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Racism in America


I. Introduction

In August of 2014, a police officer shot dead Michael Brown, a black teenager from Ferguson, Missouri, blowing the lid off a debate about racism in America. Protesters filled the streets, yelling “Hands up, don’t shoot.” The hashtag “#blacklivesmatter” began trending on Twitter. A few weeks before, bystanders filmed a police officer in Staten Island choking to death Eric Garner, an African-American man who’d been arrested for selling untaxed cigarettes. When the grand jury chose not to bring charges against the officers responsible for the deaths of Brown and Garner, many Americans sadly shook their heads.

This isn’t the first time the deaths of young black men have sparked a national conversation about race. In 2012, George Zimmerman shot and killed Trayvon Martin, an unarmed black teenager in Florida. On New Years Day in 2009, a police officer shot Oscar Grant, a 23 year-old black man, point blank while on top of him at Fruitvale Station in Oakland, California (a film was later made about his death). But unlike in those incidents, the conversation stemming from Ferguson has continued long past the shooting, in part due to a string of stories of overt racism around the country. In March of 2015, a video surfaced showing members of SAE, a fraternity at the University of Oklahoma, singing a racist song on a bus. The fraternity chapter was disbanded, the students expelled, and the national conversation about race and privilege continued.

These incidents are not unique, but are considered emblematic of a broader societal problem with racism in America. Police unfairly target people of color, filling prisons with blacks and hispanics and criminalizing generations of young people. In Ferguson and the communities around St. Louis, municipalities effectively run debtors prisons, jailing people for minor infractions like an expired tag or broken tail light. In 2013, Ferguson alone issued 32,975 arrest warrants for its 21,135 people, overwhelmingly to African-Americans. Clearly, there is a problem.

Unfortunately, these incidents, and even the unjust policies they exposed, are symptoms of the much larger, more nefarious disease of institutional racism. Unlike the overt racism on display in the shooting of Michael Brown or the chants of drunk fraternity members in Oklahoma, institutional racism is not easily seen, measured, or even defined. It has no beginning or end, having permeated every aspect of our society, and its effects are felt all around us. Michael Brown’s death, like Trayvon Martin’s death and Eric Garner’s death, was the output of a system so deeply corrupted by institutional racism that outcomes like these are not only unsurprising, but expected.

In this essay, I will explain the concept of institutional racism, (try to) break down the components of the complex systems that govern society, and explain how institutional racism within those component parts creates a self-reinforcing, unjust system where ethnic minorities are discriminated against not only by individuals within the system, but by the system itself.

II. Unpacking Institutional Racism

It makes sense to start with a definition of institutional racism. From Wikipedia:

Institutional racism is the differential access to the goods, services, and opportunities of society. When the differential access becomes integral to institutions, it becomes common practice, making it difficult to rectify. Eventually, this racism dominates public bodies, private corporations, and public and private universities, and is reinforced by the actions of conformists and newcomers. Another difficulty in reducing institutionalized racism is that there is no sole, true identifiable perpetrator. When racism is built into the institution, it appears as the collective action of the population.

Institutional racism is a difficult concept to unpack because discrimination is rarely overt or entirely unjustified. It can be subtle and almost imperceptible at the individual level, and often stems from discrimination within another system. Let’s look at particular example and trace it back to the origins.

Institution 1: The Prison

Anthony is a 22 year-old African-American kid living in the Queensbridge Housing Projects in Queens, New York. He’s got a girlfriend and a two year-old baby boy, and has been selling drugs since he was a teenager. When he is arrested for selling a small amount of crack cocaine, he is sent to jail on $1,000 bail, which neither he nor his family can afford to pay, so he ends up staying in jail until his trial. Because he has a prior record, the odds are not in his favor when he finally gets his day in court.

Anthony has a one-in-three chance of going to prison.= during his lifetime.

Anthony has a one-in-three chance of going to prison during his lifetime.

