The flight from San Francisco to Colombia is surprisingly long, particularly when you are relegated to a middle seat. Fortunately, my neighbor was afraid of flying and took her mind off it by telling me everything about the secret menu at In N’ Out Burger, where she worked during the summer (noteworthy items include chopped onions, diced chillies, and a four-patty burger). But experiencing the seaside city of Cartagena, the little towns in the Efe Cafetero (“Coffee Axis”), and the truly wild restaurant, Andres Carne de Res, outside Bogota made the eight-hour flight worth it.

My friend, Ashaya, and I planned the skeleton of the trip a month before we left, booking flights and hotels, but leaving out any specifics. Our philosophy – on this trip and one to Oaxaca, Mexico – has been to put ourselves in the right place with a roof over our heads, and let inspiration guide the day-to-day. We took a red-eye to Cartagena via Panama City and a taxi to the Old City, where the boutique hotel we’d booked, Casa La Fe, overlooked the Plaza Fernandez de Madrid, a beautiful square with artisans, sidewalk cafes, and hawkers selling Panama hats and woven bracelets (I bought both). Centrally-located with a rooftop pool and a bar, Casa La Fe is right up my alley, offering “a calm and relaxed atmosphere in the heart of the city.” We checked in and set out to find breakfast and explore the city.

Cartagena is the fifth-largest city in Colombia, but it is best-known for the walled Old Town, a UNESCO World Heritage Site that was founded by the Spanish in 1533. With its cobblestone streets, brightly-colored Spanish colonial-style buildings, and a breezy vibe, the Old Town makes for a pleasant stroll. After breakfast, we wandered into the Universidad de Cartagena, to check out an art gallery and performance space, where we sat and watched a string trio who we’d see busking around the city at least three more times, before slowly making our way to the waterfront.

A tropical city on the Caribbean coast, Cartagena has the sort of history you’d expect from a Spanish colonial port. After the city was sacked by naval officer turned pirate Sir Francis Drake in 1586 and ransomed for $200 million in today’s currency (only after the destruction of a quarter of it), the Spanish built walls around the town to protect against future calamities. As the seat of the Spanish slave trade and a key port for the export of Peruvian silver, Cartagena was an attractive target for pirates. Fortunately for us, the walls these days make for a delightful place to watch the sunset and enjoy a pisco sour.

On our way to the waterfront, we passed a dive shop, where I booked two dives the following day off the Rosario Islands, a beautiful string of beaches an hour off the coast of Cartagena. I wouldn’t recommend diving here for a few reasons. Part of the enjoyment I get from diving comes from the slow ride out to the reefs in a dive boat, where you chat with your fellow divers. But this experience felt a little assembly line-esque, with a speedboat taking us to the island and a little boat taking us to the reefs from there. And sadly, the once-beautiful coral reef of Varadero is a shell of its former self, having been destroyed by deteriorating water quality and the dredging of a new shipping line. It was nice to get a few dives in, but seeing the handful of fish left in the reef made the fact that a fifth of all of the coral in the world has died in the past three years a lot more visceral for me.

When we first arrived, Ashaya made the dubious, unsubstantiated, and highly-specific claim that Cartagena is the bachelorette party capital of Latin America. But after a few days, I began to see why. Apart of the dive-ersion on day two, we spent the better part of three days wandering the city, eating ceviche, drinking wine, and playing Uno. We ate dinner at El Boliche, a low-key family-owned cevicheria with 25 seats and a great mojito, and Cuzco, a modern Peruvian restaurant in an old colonial house, and had lunch at La Cevicheria. It is worth getting a reservation at the popular spots, but the food scene in Cartagena is solid, and you can’t go wrong with any of these choices. I’d also recommend having a sundowner on one of the outdoor bars on the wall around the city, and a nightcap at El Baron, a hip cocktail bar in the Plaza de San Pedro Claver run by a German mixologist.

By the time our three days and nights in Cartagena were over, we really didn’t want to leave. The city is charming and beautiful. From the street art murals of Getsemani to the plazas around the Old Town, the scene in Cartagena is chill, and the people reflect it. But, alas, we had to begin the second leg of our trip, and headed to the airport for an two-hour flight to a small city called Armenia, where we’d drive an hour to Salento, a little town in the heart of the Eje Cafetero, otherwise known as the Colombian coffee region.

As I mentioned in the last post, I decided to figure this India trip on the fly, refusing to make any concrete plans that might hinder my freedom to do whatever I wanted. The day before I left, I ordered a copy of the Lonely Planet India on Amazon to be delivered the next day (which it did, five hours before my flight). Armed with a book about India and a couple recommendations from friends, I felt confident that the trip would work itself out. Unfortunately, within 24 hours, I lost the Lonely Planet and was back to square one.

The original plan was to explore Varanasi, a city on the Ganges River that is among the holiest for Hindus, and Rajasthan, a region in Northern India known for beautiful landscapes, brightly-colored clothes and architecture, and a rich culture dating back thousands of years. I would take a bus from Pokhara to Varanasi and cross from Nepal to India by land. After a few days, I would fly to New Delhi and follow a path called the Golden Triangle, starting in Delhi, moving on to Agra, the site of the Taj Mahal, and Jaipur, known as the pink city for its reddish-hued stucco buildings, before returning to New Delhi.

After college, my brother worked on a nature documentary in India and spent a week in Varanasi, which he claimed is the coolest place in the world. With such a strong recommendation, I felt I had to go. Given that Varanasi is in the northern part of India, the Golden Triangle felt like a natural fit for the second half of the trip. As with most of my plans, this one quickly fell apartment when I decided to take a bus from Pokhara to Kathmandu, book a flight from Kathmandu to Varanasi, and figure things out from there.

The more I spoke with people, however, it sounded like Delhi was just another giant metropolis and Jaipur a slightly smaller metropolis. Coming to the conclusion that I didn’t know anything, I decided to let Ashaya, who attended boarding school in India, decide my itinerary. She suggested two days in Varanasi, back to Delhi for the Taj Mahal, and down to Udaipur, a small and beautiful city of palaces situated on a lake and surrounded by rolling hills. With a tentative itinerary and two days before my trip, all that was left was to book it.

Having made no reservations of any kind, I spent the day before my flight trying to book a flight from Varanasi back to New Dehli, a round-trip ticket to Udaipur, and a flight back to Kathmandu. India actually has a fledgling low-cost airline industry, with several carriers offering cheap flights around the country. Having talked to a few people who’d done the trip before, I assumed booking travel would be relatively straightforward. Sadly, as with most simple tasks in India, that was not the case.

I first tried to book a flight on Yatra.com, India’s equivalent of Kayak, searching for the lowest fares across the four major airlines in India. Having found a cheap flight from Varanasi to New Dehli, I entered my credit card information, only to be informed that they only accept international credit cards five days in advance of booking, which wasn’t going to help me book a flight in three days. I tried to book directly on website of the airline, SpiceJet, which brought me all the way through the process, including entering my credit card, before bringing me back to the main website and forgetting all about the reservation it was supposed to be processing. Feeling a little like Sisyphus, I began to doubt the wisdom of winging a trip to India.

Having decided to punt on that Delhi flight, I went back to Yatra to book the rest of my flights. I found a great deal on a round trip flight to Udaipur – 8,000 rupees there and back. When I selected the flight, a notice popped up on the screen telling me that, in the time between selecting the flight and bring it up, the price had increased by 2,000 rupees. “Son of a bitch,” I thought. So I decided to wait a bit and check again. Fifteen minutes later I found the flight again for 8,000 rupees. When I click purchase, the same thing happened. I couldn’t help but be amused that an Indian e-commerce website was haggling with me the same way as a shopkeeper selling knockoff watches.

Regardless, it didn’t matter, since every site selling airline tickets in India seemed to be broken. Sensing my desperation, Ashaya told me she’d take care of it and called her ticket-agent cousin, who booked four flights for me on SpiceJet for a total of $380. And with that, I finally had the beginnings of a plan.

Unfortunately, my trip to India got off to a characteristically rocky start when my Air India flight from Kathmandu to Varanasi was first delayed by four hours, and subsequently cancelled altogether. Fortunately, my friend Ashaya called her uncle, Kamal Rana, who works at the airport to guide me through security and ensure I made my flight to New Dehli. This was the first of several saves that made my India trip go much more smoothly than it otherwise might have.

Mr. Rana met me at the airport, shepherded me through immigration and security, bought me coffee, and sent me on my way. Aboard the flight, I sat next to an older Canadian couple, Doug and Estela, also trying to get to Varanasi. Doug struck up a conversation, and we started talking about our respective trips. Once a year, Doug went hunting with a group of American and Canadian guys. One of the America guys had a form of cancer for which an experimental treatment was available in Canada. When he asked Doug to connect him with a doctor in Canada, Doug happily obliged. In return, the American, who worked for Delta Airlines, offered him and Estela first-class, round-trip tickets to anywhere in the world. So they started preparing for a month-long trip through India, with a five-day stopover in Nepal.

Over the course of the two-hour flight, we covered a lot of ground. Doug inherited a farm from his grandfather in Canada, and he and Estela, who is originally from Colombia, bred and raised racehorses. They recently bought a 20-acre farm two hours north of Bogota and were turning it into a ranch and guesthouse for people looking to experience the lush Colombian countryside. I said I’d never been to Colombia, and showed him the places I’d lived on the Air India “Where We Fly” map. When I told him I was in business school, he warned me not destroy the world economy and take advantage of people for financial gain, which I happily obliged.

Before we left, we’d been assured that we would be put on a flight to Varanasi early the following morning. When we deplaned, the Varanasi refugees coalesced, growing to 20 by the time we found out what we needed to do. Each airport employee we asked gave us contradictory instructions, ultimately leading us to leave the airport, take a staircase to the second floor, and re-entering it at the departures terminal. After one guy told us to go back the way we came, Doug mused “Kafka would appreciate this.” There were two Germans in their twenties, each traveling alone, a Dutch family of four who were midway through a four-month trip through India, an older Czech couple that were starting their fourth consecutive month-long India trip and talked about how much had changed from 25 years ago, when they first traveled to the subcontinent, and a handful of others.

When we finally arrived at the Air India customer service desk, it was pandemonium. We were not the only flight that had been cancelled, and people were screaming. The Czech guy, who looked like Mr. Magoo, immediately stepped up as the de facto leader of the group, and reported that we were all going to be re-booked on an already-overbooked flight the following morning. At that point, the Dutch couple decided to cut their losses and head north instead. In the ensuing commotion, I found another airline – IndiGo – with flights the following day for $80. So once we were back at the terrible hotel Air India put us up at, Doug called the travel agent who organized his trip and the three of us booked another flight to Varanasi.

The next morning, we flew out without any problems, short of a three-hour fog delay that left us grounded on the tarmac. I caught a ride into the city with Doug and Estela, where they gave me a postcard of their Colombian getaway and bid me adieu.

