Category Archives: Foreign Policy

How to Deal with Al-Shabab and a Failed State in Somalia

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One of Somalia's many problems. (AFP Photo/Mohamed Dahir)

I’ve been reading a lot of opinions lately about the decline of the empire of the United States, where experts try to pinpoint the exact moment where we planted our flag atop the hill of global dominance and then began our descent down the other side (somewhere around the early 1990’s, according to the consensus).  In every calculation, the war in Afghanistan is either emblematic of a state in decline (they don’t call it the “graveyard of empires” for nothing) or something that actually precipitated the fall.  We defeated the communists at the end of the 1980’s – the high-water mark in our global position.  And one of the great ironies of that victory is that we secretly funded the mujahedeen in Afghanistan to fight the Soviet Union and, in doing so, kept the Russians mired in the same position we have found ourselves over the last ten years.  One of those mujahedeen was Osama Bin Laden, son of a Saudi billionaire who, with the help of the CIA, bankrolled the insurgency against the Soviets.  Bin Laden quickly turned against the United States (not that he was ever with the U.S.) and became the figurehead of the global jihadist movement until a few months ago when Barack Obama killed him.

People love to point out the fact that we funded the very people who have tried to kill us over the last two decades.  How could we do that, they ask?  The answer is relatively simple.  When a country doesn’t seem like a threat, no one really pays cares if we are potentially nurturing our future enemies, so long as we are able to channel them in support of our cause at the time.  And then, when the snake is all grown up, he bites.  And, in an ironic twist that would make George Santyana roll over in his grave we are doing it again.  Only this time, we are doing it in Somalia, the last truly failed state.

Ever-present Somalia.

It makes sense at this point to give some context about Somalia.  With a score of 113.6, it is consistently ranked number one on Foreign Policy magazine’s Failed States Index year after year.  Here is how it is described in the most recent ranking:

Relatively speaking, the first months of 2011 have been full of good news for Somalia, the world’s closest approximation of anarchy. For two full decades, the majority of the territory in this crescent-shaped country on the Horn of Africa has gone essentially ungoverned; an internationally recognized transitional government is fighting tooth and nail to control the capital. Yet after months of stalemate with Islamist insurgents, the momentum finally seems to be turning. Block by block, the national troops — with the considerable help of an African Union-U.N. joint peacekeeping mission — have made significant territorial gains in Mogadishu.

Yet Somalia is still in tatters. Out of a population of nearly 10 million, as many as 3 million are thought to need humanitarian assistance. Another 2 million have been uprooted in the conflict, and political infighting has paralyzed the nascent government. Neighboring Uganda has warned that the fractures stand to make matters worse, offering Islamist insurgent groups a chance to reorganize.

Perhaps the greatest fear looming over Somalia today is that it will become the next haven for al Qaeda fleeing Afghanistan. Somalia’s Islamist rebels, who call themselves al-Shabab, have already pledged their allegiance to the global terrorist network.

Here, demonstrators in Mogadishu denounce the United Nations mission in the country, accusing it of spending too much on flying diplomats in and out of Nairobi and not enough on fixing what’s broken in Somalia.

This was written prior to the recent famine, which has left over 30,000 children dead and is the localized food crisis in 20 years.  How to deal with the “basketcase” of Somalia has eluded successive U.S. governments for the last several decades.  Now, as the U.S. is faced with the prospect of Somalia becoming the next Afghanistan – a hub for global jihadist groups like Al-Qaeda – the issue has suddenly become much more pressing.  Jeffrey Gettlemen, the failed-state beat reporter for the New York Times, reports on the latest use of military contractors to fight Al-Shabab, the Islamic Fundamentalist group that only a mother could love:

The Pentagon has recently told Congress that it plans to send nearly $45 million worth of military equipment to bolster the Ugandan and Burundian troops. The arms package includes transport trucks, body armor, night vision goggles and even four small drone aircraft that the African troops can use to spy on Shabab positions.

Unlike regular Somali government troops, the C.I.A.-trained Somali commandos are outfitted with new weapons and flak jackets, and are given sunglasses and ski masks to conceal their identities. They are part of the Somali National Security Agency — an intelligence organization financed largely by the C.I.A. — which answers to Somalia’s Transitional Federal Government. Many in Mogadishu, though, believe that the Somali intelligence service is building a power base independent of the weak government.

One Somali official, speaking only on the condition of anonymity, said that the spy service was becoming a “government within a government.”

“No one, not even the president, knows what the N.S.A. is doing,” he said. “The Americans are creating a monster.”

The future of global jihad.

I have a great respect for the complexities of foreign policy, containment, defense, and dealing with a king cobra like Somalia.  But the African Union should be dealing with Somalia and taking responsibility of policing its own region.  Having a major presence there creates resentment in the same way that it has done Afghanistan.  It is a dangerous country and to allow it to effectively fall apart is not really an option either.  So I understand why these measures might need to be taken.  Still, I suppose this is how it starts.

Towards the end of the article there is another nugget of insight into the different ways of approaching a failed state with an Islamic fundamentalist problem:

In Washington, American officials said debates were under way about just how much the United States should rely on clandestine militia training and armed drone strikes to fight the Shabab. Over the past year, the American Embassy in Nairobi, according to one American official, has  become a hive of military and intelligence operatives who are “chomping at the bit” to escalate operations in Somalia. But Mr. Carson, the State Department official, has opposed the drone strikes because of the risk of turning more Somalis toward the Shabab, according to several officials.

Johnnie Carson is the highest state department official in Africa.  He is a career foreign service officer, and has cut his diplomatic teeth dealing with African governments since the 1970s.   By all accounts, he understands the cultural nuances that affect diplomacy in sub-Saharan Africa.  Reading this, I appreciate that someone like Carson is running the show.

I think that this sort of measured approach to dealing with a volatile and complex situation is reflective of Obama’s deliberative foreign policy.  Brute military force that rains collateral damage on civilians makes for fertile recruiting grounds for Jihadist groups.  It needs to be smartly applied, in combination with diplomacy and development.  But, as I wrote the other day, the latter two could end up on the receiving end of cuts at the end of 2012.  If that happens, the counterforce pushing back on the military operatives itching to put boots on the ground in Somalia will be marginalized. And history may be free to repeat itself.

Why Don’t Americans Care About Famine in Africa?

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Former congressman Bill Frist has penned an op-ed titled “Why Americans Should Care About Famine in Africa.”  Recently back from the Dadaab refugee camp on a fact-finding mission with Jill Biden and Raj Shah, the head of USAID, he discusses the tragedy of thousands of women and children arriving daily, only to find that the camp – already overcapacity by a factor of four – cannot handle the influx of refugees.  But there is a bright spot, Frist says.  That bright spot is that aid to the region has become smarter and more effective over the last decade.  Without it, the crisis would undoubtedly be much worse.

The article reads less like a critical analysis of the situation than an advertisement for USAID and a preemptive case against cutting foreign aid, which is always on the chopping block and could very well get the ax come next year when the trigger goes into effect.  The debt ceiling deal creates a super-committee to decide what will be cut.  If the super-committee can’t come to an agreement – which, if history is a guide, they most certainly will not – then a Sword of Damocles will fall and chop off a part of entitlement spending and defense.  People are happy that defense spending is finally going to be cut (twenty years after the fall of the Berlin Wall), but the fine print is not so rosy.  Over to The Guardian:

The security category includes “department of defence, the department of homeland security, the department of veterans affairs, the National Nuclear Security Administration, the intelligence community [and] international affairs.” This sets up a dynamic where hawks will be trying to cut as much as possible from the state department’s diplomatic corps, and foreign aid, in order to favour their patrons at the Pentagon and in the weapons industry. Hartung explained that the contractors, in addition to having the support of speaker of the House John Boehner:

“had Buck McKeon, the head of the House Armed Services Committee, whose biggest contributor is Lockheed Martin is the upper parts for AR-15’s with big military facilities in his district, [and] Randy Forbes, whose district is near the Newport News Shipbuilding complex, which builds attack submarines and aircraft carriers. They used their influence to get people on the inside, their allies in the House, to push their agenda.”

Defense is broadly defined in this scenario as including diplomacy and development – the three D’s.  There isn’t really a comparison between the three – Robert Gates, the defense secretary, famously pointed out that the military has more members in its marching bands than the State Department has foreign service officers – except that the military-industrial complex favors one more than the others.  So, should push come to shove and the super-committee fail to come to an agreement on cuts, it is likely that development – USAID, the Millenium Challenge Corporation, etc. – are going to receive a disproportionate percentage of those cuts.