In 2009, the incarceration rate of black males in the U.S. was six times that of whites. Is that because blacks are more likely to go to prison than white people? Perhaps. According a report from the Sentencing Project, white Americans overestimate the proportion of crime committed by people of color and tend to support more punitive measures even though they experience less crime. In Florida, a Washington Post poll found that whites believed 50% of crimes were committed by black people, when the real number is closer to 20%. This bias makes them more likely to support tough-on-crime policies, which politicians are more than willing to oblige.

new york prisonersAs a result, blacks are both more likely to be convicted of crimes and receive longer sentences than whites. Nationwide, blacks are 10 times more likely to go to jail for drug offenses. In 2012, a study found that blacks and Hispanics received longer sentences for the same or lesser offenses than white offenders.  People of color remain in prison longer and naturally comprise a larger percentage of the prison population.

If he could afford a lawyer, Anthony might receive a lighter sentence. But he can’t, so he is assigned an overworked public defender who might be meeting him for the first time on the day of his trial, and he appears before a judge wearing a jail uniform, since he couldn’t afford bail. Meanwhile, he’s been evicted from his apartment because he has been in jail, and his girlfriend and baby are staying at her mother’s house, while the primary breadwinner is sitting in jail, unable to work. With a few strikes against him, he receives two years and is sent to prison.

Anthony isn’t the only one dealing drugs in New York City, but this isn’t the first time he’s been arrested. The next questions is: why are so many blacks arrested in the first place?

Institution 2: The Police

Anthony hangs out on the corners and is frequently stopped by the police and searched. Because Queensbridge has a history of drug-dealing, there is a strong police presence in this overwhelmingly black and Latino neighborhood. People in the community have an uneasy relationship with the police, who simultaneously make the neighborhood safer and arrest young people in much higher numbers than in the rest of the city.

Part of the problem is that black males are unfairly targeted by police officers. In New York, a controversial policy called “stop-and-frisk” allows police to stop and question a pedestrian before searching them for guns and contraband. Despite the fact that blacks and Latinos make up 52.6% of the population, they consistently account for 85% of stop-and-frisk encounters. And, if they’re caught, blacks are four times more likely to be arrested for marijuana possession and selling, despite consuming the drug at largely same proportion as white people.

Stop-and-frisk has a notoriously low yield, subjecting thousands of innocent people to unnecessary searches.

Stop-and-frisk has a notoriously low yield, subjecting thousands of innocent people to unnecessary searches.

So it is true the police are overwhelmingly targeting people like Anthony, who was arrested in a stop-and-frisk encounter.  And the stats seem to support a pattern of profiling. New York City releases a report on race and crime statistics every year. In 2012, blacks and Hispanics accounted for 73% of arrestees for misdemeanor mischief, compared with 23% for whites. It is certainly possible, and even probable, that whites are getting away with more crimes than people of color. But blacks and Hispanics are, at the very least, getting caught more often.

The police argue that they’re job is to stop crimes, and arrest those who are committing them, whether they are black, white, or any other color.  When asked about racial bias in Ferguson, former NYC mayor Rudy Giuliani asked: “I find it very disappointing that you’re not discussing the fact that 93 percent of blacks in America are killed by other blacks.”  In a similar vein, responding to critics of stop-and-frisk, the NYPD released a report in mid-2012 showing that people of color made up 96% of shooting victims and 97% of shooting suspects during the first half of the year. The police commissioner, Raymond Kelly, defended stop-and-frisk as “proactive engagement”, calling it a “life-saving measure.” In other words, we’d arrest fewer black people if they committed fewer crimes.

Of course, these shooting suspects represent a tiny fraction of black and Latino youth in NYC, and hardly justify such a blunt policy. Still, given these realities, it is possible to see why police officers would target Anthony for reasons other than racial bias.

Institution 3: The City

Regardless of policy, Anthony was stopped because the police felt they had reason to suspect he may be engaged in illegal activity, so they approached him. But part of the problem is that Anthony lives in Queensbridge, a housing project with a pattern of gang violence and drug dealing. And that means cops approach kids in Queensbridge like Anthony all the time.