On December 3rd, 2014, I flew to Nepal by way of Istanbul for a wedding in Kathmandu. I’d spent the last week writing papers and preparing to leave school a week early for the trip. My flight was at 11 PM, so I had to leave for airport at 9. The Lonely Planet guides for Nepal and India I’d ordered the day before arrived at 4 in the afternoon, but I missed getting my new Capital One card with no foreign exchange fees by an hour. I grabbed the blue backpack that I carried for three years around Southeast Asia and Africa, which was filled with mostly cheap t-shirts and jeans that I wouldn’t mind jettisoning if I needed extra room, plus one pair of all-purpose dress clothes for the four-day wedding I would be attending, and took the red line to Logan Airport.

Being a Wednesday at 9:30, I breezed through security, found my gate at the international terminal, and ordered a whiskey on the rocks at the airport bar to pass the time until my flight. I’ve written about my affinity for airport bars on this blog. There is something about sitting at a cookie-cutter bar, listening to the boarding calls, and watching people come and go that brings you back to all the airports where you’ve done the exact same thing and makes you excited to head back out on the road. A half-hour later, my friend Jeff showed up and we ordered another drink. A man next to us tried to strike up a conversation. He was heading to Mumbai, and had spent a few years teaching English in China and Thailand, which we both took as a cue about the purpose of this man’s travels. After he yelled at us for some perceived slight, we finished our drinks and headed to the gate.

With the exception of the meal, the flight was long and uneventful. When I booked my ticket, I must not have been paying attention, because I thought I was required to select a meal option and chose the “bland meal”, which I took to be the default option. Of course, the bland meal is not the default option and is as bad as its name would imply. It consists of a piece of white chicken with no sauce of any kind, with a side of steamed spinach. When the stewardess on Turkish Airlines brought it to me, I was devastated. Fortunately, I was able to trade up for a regular meal, but only after everyone was served.

We arrived in Istanbul after a 10-hour flight to find that our connection was delayed, so we spent the next few hours playing the first of the many games of Uno that would be played over the next month. I’d bought it for another trip, and discovered that it is really the Cadillac of travel games. Gin rummy and spades are great two- and four-player games, respectively, but they can be hard to teach to someone who’s never played. Yahtzee, which I picked up when I visited two of my friends in Buenos Aires after college, is another excellent way to while away the hours with people, but one game takes a long time and requires a pen, paper, five dice, and a good rolling surface. Uno, on the other hand, is easy to learn and requires only an Uno deck. It is complex enough to not be stupid, but simple enough to let conversation take precedence over game play. And, given that a good travel game is merely the vehicle for the experience rather than an end in itself, Uno is among the best I’ve found.

Fast forward four hours and we are boarding again. By this point, we’d rendezvoused with Aditya, another friend of Ashaya, whose wedding we were all going to attend. We knew that Ellie and Adea, two of Ashaya’s friends from her time at the World Bank who we’d never met before, were on the same flight to Nepal, so we began playing rocks, paper, scissors to see which of us would approach random pairs of girls who seemed sufficiently socially-conscious and erudite to be Ashaya’s friends and ask them if they were by chance heading to a wedding in Kathmandu. Jeff lost, and the first one turned out to be a case of mistaken identity, so we chalked it up to a lost cause. When we finally boarded, two girls pointed at us and asked if we were heading to Ashaya’s wedding. With the five of us aboard, we settled in for a 7-hour trip aboard a quarter-filled plane. I traded in my second bland meal for the chicken, stretched out across four seats, and slept the rest of the way to Kathmandu.

When we landed at 11 in the morning, we were greeted by Kamal Rana, Ashaya’s uncle and an employee of Nepal Airlines who worked at the airport. He took our passports, led us through the VIP lane of customs and immigration, brought a porter to take our bags, and took us to the van that would take us to our hotel. This was the first of four encounters with Mr. Rana, who shepherded me through Tribhuvan International Airport in a fraction of the time it took the rest of the poor, friendless masses.

Ashaya put us up at the Shanker Hotel, formerly a palace located in the heart of the city. The place had a lot of character, with old unique rooms, a bar called the Kunti Bar, and killer pool bar surrounded by a grassy field. After dropping off our stuff, Jeff and I headed out to try to meet with a few of our friends, but missed them by a few minutes. Without a cell phone or Internet, finding your friends in downtown Kathmandu is next to impossible, so we found an upscale lounge bar on Durbar Marg called Mezze by Roadhouse, ordered an Everest beer, and used the wifi to discover that our friends had gone to a store called Monalisa Textiles to pick up kurtas for the formal event the next day and had already left for Ashaya’s house. So we went the same store, bought our kurtas, and went back to the hotel to freshen up and head to Ashaya’s house to catch the tail-end of the mehendi ceremony and meet our friends.The house – located in an area referred to as Bhatbateni, after the eponymous supermarket – is beautiful. Bustling with 20-30 workers and a full band, and decorated with brown and orange colors and icons designed by Ashaya of two elephants holding a heart, the place was a beehive of activity. After 24 hours of travel, it was nice to finally see Ashaya and the rest of the crew, who were busy getting their mehendi tattoos – floral patterns for the ladies, the image of Ganesh for the men. I respectfully declined, though in retrospect, it was probably a mistake.

With four hours to kill between the ceremony and the party, we all went back to nap before grabbing a drink at the Kunti Bar. Aditya wore a white linen suit straight out of Miami Vice, and I had on my all-purpose blazer and slacks. Everyone else wore their kurtas and saris, as white people are wont to do at traditional South Asian wedding events. We were joined by the rest of our Shanker crew – Graham, Yscaira, and Kaia. After making the van wait for an hour, we finally piled in and left for the party.

The party was in full-swing when we arrived. With two fully-stocked open bars, a military band playing jazz songs, and several hundred people milling around, I set about to get a drink. We were told by our friends that we would need to perform a dance on stage when the bride is introduced. “Just follow what she does,” I was told. At that point, I decided I wanted no part in this, ordered a Ballantine scotch on the rocks, and convinced Jeff to hang back with me while the rest of our friends made fools of themselves on stage in front of 200 Nepalis.

Eventually, the combination of an open bar with a never-ending supply of Ballantine and aggressive peer-pressuring by Brandon, the husband of one of Ashaya’s friends, got the better of me, and I wound up in rough shape back at the Kunti Bar, where we were all playing a terrible drinking game called Ibble Dibble, which sent me on a downward spiral that was fortunately cushioned by my bed two floors up.

The next day was the first of the main wedding ceremonies. The groom’s family comes to the bride’s house, where an engagement takes place, followed by the actual wedding. We headed over to the house for gift-giving ceremony and watched as people streamed onto a stage with two couches for the couple to present them with gifts. After a hearty lunch of Nepali food, we headed back to the hotel to spend the rest of the afternoon at the pool bar at the Shanker.

As a rule of thumb, when you leave Boston in December for a landlocked city that is 75 degrees and sunny and stay in a hotel with a pool bar, you not only try to maximize your time there, you do things to make it seem even more ridiculous than it is. To that end, I ordered a Singapore Sling – my go-to pool-bar drink, after Hunter S. Thompson ordered one at the Polo Lounge in Fear and Loathing in Las Vegas – put on a playlist created by a friend called “Sexy 80’s Pool Party”, and broke out the Uno deck. A few drinks later, the rest of the crew showed up in their saris and kurtas, so I headed back to get ready before leaving for the party.

The second night turned out to be as lively as the first, with an open bar and several hundred people milling around the compound, drinking scotch and mulled wine, watching a slideshow of Ashaya and her friends through the years, and listening to the band and DJ. One of the uncles – colloquially referred to as “Crazy Uncle”, who I subsequently found out was the CEO of the largest steel company in Nepal – saw that the young folks were fading, and took it upon himself to take shots with everyone and tell the DJ to put on pop music and create a dance party, which took the party to another level. At midnight, another wedding ceremony began, with the parents of the bride washing the feet of the couple, to the soundtrack of “Timber” by Pitbull.

We had most of the following day free to check out Kathmandu and the surrounding area. The Shanker crew piled into two cabs and headed first to Durbar Square, where we wandered the streets, dipped into shops to look at fabrics and gurkha knives, walking down narrow alleys that opened up into huge squares with Buddhist stupas and Hindu temples sprinkled everywhere. The buildings are old and rundown, with brightly painted doors and chipped paint. Street dogs are everywhere, and sacred cows wander around, doing whatever they please.

While tame in comparison Indian cities, Kathmandu is a chaotic place. With few perceivable driving or walking rules, the streets are polluted and loud, as drivers honk anytime a person or animal ventures close to the car. Vendors sell everything from jewelry to raw fabrics, silver pots to knives, art, trinkets, and more. Inlaid statues of Ganesh and other Hindu gods are tucked between old doors and alleyways, and passing pedestrians will briefly pray at the shrine before ringing a bell and moving on. Not dissimilar from other big cities in developing countries, like Bangkok, Manila, Phnom Phen, or Accra, it is best described as ordered chaos.

One fascinating part of Durbar Square is the house of the Royal Kumari, known as the Kumari Ghar. In Nepali culture, the kumari is the tradition of worshiping young pre-pubescent girls as manifestations of the divine female energy or devi in Hindu religious traditions. She is selected through a rigorous process from a particular caste, and must have perfect features, which have quite poetic descriptions, such as a neck like a conch, a body like a banyan tree, a chest like a lion, and a voice as soft and clear as as duck’s. The philosophical basis for her existence is seriously heady:

“The worship of the goddess in a young girl represents the worship of divine consciousness spread all over the creation. As the supreme goddess is thought to have manifested this entire cosmos out of her womb she exists equally in animate as well as inanimate objects. While worship of an idol represents the worship and recognition of supreme through inanimate materials, worship of a human represents veneration and recognition of the same supreme in conscious beings.”

The Kumari comes to the window of her palace, to which she is confined until she reaches puberty, once a day to allow visitors to view her. We waited for a half hour to catch a glimpse of the living goddess, but unfortunately, like the elusive snow leopard, she never showed. So, content with the fact that we almost saw a living goddess and having mixed feelings about perpetuating an arguably exploitative, anachronistic tradition, we searched for the highest possible bar we could find to regroup, have a drink, play Uno, and plan the next move

Once we had our fill of tourism for the day, we headed back to Ashaya’s house for another key part of the wedding ceremony, when the bride is ceremonially led around a structure built specially for the occasion, and is taken to a horse-drawn chariot with the husband to leave for the house of the groom, where she will stay for the rest of the ceremony. During this ceremony, the women cry as she is led from the home for the last time (ceremonially), and the band plays a loud and, at least to these western ears, eerie repetitive song. The two prominent instruments are a nadaswaram, which is a kind of non-brass horn that has a tinny sound like a muted trumpet that you might see a snake charmer play, and a sringa, which is a giant semi-circular horn that you’d find in an old James Bond movie and is blown loudly over and over again. We watched as the chariot took off and the procession followed them to the house of the groom’s uncle, who hosted the groom’s party, since the groom’s family lives in Baltimore and doesn’t have property in Kathmandu.