Development has almost no constituency.  When the government cuts defense spending, it eliminates jobs in communities where contractors like Raytheon and Lockheed Martin have their factories.  The F-22 fighter jet – the next generation plane for the air force – manufacturers at least one component in every single state in the country.  From a supply chain perspective, that doesn’t make a lot of sense.  But when your biggest client is the government, it makes sense as a company to make yourself an integral part of the local economy for as many constituencies in the country as you can.  Development, on the other hand, employs very few people, and the ones that it does are typically not American.  Despite its strategic importance as part of US foreign policy (the three largest recipients of aid are Israel, Pakistan, and Afghanistan), people question the efficacy of aid.  And, in the current political climate where the term “socialism” is used liberally, people find it difficult to stomach the idea of giving money to other people when people believe that a) we are spending too much as a country, and b) we have our own problems at home.

Frist isn’t the only one who has come out in defense of aid.  John Kerry has an op-ed in the Washington Post from a few days ago about the importance of foreign aid to the country:

At this time of budget crisis, a United States senator defending foreign aid might well be advised to get examined by a political consultant if not a mental health professional. But right now it’s more urgent than ever that those of us who believe in robust American leadership step up and articulate the dangers of American retrenchment. Many question whether we can afford foreign aid and development investments, but the reality – however hard to swallow – is that we can’t afford not to.

So why don’t Americans care about foreign aid?  When asked to prioritize what they would cut from the budget, foreign aid is always number one.  People assume that our foreign aid budget is ten times larger than its actually size (about 1%).  I think there are a lot of reasons why Americans don’t care about famine, or, more broadly, foreign aid in general (clearly Americans care about famine, but I define “caring” as making a concerted sacrifice toward its elimination).  Here are a few that come to mind:

  • Foreign assistance goes to countries that are beyond the ability to help

Somalia has been without a functional government for twenty years.  It is controlled by a mixture of rebels, pirates, warlords, Islamic fundamentalists, and, depending on the day, a weak transitional government that has been in transition for the better part of two decades.  The U.S. sent its special forces into Somalia during the Clinton administration.   The resulting Battle of Mogadishu was immortalized in a book and a film, and has given pause to subsequent governments considering entering Somalia.  With the recent deaths of 30 Navy Seals in Afghanistan will only serve to make us more wary of sending troops into a situation where they might get killed (which is a good thing).  If Somalia is the poster child for where our foreign aid dollars go, most Americans would probably rather spend money on a fight that can be won (the last ten years, notwithstanding).

  • It is called “aid”

The American dream still resonates strongly with people, despite the fact that it is moving further and further from the grasp of everyday Americans.  Hard work and bootstrapping are synonymous with being an American.  We have something of a welfare state, but it pales in comparison to countries in Europe (for better or for worse).  When smaller government is what the country wants (or least a government that spends less), taking money away from people who should be earning it anyways is an easy sell.

  • We’re broke and foreign aid has no constituency

The United States has a “spending problem,” according to Juan Boehner.   This is true, but the interesting thing about political debates about spending is that the participants rarely use percentages.  That is why it is easy to get people whipped up about the “bridge to nowhere,” when 70% of government spending is tied up in defense, medicare, and social security.  So, if you are shedding programs, aid has the least political backing and is easy to unload.

  • Americans do not empathize with the recipients of foreign aid

How can they?  This isn’t the fault of the American people.  I used to live in an apartment in Boston and met my neighbors once.  I didn’t care what they were doing, and they didn’t care about me, I’d imagine.  And they lived below me.  To ask people to care about the welfare of people with whom they have no tangible connection is a stretch anywhere.  This is why Nick Kristof uses “bridge characters” in his writing – to get the average American to care about Darfur or Somalia or Cambodia, which, as he discovered as a reporter for the New York Times, is not easy.

  • Foreign assistance has bad marketing

How do you get people to buy Coke over Pepsi?  How do you convince them to buy the loveseat in addition to the sofa?  How do you get them to increase the percentage of the national budget that is allotted to foreign aid?  The same way – you market it, and you sell it.  Foreign aid projects have poor marketing.

  • Some foreign aid is wasted

When money goes toward a good cause, like the current famine, it doesn’t get much press.  When it is stolen by a kleptocrat dictator in Africa, who then buys cars, boats, and airplanes, it really sticks in people’s craws (and rightfully so).

These are a few ideas, but I am sure there are more.

Perceptions of China and the United States

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A guaranteed way to bait someone into a contentious discussion in Nairobi is to ask for their opinion on the value of China’s activities in Africa and how the massive investment in infrastructure and buildings has and will contribute to the development of the continent.  Most are quick to dismiss the role of foreign aid in development, accusing the West of possessing ulterior strategic motives and exacerbating the problems by distorting the market for goods and services and propping up corrupt and unaccountable governments.  But many also believe that China’s approach to securing land and natural resources in exchange for building roads and hospitals is bad for the countries in the long-run.  They cite the poor quality of work and even accuse the Chinese of emptying their prisons and sending their criminals to work on infrastructure projects in exchange for their freedom and a guarantee that they will never return to China.  This is hearsay, of course, and may well be false.

Other people – businesspeople and educated Africans – praise the Chinese for investing in Africa.  They cite the sheer volume of foreign direct investment and China’s method of holding the money in escrow until it is released for Chinese construction firms to quickly and efficiently complete the projects.  When you press these people about China’s “no questions asked” policy when it comes to dealing with autocratic and repressive governments, or the no-bid contracts given to Chinese state-owned construction firms, or the lopsided deals heavily weighted toward China, they understand that you have to take the good with the bad.  Africa might be getting a raw deal now, but wait a few decades until the economic returns of investments today give the continent a position of leverage and the tables might just turn, they say.  The other day I had drinks with an editor from the Nation Media Group, a Kenyan media conglomerate that publishes the Daily Nation and the East African.  After sustaining a drubbing as a stand-in for my country, I asked how she felt about the Chinese.  “I think what they’ve done for the continent is remarkable,” she said.

As it turns out, she isn’t the only one who thinks that.  In fact, most of Africa and Latin America are pretty happy with China, considering them a move valuable partner in development than the United States.  Or maybe these countries just have long memories and haven’t forgotten the fact that the U.S. catalyzed the coup against the first leader of independent Ghana and father of pan-Africanism, Kwame Nkrumah, or propped up Mobutu Sese Seko in the Congo and other dictators during the Cold War, or that the CIA trained military dictators how to overthrow the leftist governments in power, also during the Cold War.  Either way, much of the developed world seems to prefer China’s approach to foreign policy, geopolitical relations, and trade to that of the United States.

This chart is from the 2007, so it may be a bit dated.  But, given that China’s foreign direct investment in Africa has increased substantially since the data was published, I can’t imagine the opinions have changed much.  Below are a few more instructive graphs show the perceptions of China by other countries around the world and other interesting charts.

(H/T Dani Rodrik)

Why is Income Inequality in the U.S at the Highest Level in 90 Years? A Brief History

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Something strange is happening in the United States.  Parallel sets of reality exist, disconnected from one another in the discourse over issues like taxes, the tea party, and the debt ceiling.  In one reality, there is a very loud and public debate over the growing size of government and the intrusion on the lives of ordinary folks in the form of higher taxes and more restrictions.  During the debate, the GOP opposition candidate made a bald, white Ohioan nicknamed “Joe the Plumber” the central point of his campaign.  He was supposed to be representative of the millions of Americans who don’t want to see the socialist then-candidate Barack Obama to “spread the wealth around” and turn the country into a latter-day Soviet Russia.  In fact, people were so convinced that Obama’s policies would destroy the American dream for hard-working middle America that they formed something called the Tea Party, an ideologically-pure subset of Republicans that are now almost certainly directly responsible for bringing the country to the brink of default on its debt, a first in American history.

The tea party and the middle class is incensed with the Democratic party for bringing the country closer and closer to communism.  But, if you look at the chart above, which shows that the income gap is actually widening and has been for some time, exactly the opposite is true in the United States, as the country has become more capitalistic over time.