The concentration of violent crime around certain geographies has given rise to programs like predictive policing, which uses data analytics to identify crime hotspots and preemptively deploy resources to prevent crimes before they occur. Because those crimes are often committed in predominantly ethnic neighborhoods, police presence is higher and more people of color are arrested. The resulting higher arrest rates are not necessarily due to overt racial bias, but actually an analysis of where crimes are most likely to occur. And, in Anthony’s case, Queensbridge fits the bill.

Stops by neighborhood.  In the ten highest crime precincts, there are 16.9 stops per 100 residents - three times the city average (Source: NYT)

In the ten highest crime precincts, there are 16.9 stops per 100 residents – three times the city average (Source: NYT)

So why do specific urban neighborhoods like Queensbridge have such a problem with crime? Sociologists, criminologists, and economists have tried to answer that question for decades, and proposed several explanations. Conflict theory is one of the more prominent criminological explanations for the concentration of crime in certain neighborhoods:

As a general theory of criminal behavior, conflict theory proposes that crime is an inevitable consequence of the conflict which arises between competing groups within society. Such groups can be defined through a number of factors, including class, economic status, religion, language, ethnicity, race or any combination thereof.  Sociologists and criminologists emphasizing this aspect of social conflict argue that, in a competitive society in which there is an inequality in the distribution of goods, those groups with limited or restricted access to goods will be more likely to turn to crime. 

According to conflict criminology theory, people with fewer means are more likely to turn to crime to make ends meet. And, in a self-fulfilling way, crime begets crime – a fact that underlies the controversial broken windows theory of policing.

It is critical to note that poverty, not race, explains high levels of crime in this and just about every other theory of criminology. The link between poverty and crime is well-documented, going all the way back to Aristotle, who said, “Poverty is the parent of revolution and crime.” In a 2005 paper in the American Journal of Public Health titled “Social Anatomy of Racial and Ethnic Disparities in Violence”, three researchers from the Rand Corporation posit that the relationship between race and crime is based on underlying factors specific to racial groups:

Our theoretical framework does not view “race” or “ethnicity” as holding distinct scientific credibility as causes of violence. Rather, we argue they are markers for a constellation of external and malleable social contexts that are differentially allocated by racial and ethnic status in American society. We hypothesize that segregation by these social contexts in turn differentially exposes members of racial and ethnic minority groups to key violence-inducing or violence-protecting conditions.

The authors go on to offer a few statistically-significant examples of those social contexts, including marital status of parents, immigrant generation, and neighborhood characteristics associated with racial segregation. So, what exactly is it about these neighborhoods that help to explain the propensity to commit crimes?

Institution 4: The Neighborhood


Nas in Queensbridge

Anthony’s neighborhood, Queensbridge, is the largest housing project in the borough of Queens in New York City. It was first built in 1939, and has around 6,500 residents at any given time. During the late 1950’s, the management converted it to a low-income housing project, transferring families with an annual income of more than $3,000/year, most of whom were white, to a middle-income project, leaving a predominantly poor black and Hispanic population.

Throughout the 70’s and 80’s, poverty increased, and Queensbridge became notorious for the prevalence of crime, gaining the dubious distinction of having the most murders of any project in New York in 1986. Queensbridge’s most famous resident, Nas, described growing up there in the song, “Memory Lane”, from one of your correspondent’s favorite albums, Illmatic:

My window faces shootouts, drug overdoses
Live amongst no roses, only the drama, for real
My pen taps the paper then my brain’s blank
I see dark streets, hustling brothers who keep the same rank
Pumping for something, some’ll prosper, some fail
Judges hanging niggas, uncorrect bails for direct sales
My intellect prevails from a hanging cross with nails

Things have changed from the days when Nas lived there. Since the 2000s, crime in Queensbridge, along with the rest of NYC, has decreased, but is still higher than in many places around the city. The median income today is between $21,000 and $25,000 a year, and the average rent is less than $500.

Queensbridge fits a common pattern of poor urban neighborhoods during the 20th century that has been well-researched by sociologists. In his 1987 book, The Truly Disadvantaged: The Inner City, The Underclass, and Public Policy, William Julius Wilson, a Harvard professor focused on urban communities, introduced the concept of “concentrated poverty” – a poverty incidence of 40% or greater, which has since become the de facto threshold for sociological research around urban ghettos. He argued that concentrated poverty creates “social isolation”, in which the community has fewer interactions with mainstream society, and, as a result, limited access to job networks and economic opportunities. With fewer opportunities to earn a living, people in poor communities are more likely to turn to crime as an alternative.