That night we headed to another party at the groom’s family’s house. By this point, two days of wedding parties and sightseeing and a 12-hour time difference were beginning to take its toll on me and my friends, and the spirit that drove the first two nights had largely subsided. Fortunately, when we got to the party, we were greeted by a much more subdued party and “The Essential Kenny G” playing, on repeat, all the way through. I had a brief moment when I thought to myself, “Is this the Kenny G version of ‘My Heart Will Go On?’” The answer was yes, so I made a mental note that that was a funny music choice, and moved on to the bar. The night ended early for us, and we crashed early.

The next morning we headed to the Boudhanath Stupa, referred to as the “monkey temple” after its simian inhabitants. The climb to the top was treacherous, with twenty flights of steps leading to the top of a large hill at the outskirts of Kathmandu. The temple is certainly impressive. It is one of the largest ancient Buddhist stupas in the world, and it dominates the skyline. It was built in the 8th century AD by the Tibetan emperor Trison Detsan, along a trade route between Tibet and Nepal, serving as a resting place for many Tibetans who traveled through and, in the 1950s, the neighborhood of choice for Tibetan refugees seeking asylum in the country.

After spending an hour exploring the stupa and checking out the shops, we headed to another Durbar Square in a smaller city called Patan. This was my favorite part of the Kathmandu Valley. With old brown buildings built in the 1600s by Newari kings, the Patan Durbar Square is beautiful and clearly rich with history and culture. We lazily explored the square for an hour, before finding a place to sit and plan the next move. We jumped into two cabs and headed back to Thamel Square, the beating heart of Kathmandu, to check out a few shops and head back to the hotel to prepare for the final party of the four-day event.

When we arrived at the Officers Club of the Nepali army, I looked around at a party of 1,200 people and thought to myself, “Wow, this is a big party”. There were bars everywhere, and a buffet line that made me wish I hadn’t eaten that day so that I could take advantage of the Indian, Nepali, Chinese, and Italian food that was there in abundance. Almost as soon as we got there, the party started winding down, so we headed back to the hotel, where we threw an impromptu party for Ashaya and her new husband.

In the morning everyone said their respective goodbyes as we all went on to the next legs of our journeys. Ellie, Adea, and I were driving up to Pokhara, a lakeside town at the foot of the Annapurna range in the Himalayas that was 7 hours to the north. Jeff, Graham, and Yscaira had another day before flying out, and everyone else was set to leave that day. Four days and a lot of ceremonies later, the next chapter began.

In the last post, I explained the concept of “least developed countries” and discussed some of the characteristics shared by the 48 countries that bear the label. In this post, I’ll review a few different theories for why some countries are so much poorer than others.

In Why Nations Fail, Daron Acemoglu and James A Robinson, economists at MIT and Harvard, respectively, argue that the key to prosperity are strong institutions. This is a common refrain among a lot of economists, and certainly rings true in a lot of cases. Here at Develop Economies, your humble correspondent wholeheartedly subscribes to the premise, and has written about it extensively in the past. In a previous post titled “The Convergence: America’s Long Arc of Development”, I explain some of the same concepts and apply them to the example of the United States. For a time, international organizations, like United Nations, the World Bank, and the IMF, and donor nations demanded reforms in governance in exchange for loans, aid, and other resources. According to the authors, stronger institutions enable countries to grow.

Specifically, economic institutions, like property rights, enforceable contracts, a functional legal system, and an overall business climate that promotes competition, create incentives for individuals to invest in the future. Conversely, economic institutions enrich a wealthy political elite at the expense of the masses. These weak economic institutions are ultimately a function of what the authors call “extractive” political institutions, which effectively rig the system in favor of the elite. Seeking onerous rents, they exploit the system to their benefit, leaving the nation paralyzed economically, with few prospects for growth. Inclusive political institutions, on the other hand, promote growth by creating the economic institutions that enable creative destruction, and, therefore, progress.

Acemoglu and Robinson focus on the political failings of LDCs as an explanation for their condition, and provide a lot of good examples of the theory in action. While most people agree that inclusive political institutions are key to a country’s success, many dispute the idea that they are elemental. What I mean by this is that strong institutions are a prerequisite for prosperity, but their absence is not the root cause of why some countries are so poor.

Rather, the physical attributes of a nation – its geography, climate, and soil content, and whether it has depleted its natural resources through deforestation and other environmental degradation – ultimately determine a country’s fate. This is an idea Jared Diamond lays out in Collapse: How Societies Choose to Succeed or Fail, and it stands in contrast to the theory of institutions put forward by Acemoglu and Robinson.

Unlike Acemoglu and Robinson, Diamond is scientist and historian famous for examining trends in human history through a lens of geography, science, and culture. While Collapse deals with the decline of once-great societies, his borderline deterministic view on what makes countries succeed or fail places much of the blame on environment rather than governance. In a review titled “What Makes Countries Rich or Poor?”, he delivers a rejoinder to the institutions theory, attributing success to location instead. While he acknowledges the importance of strong institutions, he is not convinced that they provide the whole story:

While institutions are undoubtedly part of the explanation, they leave much unexplained: some richer temperate countries are notorious for their histories of bad institutions (think of Algeria, Argentina, Egypt, and Libya), while some of the tropical countries (e.g., Costa Rica and Tanzania) have had relatively more honest governments. What are the economic disadvantages of a tropical location?

The answer, according to Diamond, is twofold: prevalence of disease and agricultural productivity. First, the tropics are notoriously unhealthy because, unlike in temperate climates, bacteria and parasites thrive year-round. In addition, they are far more numerous in the tropics, evolving at a faster pace without the threat of dying off in the winter. This public health challenge saps the productivity of people living in the tropics, hindering economic growth. Second, agricultural productivity in the tropics is lower for a variety of ecological and geological reasons, including glacier mass, energy content, soil fertility and more. If you are interested in learning more, read the review, because it is far too dry to talk about here.

Another unfortunate characteristic of many LDCs is lack of access to oceans. This is something I saw firsthand in East Africa, which is home to quite a few landlocked nations, like Uganda, Rwanda, and Burundi. Diamond explains the challenge for these countries:

It costs roughly seven times more to ship a ton of cargo by land than by sea. That puts landlocked countries at an economic disadvantage, and helps explain why landlocked Bolivia and semilandlocked Paraguay are the poorest countries of South America. It also helps explain why Africa, with no river navigable to the sea for hundreds of miles except the Nile, and with fifteen landlocked nations, is the poorest continent. Eleven of those fifteen landlocked African nations have average incomes of $600 or less; only two countries outside Africa (Afghanistan and Nepal, both also landlocked) are as poor.

So, rather than purely a failure of institutions, Diamond attributes perhaps 50% of the LDCs misfortune to something other than institutions – whether location, environmental degradation, or something else. The authors of Why Nations Fail disagree with his conclusion, and, if you are really into it, read Acemoglu and Robinson’s response to Diamond.

In the third and final book, The Bottom Billion, Paul Collier, a development economist at Oxford, puts forward another theory (or, more specifically, a suite of theories) explaining just why these countries are in such rough shape. According to Collier, there are four key explanations for the state of the 60 poorest countries in the world (he adds a few more in addition to the LDCs), which are overlap with the institutional theory of Acemoglu/Robinson and environmental theory of Diamond:

1. The conflict trap

2. The natural resource trap

3. Landlocked with bad neighbors

4. Bad governance in a small country.

The conflict trap refers to civil wars and the political, economic, and social toll they take on countries. At a cost of $64 billion each, civil wars unwind any progress and plunge the countries back into misery. Think of Sierra Leone, Liberia, Rwanda, Somalia, Cambodia, Myanmar and others. What makes conflicts particularly pernicious is that, with every successive conflict, the likelihood of devolving back into civil war increases, continually threatening any progress going forward.

A child solider in the Congo in 2003. A sad product of the conflict trap. (Photo credit: Evelyn Hockstein)

The natural resource trap, also known as the natural resource curse, explains why, somewhat paradoxically, natural resources can make ill-prepared countries worse off. Collier explains why this is the case:

• Resources make conflict for the resources more likely.

• Natural resources mean that a government does not have to tax its citizens. Consequently, the citizenry are less likely to demand financial accountability from the government.

• The exploitation of valuable natural resources can result in Dutch disease, where a country’s other industries become less competitive as a result of currency valuation due to the revenue raised from the resource.[4]

I described the problem of being landlocked above, and, of course, Acemoglu and Robinson spend an entire book explaining by why bad governance is a real deal-killer for the LDCs.

Collier’s assessment takes elements of all the theories and mashes them up in to one big super-theory. The book was well-received by critics, in no small part to the fact that, unlike a lot of books about development economics, like Bill Easterly’s White Man’s Burden and Jeffrey Sachs’ The End of Poverty, he offers some feasible solutions to the problems. It is perhaps more centrist than the others, trying to find a middle ground Easterly’s bottom-up approach and Sachs’ top-down one. For a review of his policy prescriptions, you can check out this review from Michael A. Clemens in Foreign Affairs.

So, those are some of the many theories about why LDCs are so poor. But what does it all mean? Is there hope for these countries. According to Clemens in the same review, the answer is a quite pessimistic and very sad, “no.” In response to Jeffrey Sachs’ proposal for what he calls “clinical economics,” Clemens lays out some harsh realities:

The problem of the bottom billion, however, is not that they live in places where functioning modern economies have become sick and require a doctor. It is that they live in places where there have never been functioning modern economies. Development assistance began as an effort to rebuild Europe after war — indeed a case of helping a sick patient become healthy once again. In countries of the bottom billion, there are not and never have been preexisting healthy economies to which to return. There is, in the medical metaphor, simply no patient. As interesting and correct as it may be to list self-reinforcing “traps” that prevent an absent organism from existing, this exercise tells us nothing about how to fabricate the body from scratch.

Unfortunately, in the unforgiving realpolitik world of global development, realities are, more often than not, harsh. While I am not sure I share the fatalistic views of some, I agree with Clemens’ assertion that we will be unlikely to see any of the LDCs or other bottom billion countries graduate from their moribund status in our lifetime. This does not, of course, mean that we can’t do everything we can to help ease the suffering of those struggling to survive. But, regardless of the reasons for their misfortune, these countries have never quite caught a break, and, in all likelihood, never will.

Part I: How Countries Develop

For all of their differences, countries, and even civilizations, follow a similar path in their development. The timeline and specifics vary from nation to nation, but the general formula remains constant. On a high level, poor countries become rich through industrialization. The Renaissance in Europe, the Industrial Revolution in the United States, and the era of outsourcing – services in India, manufactured goods in China, and raw materials in Brazil – are all examples of the broad arc of economic development in once-poor nations. Mechanization produces efficiencies that make a country’s exports more competitive. When the value of exports exceed that of imports, it creates a trade surplus, also called a “favorable balance of trade”, as it brings more foreign currency into the country and generally makes the country richer.