This is other set of reality, which is supported by statistics: the United States is more unequal than ever.  Wealth is more concentrated among the top 1% of earners than it has been since the the 1920’s, at the start of the Great Depression.  The Bush-era tax cuts – a move to secure the political backing of the wealthy – disproportionately benefit the top earning segments of the country, yet they are vociferously defended by the Tea Party, a group that, as a generalization, stands to lose more than they will gain by their extension (which Obama did anyways at the end of 2010 in exchange for an extension of unemployment benefits – a move that certainly benefited many of those in the Tea Party that campaign against him).  Capital gains are income earned from the sale of an investment – either in the stock market or from the sale of a company via a private equity firm, or some other vehicle.  Because capital gains are taxed a lower rate than regular income taxes Warren Buffett, one of the world’s richest men, famously pays less in taxes every year than his secretary.  Most recently and perhaps most disturbingly, according to the Pew Research center, the current wealth gap between whites, blacks and Hispanics – which now stands at an appalling 20 to 1, is the highest in history!

But the chart below is the most damning of all.  It shows the Gini coefficient – an indicator of income inequality and wealth distribution – by country.  As of 2007, the United States, the global economic superpower and country in which nearly half of the population believes the current presidential administration is leading us down the path to socialism, had a Gini coefficient of 45, placing it just ahead of Uruguay, Uganda, and the Philippines, and just behind Cote D’Ivoire, Cameroon, and Iran.

By all accounts, the lower and middle class of America are doing worse than ever before, yet many in these segments have been the most vocal proponents of lower taxes and fiscal austerity during a time where government spending is probably pretty damn important to prevent the country from going into a double-dip recession.   So why is this happening?  The answer is quite literally complex.  In any country – developed or developing – the top of the economic pyramid typically has the most to lose from higher taxes and the least to gain from social programs.  Welfare, Medicaid, and other policies are critical to ensure social stability, preventing the disenfranchised from falling too far in desperation and reacting in the form of protest, but the immediate benefits of living in a country where social stability is the norm is not immediately apparent.

So, sometime in the early 2000’s, Karl Rove, Bush 43’s top adviser, solidified a Republican coalition comprised of three main groups: the fiscal conservatives (typically the top 10% of earners), the defense and foreign policy hawks, which were responsible for our multiple forays into nation-building in the Middle East, and the religious right, a large and disciplined voting block that are frequently single-issue voters concerned more with social issues than those of the public purse.  The first group supplied the money for political campaigns (including, according to Jane Mayer and others, the “grass roots” Tea Party movement) and received favorable tax policies in return.  The second group provided the ideological approach to governance, one of “American exceptionalism” in which it was the burden of the United States to restore order to a world plagued by non-democratic regimes that stood in the way of global dominance (i.e. access to oil).  And, lastly, the the third group of evangelicals provided the vast network of foot soldiers motivated by their commitment to God to guarantee the right of life and defend the sanctity of marriage through federal and state legislation.

Signing the Bush tax cuts. Where are all the Tea Partiers?

Now, anyone who has spent 15 minutes reading an article on political philosophy while perched on the john knows that, from an ideological perspective, the amalgamation of positions that make up the platform of this three-pronged Republican party are full of contradictions.  For one thing, the fiscal conservatives generally believe in limited government and minimal intrusion by the government on all matters, including the way we citizens choose to live our lives.  If it were politically expedient and they did not need the numbers of the religious right, you can bet your bottom dollar that that sect of the Republican party would be pro-marriage, pro-choice, and pro-legalization, if only for economic reasons.

The hawks, which believe that spending as much as the next ten countries combined on defense is essential to the survival of our way or life (or so they say), consider any cuts at all to defense to be anathema.  The “Bush Doctrine,” an ideologically-pure interventionist approach to foreign policy, which controversially supported the premise of preventive war (remember weapons of mass destruction in Iraq?), has cost the United States trillions of dollars fighting wars in God-forsaken parts of central Asia and the Middle East, where the people we are trying to help despise us and would like nothing more than to see us leave.  The hawks are extraordinarily pro-Israel due to its strategic interest in controlling one of the most volatile regions in the world and guaranteeing that the price of oil – the underlying element of every foreign policy decision ever made – remains favorable to the United States.  The following is a direct quote from Dick Cheney, the leader of the hawks within the Bush administration:

The good Lord didn’t see fit to put oil and gas only where there are democratically elected regimes friendly to the United States. Occasionally we have to operate in places where, all things considered, one would not normally choose to go. But, we go where the business is.

Now, if the platform of the Republican party truly reflective conservative political philosophy, the fiscal conservatives would be opposed to unnecessary wars for both economic and geopolitical reasons, while the religious right would be supporting pro-growth domestic economic policies – smart and efficient social programs, school choice, etc.  But that isn’t the way it goes.

Remember that Reagan raised taxes 11 times during his two terms.

The religious right is the last angle of the tri-cornered hat of the Republican party.  This group tends to be lower-middle class, pious, and socially conservative when it comes to just about everything.  Abortion is murder and homosexuality is unnatural and a choice (“Thou shalt not lie with mankind, as with womankind: it is abomination.”).  They believe in an original interpretation of the constitution, but they don’t really understand why.  They pick and choose policies based on a believe that the separation of church and state is irrelevant if you can imbue the government with Christian values.  Because of their socioeconomic status – blue collar, middle America – they tend to be relatively xenophobic and anti-immigration, despite the fact that smart immigration leads to the creation of more of the same types jobs that they are terrified of losing.   They stand to lose much from the economic policies of the fiscal conservatives and the foreign policy prescriptions of the hawks, yet these issues are secondary to the social issues that the former two groups support more out of convenience than conviction.

This the construct of the Republican party circa 2007.   Then the 2008 election occurred and the Republican nominee, John McCain, a man the religious right could hardly stomach due to to his relatively moderate positions on social issues, realized he would not be able to win the election with his first choice for vice-president, Joe Lieberman, a hawkish, fiscally-conservative democrat from Connecticut, and needed to make a radical attempt to shoot the moon and go for broke.  So he chose Sarah Palin, because she was a good-looking, young woman – someone who added diversity to the ticket to complement a black nominee (Republicans are cynical to the end) – and she appealed to the evangelical base of the Republican party, which was McCain’s only ticket to the White House.  She was perfect – someone who could be used to draw in the base, but without the intellectual or political clout to influence the policies of the White House once the party was in power.  So, in a hastily-planned decision encouraged by Bill Kristol, editor of the Weekly Standard and intellectual figurehead of the Hawks, McCain unveiled Sarah Palin to the world.

Bill Kristol and Sarah Palin

But then something strange happened.  Sarah Palin went rogue.  She realized that she didn’t need the Republican establishment and jettisoned them in the middle of the campaign as she sought to chart her own political future.  After McCain lost and America elected its first black president, the Koch brothers and other fiscal conservatives who felt threatened by a Democrat with a fairly liberal voting record were busy bankrolling a new grass-roots movement designed to oppose the socialist policies of the new president, Barack Obama.  Sarah Palin, the new force in American politics, became its figurehead, and, once again, the movement soon realized that it no longer needed to heed the call of its masters (the Republican party establishment) and began to vote its own kind into the government in an effort to shut it down.  The 2010 midterm elections saw sweeping victories for the Tea Party, with 80 or so freshman representatives heading to the House to tear the roof off the mothersucker.  Those representatives are now at the center of the dangerous game being played with the debt ceiling, a political calamity that could have disastrous effects for years to come.

The impacts will not just be felt by the Tea Partiers themselves, who don’t really understand the complexity of the debt ceiling nor do they realize the implications for future job creation, growth, and employment.  It is also going to be felt by the Hawks, who are now flailing wildly as they watch, for the first time since Reagan came to power in 1980, the defense budget becoming threatened.  It will also be felt by the fiscal conservatives, who are going watch billions of dollars of their net worth disappear in an instant as the stock market plummets on the news that the United States, the last refuge of the conservative investor, has voted not to raise the debt ceiling, leading the ratings agencies to downgrade our debt and send us flying back into a recession.  So, what has happened over the last decade, beginning with the fantasies of Karl Rove for a permanent Republican majority to the present debt ceiling calamity, is that an effort to control and harness the raw numbers of the stupid and convince them to vote against their interests, has backfired.  The machine has become self-aware, and it no longer operates at the behest of its master.