Share of the poor population living in neighborhoods with poverty rates of 40 percent of higher, 2008-2012. (Source: Brookings Institution)

Share of the poor population living in neighborhoods with poverty rates of 40 percent of higher, 2008-2012.
(Source: Brookings Institution)

According to Wilson, there are a number of reasons for the high proportion of blacks and Hispanics in communities marked by concentrated poverty. First and perhaps foremost to this discussion, overt systemic racial discrimination and segregation pushed more minorities into the inner cities:

Blacks were discriminated against far more severely in the early twentieth century than were the new white immigrants. Through restrictive covenants, municipal policies, and federal housing programs, blacks, unlike other immigrant groups, were forced into particular areas inner cities. At the same time blacks were discriminated far more severely than other groups in the labor market making them disproportionately poor and concentrated in low-paying jobs, particularly in the industrial sector. Collectively these forms of racial and spatial discrimination laid the basis for most areas of contemporary concentrated poverty.

Later on in the twentieth century, broad societal changes that I describe in another post, “The Convergence: America’s Long Arc of Development”, ushered in a period of de-industrialization, reducing the number of low-wage jobs available to blacks, while white flight and “spatial mismatch”, which describes the expanding geographic rift as economic growth shifted from the cities to the suburbs, all led to the further decline of urban ghettos.

This is exactly what happened to Queensbridge. The shift to a low-income housing project in the 50’s increased racial segregation in the community and declining socioeconomic conditions intensified, causing violent crime to increase. The escalation of the war on drugs during the Reagan Era only exacerbated the situation, and Queensbridge became a more dangerous place than ever.

The result for communities like Queensbridge is a decades-old poverty trap, in which social isolation and declining economic opportunities make it increasingly difficult for the overwhelmingly minority inhabitants to pull themselves out of poverty, creating a permanent underclass.  And for people like Anthony, fewer economic opportunities put pressure on them to support their families in other ways.  When drug dealing is ubiquitous in a community, it becomes an attractive proposition for someone without a lot of options.

Institution 5: The Schools


The kids from Season 4 of The Wire.

Poverty does not only lead to more crime in neighborhoods like Queensbridge. It affects just about every institution that is built in and around the community. The Brookings Institution explains some of the other ramifications of concentrated poverty:

Poor individuals and families are not evenly distributed across communities or throughout the country. Instead, they tend to live near one another, clustering in certain neighborhoods and regions. This concentration of poverty results in higher crime rates, underperforming public schools, poor housing and health conditions, as well as limited access to private services and job opportunities.

We have covered higher crime rates and limited access to private services and job opportunities, so let’s turn our focus to the underperforming public schools. In the U.S., funding for public schools comes from local property taxes. As the poverty level creeps up, housing prices decline dramatically. According to one study, once the poverty level in a community exceeds 10%, housing and rental prices steeply decline until it reaches the 40% threshold of concentrated poverty, at which point prices level out.

Since property taxes are calculated using housing prices, schools in poor communities have fewer resources available than those in more affluent communities, where housing prices are higher. This systemic problem, coupled with limited job opportunities for high school graduates due to spatial mismatch, fewer mentors to provide positive guidance, and the high prevalence of crime in and around the schools, results in an inferior education for children in areas of concentrated poverty, leaving them ill-prepared to succeed, further widening the income divide and compounding socioeconomic inequality.

In New York City, spending on a pupil in a neighborhood with 30% poverty is 11% less than in one with very little poverty.

In New York City, spending on a pupil in a neighborhood with 30% poverty is 11% less than in one with very little poverty.

I have covered the tragedy of the American education system ad nauseum in this blog, and have discussed the importance of education for economic development in several posts. Without a decent education, generations of children born into poverty have few opportunities to break the cycle of poverty, keeping them ensnared in a vicious cycle of poverty that all too often ends with prison.