As countries become richer and more industrialized, the economy shifts toward producing value-added goods. The wealth increase strengthens the currency of the country, and skilled – and unskilled – workers demand higher wages. As a result, labor-intensive industries become less competitive, leading rich countries to outsource these jobs to poorer countries. In the 1600’s, Colonial America traded cash crops and raw materials for finished goods from England – one of the factors leading up to the American Revolution. As the U.S. became richer post-WWII, it began outsourcing its labor-intensive industries to China and India. And today, these two countries are vying for influence and access to raw materials and cheap labor in a modern scramble for Africa

When a country develops in this way, the spoils are more equitably shared, as millions of jobs are created in new industries. From the textile mills in Lowell, to the garment factories in Bangladesh, to the manufacturing facilities springing up in Ethiopia and South Africa, a generation of previously unemployed people starts to work, fueled by demand from wealthier countries for more finished goods. And those new additions to the workforce are introduced to one of the perks of earning a decent wage: paying your taxes.

In pre-industrial nations, income is highly stratified, with an ultra-wealthy elite wielding a disproportionate amount of both political and economic power. On the other extreme, a huge percentage of the population is impoverished, rarely sharing in the spoils of the natural resource contracts that enrich the elites. The only voices that matter are those with access to money and influence, and the poor are marginalized, resigned to the realities of corrupt politicians and unscrupulous businessmen stifling growth and progress in the country.

As a country industrializes, however, the inexpensive labor provided by the massive percentage of the population living below the poverty line enables those disenfranchised segments by creating a middle class. With greater disposable income, poorer families can invest in education, ensuring that their children will reap the benefits of development by ushering in the inevitable move toward value-added goods that immediately follows industrialization. And that middle class – which pays a percentage of its hard-earned money in taxes – starts to demand accountability from its political leaders. As the concentration of wealth shrinks, the broader population begins demanding greater freedoms. A free press develops to satisfy the new-found demand for information, and politicians are brought out of the shadows and into the light.

A more responsive government and an expanded treasury lead to investments in infrastructure, education, healthcare, and other institutions, laying the groundwork for the shift to post-industrialization. With the foundation in place, the country steadily moves up the ladder. The call center that once offered only customer service now offers accounting, IT, and financial services. The t-shirt manufacturer becomes a fashion house. And with each step, the country becomes richer.

And what happens to this newly-created middle class? As their income increases, the percentage spent on food, clothing, and housing decline. Their buying power increases, their lifespan becomes longer, and the shocks that once destroyed their lives – an illness left untreated, a drought that destroyed their crops, a civil war erupting out of desperation – decrease, enabling them to not only invest more money in themselves – in the form of better healthcare, better schools, better houses – but also free them from the debilitating stress generated by uncertainty. Not knowing where your next meal is coming from, or whether your daughter will be able to survive a bout of typhoid, or malaria, or tuberculosis, weighs on the poor, deeply affecting their decision-making. Short-term thinking becomes long-term planning, and the whole country is better off as a result.

At some point – when a country has reached this transcendental state of development – it begins a steady decline. Some thinkers for whom I have a tremendous amount of respect, like Fareed Zakaria, describe a “post-American world” marked not by the decline of the west, but the “rise of the rest”. For a time, I agreed with his conclusions. But lately I’m beginning to think that view is a shade too optimistic.

Part II: The Great Divergence

It is hard to pinpoint the moment at which America turned the corner and began its march to peak decadence and subsequent decline. If you ascribe to what some economist call “The Great Divergence,” the trend began in the late 1970’s, as a number of convergent forces changed the economy of the United States. This is right around the time the U.S. began outsourcing its manufacturing sector in response to the increase in standard of living that I described above. James Surowiecki of the New Yorker explains the trend:

In 1960, the country’s biggest employer, General Motors, was also its most profitable company and one of its best-paying. It had high profit margins and real pricing power, even as it was paying its workers union wages. And it was not alone: firms like Ford, Standard Oil, and Bethlehem Steelemployed huge numbers of well-paid workers while earning big profits. Today, the country’s biggest employers are retailers and fast-food chains, almost all of which have built their businesses on low pay—they’ve striven to keep wages down and unions out—and low prices

Simultaneously, just as the middle class was starting to see its job prospects shipped overseas, the most influential conservative president of the last hundred years arrived to reshape the political system to systematically dismantle the welfare state, declare a war on drugs that crippled the socioeconomic development of a generation of African-Americans, and establish an approach to domestic economic policy – colloquially referred to as “Reaganomics” – that sought to restrain the power of the federal government and empower the free market through de-regulation, lower taxes, a tighter money supply and relentless opposition to anything might cause inflation.

President Clinton largely maintained the laissez-faire approach to the economy, presiding over a period of growth and prosperity that continued deep into the Bush years. Then, of course, the inevitable happened: the economy collapsed, having been fueled by a mythical belief that housing prices would never go down. The resulting collapse plunged the global economy into its greatest recession since 1929 – one which it is steadily climbing out of now.

I have purposefully glossed over the last 20 years because the actual events leading up to the collapse – liberal lending policies by the Federal Reserve, de-regulation of the financial sector, the repeal of Glass-Steagall, and other causes – are irrelevant. The financial collapse was a correction back to economy’s original state. It is simply the mechanism by which the truth was exposed. What is more interesting to me now is the current state of affairs. In a nutshell, the economic development trend is not only slowing, or even plateauing. Rather, it is actually happening in reverse.

Part III: The Current State of the Union

Income inequality – which decreased during the era of industrialization – is on the rise again. As money and power become more concentrated, fewer individuals enjoy the spoils of prosperity. Wealth concentration in isolated communities exacerbate already appalling disparities in our education system. In a 2012 study, the OECD (Organization for Economic Co-Operation and Development) quantified the relative performance of students in the 33 high- and middle-income countries. Among 16-24 year olds, the United States ranks dead last in proficiency in numeracy. In other words, rather than investing in creating a highly-skilled workforce that will enable the country to thrive in that post-industrial economy, it allows any advantage it once had to slip away, damaging the prospects of future generations.

And what about on a microeconomic level? Remember how the poor in pre-industrial nations spend a disproportionate amount of their income on food, clothing, and housing, leaving them vulnerable to financial shocks? Well, that is happening again too. Derek Thomson of The Atlantic provides a sobering analysis of the realities from the Bureau of Labor Statistics:

For the poor, food, clothes, and housing account for more than 60 percent of all spending. The rich have more left over for leisure, insurance, and savings.

The term consumption takes on a more literal meaning when you see the difference between rich and poor spending. Cash-hungry families consume more of their income immediately, spending two in three dollars on absolute essentials like food and shirts. The rich are more predisposed to spend toward the future, with eight-times more of their income going toward insurance and even more going toward savings (although the bottom 20 percent includes lots of retirees on Social Security, the next quintile doesn’t see much in the way of savings either).

There has been a good amount of research recently about how being poor changes your thinking about everything. “If you have very little, you often behave in such a way so that you’ll have little in the future,” Sendhil Mullainathan recently told Harold Pollack in Wonkblog. The poor don’t plan as much for the coming years, because they can’t afford to.

Thinking about the future is a form of luxury.

Why is this important? Aren’t we living in an era of unprecedented prosperity? Yes and no. If you are one of the 2.4 billion people living on less than $2 a day, life is hopefully going to get better for you. You will benefit from the broader trend of globalization and general connectedness of the modern world, by which information and goods flow more freely, regardless of borders. But if you are lower middle class, or, even worse, already poor in America, life is about to get a lot worse.

That is because this trend will continue. The concentration of wealth will only become more pronounced. The Citizens United decision, coupled with the recent Supreme Court decision to strike down the overall political donation cap, will only reinforce the increasingly disproportionate power the wealthy have over the American political system. This sad turn of events brings us one step closer to that pre-industrial political landscape, where the ultra-elite control the government.

Each of these developments bring us closer and closer to our origins as a pre-industrial country.

Part IV: The Future

This long arc of our historical development lead us to one inevitable truth, articulated nicely by the Nobel prize-winning economist, Joseph Stiglitz:

Nowadays, these numbers show that the American dream is a myth. There is less equality of opportunity in the United States today than there is in Europe – or, indeed, in any advanced industrial country for which there are data.

This is one of the reasons that America has the highest level of inequality of any of the advanced countries – and its gap with the rest has been widening. In the “recovery” of 2009-2010, the top 1% of US income earners captured 93% of the income growth. Other inequality indicators – like wealth, health, and life expectancy – are as bad or even worse. The clear trend is one of concentration of income and wealth at the top, the hollowing out of the middle, and increasing poverty at the bottom.

At the end of his article, Stiglitz says that it is not too late for the American dream to be restored. To that point, I believe it is important that we collectively remember our roots – not as individuals, but as a country, and even a civilization. Remember that we all started from humble beginnings and invested in ourselves to ensure that we provided future generations the resources and skills to thrive in a changing world. Because not only will that ensure that we as a country are caring for one another the way that a country should, but also, from a more realpolitik standpoint, income inequality leads to greater economic instability, and a higher risk that we tumble down the chasm yet again.

There is another alternative: that we do nothing, and the trend continues, expanding the gap between what the creator of the show, The Wire, David Simon calls the “Two Americas.” In a speech given at the Festival of Dangerous Ideas in 2013, Simon explains ones manifestation of these two options:

So how does it get better? In 1932, it got better because they dealt the cards again and there was a communal logic that said nobody’s going to get left behind. We’re going to figure this out. We’re going to get the banks open. From the depths of that depression a social compact was made between worker, between labour and capital that actually allowed people to have some hope.

We’re either going to do that in some practical way when things get bad enough or we’re going to keep going the way we’re going, at which point there’s going to be enough people standing on the outside of this mess that somebody’s going to pick up a brick, because you know when people get to the end there’s always the brick. I hope we go for the first option but I’m losing faith.

Like David Simon, I’m losing faith. I hope that we as a society can stand up and recognize this broader trend. In the opening song of the seminal Dead Prez album Let’s Get Free, “Wolves”, the narrator uses an interesting parable to explain how African-Americans in inner cities have been systematically disenfranchised and sabotaged by crack cocaine, the police state, and the prison-industrial complex:

I’m not a hunter but I am told, that, uh, in places like in the arctic, where indigenous people sometimes might, might, hunt a wolf, they’ll take a double edged blade, and they’ll put blood on the blade, and they’ll melt the ice and stick the handle in the ice, so that only the blade is protruding, and that a wolf will smell the blood and wants to eat, and it will come and lick the blade trying to eat, and what happens is when the wolf licks the blade, of course, he cuts his tongue, and he bleeds, and he thinks he’s really having a good thing, and he drinks and he licks and he licks, and of course he is drinking his own blood and he kills himself.

I would argue that that is what is happening to everyone. People are tricked to vote against their own self-interest after being whipped up into a frenzy about gay marriage, abortion, and other inconsequential issues. “Look over over there,” while I reach into your pocket and steal your wallet. The party of Christianity and family values is the same party that votes against expanding healthcare, that votes against supporting the poor, that votes for the corporation that pollutes its rivers and destroys its communities. In the Dead Prez analogy, “social issues” are the blood, and economics are the blade.

Can we reverse this trend? I don’t know. I would like to hope that this is not the new world order. But, unfortunately, very little as of late has given me reason to think otherwise.