I'm guessing he hasn't read Das Kapital

In Jewish folklore, there exists a creature called a Golem, which is a beast that can be activated and used to perform tasks by its master.  It provides an instructive metaphor for this phenomenon:

The existence of a golem is sometimes a mixed blessing. Golems are not intelligent, and if commanded to perform a task, they will perform the instructions literally. In many depictions golems are inherently perfectly obedient. In its earliest known modern form, one story has Rabbi Eliyahu of Che?m creating a golem that became enormous and uncooperative. In one version of this story, the rabbi had to resort to trickery to deactivate it, whereupon it crumbled upon its creator and crushed him.

The other metaphor is a little bit more of a stretch, but I still think it works.  It comes from the second Batman movie, “The Dark Knight.” In the scene, Alfred, the butler, is explaining to Bruce Wayne the mind of the joker, and why it is so difficult for him and others to understand:

Alfred Pennyworth: A long time ago, I was in Burma, my friends and I were working for the local government. They were trying to buy the loyalty of tribal leaders by bribing them with precious stones. But their caravans were being raided in a forest north of Rangoon by a bandit. So we went looking for the stones. But in six months, we never found anyone who traded with him. One day I saw a child playing with a ruby the size of a tangerine. The bandit had been throwing them away.
Bruce Wayne: Then why steal them?
Alfred Pennyworth: Because he thought it was good sport. Because some men aren’t looking for anything logical, like money. They can’t be bought, bullied, reasoned or negotiated with. Some men just want to watch the world burn.

The lead-in to this story begins with Alfred explaining how Batman pushed the criminals of Gotham City into a corner, leading them to turn to a man they didn’t fully understand – the Joker.  The same principle holds true for the Republican establishment.

Why so serious?

The Republican party has created a Golem in the Tea Party, which has now become too strong and unwieldy for them to control.  They are electing their own politicians – specifically, Michelle Bachmann, Rick Santorum, and Sarah Palin, to name a few – and developing their own platforms.  Their xenophobia leads them to be increasingly isolationist when it comes to foreign policy, to the horror of the neoconservative hawks that ran amok during the Bush administration.  They are nihilistic when it comes for fiscal policy, leaving themselves open to influence from politicians who want to exploit their misunderstanding of the debt ceiling to advance their own agendas, at the expense of the country.  The permanent Republican coalition envisioned by Karl Rove has fragmented, as the beast of burden is no longer content to carry the weight and has learned to assert his political voice.

This all brings us back to why the United States is in its current predicament, and why the two realities highlighted at the beginning of this post exist.  It is because the people who have controlled the country for the last 10 years (see the slope of the graph since 2000) used the voting power of the uneducated (politically and economically) masses to advance an agenda of low taxes on the rich that increases income inequality to unprecedented levels and simultaneously turned the budget surplus created by Bill Clinton into one of the largest deficits in history, in no small part due to the hawks, which led us into Iraq after Afghanistan and funded both wars with debt from China – something on the order of several trillion dollars.

Well, now the Golem has woken up after the beast that the hawks and fiscal conservatives didn’t fully understand has turned on them.  And the result?  Calamity for everyone.

A Toaster in Every Kitchen: Growing Demand in Developing Nations

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The chart above is a bit complicated, but remarkably interesting.  For a good explanation, read Felix Salmon.  For a below-average explanation of questionable veracity, keep reading.  This chart displays the ratio of two ratios.  The numerator is the P/E (price to earnings) ratio of all the companies on a major U.S. technology stock index, and the denominator is the p/e ratio of all the companies on a major U.S. industrial stock index.  Simply defined, a P/E ratio is the market value of a share over the earnings per share.   When a company has a high P/E, it means that the market views the company as having greater potential than what is reflected by its current profits, and investors are willing to pay more for less income, ostensibly because they believe that the company will make more money in the future.  During the tech bubble in 2000, P/E ratios shot through the roof as companies that were not yet profitable (like Pets.com) had high valuations.  So, when ratio of technology P/E to industrial P/E is less than one, it means that the market values industrial companies (manufacturers of cars, appliances, electronics, etc.) more than technology companies.

For the first time since 1996, as the chart shows, that ratio is less than one.  In fact, the ratio is now at its lowest point in history.  What is going on?  After all, if you turn to the Marketplace section of the Wall Street Journal (if you have access, that is), you are more likely to read about Facebook’s $100 billion valuation (!) or Groupon’s pending IPO than you are about sales of GE washing machines.  But if this chart is an accurate reflection of the truth, then the communal conscience of the market believes that the invisible hand is going to push sales of Cuisinarts and Hoover vacuums to levels beyond the sales of whatever snake oil the latest tech stocks are peddling.  This all begs the question: in the wake of a financial meltdown and the worst recession of the last eight decades, where is all that demand coming from?

Matt Yglesias thinks he has an answer to that question, which I will quote in full:

What this says is that markets are more pessimistic about the growth prospects for high-tech firms than for industrial ones. That actually seems quite reasonable to me. The thing about high-tech firms is that the stuff they make tends to be relatively cheap. A MacBook Air is a steal compared to a new car, and a used computer can be found for almost nothing. Google is free. If you imagine a world in which the bulk of growth is going to occur in large developing nations. So imagine hundreds of millions of Chinese, Indians, Brazilians, etc. achieving something resembling the lifestyle of lower-income people in today’s rich countries. You’re imagining a household acquiring a quantity of cars, washing machines, refrigerators, toasters, vacuum cleaners, etc. whose dollar value vastly exceeds the price of its total quantity of computers, smartphones, and software.

In America, for a long time now we’ve been in a kind of major appliance funk. People don’t get richer and say, “Now I’m going to own seven toasters.” People buy these kind of low-tech goods, but it’s driven by population growth and depreciation. So the high-tech sector — new inventions — has been the high-growth sector. But in a world of catch-up growth you don’t need to be “high-tech” to find new customers. There are lots of people around the world who don’t own a blender.

Through its focused efforts to turn China into the world’s manufacturer, the Chinese government has pulled hundreds of millions of its people out of poverty.  Companies like Tata Motors in India and BYD Auto in China are growing gangbusters on the backs of a burgeoning global middle class, a product of what Fareed Zakaria calls “the rise of the rest.”  Say what you will about inequalities of economic liberalization and free trade, but the miracle of globalization, as someone described it to me in a conversation last night, has lifted millions of people out of poverty across the world and, moving a step higher on the ladder, created a middle class with the same appetite for convenience as your average Jack and Diane in Illinois.  Higher disposable income in the hands of a newly-empowered consumer class means toaster ovens, more stoves, more irons, mores refrigerators (I am scanning my apartment in Nairobi for inspiration, but you get the point).  Demand for cars in Asia, Africa, and Latin America has grown tremendously, to the benefit of the aforementioned manufacturers.  And that is just on the direct consumer level.  One could extrapolate further and say that the growing demand for meat and dairy products means more freezers and industrial chilling plants, for example.  Manufacturers in the United States and, increasingly, in the developing world will need to scale up production to meet the tidal wave of emerging market demand.  And, as Yglesias points out, smart investors are beginning to recognize that potential.

There are two interesting points to be made here.  The first is that the developing world is developing fast, and the bulk of demand in the coming decades is clearly going to come from emerging economies that are savvy enough to reap the benefits of globalization.  The second point stems from a conversation I had with some friends last night at a swanky outdoor lounge bar in Nairobi surrounded by the TGIF Kenyan after-work crowd, all dressed to the nines and enjoying a mixed drink and calamari appetizer before dinner.  It is this: the United States and Europe do not really appreciate  just how fast the rest of the world is growing.  The chart on the right shows year-over-year growth in retail sales.  The developing world has averaged 10% a year, with hardly a blip from the financial crisis.  It is starting from a smaller base, but such tremendous growth rates cannot be dismissed as poor countries simply transitioning to lower-middle income status.  As a result of globalization, the tortoise isn’t just catching up – it is becoming the hare.

The United States still has the edge in many areas.  Our post-secondary education system is the best in the world, and we have a culture of innovation, entrepreneurship, and risk-taking that is still producing the largest companies on earth (Google, Facebook, Apple, etc.).  Yet our policies suggest that, as a nation, we have a mixture of either ignorance, willful blindness, or arrogance that leads us to collectively believe that we are invincible.  But, as the European Union (actually, just Germany and France) struggles to pull itself together as one country after another risks default (the P.I.G.S – Portugal, Italy, Greece, Spain), and the dysfunctional government of the United States threatens to actively cause the country to default on its debt, the rest of the world continues to grow.  And in countries like China, India, and Brazil, where the people have less to lose and more to gain from economic development, the hunger that drives the economic engine mirrors that of the United States at the turn of the 20th century, and in Europe before that.