It is impossible to say whether a strong public school system would have set Anthony on a different path. But the purpose of education is to give children the tools to succeed and skills to find employment. Without a good education, the opportunities are limited.

III. Conclusion

Let’s take a step back and review the each of the institutions, starting at the beginning. Anthony is arrested, tried, and convicted of dealing drugs, after being stopped-and-frisked on a project corner. His neighborhood, Queensbridge, is poor and overwhelmingly black and Hispanic. The school system is underfunded, the community is isolated, and few economic opportunities exist for young people, increasing the likelihood that they join a gang, either to earn money from selling drugs or simply for protection. Anthony gets caught up in the life and goes to jail, leaving his girlfriend without a breadwinner and son without a father.

Systemic racism has a long history in America

Systemic racism has a long history in America

Now we can generalize his experience more broadly. Historical racial segregation and discrimination and the changing dynamics of the American economy led to concentrated poverty and increasing social isolation in urban ghettos, the majority of whose inhabitants are black and, more recently, Hispanic. Higher levels of poverty drive down housing prices, which deprive the community of property taxes, which creates an inferior school system for black children and prevents poor urban communities from improving.

Those inhabitants have fewer economic opportunities and are more likely to turn to crime as a way of making ends meet. Crime becomes increasingly concentrated in these communities, leading to a greater police presence and higher rates of arrest. Various factors, including generic racial bias, politicians’ fears of being labeled soft on crime, and the disproportionate media coverage of black criminality, leads to policies like mandatory sentencing that unfairly result in longer sentences for people of color. And all of these factors combined result in an incarceration rate of six times that of white people, which is right where we started.

The dog whistle that results in tough-on-crime policies

The dog whistle that results in tough-on-crime policies

In this essay, I have tried to break down the infinitely complex systems that govern individuals and highlight how systemic institutional racism pervades every aspect of society. This racism is not overt, and it is not sensational. It is not a white police officer shooting an unarmed black teenager and leaving him to die in the streets. It is not a bunch of white fraternity members chanting racial epithets on a bus. It is not spoken, nor is it perpetrated by any one individual. This racism is built into the very fabric of our society, creating a permanent underclass that is overwhelmingly black and Hispanic. And it is getting worse.

I don’t know the answer to this problem. I fear that it is so ingrained into our society that we cannot diagnose, much less eliminate, the disease. As a society, we must be be willing to engage in collective self-criticism that makes most people uncomfortable.  Whenever a politician tries to have an honest conversation about systemic racial inequality, they risk being labeled an apologist for America.  And, unfortunately, in every society, the underclass, despite having the numbers, rarely has the political influence or money to effect real pro-poor policies.

I welcome the discussion about race that the the events of the last year have forced America to have. But as long as we focus on the symptoms, rather than the disease, the problem will only continue to get worse.

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Why Do Some Countries Have It So Bad?


Open a newspaper today and you’ll be bombarded with a panoply of terrible news. Ebola is ravaging West Africa, with a projected 10,000 new cases per week and the possibility for 1.4 million people infected in Sierra Leone and Liberia alone. Two decades ago, those same countries were embroiled in one of the most horrific civil wars in modern history. A few thousand miles away, a possible genocide in the Central African Republic has been unfolding – largely unnoticed – since the end of 2013. Head south and you’ll find never-ending violence in the Democratic Republic of Congo that has claimed the lives of 5.4 million people since 1998. Outside Africa, uprising and rage are threatening to topple the government in Yemen, and Haiti struggles to recover from the earthquake that killed 160,000 people. The list goes on and on. Beyond the penchant for inflicting misery on the people who live in them, these countries share a common bond.

Among the 196 nations in the world, some countries, it seems, consistently draw the short straw. There is no shortage of colloquial terms for them – basketcases and failed states, to name a few – but the United Nations has a specific designation for countries that occupy the bottom of the human and socioeconomic development indices: the “least-developed countries”. Of the 48 countries to receive the ignominious distinction of being considered an LDC, only four have ever graduated to “developing country” status: Botswana, Cape Verde, Maldives, and, until 2014, Samoa. The LDCs have 880 million people, or 12% of the world’s population, yet they contribute 2% of its GDP and 1% of its global trade in goods. With so many people, the question is: why do these countries have it so bad?