I. A Long Way Gone

The other day I finished reading “A Long Way Gone”, the autobiography of Ishmael Beah, a child soldier during the country’s civil in the 1990’s. After his village was attacked by the rebel army known as the RUF (Revolutionary United Front), Beah remained in a small town called Mattru Jong, before fleeing another attack. Eventually, he made his way across the country to a village controlled by the national army, where he becomes a drug-addicted soldier who murders and tortures people who are unfortunate enough to find themselves in his path. After two years as a soldier, he was rescued by UNICEF, brought to the capitol city of Freetown, and rehabilitated. But the rebels soon invaded the capital, and Beah fled to the U.S., where he was taken in by a woman he’d met while speaking at the UN a year earlier.

The story is raw and violent. The book became a hit, selling well over a million copies and launching a career for Ishmael Beah as an advocate for child soldiers around the world. He has spoken before the UN and other international bodies, started an charity group called Children Affected by War (CAW), and become the most famous advocate for child soldiers in the world.

Yet, as it turns out, his story may not actually be true. In 2008 – a year after the book was published – an Australian newspaper published a 4,000 word expose claiming that the attack on Mattru Jong, which kicked off a chain of events leading to him becoming a soldier, occurred in 1995, not 1993 as he had claimed. This would mean that he was only a soldier for a few months, rather than the two years he discusses in the book. Beah and his publisher denied the accusations, and the two groups have been trading barbs back and forth ever since.

The specifics of the chronology are not that important. There are plenty of explanations, not least of which is that a 13 year-old addicted to drugs and brainwashed to kill might be granted a little leeway in ability to recall specific memories. But it did get me thinking about the role of narrative in shining a light on things that might otherwise go unseen.

II. Nicholas Kristof and the “Bridge Character”

This is a topic I have written about extensively in the past. At the time, I watched international development experts criticize Nicholas Kristof for writing stories that oversimplified complex conflicts and using “bridge characters” to widen the story’s appeal. Kristof would distill the war in the DRC to a fight over natural resources, leaving out the messier parts about the oppression by the Belgians during the colonial era, or the assassination of Patrice Lumumba and the installation of pro-Western dictator, Mobutu Sese Seko, who drove the country into ruin, or, most recently, the fact that much of current conflict might be traced back to the Rwandans, who, up until a few months ago, were the darling of the international development community. If he took the time to explain the Byzantine web of cause and effect, people would simply tune out and go back to not being able to point out the DRC on a map, much less empathize for its people.

For writers like Kristof, good intentions justify the means. If you have 750 words every week through which you need to convince an audience of millions to care about something they don’t have the patience to really understand, then you do everything you can to pull at the heartstrings of your readers and draw them in not with discussions about the roots of the conflict, but about the young, usually white, recent college graduate who started a clinic serving victims of the war. Through their story, people begin to pay attention.

In an interview with Outside magazine, he explains how he decided to frame his stories the way he does:

So I turned to the field of social psychology, trying to understand how I could craft my writing so that it would generate a response rather than a turned page. Over the past 20 years, there have been many studies that shed light on this question, and, increasingly, I’ve come to believe that those of us who care about human rights and global poverty can do a far better job in our messaging. Like Pepsi, humanitarian causes need savvy marketing. Indeed, they need it far more than a soft-drink company.

Good people engaging in good causes sometimes feel too pure and sanctified to sink to something as manipulative as marketing, but the result has been that women have been raped when it could have been avoided and children have died of pneumonia unnecessarily—because those stories haven’t resonated with the public. So for God’s sake, let’s learn how we can connect people to important causes and galvanize a robust public reaction.

I think he has a good point. The cause du jour is often not always the one the demands the most immediate attention.

People demonstrate violently in the street in Bangui, demanding that President Djotodia steps down following the murder of a magistrate shot dead the night before. 30 minutes later, the Séléka arrived and fired into the crowd, killing two men and wounded one. (Credit: William Daniels)

Everyone, for example, knows about the civil war in Syria, which does not even have significant advocates. But very few people, I would guess, know that the Central African Republic, a small country in a conflict-ridden region of Africa, is about to explode into civil war, prompting fears of genocide and mass murder. This report is from the Guardian newspaper last week:

A massacre of the innocents is taking place in the heart of Africa as the world looks the other way.

One man describes how his four-year-old son’s throat was slit, and how he saw a snake swallowing a baby. A woman explains that she is caring for a young girl because her mother went searching for medicine and was bludgeoned to death with Kalashnikov rifles. A young man tells how he was bound and thrown to the crocodiles, but managed to swim to safety.

This is the world of horrors that the Central African Republic (CAR) has become. Thousands of people are dying at the hands of soldiers and militia gangs or from untreated diseases such as malaria. Boys and girls as young as eight are pressganged into fighting between Christians and Muslims. There are reports of beheadings and public execution-style killings. Villages are razed to the ground.

Never much more than a phantom state, the CAR has sucked in thousands of mercenaries from neighbouring countries and, France warned on Thursday, now stands “on the verge of genocide“. Yet many would struggle to find the country on a map, despite the clue in its afterthought name.

If you count yourself among the few people who knew this story, consider yourself among the most informed in the world. But, as I will explain in the next section, graphic descriptions of conflicts can sometimes become controversial as well.

III. The Fog of War in the DRC

A friend of mine, Laura Heaton, wrote an article for Foreign Policy magazine a year ago called “What Happened in Luvingi?” It is about her trip to a rural village in the DRC that had been attacked by a rebel group, which allegedly raped 387 women over the course of the four-day attack. The conflict in the Kivu region of the Eastern DRC was notable for its violence, yet even by these standards, this was exceptinally brutal. Even worse, there was a group of UN Peacekeepers stationed nearby that failed to protect the village.

The event galvanized a massive response from the interational community. In many ways, it was a bellwether moment in the conflict, drawing the spotlight to rape as a devastating tool of war. It highlighted the ineffectiveness of the UN and its Peacekeeper program, and brought huge attention to the conflict as a whole.

When my friend went to the village three years later to investigate, she spoke to the village elders, who told her much of what she already knew, but refused to let her speak to any of the women. That night, her translator spoke to one of the women who had allegedly been raped and discovered something startling. It turns out, much of what was claimed never actually happened.

In reality, there were probably a few instances of rape, though it was probably closer to 10 than the 400 that was claimed. But by inflating the numbers, the notoriety generated by the event generated a tremendous amount of support for the community, in the form of money, healthcare, and supplies. If the true story came out, it would mean an end to all that.

This is an example of the slippery slope of hyperbole. Undoubtedly, the horrific nature of these crimes drew the world’s attention toward a problem that, up until that point, it had been able to ignore. The sheer scope of these mass rapes meant that people had to start watching and caring. But, at the same time, this particular village drew resources away from other affected areas that may have needed them more. The same ethical question remains: is exaggeration in the name of raising awareness justified?

IV. The Current State of the Debate

These three anecdotes highlight the complexities of the awareness debate. Does Ishmael Beah risk doing more harm than good to a cause if he exaggerates his experience? Does hyperbolizing an event risk diverting attention away from other, more pressing issues, or does it provoke outrage from people who would never have tuned in in the first place? Does the disproportionate attention given to particularly egregious events, like rape and crimes against children, create perverse incentives from groups in desperate need of support from the international community? These are complex and difficult questions to answer.

In the era of social media – of Twitter, Facebook, and the fast, fleeting, viral stories that circulate – you see general feel-good awareness-raising more and more. The website Upworthy shows feel-good videos of people doing the right thing in the face of adversity, allowing people to feel better and perhaps more informed about certain social issues. The story of Batkid in San Francisco, where 20,000 people helped turn San Francisco into Gotham City to make a five year-old’s wish come true, is another example. These are human issue stories that draw attention to a larger cause, but also, by their very nature, provide a narrow lens through which to view it. Childhood leukemia is something terrible that we should work hard to solve. But perhaps there are other more treatable ailments that are overshadowed by the story.

I think that, on-balance, simplifying issues to give them a wider appeal and increase the likelihood that action will be taken is a good thing. I don’t think that technocrats will base their policy recommendations on the writings of Nicholas Kristof, Bono, and other cause advocates. Instead, I think these advocates provide cover to policy-makers who face an electorate that needs a reason to care about these issues. Similarly, feel-good stories shared on Facebook and Twitter help to make people generally more compassionate. They expose them to real stories that allow them to experience empathy when thinking about controversial issues like gay marriage and immigration reform, where the basic rights of historically-marginalized groups are debated. The threat of being labeled a bigot carries more weight when the threat of your bigotry going viral on Facebook is real.

So, in conclusion, while I would love for the journalism of Jeffrey Gettleman and the research of Esther Duflo to have mainstream appeal, I know that will never be the case. In the meantime, if sharing Upworthy videos on Facebook makes people more compassionate, and Nicholas Kristof and Ishmael Beah inform people about injustices they would never have known otherwise, that is just fine with me.

Bridge International Academies, a chain of low-cost private primary schools based in Nairobi, Kenya, was the subject of a recent episode of All Things Considered on NPR. I would encourage you to listen to it in full, as the cofounder and my old boss, Shannon May, does a great job of explaining the philosophy of Bridge. The radio segment and accompanying blog post discuss the Bridge model, and highlight a few common criticisms. Here is one:

“If somebody suggested that kind of an educational model, in this country they would be laughed out of the educational community,” says Ed Gragert, the U.S. director of the Global Campaign for Education, which advocates for increased access to education in the developing world.

“That’s not how kids learn best,” he says. “Kids learn by interacting with each other. It seems like we are going back for the sake of somebody making a profit to where a robot could teach that class.”

I worked as a business analyst with Bridge for a year, where I was responsible for all things data, including longitudinal student performance testing, marketing analytics, and a whole lot of one-off projects. When I left the company in May 2012, I wrote a five-part post discussing my thoughts on Bridge and its model. Given that I wrote the post 18 months ago, some of the processes, data, and technologies I describe may be a bit dated. For example, Bridge hadn’t yet rolled out e-readers and was just starting to utilize the smartphone application.

I am reproducing the unedited post here in full. At the end, I’ve added an updated conclusion that gives my thoughts on the criticisms raised in the NPR segment, and my thoughts on Bridge and the state of education today.

I. The model

After six months learning about agriculture in West Africa and working on a project whose objective was to improve the private sector, I decided to return to the private sector, since the public sector was not very good at making it any better. I had interviewed with the Acumen Fund for its global fellowship in Nairobi six months prior. I knew a few folks through my Kiva connections, and began networking for jobs there. I cold-emailed a few, hit up friends for introductions, and stumbled into an informational interview with Jay, the founder of Bridge International Academies, through a former Kiva Fellow in Benin. When I told him I was trying to move to Kenya four months later, he said “let’s meet when you get here.”

So, when I got there – actually, 10 hours after I got there – I met with him to discuss the prospect of me working with the company. The company, as a background, is a chain of low-cost private primary schools serving the slums and low-income communities in Kenya. When I met him in January, they had just opened their 20^th school. When I met him again in May, they were at 25 schools. When I left two weeks ago, Bridge had 75 schools throughout Kenya, and is planning on opening another 200 by the end of 2013.