But this is the nature of things, as loyal followers of Develop Economies have heard me say in the past.  Countries don’t develop through aid.  Fewer people die from starvation and water-borne diseases because of aid, but economies do not grow on the backs of donor dollars.  They grow because of investment in human capital and in manufacturing.  China became the world’s manufacturer, India its hub for business process outsourcing (BPO), and Brazil its provider of natural resources.  And now these three countries are reaping the benefits of hard work and discipline, while the West remains mired in unnecessary wars and struggles to uphold a standard of living it can no longer afford.

Forbes Magazine describes the magnitude of retail sales growth and the mushrooming of consumer demand in developing countries:

Retail is exploding in developing markets and those markets have become the driving forces fueling global growth in retail sales and space. Over the 10-year history of A. T. Kearney’s Global Retail Development Index (GRDI), an annual research project designed to help global retailers prioritize which countries to enter, the population of developing markets increased 11%, while retail sales per capita has almost doubled, retail space has more than tripled and Internet access grew by nearly 500%.

Ten days ago, Pew Global Research released a report which shows that the world now sees China overtaking the United States as a global superpower.  Meanwhile, back in the New World, we are exactly one week away from the biggest man-made economic calamity in the nation’s history (the secondary market prediction at Intrade shows a 29.9% chance of the U.S. increasing the debt ceiling by July 31st).  The rest of world is looking at the United States with a mixture of disbelief and smug satisfaction as the world’s most hubristic and sanctimonious nation undergoes a very public, very childish debate about whether not to jump off a cliff.  China, which owns a not-insignificant percentage of our national debt, is telling us to shape up and deal with our problems.  It used to be the other way around.

So, while the Western world struggles with its problem of unemployment, stagnant growth, and a long period of detox from debt and irrational exuberance, the developing world continues to lift its people out of poverty and expand its middle class.  Industrial demand will continue to increase as the appetite for material goods grows among the newly-enfranchised.  For an American insulated the rest of the world, charts like the one above defy logic and reason.  For a citizen of the world, attuned to the tremendous growth and potential of emerging economies, this chart makes a whole lot of sense.

Technology Evolution and Revolution in Africa

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Chances are you have never heard of the company Huawei.  Founded in 1988, this somewhat secretive Chinese company has become the fourth largest telecoms equipment and service company in the world, just a few billion in revenue behind Nokia.   Huawei, with Chinese handset manufacturer ZTE, have prime access to China’s $59 billion 3G market that continues to grow exponentially.  But, as with other Chinese firms, Huawei’s global aspirations in the 1990’s took them to Africa to build the growing telecom infrastructure.  The industry, led by Bharti Airtel and other innovators determined to tap into the raw market potential of the African consumer, grew in part due to the physical infrastructure built during this period.  Judging from the fierce price wars raging across continent, the investment turned out to be a smart and profitable venture.

Huawei has built up much of the 2G and 3G infrastructure in East, West, and Central Africa, and supplies the hardware for most of the USB modems in Africa.  Now, it has developed a Android smartphone called the IDEOS, which is selling out of stores in Kenya.  At less than $100, including $25 of free airtime, it is the cheapest smartphone on the market.   This is in a country where 40% of the country lives on less than $2 a day, yet the cellphone penetration is now at 63% majority of the money is moved by MPESA, the mobile money service run by Safaricom, the biggest telecom in Africa.

For the last few weeks, I have been working out of shared working space for software developers and entrepreneurs called the iHub.  It is the beating heart of the Nairobi tech scene; a place where young smart developers, engineers, and business development people come together to collaborate and raise the bar.  Last week I had to move from where I was working because the “Open Data Evangelist” from the World Bank came to the iHub to give an impromptu pitch to the Kenyan software developers to develop applications to keep tabs on government spending and corruption.  To tap into the tech scene of Nairobi, people come to the iHub.

In this environment, surrounded by Android developers, it would’t be unreasonable to assume that the IDEOS phone is going to revolutionize Kenya, if not all of Africa.  A Google Android phone with 3G wireless internet that is affordable for the typical African consumer will do more for productivity, communication, information transfer than any other technology innovation on the market today.  And, given the rabid levels of competition within the telecom sector in Africa, the price point of the IDEOS phone is the high mark – it can and will come down as more and more companies enter the fray.

The IDEOS phone has been very successful for several reasons:

The $100 Android phone has likely been a hit in the East African country due to the following factors:

Its affordability made it within reach of Kenyans, giving them the option of having a cost effective phone with premium features. The phone runs on Android 2.2 with a touch screen, has up to 16GB storage and has the ability to be transformed into a 3G Wi-Fi hostpot that can connect up to 8 devices. Currently, Kenyans have access to all these features and more for a hundred dollars or less.

In addition, its strategic partnership with leading Kenyan telecommunications firm, Safaricom as the phone’s main distributor and marketer also likely helped facilitate its fast adoption.

At present, most cellular phone users in Kenya use  feature and low end phones. IDEOS’ fast adoption rate in the country could hopefully boost smart phone adoption rates by making it accessible to Kenyans who had previously been priced out of the market.

These reasons make a lot of sense, as they would in any free and developed market.  But it is important to remember this is Africa.  C.K. Prahalad, the famous management thinker, wrote Fortune at the Bottom of the Pyramid, which discussed the incredible market potential offered by the poor and low-income classes in the developing world.  His book and subsequent work drew attention to the vast opportunities that exist in countries with a low per-capita GDP but a high population levels, particularly when they are concentrated in urban slums, as in Bangladesh, India, Nigeria, or Kenya.  At the time of the book’s release in 2004, mobile penetration in Africa was less than 10%, and a cell phone might cost several hundred dollars, before even buying a plan.  Data was out of the question, of course, as it was for the rest of the world.

But mobile communications took off, and did so in the face of some most credible prognosticators who thought that any cell phone access, much less cheap and ubiquitous continent-wide coverage, was a fantasy.  In fact, Prahalad, the “base of the pyramid” visionary who saw profit potential where others saw a basketcase, had this to say about telecommunications in Africa only two years earlier in an article titled “Serving the World’s Poor Profitably” from the September 2002 edition Harvard Business Review:

It’s true that some services simply cannot be offered at a low-enough cost to be profitable, at least not with traditional technologies or business models.  Most mobile telecommunications providers, for example, cannot yet profitably operate their networks at affordable prices in the developing world.

That article is almost exactly ten years old, written in the wake of the Internet bubble and at a time when Africa countries were recovering from deadly civil wars in Rwanda, Sierra Leone, and Liberia.  If Mr. Prahalad were alive today, I am sure he would appreciate that, only a decade after he expressed doubt about an African telecom sector, a Chinese manufacturer of telecommunications equipment had partnered with a technology giant from Silicon Valley to develop a phone that offers high-speed internet access outside the urban centers at a price point the middle class can afford.

But this is the story of Africa, or, at the very least, Nairobi and the other burgeoning urban centers around the continent.  I am a biologist by academic background (though somehow I ended up across the world as a business analyst for a chain of schools).  Stephen Jay Gould, the legendary evolutionary biologist, developed a theory called “punctuated equilibrium,” which maintains that evolutionary change occurs rapidly, in geologic terms (i.e. a million years is short), followed by long periods of of stasis, or equilibrium.  On a macro-scale, the theory explains why evolution of the organism occurs suddenly (the movement from water to land, for example), as opposed to in a progressive, linear fashion.  Applied in a cultural and social context, the theory might explain something like the technology and mobile revolution in Africa, with the caveat that the period of equilibrium is in the past.

For decades in Africa, communication was slow or non-existent, information was tightly controlled by autocratic dictators, which kept their populations in the dark about the deep corruption and injustice perpetrated on their watch.  Most of the people were poor, making it nearly impossible to provide basic human services, like sanitation and adequate health care, or profitably provide access to financial services.  Remember that C.K. Prahalad’s concept of “fortune at the bottom of the pyramid” was considered to be breakthrough innovative thinking by all but a prescient  multi-nationals and sovereign investors like China.  And that was in 2004! Now, the continent is wired.  Everyone has access to financial services through M-PESA and the other mobile money providers.  Information is accessible through basic mobile phones and the next generation of super-cheap smartphones that are likely to become ubiquitous in the next five or ten years.  A continent that once had a dearth of information transfer will soon have instant access to Google, Wikipedia, Facebook, and Twitter.  The revolutions in Egypt and Tunisia wouldn’t have been possible without mobile phones and the Internet.  Now, Kenya’s government – by most indicators one of the most corrupt in the world – has posted all of its data online for any knowledge-hungry developer to tap into.  E-commerce, mobile commerce, and app development are growing exponentially.  Africa is now home to some of the fastest-growing economies in the world.

