Uganda

By Jackee Budesta Batanda, Foreign Policy, March 9, 2012

While the rest of the world jumps onto the Kony2012 bandwagon — wrongly assuming that the main problem in Uganda is the Lord’s Resistance Army — Ugandans are worrying about the much more urgent problem plaguing their country: nodding disease.

The cause of the disease is unknown. It affects thousands of children in Northern Uganda, causing symptoms similar to epilepsy, but with more severe mental and physical retardation. (The photo above shows 12-year-old Nancy Lamwaka, a victim of the disease.) Yet the Ugandan government has been notably slow to deal with the problem.

A lot has happened since I last blogged about the government’s strange priorities. As I noted at the time, the Ugandan president’s office requested additional funding for its own needs that amounted to nine times of what the Health Ministry had specified for its first response to the disease. The government’s failure to allocate resources to this threat raises serious questions about its competence and its commitment to dealing with crises.

So the Hon Beatrice Anywar, an MP for Kitgum District, decided to take action: she ferried a number of children from her constituency to Mulago National Referral Hospital in the capital, Kampala. There were reports that the police tried to stop the bus from leaving Kitgum for fear that she would parade the children before Parliament.

When the sick children arrived in Mulago, journalists had a field day taking pictures. While the ethics of this display are questionable, I think it was necessary in order to shock our leaders into action. And Anywar did exactly that by bringing nodding disease to our doorstep. The issue can no longer be ignored.

The president later visited the victims at Mulago, where he promised more government support.

In the spirit of International Women’s Day, women activists in Uganda tied themselves to trees today in solidarity with Northern Ugandan mothers whose children are afflicted by the disease. Parents are often compelled to tie their sick children to trees to protect them from falling down or wandering off.

The gravity of the problem has been aptly described by women’s rights activist Jackline Asiimwe: “It is not acceptable for any parent to think that the only option left to save their children is by tying them to trees when they have a government whose mandate is to ensure that the citizens exercise their right to good health and access to medical attention wherever and whenever necessary.”