The model is as simple as it is elegant. Bridge is creating a “school in a box” – a highly standardized, systematized, and replicable model for an individual school, where everything, from the curriculum to the training to the school operations, is designed for scale. The process begins with market due diligence, where a team of research associates interview 40 households in each community where we are considering opening a school. We survey the parents to determine whether there is a market for one of our schools. For the last four months, I worked with the research team, developing an algorithm to predict the size and profitability of each new school, allowing us to determine how much we need to pay for land, how many classrooms we need to build, etc. I redesigned our research report and, using our enrollment figures from this year, created a rubric based on population density, market size, cost-competitiveness, and the number of competing schools, which gives us a fairly accurate projection of how a school in that community will do.

Once we have approved a community, we scout for suitable plots and negotiate for the land. Our construction team builds the school, and our training department ensures that teachers are trained and ready to teach by the time our school opens. The curriculum team – which consists of 40 Kenyan and American educators – script every minute of every lesson, from math to English to science to Kiswahili, which is then delivered to the students by the teachers. The incentive structure for school managers is based on the number of students they attract to their school, while the teachers are given bonuses based on performance. All problems at the school – from teacher complaints to requests for water or desks – are routed through an in-house call center, which also makes outgoing calls to schools and teachers to ensure that the ship is running smoothly. Lastly, the IT department has designed a billing system that allows parents to pay with M-PESA, and a school-management Android smart-phone application that automates much of the payment and performance monitoring at the school level. All in all, it is a remarkable model.

II. Why is Bridge successful?

I think that one of the reasons that Bridge has been so successful at innovating has been its willingness to bring in a multidisciplinary team to run the show. People like me, who have no background in education, but a good deal of experience in other areas, bring fresh ideas to an industry that, apart from certain ed-tech companies and charter schools like KIPP, is not known for innovation. Our head of operations was the former director of business development for Dominoes Pizza in Asia, responsible for introducing the retail chain to a completely new market. The founders include one successful tech entrepreneur, a division lead at IDEO, the design firm, and an anthropology PhD. It doesn’t get much more interdisciplinary than that.

Another reason I think it has seen success where others like it have seen failure is that it refuses to accept excuses for poor performance on the part of its employees and vendors, and sees itself first and foremost as service provider that puts its customer first. As a generality, business in Africa moves more slowly and expectations are sometimes different. The business culture – with many notable exceptions – is such that the customer is never at the top of the priority list. The other day, a coworker told me that a vendor to whom we paid a lot of money to perform a service which he performed poorly – was upset that the management was too busy to see him. “This is an outrage – I am a client,” he said. The fact that we were, in fact, the client and he the service provider undoubtedly never crossed his mind.

Bridge demands quality from it suppliers, timeliness from its vendors, and results from its employees. This mentality ensures that the best people for the job are in place, and they can perform their jobs efficiently. In the NGO world (or at least the ones I have seen), this approach to doing business is hardly, if ever, the norm. If a deadline is missed, people say “what can we do – it’s Africa time.” Or an NGO holds a conference that only attracts participants for the per diems and lunch provided. Accountability is not part of the lexicon. At Bridge, on the other hand, if a vendor screws up the logo on the 1,000 shirts it ordered, it refuses to pay until the mistake is corrected. It’s only business.

That is because Bridge, above all else, is a business. It happens to be building low-cost primary schools in slums, but it is first and foremost a profit-oriented enterprise. If Bridge is going to reach 1,000 schools and one million children in countries around the world, it has to be laser-focused on the bottom-line to succeed. Drawing from a talented pool of private sector veterans and a founder who started and sold a company in his twenties, Bridge understands this well.

This kind of truly business-minded approach to development is rare, even within the relatively new and trendy industry calling itself “social enterprise.” While many social enterprises – companies that try to turn a profit while doing good – struggle to balance the demands of a double bottom-line, Bridge has create a model where the profit motive is inseparable from the social mission – one cannot exist without the other. If Bridge students perform poorly on the KCPE exam – the test culminating primary education in Kenya – parents will pull their kids from Bridge schools en masse. On the other hand, if they perform better than students at other schools, Bridge schools will double in size in a day.

That is because poor parents, just like middle- and upper-income parents, are discerning consumers when it comes to education. They look for quality and, more importantly, value for the little money they have. This is generally true for most products and services, but particularly so for education, which parents see as a means of getting out of the slums. For Bridge to grow, it must be educating its students better than the alternatives in the community – either government schools or other non-formal schools. In this case, it means ensuring that we outperform other schools – both government and other non-formal schools.

III. The academic foundation of the concept

The Bridge model is a fundamentally libertarian idea. It is premised on the belief that school choice is a good thing. Many organizations, including many establishment development titans, believe that education should be a public good, provided free by the government. This may be true in theory, but, like most development theories, it is rarely true in practice.

For example, Kenya already technically has a free primary education system, where all students, regardless of socioeconomic status, are guaranteed the right to an education at no cost. Yet, in the slums, where the houses are built illegally, few government schools exist to serve the communities. And even in areas where public schools do exist, additional fees payable to the head teacher and others mean that parents are paying almost as much for school as they do at Bridge. Outside of Nairobi, many of the government schools are as close to free as a school can get in Kenya, but they are often overcrowded, far away, and staffed by complacent teachers who are either overburdened with too many students or complacent when it comes to teaching.

Much of the free primary education system in Kenya was subsidized by foreign donors. But these donors eventually decided to scale back funding after massive corruption scandals were exposed. In the main Kenyan daily newspaper, the Daily Nation, every day exposes a new corruption scandal. Needless to say, the state of the government education system is underwhelming at best.

Because of the failures of the government system, thousands of non-formal schools have sprung up throughout the slums to serve these communities. Education entrepreneurs, churches, NGOs, and other groups build and operate schools to fill the void left by poor state-run education. While the Global Campaign for Education and others would like to believe that these schools do not exist, they are everywhere.

When people speak and write about Bridge, they credit the company with a radical new approach to education, offering private education as a means of providing quality education. But Bridge is hardly innovative in this respect. Non-formal schools like Bridge have existed for decades. It was not until the early 2000’s that a British academic named James Tooley began seriously researching education in the slums of India, Nigeria, Ghana, Kenya, and other countries, and finding bustling schools with hard-working teachers. He published a book called The Beautiful Tree and several articles for the Cato Institute detailing his findings, which were influential in seeding the idea for Bridge.

Rather, the real innovation Bridge brings to this sector is its relentless pursuit of efficiency gains and systematization of the day-to-day running of a school. Technology as a means of creating scalable payment and performance monitoring systems, a scripted curriculum written by subject-matter experts, modular school construction using low-cost materials – these are all key innovations that have the potential to revolutionize this sector. But the concept of a low-cost private primary school for the poor is nothing new.

IV. The criticisms of Bridge

The first and most obvious criticism of the Bridge model of education is that a scripted curriculum creates a non-dynamic learning environment for children. The western model of education is premised on the idea that critical thinking is essential to success. The very idea of a liberal arts education is a distinctly Western concept. So, naturally, when people hear that our teachers are high school graduates who are taught to teach by reading to children from a script, they automatically assume that the quality of the education is poor.

It is true that the standard of education at a Bridge school is going to be far below that of more expensive schools. But when compared with the alternatives – which include government schools staffed by often unmotivated teachers and other non-formal schools offering little in-house teacher training – Bridge offers an education that is subject to rigorous testing and review. For example, our curriculum is written by a team of Kenyan education professionals and Teach for America alumni, many of whom have Masters Degrees in education. It has a video team that films lessons to be reviewed by the curriculum writers. They look for level of engagement among the students and adjust the approach to maximize comprehension and retention. Student exams are digitized and reviewed both to identify weaknesses in the curriculum, but also review teacher performance. Lastly, the school managers audit the teachers on a regular basis to ensuring that they are performing adequately.

Lastly, and most importantly, Bridge undertakes a rigorous longitudinal testing study of 5,000 students every six months to monitor improvements in reading and math. Using a test developed by the Research Triangle Institute and USAID called the Early Grade Reading Assessment and Early Grade Math Assessment (EGRA / EGMA), Bridge compares the performance of 3,000 of its own students with that of 1,000 students at government and other non-formal schools. The results, which are shown on the website, show strong performance gains in basic reading skills, compared with its peers and less strong, but still measurable, gains in math. I know this because I was responsible for leading this student testing and performing the analysis. Using this data we can then tailor our curriculum to address our problem areas and improve the curriculum.

This level of analytical rigor is simply not possible at other non-formal schools. Why? Because Bridge is able to leverage economies of scale. It can invest huge amounts of resources into improving its model because it knows that all changes can easily be rolled out across every single school in a day. When I first met Jay in January 2011, Bridge had just broken 10 schools and opened its first school outside Nairobi. By the time I left, the company had 73 schools across Kenya.

This level of growth means two things. First, since the unit economics are such that each individual school is profitable at a relatively small size, more schools mean additional revenue that can be poured back into the company. And second, any major policy changes can be backed with incredibly rich data sets. As the company’s business analyst, I was working with datasets with sample sizes in the tens of thousands. For someone trying to use data to better understand how our parents think, pay, and act, and understand what makes a good school, I was in heaven.

V. How Bridge uses data to perfect the model

In the last post, I talked about how Bridge is able to leverage its economies of scale to both utilize huge amounts of data to make decisions and, once those decisions are made, they can be rolled out en masse. I will give a few concrete examples of how this works in practice.

Last September, we wanted to see whether offering a free month of school and having a grand opening ceremony with a bouncy castle would boost enrollment. So we did what most respectable startups exploring a new product or market would do: we tested it. Of the nine schools we opened last September, four had a grand opening ceremony (GOC) and first month free (FMF), two had only FMF, one had only GOC, and two had neither. When I looked at the numbers, the results were amazing. Not only was initial enrollment nearly three times what we had experienced in the past, but the conversion rate – the most important factor in measuring the efficacy of a marketing promotion in retail – was 85%. This is practically unheard of in retail. In other words, 85% of people tried the product and decided to buy it. When was the last time you started paying after the free trial expired?

When I shared the results with the management team, the action was relatively decisive. With the 30 January-2012 schools scheduled to be opened in only eight weeks, they changed everything. Effective as soon as possible, every new school would have a grand opening ceremony and every new student would be given a free month of school. And, to make it fair, all 60 schools would have a GOC in January and every student would receive January free. One by one, the managers detailed what needed to be done and set to work.

The IT team began making changes to the billing system and the smartphone application; the training team began prepping the training facilitators to communicate the new policy, and the operations team went out to each school to explain the changes directly. Marketing began contacting companies that rent bouncy castles and negotiating prices, while government relations reached out to the elders in the community and invited them to attend as “Friends of the Academy.” Within 24 hours of my sharing the analysis, the company began preparing for a monumental change in the way things were done. In January 2011, our largest school opened with 200 students. In January 2012, the biggest had more than 700.