It is this biologist’s opinion that Africa is moving from a period of equilibrium toward an evolutionary jump, with technology as the catalyst for systemic change.  The paradigm has shifted, and the deep and broad telecom infrastructure has laid the groundwork for a revolution.  Africa’s technological evolutionary paradigm will be different.  It skipped the land line and went straight to the mobile phone.  It skipped the desktop computer and adopted the laptop wholesale instead.  The community bank became irrelevant with the creation of branchless banking in Kenya and other countries through Africa.  In our modern world where cartography seems about as relevant as sanskrit or alchemy, much of the continent is not even mapped.  Fortunately, Google MapMaker allows residents to map their own communities, effectively crowdsourcing a massive undertaking very simply using technology.   And just two weeks ago, Huawei, the Chinese manufacturer that triggered the smartphone revolution, released the IDEOS tablet PC, only a year after the release of the iPad.  The evolution here moves quickly, as it builds on existing innovations from the developed world and adapts the technology to fit the African context, which is, in many ways, unique.

I bought the Huawei IDEOS phone after a week in Kenya.  I have never owned a smartphone, and wanted to understand how this phone that everyone is talking about is going to change the game.  I went to three stores – it was sold out at the first two – before I could buy one.  It is fast, it easy-to-use, and the law of technology pricing says that the inevitable trajectory points down and down.  Being here feels like being in ground zero at the start of something big, and, insha’allah, I will continue to chronicle the tech-driven transformation that will define Africa for the next decade.

The China-Africa Trade Boom

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The following is a guest post by Joseph Cox, an MA candidate at the Georgetown Public Policy Institute and managing editor of the The Inductive, a blog about U.S. economic and foreign policy.

When polled, Americans always cite foreign aid as the budget item most in need of a good hatcheting, yet, there is also a deep suspicion of Chinese investment in Africa.

The fact is that Chinese investment in Africa dwarfs U.S. aid.  The Chinese have over $100 billion in trade with Africa a year(admitted, not the same thing as direct foreign investment), while the U.S. musters about $4.5 billion in aid.

Source: The Economist

This aid is not without controversy, especially on the ground. The Financial Times (warning gated) recently reported on Zambian miners upset at low wages paid by their Chinese bosses.  However, the end of the article gave the game away:

Despite simmering anger over October’s shooting and labour conditions, workers do not want Collum Coal Mine to close. In a country where two-thirds of the population lives on less than $1 a day, a poorly paid job is better than none at all.

“We’re not happy with the Chinese investment,” says Bernard Dolopo, local representative of the Mineworkers’ Union of Zambia. “But unfortunately we don’t have better investors than the Chinese.”

I have no doubt that working for a Chinese owned mine in Zambia is a miserable experience, but the fact that people are willing to work in those mines anyway demonstrates their benefit.  Likewise, I can understand why Africans are skeptical of Chinese immigration (its not like people from other countries have ever exploited Africans before).  But a decade of 5% GDP growth is a pretty powerful statement that something is working.

I think there is sustainability in this model since the Chinese also directly benefit, and the Africans can negotiate for a better deal later.

A basic truth in investing is that returns and risk are directly related, so the more risk the more return.  Otherwise, the available arbitrage would attract investors and drive down the return. Africa has been dramatically underdeveloped for years leading to massive investment opportunities with huge political risks.  Chinese government run companies are able to reap large rewards and mitigate the risk by (1) not destablizing incumbant governments no matter how illegitimate, it is all ice cream and no spinach for who ever is running the country when the Chinese come in and (2) if there was regime change, the Chinese would just pay the new person to keep the business rolling.

For all the talk from the west about how the Chinese should pressure the Africans on political goals, I think the Chinese have proven to be good examples on other fronts.  The Chinese government’s philosophy is that growth brings legitimacy and that it is possible to create the economic prerequisites for growth (property rights, economic opportunity, infrastructure, working markets, investment) without losing political control.  So, and this is just speculation, even if the Chinese aren’t encouraging political development I think they are (at least implicitly) encouraging growth.  If you look at growth in the developing world over the last decade it has been very strong.  I think this is basically because a lot of poor countries saw what China was doing and copied it. And the Chinese were happy to help them in exchange for access to resources.

So bravo China, here’s to a country with an economic strategy!

Films about Africa: “Blood Diamond”

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I watched the film “Blood Diamond” for the first time the other day.  For those who have not seen it, the movie is graphic, placing the horror of armed conflict in Africa on full display.  The director does not seem to pull any punches in terms of violence, choosing to show child soldiers doing drugs and killing women and other children.  The main storyline, however, tracks the odyssey of Danny Archer, a white mercenary from Rhodesia played by Leonardo DiCaprio, as he and his guide, a Sierra Leonean fisherman named Solomon Vandy (Djimon Hounsou), whose son has been kidnapped by the RUF, and forced to take up arms, as they venture deep into the rebel-controlled bush to search for a diamond worth millions of dollars.  The cynical opportunist Archer ultimately finds redemption with the help and support of an American journalist, Jennifer Connelly.  In the end, Van de Kaap, a thinly-veiled reference to the DeBeers family I’m sure, is exposed for purchasing conflict diamonds, and the world opens its eyes to the terrible war in Sierra Leone.

That is where the movie ends.  One would like to see life imitate art and see a spike in Google searches for the Kimberley Process or “why am I supposed to spend three months’ salary on a diamond?” (The answer, according to the Inductive, has something to do with DeBeers marketing).   At the very least, the film raises awareness about the civil war in Sierra Leone.  For those unaware, here is a brief primer:

How could this happen?

The film “Blood Diamond” takes us back to war-ravaged Sierra Leone in the late 1990s when that country’s diamonds were used to finance rebel groups who fought against legitimate governments.  This illicit diamond trade devastated the country, and these traded diamonds consequently were named “blood diamonds.”  This war was infamous for its brutality, especially for the purposeful maiming of children, which led to panic in the population and to their flight from Sierra Leone. In such wars none of us can remain bystanders.

This film, set in Sierra Leone, showed that action can be undertaken to end genocide or war, as in Darfur, and revealed the way to eliminate financing for the conflict. During the war in Sierra Leone the Revolutionary United Front (RUF) grew from a band of 400 to an army of thousands.  In the end, the civil war in Sierra Leone killed more than 50,000 people, displaced over one-third of the country’s 4.5 million people, and drove more than 500,000 to neighboring countries.

Some reviewers complain that the movie exploits the horrors of war in Africa and fails to tease out the nuance of the conflict.  Others say that the film is typical in that it follows two white protagonists, using a love story and a tale of redemption as a plot device, while relegating the third lead, the poor fisherman from Sierra Leone, in more of a supporting role.

That is Naomi Campbell AKA a horrible person, next to Charles Taylor, the dictator who caused the war.

The same criticisms are often leveled at Nicholas Kristof, the New York Times columnist who has made it his life’s work to bring injustice in the developing world to the conscious of the mainstream.  In his latest piece for the NYT, titled “An African Adventure, and a Revelation,” he brings two Americans – a medical student from Atlanta and a teacher from a Catholic school in Newark – to Africa to witness the realities of poverty with their own eyes.  They travel to Mali, Burkina Faso, and other countries that almost never grace the pages of New York Times except when they are in reference to drug trafficking, civil war, corruption, or violence.  And because he uses two typical Americans as “bridge characters,” people are able to relate the experience in a more meaningful way and, instead of immediately turning the page, read the article and learn something about countries in West Africa they have probably never thought about in the past.

People criticize Kristof for using so-called “bridge characters,” saying that it is patronizing to his readers to assume that they do not care or cannot relate to the experiences of the Africans on the ground that are doing the real work.  They see this as another example of injustice.  I have written about this several times on this blog, and I both understand and support what Kristof is trying to do.