The least developed countries in the world.

Before examining the underlying causes, let’s first define what it means to be a least-developed country. Here is the United Nations’ description of the attributes that warrant the distinction:

The Least Developed Countries represent the poorest and weakest segment of the international community. Their low level of socio-economic development is characterized by weak human and institutional capacities, low and unequally distributed income and scarcity of domestic financial resources. They often suffer from governance crisis, political instability and, in some cases, internal and external conflicts. Their largely agrarian economies are affected by a vicious cycle of low productivity and low investment. They rely on the export of few primary commodities as major source of export and fiscal earnings, which makes them highly vulnerable to external terms-of-trade shocks. Only a handful has been able to diversify into the manufacturing sector, though with a limited range of products in labour-intensive industries, i.e. textiles and clothing.

These constraints are responsible for insufficient domestic resource mobilization, low economic management capacity, weaknesses in programme design and implementation, chronic external deficits, high debt burdens and heavy dependence on external financing that have kept LDCs in a poverty trap.

There is a lot to unpack in that statement, but, suffice it to say, LDCs are in a tough spot. Most of the people are subsistence farmers, growing just enough for themselves and their families, and relying on nature for their livelihoods. More than 70% live in rural areas, compared with 55% for other developing countries. They struggle to get by and move from crisis to crisis with little opportunity to implement systemic changes and reforms that will break the cycle of poverty and stagnant growth. With much of the population growing just enough to feed their families, the people are one natural disaster, family illness, or armed conflict away from the edge. They are the proverbial sailors in the boat with a hole in the bottom, bailing out just enough water to keep them from sinking any further. Only these boats are trying to stay afloat amidst raging seas, and a big enough wave – in the form of an earthquake or cyclone, a planned genocide, or an ultra-deadly virus that kills more than 70% of people it infects – is enough to tip the boat and send the sailors overboard, reversing any progress they have made in the past.

The question is: why these particular 48 countries? Economists have different underlying causes, ranging from the strength of institutions to the physical attributes of the geography. In the next few posts, I’ll review at a high level three arguments from three different books: Why Nations Fail, by Daron Acemoglu and James A. Robinson, Collapse: How Nations Choose to Fail or Succeed by Jared Diamond, and The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It, by Paul Collier. In the end, I’ll weigh in on the question myself and give my own opinion, though, as a mere dilettante in the field of development economics, your humble correspondent warns you in advance of the dangers of listening to him.

In the next post, I’ll cover some of the theories explaining why LDCs are so poor.

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The Link Between Poverty and Terrorism

The link between poverty and terrorism is well-known.  In theory, one of the purposes of organizations like USAID is to complement the other “D’s” of the foreign policy apparatus – diplomacy and defense – to improve conditions for people most likely to be driven to desperation: the poor.  It is not surprising that the hotbeds of terrorism today – Afghanistan, Yemen, Somalia, Pakistan, Indonesia – happen to be some of the poorest countries in the world.  Nor is it surprising that many of these countries receive the lion’s share of foreign aid from the U.S. government, despite their apparent animosity toward the country.  The Nesaji cotton-and-wool factory in Kandahar is a perfect metaphor for the complex forces working against development efforts.  Built by Iran and the Soviet Union in 1971 and maintained by a motley crew of warlords and foreign countries, including its current steward, the United States, the factory has operated for only 60 days throughout its 40-year history. Governments are not the only ones concerned about the causal relationship between poverty and terrorism.

Here in Kenya, an organization called Nuru International, founded by former special ops marine Jake Harriman, is pilot-testing a holistic community-based development model.  Its mission is to end terrorism by ending extreme poverty. The connection is not difficult to make.  For people living hand-to-mouth, life is a series of struggles often ending in tragedy.  Anger, resentment, and despair are a volatile combination in the minds of young men and women who see little hope for escaping their situation.  For recruiters of organizations like Boko Haram and the Al-Shabab – literally translated as “The Youth” – these young minds can be manipulated to pick up arms.  By stoking latent frustrations at the injustice of poverty and promising a sense of a community, brotherhood, and commitment to a higher cause, a recruiter can more easily convince a teenager to become a suicide bomber.