For me, the policy change had even greater implications. Since each cohort of schools opened with different policies, regulations, and circumstances, it was difficult to isolate determinants of performance without introducing incredible amounts of bias. But now, every school had a grand opening ceremony and January became a free month for every single student. Therefore, the maximum attendance in January effectively equalized every school and made them as close to comparable as they would ever get. Now, all of a sudden, we were able to actually measure how factors like population density, school location, cost competitiveness, income levels, urban/rural, and relative importance of education in the community influence school size and profitability.

Example of a regression model built to predict enrollment.

From our market research, we had hundreds of consistent variables about each community. So I built a massive Excel model and ran some basic correlation analyses and scatter plots to identify the most important factors in determining where to open a school. Based on the analysis, I created an algorithm to actually project the size of the school after one year that was accurate within a range of 100 students at 80% of schools. We automated the report creation and incorporated a profitability model into each one, which would dictate land price and school size. And, just like everything else at Bridge, once we had it right, the new report became part of the Bridge model, and is there to stay until the data proves it wrong.

VI: Updated conclusion from November 2013

I feel largely the same way about Bridge today as I did back in 2012 when I left to return to the U.S. I still believe it is a revolutionary idea that has the potential to re-define how companies serve the poorest segments of the population around the world. It’s laser-focus on scalability and and its systems-orientation have made it a model for other burgeoning social enterprises, and not just in education. A standardized approach designed for replication has applications in healthcare (see Penda Health), water and sanitation (see Sanergy), agriculture (see One Acre Fund), and other sectors.

Bridge has strong partners in its investors and has some very talented individuals leading different segments of the company. If it is successful, it has the potential to prove out the social enterprise model as a viable approach to economic development. In doing so, it would open up funding for similar companies around the world.

And perhaps most importantly – at least to me – it has the potential to prove that the conventional wisdom can and should be challenged. When James Tooley and others first began advocating for private schools in the slums and talking about charging poor families for an education, he was lambasted by the education establishment for trying to charge for what they considered to be a public good. But over time, people came to realize that theory does not always jive with the realities of the situation on the ground.

In the specific case of Ed Gragert, the man criticizing the model in the NPR piece, he should go to Mathare, Kawangware, or any of the other slums where Bridge schools are located and visit the schools in the area. Before passing judgment, he should look at the alternatives and judge for himself whether Bridge offers a decent education relative to other schools. He should think about the availability of talented teachers in the communities where Bridge builds schools, and look at the incredibly rigorous screening process they use to identify the best candidates in the community. Because then, he would realize that what people would say about a school like Bridge in the U.S. means next to nothing. If there is one thing I learned during my years working in international development, it is that context is key.

In reality, Bridge – like many of the innovations in Africa – is far ahead of the curve of the U.S. education system. Contrary to Mr. Gragert’s assumption that a person would be laughed out of the room for proposing a Bridge-like model, the arc of education is bending closer to the Bridge model than he would like. MOOCs, Khan Academy, “flip teaching” and the entire blended learning model are an attempt to leverage economies of scale and domain expertise to improve the quality of education in the U.S. Because Bridge is deeply constrained by a lack of resources, it is required to innovate in ways American educators do not.

For example, the scripted curriculum allows Bridge to thrive in the absence of a robust higher education infrastructure in low-income areas of Kenya. If they can leverage the expertise of skilled educators, Bridge teachers can focus on controlling the classroom and ensuring the students are at least reasonably engaged. Without electricity or Internet, Bridge schools cannot simply project Khan Academy lessons. So, in reality, the e-readers are an ingenious way of delivering world-class lessons without the resources of an American classroom. These innovations may seem trivial, but, in reality, are quite ahead of their time.

So, a year and a half later, I feel the same way about Bridge that I did when I finished working there back in 2012. I wish them all the best in their expansion to Nigeria, and can’t wait to see what they do in the future.

Last month, terrorists from the group al Shabaab attacked the Westgate Mall in Nairobi, killing 67 people. In the wake of the devastating event, Kenyans rallied together in a showing of national unity often missing in this deeply divided country. Outside Kenya, the world expressed its sympathy and offered support to the country. And over the last month, under the bright spotlight of media, the government has manage to squander that good will so spectacularly that it calls into question the integrity of the most respected state institutions.

The attack occurred on a Saturday morning. The police were the first to respond, and, according to reports, managed to contain the terrorists in a corner of the Nakumatt grocery store. On Saturday evening, the KDF (Kenya Defence Forces) took over the operation from the police. A breakdown in communications between the groups led to confusion about the whereabouts of the remaining terrorists, and possibly allowing some to escape. At one point, the Kenyan military fired at the police inside the mall, killing one policeman who was responding to the attack. The siege on the mall lasted for four days, ending only after the Kenyan military fired anti-tank missiles into the store and destroyed three floors of the mall, possibly killing additional hostages.

During the siege, few details emerged about the attack and its immediate aftermath. Initial reports said that between 10 and 15 attackers stormed the mall. A month after the attack, a CCTV camera from the Nakumatt released to the press showed four men armed with AK-47s seeking refuge in the loading area of the supermarket, often putting down their weapons to pray. In addition to killing 70 innocent people, Al Shabaab could now say that four of its members held off one of the strongest militaries in Africa for four days.

A week after the attack began, shop owners were allowed to return to the mall to survey the destruction, and were surprised by what they saw. The entire mall had been looted. Everything – watches, jewelry, lingerie, electronics, and alcohol – was gone. The banks had been robbed. Six ATM machines were shot open and cash registers were emptied of their contents. Stunningly, the military claimed that it had not stolen the money, but rather “recovered and repatriated” it for the tenants at Westgate.

Within a week, 21 of the 85 businesses had filed reports with the police saying their stores were looted. Some business owners even questioned whether the military deliberately prolonged the attack to enable it more time to steal. Jeffrey Gettleman describes the aftermath:

Four days after that, the first shopkeepers were allowed back in to survey the wreckage. Millions of dollars of property had been destroyed, and businesses said that at least hundreds of thousands of dollars in cash and merchandise were missing.

On Thursday, the talk among a group of forlorn shopkeepers was of “terrorism insurance.” Nobody there had it. But Mr. Manji hoped that would not matter.

“This was not terrorism; this was looting,” he said. “It’s sad that the people who were supposed to protect us have robbed us.”

At first the Kenyan military denied the accusations. A spokesman for the KDF, Major Emmanuel Chirchir, claimed that the military was being falsely accused, citing that one store – a shoe store – had not been looted. Chirchir stated: “It would also be good to list shops that were vandalised out of the over 80 stores. So far, Bata shop has talked of its shop being intact. KDF did a fantastic job, we know our enemies who have decided to use propaganda to undermine our public good will.” That was on October 5th.

On October 3rd, A Kenyan TV station claimed to have viewed surveillance footage that showed soldiers emptying cash registers into bags and walking out of the mall with white plastic bags. Last week, television stations in Kenya aired that footage, and it was damning. Soldiers walk into the supermarket, guns raised, and later are shown walking out carrying goods with one hand and rifles with another. One soldier is shown trying to break into a jewelry case, but is unsuccessful. The military claimed that the men were only taking bottled water from the supermarket to “quench their thirst” during the assault.

The Kenyan news media, led by the Daily Nation and the Standard, are generally hard-hitting journalistic institutions, particularly by African standards. They were highly critical of the military in the aftermath of the attack, as more information came to light. And they spared no institution in their excoriation of the government and its handling of the attack.

Instead of admitting they had indeed looted the mall, the military instead began looking for the source of the leak. They interviewed the founder of Nakumatt at a police station, and, when that did not turn up anything, trained their guns on the media. On October 24th, they announced that they would be arresting and prosecuting two journalists from the Standard for their coverage of the scandal. “You cannot provoke propaganda and incite Kenyans against the authorities. The two journalists will be apprehended,” explained the Inspector-General of the police, David Kimaiyo. So much for freedom of the press.

In perhaps the strangest twist of all, the Standard published an article on October 26th titled “Kenya Defence Forces considered among strongest, most disciplined army in the world.” The timing is certainly suggestive.

The drama continues to unfold in plain sight of the rest of the world. Coverage of the looting and the internal squabbles and blame-throwing can be found in every major newspaper in the world. Kenya’s reputation as lion of East Africa – a fast-growing economy with tremendous potential in the midst of region wracked by instability – is slowly being chipped away.

No where is this feeling more palpable than in Kenya itself. In a letter to the editor, a Nation reader shared his thoughts about the crisis:

Much has been said about Kenya Defence Forces’ conduct during the Westgate siege. I feel betrayed by our forces should the allegations against them be proved true. It is disheartening watching the last bastion of integrity falling to the beast of looting and corruption.

His opinion reflects the broader feelings of many in the country. Kenya is one of the most corrupt countries in the world. It ranks 139th out of 176 on the 2012 Corruption Perceptions Index, the standard for assessing the level of graft in a country. The average urban Kenyan pays 16 bribes every single month. By some estimates, one-third of Kenya’s GDP is lost to corruption every year.

The national security apparatus was thought to be the last bastion of integrity in a sea of corrupt state institutions. This is why the realization that the KDF exploited one of the most vulnerable collective moments for the country in recent memory for its own deeply selfish gains is so troubling. If the core of the military is rotten, the thinking goes, what else is left?

The role of a free press is to expose corruption and graft and hold the guilty accountable for their misdeeds. Yet now the institutions that were supposed to protect the country are threatening that freedom by arresting and prosecuting journalists who are doing their jobs. It is a sad turn of events for a country that, just a few months ago, seemed to be on the verge of a renaissance.

John Githongo, a former journalist and anti-corruption official in the Kenyan government and subject of the book It’s Our Turn To Eat, lamented the Westgate scandal as unfortunate, not only with respect to the looting itself, but because of its predictability. In his conclusion, he explains the current state of affairs:

In truth, we celebrate thieves instead of imprisoning them; we elect those who pilfer public funds instead of throwing the book at them; we virulently abuse each other on the basis of tribe and yet employ grand pretentions to modernity.

This modernity is skin deep. Since the middle of the Kibaki regime, deepening and spreading graft has been excused away by throwing GDP numbers at those who complain about graft.

But then our entrenched corruption is merely a symptom of a deeper malaise that has de facto legalised graft. With the discovery of oil and other minerals, even Western countries that once placed graft near the top of their agenda in their interactions with us have gone silent.

The scandal is in the process of unfolding now. Where it will go remains to be seen. But what is certain is that the Al Shabaab did more than just murder 70 innocent people and terrorize a country. It revealed that even Kenya’s most venerable institutions are mired by corruption. And it is not surprising. Corruption is a cancer. Once it metastasizes, it spreads through the organism, infecting every piece of it. And Kenya, it appears, is even more infected than once thought.

This weekend a dozen gunmen stormed the Westgate Mall in the Westlands neighborhood of Nairobi. Armed with AK-47s and grenades, they killed 70 people and injured 150 more. As I write this, a former colleague at Bridge is in the hospital and my friend Ravi is still missing. Waiting to hear any news has been painstakingly difficult as we all pray for him. I am not a particularly spiritual man, but, for the last 36 hours, I’ve been praying for some good news.