The reality is that he is right – the majority of his readers probably would not read his articles if they were not written in the way he writes.  The people who criticize him are, in general, people who already know, understand, and care about the issues he writes about.  So it makes sense for them to assume he is being patronizing.  But what they don’t understand is that they are not the readers he is targeting.  Instead, his target is the woman from Florida who has never heard of the countries he writes about and, as a result of his stories, becomes incensed at the level of injustice that exists.

I felt the same way when watching this movie.  I have never read much about the conflict in Sierra Leone.  After watching “Blood Diamond,” I wanted to learn more.  I wanted to know how achieving that level of chaos and dehumanization is possible.  I am sure there are many documentaries that have covered the issue in detail.  But because “Blood Diamond” was a blockbuster hit, that was my entry into understanding a complex and crucial time in West Africa.

There is no doubt that the movie achieves its goal in raising awareness.  The question becomes whether awareness  ultimately translates into action.  In a review from New York magazine, film critic and frequent guest on Fresh Air with Teri Gross, praises the acting of Leonardo DiCaprio, saying that his performance makes the heavy subject matter a little bit lighter.  But this dynamic brings with it a contradiction:

[DiCaprio’s] lightness here keeps Blood Diamond from getting weighed down by the horror of its subject.  Whether it should be weighed down—that’s another matter. As I watched the senseless brutality, the shooting of mothers and children as they fled, I was torn up, divided. I thought, Why do I need to see this? Then I thought, This happened in Sierra Leone and is still happening in parts of Africa—I need to see it. Then I thought, If I need to see it, I need to see more than a sneering villain with an eye patch. I need to understand how this man—and the people under him—become the monsters they are. That’s what you don’t get in Blood Diamond, what you don’t get in even the best melodrama: insight. After we stop buying blood diamonds from conflict zones, what then?

Sadly, it is true.  People need to take the next step themselves and become active in making sure that the roots of injustice are addressed.  Unfortunately, I think this will take time.  But, in the meantime, I think more films like “Blood Diamond” are a good thing.

The bridge characters at work

Fewer Farms, Bigger Farms

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The realities of another food crisis. (Photo Credit: Foreign Policy)

Right now, the world is in the midst of a food crisis.  Some might contend that we never fully recovered from the food crisis of 2008, but what is certain is that food prices are rising.  The reason for the spike is open for debate, but some combination of a growing demand due to population growth, an increase in the frequency of extreme weather events (floods in Pakistan, the Moscow heatwave, etc.), an expanding middle class with a growing taste for meat and dairy, global trade policy, commodity speculation, agribusiness  and ethanol lobbying in developed countries, and other factors are likely to blame.

Global warming was another issue.  Over the last two decades, economists and climatologists have been contemplating the effects of global warming on food production.  The consensus was that, while climate change and the corresponding shift in weather patterns would have an adverse impact on agriculture in certain regions of the world, a rising temperature could actually open up new pockets of arable land.  The one bright spot of climate change was that the increased amount of carbon in the atmosphere would actually improve crop yields.   Unfortunately, that hypothesis proved to be overstated, at best, and quite possibly downright wrong.  It turns out that a warmer world, despite what the computer models may say, is not good for food production.

The amount of research dollars devoted to finding new drought-resistant seed varieties and better, cheaper fertilizers is leaving the world less prepared for the adverse effects of global warming on agriculture production. The success of the Green Revolution beginning in the 1960’s caused food prices to fall year after year for decades.  With the world assuming that the food problem had been solved, the limited number of development dollars went to researching other global problems, name solving public health issues like HIV/AIDS, tuberculosis, and malaria.  Testing new varieties and growing conditions takes time, counted in years, not months.  In response to a problem where time is of the essence, we are not moving fast enough.

The Economist recently had a special report on the feeding the world.  The articles were thought-provoking and alarming.  The precarious situation the world finds itself in should galvanize a stronger response from the developed world, but it doesn’t.  As food prices increase, the people who are hit the hardest are those spending the highest percentage of their annual income on food.  So, for people living in the developed world, a dramatic increase in the price of wheat and maize is a minor dent in their overall spending.  For the rural farmer who is spending 60% of his income on maize, it is the difference between three meals a day and two.  For this reason, the 2008 food price crisis led to riots in some countries and was hardly acknowledged in others.  For the 100 million people driven into extreme poverty as a result of the spike in staple crop prices, the prospect of another food crisis in 2011 is likely terrifying, particularly if they understand the challenges in feeding nine billion people over the next half-century.

The Economist is quite expensive in Kenya, unless you buy an old copy from the street newsstand vendors.  Yesterday I picked up the issue following the one with the special report on food from March 19th, 2011, and perused the letters in response.  One response from Chris Haskins of the House of Lords stood out:

SIR – Regarding the future of food (Special report, February 26th), there are two additional factors to existing and new technology that will raise farm output significantly. Large tractors and combines have transformed agriculture in the developed world, enabling far more land to be cultivated and crops to be harvested at speed, which reduces the loss caused by weather. Sixty years ago my father needed six men to grow 100 acres (40 hectares) of crops. Today my son can farm 1,000 acres with one man.

Agriculture in the developing world could also be transformed by this existing technology, but there needs to be fewer and bigger farms to make use of large equipment and to raise the collateral to invest. That means far fewer rural workers, and controversial social consequences.

New technology, such as satellite mapping, will enable farmers to identify wide variations of soil quality across every field and to adjust their equipment to apply their seeds, fertilisers and chemicals precisely at varying rates, depending on the fertility across the field. This makes great economic and environmental sense.

This is a controversial position, but one with which I happen to agree.  Large-scale commercial farming offers economies of scale that drive down the cost of production through mechanization, irrigation, and the consistent application of GAPs (good agricultural practices).  In northern Ghana, it is difficult to offer mechanization services profitably to smallholder farmers because, frequently, the plots of land are not contiguous, meaning the tractor has to travel longer distances to serve the farmers, increasing fuel costs and adding to the per-acre cost.  Not to mention, smallholder farmers often don’t have the resources to remove all the stumps and stones from their land, which, if run over by a tractor, will destroy it.  The cost of importing replacement parts into the country is high, which is why if you go to northern Ghana, you will see tractors gathering rust on the side of the road.

Zimbabwe was once called the “breadbasket of Africa” due to its massive agricultural output.  The commercial farms operated by the predominantly white settlers were highly efficient, with yields that might rival other parts of the world.  After Robert Mugabe redistributed the land during his controversial land reform program, farm output fell.  Now, Zimbabwe can hardly feed itself, causing many Zimbabweans to migrate into neighboring South Africa to find work.  Say what you will about colonialism, but Zimbabwe’s agricultural prowess was once the envy of Sub-Saharan Africa (SSA).

The last point about Mr. Haskins letter I’d like to address is his call to reduce the number of farms and farmers – a move with “controversial social implications.”  So much money is invested in helping farmers in SSA improve production and increase profits.  FAAB – “farming as a business” – programs are designed to get subsistence farmers to think about their input costs and yields as components of a rudimentary profit-and-loss statement.  Is this really what the subsistence farmer trying to make enough to feed his family really needs, wants, or cares about?

In Ghana, an exasperated colleague lamented the fact that, unlike in other places she’d worked in Africa, including Kenya, Mozambique, and South Africa, farmers in Ghana were lazy.  Instead of transplanting rice by hand, or individual planting soya bean seeds in rows, Ghanaian farmers were content to broadcast the seed, throwing it haphazardly into the soil.  The result is higher seed costs and lower yields.  My Canadian friend and I were listening to her, and after she left, I asked what he thought.  He’s been living in Ghana for the better part of three years, working with the Ministry of Food and Agriculture and living in the rural communities with farmers.  Maybe it isn’t that farmers in Ghana are lazy, but rather that smallholder farmers anywhere, be it in Africa or the rest of the developing world, don’t actually want to be farmers.  They are farmers because they have to be farmers, and farming all they know.   Maybe they would prefer to draw a salary from working on a large-scale commercial farm – a steady salary, unlike the lump sum payment they get for their crop at harvest time.  I don’t know, but it’s a question that is worth debating.

I agree with Mr. Haskins.  Fewer farms and larger farms are the answer.  It is a controversial position because, in the past, laborers on commercial farms have been mistreated, and land ownership is is incredibly important for a family with very few assets.  Yet farmers could still lease the land to large commercial operators and earn income that way.  There are ways around these cultural barriers.  I once asked another colleague how make Ghana rice competitive against the Thai, Vietnamese, and U.S. imports.  “Give me 200,000 acres below the Volta Dam with the full irrigation and three growing seasons, a warehouse in Tema (the port) and I’ll feed all of Accra.” Unfortunately, 200,000 farmers, each with an acre of land, will probably never come close to feeding all of Accra.