A member of Boko Haram.

This anger and frustration is compounded by a sense of injustice.  When the gap between rich and poor is vast, the impoverished majority are more likely to consider their situation as a function of either indifference or criminality by those controlling the wealth.  It is under these circumstances that the fledgling Nigerian terrorist group, Boko Haram, has grown.

Boko Haram has killed more than 900 people since 2009, including perpetrating a massacre last month that left 300 people dead in Kano, the capital of the Kano state in Northern Nigeria.  As an Islamic fundamentalist group with ties to Al-Qaeda in the Islamic Maghred, the North African faction of the jihad organization, Boko Haram is a growing concern for Western security analysts.  But according to some on the ground in Kano, the group’s motivations are simpler.  In an article titled, “In Nigeria, a Deadly Group’s Rage Has Local Roots,” Adam Nossiter explains the situation on the ground:

For now, Boko Haram’s targets remain largely local, despite its bombing of a United Nations headquarters in Abuja, the capital, last summer. The Nigerian state is typically the enemy, and many analysts see the nation’s enduring poverty as one reason. This month figures were released in Abuja indicating that poverty has increased since 2004, despite the nation’s oil wealth; in the north, Boko Haram’s stronghold, about 75 percent of the population is considered poor. Overall, 60 percent live on less than $1 a day. Every citizen appears aware of the glaring contrast between his or her own life and those of the elite.

Ado Ibrahim, a 22-year-old sugar cane vendor wearing a yellow soccer jersey, suspected more violence could be ahead. “Injustice, and misgovernance by officials,” he said, adding, “It’s possible, as long as injustice persists, it’s possible to have another flare-up.”

Down the street, squatting in his open-air stall where he sells cooked yams, Abdullahi Dantsabe had a similar point of view. Why had the attacks occurred? “Injustice,” he said. “The leaders are not concerned about the common man.”

A Yemeni man sits by the wreckage of tourists' cars at the site of a suspected al-Qaeda car bomb attack in Marib in July 2007. Photograph: Khaled Abdullah/Reuters

Nigeria is one of the most corrupt countries in the world.   The Corrupt Perceptions Index, which is a measurement of how people view their government, ranks Nigeria 143 out of 180.  A Nigerian friend of mine once explained to me the concept of “bunkering,” which is when a businessman – usually someone with military connections at the highest levels or a general himself – connects a pipe to a much larger oil pipeline in order to siphon the product and sell it on the black market.  Add to this dynamic massive income inequality and ethnic tensions throughout the country (but mainly on situated on a north-south divide), and the elements that typically fuel the growth of groups like Boko Haram seem to be in place.

In fact, most of the countries today where Islamic fundamentalism is on the rise are generally poor and massively unequal with highly corrupt governments.  In Africa, Chad (168), Sudan (177), Niger (134), and Somalia (180), which holds the dubious distinction of last place, are all areas where for terrorist organizations have flourished.   In the Middle East and South Asia, Pakistan (134) and Yemen (164) are considered some of the most dangerous countries in the world.

I am not saying that terrorist organizations develop due to circumstances alone.  At the highest levels of these organizations are typically rich and educated planners, who are misguided, at best, or sociopathic.  Osama bin Laden was the son of a wealthy Saudi construction magnate, and many of Al-Shabab’s top leadership hail from countries outside Somalia – including one, Omar Hammami, AKA Abu-Mansoor al-Amriki, who grew up in Alabama. But the soldiers – the grunts on the ground who are blowing themselves up along with innocents around them – are disproportionately drawn from the poor underclass, the idle youth with few prospects for employment.

It is these people who economic development programs aim to help.  Whether they are successful is a different question.   In the case of the Nesaji cotton-and-wool factory in Kandahar, the answer is clearly no.

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Are Conditional Cash Transfers Really the Answer?


A while back I wrote about conditional cash transfers, which are the next biggest thing in development, in a post called “Where’s My Money, Fool,” titled so as an homage to the curler-wearing drug dealer Big Worm in the movie “Friday.” The most successful example of a good CCT program is Bolsa Familia, a government program in Brazil which has helped to increase incomes for poor families by 7 times as much as incomes for the rich (albeit, off a lower baseline).  Brazil has seen its poverty level drop faster than Snooki inside a plastic Zorb-like ball in the Jersey Shore on New Years Eve.  Specifically, the number of people living in poverty has dropped from 22% to 7% over the last decade.

The theory behind conditional cash transfers is simple.  The government pays poor families for meeting certain requirements.  Attendance in school and maintaining standards of healthcare are rewarded with monthly payments.  As long as the family achieves the targets of the program, they are eligible for a payout.  The outcome is two-fold.  First, the family gets immediate relief in the form of cash payments from the government, which can be put toward food and education.  Second, the underlying conditions that cause the unbreakable cycle of poverty to unbroken – lack of education due to the demands of meeting financial needs for the household – are addressed, as financial incentives eliminate the need to pull kids from school to help their parents earn income for the family.  An explanation from the New York Times:

The program fights poverty in two ways.  One is straightforward:  it gives money to the poor.  This works.  And no, the money tends not to be stolen or diverted to the better-off.   Brazil and Mexico have been very successful at including only the poor.  In both countries it has reduced poverty, especially extreme poverty, and has begun to close the inequality gap.

The idea’s other purpose — to give children more education and better health — is longer term and harder to measure.  But measured it is — Oportunidades is probably the most-studied social program on the planet.  The program has an evaluation unit and publishes all data. There have also been hundreds of studies by independent academics. The research indicates that conditional cash transfer programs in Mexico and Brazil do keep people healthier, and keep kids in school.

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The Problem of Rural Education in the Philippines

In this journal, I have discussed the relationship between education, poverty alleviation, and economic development. The link is critical and the three are self-reinforcing.  Education creates greater opportunities for the youth, who go on to work decent jobs in cities like Bacolod, Manila, and Cebu.  The children remit money back to the parents, who spend on home improvements and the tuition fees for the younger siblings.  College-educated individuals are much less likely to end up impoverished (about 1 in 44).  Trade schools also create opportunities, with only one in 10 people with post-secondary degrees living below the poverty line.  Unfortunately, the ratios drop precipitously after that.  One in three high school graduates and half of elementary school grads are impoverished.  Here are the sobering education statistics: Continue reading

Who is Poor? Defining Poverty

This was written for the Kiva Fellows blog.  Read the original here.

How do you define poverty?   A basic needs index looks at whether (and to what extent) fundamental needs are fulfilled – food, water, shelter, clothing – and whether people have access to critical services – education, information (newspapers, etc.), sanitation facilities, healthcare, financial services.  This is an absolute poverty calculation, which uses a standard threshold that can be compared across countries and continents.  Another method is to use a national poverty line, usually a percentage of median income.  For example, if the median income is $10,000 USD, and the poverty line is 60% of that, any family making below $6,000 is technically below the poverty line.  This is a relative poverty calculation, because it is country-specific.  Using this method, it doesn’t make sense to compare across countries, since the poverty line in wealthier countries with higher median incomes will allow for greater purchasing power than in much poorer countries.  In microfinance (and development in general), you often hear about the percentage of the population that lives on less than $1/day – the definition of extreme poverty – or $2/day, or some other defining statistic of poverty.

Statistics are important for microfinance institutions (MFIs).  When you know what you are dealing with, you can more effectively target the population with programs that are proven to work.  It is important for an MFI to understand its clients and where they exist on the spectrum of poverty.  This is actually more difficult to assess than you’d think.  It is not feasible to ask clients how many dollars a day they spend, or even try to determine their income relative to the rest of the population.   Instead, MFIs use social performance metrics – simple tools to help them to define exactly what they are as an organization and whom they are serving.  They are basically proxies, which, when examined in aggregate, give the MFIs a profile of the poverty level of their clients.

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