Sub-Saharan Africa, 2020.

The Many Forms of Corruption

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cor·rup·tion (n.): Dishonest or fraudulent conduct by those in power, typically involving bribery

In Nairobi the other day, the police pulled over my taxi at a checkpoint.  There were four people in the backseat, so the officer beckoned me, seated in the front seat, out of the car and said “You’re breaking the law – what do you want to do about it?” Fortunately, a friend sitting in the back felt strongly about not perpetuating the system of bribery and demanded to see their badge, since he was an employee of the embassy and wanted to report them.  The police officer held up his gun and said “this is my badge,” while my friend explained to the “security officer” for the embassy on the phone that he was being harassed by police officers (I later went to dinner with another friend, who, it turns out, was the “security officer” on the other end of the line).

In Tamale in Northern Ghana, we took an illegal U-turn on our motorbikes and were stopped by a plain clothes police officer.   He took away my friend’s keys and said we were going to the police station unless we gave him something to “make it better.” My friend, who works at the office of the regional coordinating council for the Northern Region, pulled out his phone and showed the officer the phone number of the regional minister, and explained that, because he did not understand what “make it better” mean, he was going to call the minister and ask for some clarity.  We quickly got our keys back and were on our way.

In the Philippines, the 2010 election took place during my stay.  Politicians send emissaries out to the different barangays (communities within a town) to distribute money directly to the people in exchange for votes.  If a politician can’t buy a community, he rents a bus, loads it with booze and fried pork, and brings the members of the community to the beach for a party on Election Day.

The point I am trying to make is that, in many developing countries, corruption is a problem.  It exists out in the open, in forms that are easy to see and easy to track.  Some estimates place leakage in the Kenyan government due to corruption at 40% of GDP.  As I discussed in a post the other day, the government is embroiled in a scandal over 4bn Kenyan shillings designated for free public education.  Yes, corruption is a problem, and can be a major impediment to economic and social progress.

The western approach to Africa emphasizes good governance, democracy, and transparency in exchange for aid and development (tied or untied).  Ghana is referred to as a “donor darling,” as its history of successful democratic elections has made the government a reliable (if not strategic) partner for donors in terms of economic development.  In contrast, the Chinese approach in Africa has been to provide direct infrastructure investment in exchange for natural resource concessions, irrespective of governance.  To the Chinese government, it is none of their business how another sovereign nation chooses to govern itself, particularly when it is in their interest to maintain the status quo.

Regardless of efforts to stem the tide of corruption, it exists and will likely continue to exist until certain fundamental underlying issues are addressed.  I used to note that Filipinos are some of the most cynical people I’ve ever met about politics.  Corruption is so pervasive in the system that (at least in local elections) people vote for the politician who is most adept at playing the game than the one who vows to change the rules.  And when they talked about this, I used to say that corruption comes in many forms, and the United States is hardly immune.  In fact, I would argue that corruption in the United States is arguably worse than in certain developing countries, if only because it operates under a veil of legitimacy.

K Street is a physical street in Washington D.C.  It is also a euphemism for the lobbying industry, which, for the most part, calls K-street home.  Wikipedia describes how lobbying works in the United States:

Lobbying (also Lobby) is the act of attempting to influence decisions made by officials in the government by individuals, other legislators or government actors, constituents, or advocacy groups. A lobbyist is a person who tries to influence legislation on behalf of a special interest or a member of a lobby. Governments often define and regulate organized group lobbying that has become influential.

Lobbyists use their time both with legislators, to explain the issues of the organizations which they represent, and with their clients to explain the obstacles elected officials face when dealing with these issues. Many of these lobbyists are employed by lobbying firms or by law firms, which retain clients outside lobbying, other lobbyists are employed directly by advocacy groups, trade associations, companies, and state and local governments. In 2007 there were over 17,000 federal lobbyists based in Washington, DC.[1]

Lobbying activities are also performed at the state level, and lobbyists try to influence legislation in the state legislatures in each of the 50 states. At the local municipal level, some lobbying activities occur with city council members and county commissioners, especially in the larger cities and more populous counties.

There are 17,000 people whose sole qualifications are their connections to lawmakers, and whose job it is to influence legislation in exchange for money.  A rose by any other name would smell as sweet, and lobbying smells like corruption to me.  In fact, I am not sure exactly how lobbying can be construed as anything but a legal form of corruption that operates with complete immunity from prosecution.  Legally, politicians are not allowed to accept gifts from lobbyists.  But, they can accept campaign donations to from political action committees (think Swift Boat Veterans for Truth) during a campaign year, increasing their likelihood that they’ll keep their job and their magnanimous donor will encounter what Michael Porter would describe as a “friendly regulatory environment.”

Yesterday, an article in Politico describes what Andrew Sullivan calls “Talk Radio’s Ideological Industrial Complex,” in which prominent talk radio hosts accept money from influential political think tanks in exchange for endorsements:

In search of donations and influence, the three prominent conservative groups are paying hefty sponsorship fees to the popular talk show hosts. Those fees buy them a variety of promotional tie-ins, as well as regular on-air plugs – praising or sometimes defending the groups, while urging listeners to donate – often woven seamlessly into programming in ways that do not seem like paid advertising.

“The point that people don’t realize,” said Michael Harrison, founder and publisher of the talk media trade publication TALKERS Magazine, “is that (big time political talk show hosts) are radio personalities – they are in the same business that people like Casey Kasem are in – and what they do is no different than people who broadcast from used car lots or restaurants or who endorse the local roofer or gardener.”

The Heritage Foundation pays about $2 million to sponsor Limbaugh’s show and about $1.3 million to do the same with Hannity’s – and considers it money well spent.

This is called the “politico-media complex,” and, to my mind, it is another form of corruption.   The military-industrial complex – Harry Truman’s phrase for the unholy relationship between the defense industry and the government that Dylan sang about – is another form of corruption.  So is the prison-industrial complex, which describes the connection between the drastic increase in the number of incarcerated Americans – by far the largest of any industrialized nation as a percentage of population – to the political influence of the private-sector prison lobby.   Remember the Arizona immigration law?  The one that legalizes racial profiling and is designed to stop “the Trojan horse destroying our country,” as described by Arizona state senator Russell Pearce?  Well, that bill was influenced by, if not drafted by, the private-sector prison lobby, led by the Corrections Corporation of America.  The business model of for-profit prisons is simple: revenue is directly correlated to the number of inmates being housed in the correctional facility.  Illegal immigration – an issue that appeals to people’s basest tendencies, drawing on latent xenophobia and racism – is, frankly, a big market. This, from NPR:

NPR spent the past several months analyzing hundreds of pages of campaign finance reports, lobbying documents and corporate records. What they show is a quiet, behind-the-scenes effort to help draft and pass Arizona Senate Bill 1070 by an industry that stands to benefit from it: the private prison industry.

The law could send hundreds of thousands of illegal immigrants to prison in a way never done before. And it could mean hundreds of millions of dollars in profits to private prison companies responsible for housing them.

Yes, that is corruption too.  Food is another one.  The agribusiness sector in the United States spent $1.3 billion on lobbying between 1998 and 2010, representing ~4% of the total, and the return on that investment has arguably had a greater impact on world hunger than do the corrupt politicians that preside over the hungry populations.  The U.S. senate recently voted to repeal a $6 billion tax credit to ethanol producers, which probably existed in part due to the fact that presidential candidate Newt Gingrich received $300K in campaign contributions from biofuel lobbyists.  Meanwhile, the world is in the midst of a serious food crisis.  Fortunately, Mr. Gingrich and his constituents will not feel the sting, as they do not spend half of their income on food, unlike the 100 million people who were pushed into extreme poverty during the last food crisis back in 2008.

These are all forms of corruption.  I am a realist, as readers of this blog know.  Geopolitics is driven by oil and money, and that is not going to change.  Bribery – financial or otherwise – greases the wheels of capitalism and is part of the game, for better or for worse.  But I do think it is only fair to acknowledge the hypocrisy in demanding good governance from other countries.  Because corruption comes in many forms, and with more complexes than I can count on two hands, the United States would do well to take a hard look at its reflection in the glass house before it decides to throw stones.