There is so much I want to write about here that I don’t even know where to begin. This will be a long series of posts. I’m going to start by giving the context for while all of this is happening.

A Brief History of Terrorism in Kenya

When I moved to Kenya in May of 2011, Somalia was characteristically a mess. The country barely had a functional central government, and the majority of the country was (and still is) lawless. The country is technically split into three semi-autonomous regions: Somaliland, Puntland, and Somalia. Somaliland is a functional region within Somalia that is far more stable than the others. Puntland is second in terms of stability, but it is best known for being the epicenter of piracy off the Horn of Africa. Somalia, which covers the southern half of the country, is a fragmented, war-torn region controlled by warlords from different clans. Despite being one of the most homogenous country in Africa – everyone speaks the same language (Somali) and follows the same religion (Sunni Islam) – the country has an extensive clan structure that dominates what little political landscape exists.

In May 2011, Al Shabaab (literally translated as “The Youth”) controlled huge swaths of Somalia. They had been firmly in control for several years, and wreaked havoc on the population. During the worst famine in decades, Al Shabaab refused to allow foreign aid organizations into the country to deliver food to starving populations. As a result, the food crisis escalated into a famine, and tens of thousands of people starved to death. Later, they bombed a public square in Mogadishu where young students were applying for scholarships to study at university. It was despicable to watch then, and many times I wrote on this blog about the nihilistic and wanton brutality employed by the group towards its own people.

The turning point came in late 2011, when pirates on two occasions crossed the Kenyan border and abducted tourists from the pristine island of Lamu off the northwestern coast of Kenya. After a French tourist died during the ordeal, Kenya decided to invade Somalia and neutralize the threat to its border. Over the course of a few months, working in tandem with UN peacekeepers from Uganda and other nations, the Kenyan military drove the Shabab from its strongholds in Mogadishu and Kismayo, where it controlled the port and extracted a large amount of the revenue that kept it in operation.

In effect, two complementary forces led to Al Shabab’s weakening. Most directly, military intervention by Kenya and the Uganda-led peacekeepers killed much of the group’s leadership and rank-and-file. Military force, however, would not have been sufficient had Al Shabab not lost the support of the people. The group claimed to fight for the Somali people against foreign powers that sought to control the country, rising to prominence in the wake of a failed US-backed invasion by Ethiopia. But the Al Shabab’s cruel indifference to the suffering of the people during the famine, its brutal enforcement of Sharia law, and its callous efforts to violently prevent any semblance of Western influence to permeate the country, led Somalis to turn against them and support their neutralization. All of these events – the kidnapping, the bombing in Mogadishu – occurred in October 2011, which is when the tide turned.

After the invasion, Al Shabab vowed retribution against Kenya. My friends and I became warier of our surroundings. We would frequently hear from a friend of a friend at the U.S. embassy that the Al Shabab was planning an attack and that we should stay away from certain places. During the summer of 2011, my friends and I would often go to the Westgate mall and get brunch at ArtCaffe, the restaurant that became the epicenter of the attack yesterday. After Kenya declared war on Somalia, we stayed away for a while.

Over the next few months, there were random attacks here and there, though none appeared to be coordinated terrorist plots. I remember sitting in London Heathrow Airport in January 2012, waiting for my connection to Nairobi, and watching a report on the BBC warning people not to go to Kenya because of an imminent terrorist attack. But the alert came and went, and no attack was staged. It remained like this for months, as broad warnings thankfully never came to fruition.

We were all surprised that there were no attacks from Al Shabab that year. Nairobi has so many soft targets that creating havoc would be easy. But, at the time, people surmised that the reason for the apparent peace was not because of the tactical difficult of staging an attack, but rather the extensive Somali diaspora in Nairobi whose business interests were so intertwined with the Kenyan economy. If the Al Shabab were to commit terrorism in Nairobi, there would inevitably be a backlash against the Somalis, which would compromise Somali business interests and further alienate the group from its population. So, as a result, they staged more attacks closer to home – in Mogadishu and in Kenyan border towns like Garissa.

I left Nairobi for good in May 2012 having avoided any violence. There continued to be a lull until this weekend, when the Shabab committed the worst terrorist attack the country has seen since 1980.

If you were to Google “Somalia” anytime in the last six months, you might be surprised to see mostly positive press about the country. The Kenyan-led invasion brought a period of stability to the country. For the first time in many years, the central government controlled most of Mogadishu. The Somali diaspora began to return to the country, looking to invest in rebuilding the institutions that had crumbled over the previous 20 years. In a move filled with symbolic significance, Turkish Airlines launched its first direct flight to Mogadishu on March 12th, 2012. For the first time in many years, optimism returned to Somalia.

In the background, Al Shabab appeared to be on the ropes. They had been beaten back to more remote areas of the country, and continued to lose what little popular support they still had. And the return of the Somali diaspora was perhaps the best indication that things were possibly taking a turn for the worst.

There are a lot of theories about why this happened now. Some people are saying that this attack was an inevitable backlash against the Kenyan invasion of Somalia. Others are saying that it is only the beginning of an Al Shabab resurgence, as it tries to push back and regain control of the country’s destiny. And some believe this is Al Shabab’s way of re-asserting its loyalty to Al Qaeda. Within Al-Shabab, there have always been power struggles between two factions – one which is focused on gaining control of Somalia, and another with jihadist ambitions of restoring the Islamic caliphate. By attacking a symbol Western influence, like an upscale mall in Nairobi, it is following through on its jihadist goals.

I don’t know what the answer is, but I suspect it is more complex than any of the reasons above. Ken Menkhaus, a scholar on Somalia at Davidson College, believes that this is an act of desperation by a fundamentalist Islamic terrorist organization that has been all but defeated in its own country. I urge anyone who wants to understand the underlying roots of this conflict to read Menkhaus’ post in ThinkProgress. In it, he explains the logic behind this brazen attack:

The Westgate attack is the latest sign of the group’s weakness. It was a desperate, high-risk gamble by Shabaab to reverse its prospects. If the deadly attack succeeds in prompting vigilante violence by Kenyan citizens or heavy-handed government reactions against Somali residents, Shabaab stands a chance of recasting itself as the vanguard militia protecting Somalis against external enemies. It desperately needs to reframe the conflict in Somalia as Somalis versus the foreigners, not as Somalis who seek peace and a return to normalcy versus a toxic jihadi movement.

I think he is largely right in the sense that this is the action of an organization whose back is against the wall and is flailing wildly. But I disagree that this is was a calculated strategic bid to gain support from a population that has turned against them. They already lost that support, and it is never coming back. A few weeks ago, Somalia’s future was bright. If Al Shabab were to have its way, the country would regress to chaos and destruction. And without a common enemy like Ethiopia – which is how Al Shabab rose to power in 2008 – there is no reason to support an organization that claims to fight for the people while callously leaving so many of them to starve to death.

Rather, I think this attack is the action of a few psychopathic, manipulative mass murderers who justify their actions under a banner of religion, and a dozen deeply misguided and sociopathic followers who have no real understanding of why they are doing what they are doing.

I think this is the action of nihilistic psychopaths who pervert religion as an end to justify their evil means. They understand nothing about Kenya, other than what they have been told, and callously murdered nearly 100 people this weekend. They fight under the banner of an organization with the blood of 260,000 Somalis – including 120,000 children – on its hands. What they have done is inexcusable and they deserve to die, which they know too well is their inevitable fate at the end of this standoff.

While I don’t agree entirely with Ken Menkhaus’ analysis of the situation, I do agree with his conclusions about what to do next:

The Kenyan people and government now control the next move. If they respond to this terrible tragedy with restraint and respect for due process and rule of law, they will do more to undermine Shabaab than all of the counter-terrorism operations conducted inside Somalia.

Kenya and Kenyans are not the only players who have the next move. Somalis – in Kenya, in Somalia, and in the diaspora – also face an unavoidable and immediate choice. Either they can mobilize against Shabaab and take the movement out once and for all – by drying up its financial sources, exposing its operatives, and denying the movement any safe space from which to operate – or they can sit on their hands and make vague calls for a negotiated settlement, as they have done for years. Somalia desperately needs a “Sunni uprising” against the hard-core extremists who now make up what is left of Shabaab. If Somalis refuse to act decisively against Shabaab, then it will be up to foreign governments to crush the group. But this will entail crackdowns that will almost certainly impact innocent Somalis and legitimate Somali businesses in Kenya and around the world, and that is not in anyone’s interest except Shabaab’s.

This is ultimately a Somali problem, and requires a Somali solution that is swift and unequivocal. If that happens, the terrible attack of September 21 will go down as the day Shabaab dug its own grave.

I know it will be hard to forgo retribution against Somalis living in Kenya. But Kenya is a beacon of optimism in East Africa, and its people are rallying in support. They will be shaken, but unnerved. They are resilient, and will respond in a measured and thoughtful way.

This weekend has been difficult. I found out yesterday that a friend was killed in the senseless, horrible attack in Nairobi. He was a great person and meant a lot to many people. He had a profound impact on so many people’s lives that I would not even begin to understand how to chronicle it all. So I will settle for talking about the time I knew him.

I met Ravi early on in my time in Nairobi. I was grabbing a drink at a bar called Sierra Brewery with another guy named Ravi (Ravi Bungoma, after the town he hailed from in Western Kenya) who was applying for a job at my company, and he brought along Ravi Ramrattan (also known as Ravi Mumias). He worked for an organization called Innovations for Poverty Action at the time, and was stationed at a sugar factory in a town called Mumias a few hours outside of Nairobi. I remember thinking that this guy was exceptionally smart. Subsequently, I found out he had bachelors degree in mathematics from the University of Cambridge, a masters degree in financial economics from Oxford, and another masters in econometrics and mathematical economics from the London School of Economics. After teaching statistics to graduate students at the London Business School for a year – at the tender age of 26 – he decided to move to Kenya to commit himself to the cause of poverty alleviation.

After six years in London, Ravi moved to Mumias, a rural town of 33,000 people in Western Kenya, where he spent a year and a half implementing an academic study at the Mumias Sugar Factory. Ravi ran a study evaluating the impact of a conditional cash advance and a cell phone based extension system on sugar cane farmers. Using a randomized controlled trial – the methodology used by pharmaceutical companies to determine the efficacy of a drug – Ravi tried to determine whether this particular development intervention generated additional income for the recipients. After picking up three degrees from some of the most prestigious universities in the world, he moved from London to a rural town in Western Kenya to help people he’d never met.

A few months after I met him, he moved from Mumias to the big city to take a job as an economist with an organization called Financial Sector Deepening, which, despite having one of the worst names imaginable, had the noble goal of “supporting the development of financial markets in Kenya as a means to stimulate wealth creation and reduce poverty.”As part of his role at FSD, he worked to develop the capacity of financial institutions in the country in order to make them more inclusive. When I found out he worked with microfinance institutions, I took every opportunity I could to goad him into an argument about whether microfinance worked. This is something I did whenever I met people from Innovations for Poverty Action. But with Ravi, I always left with my ego bruised from the intellectual drubbing he would deal me.

As a wannabe economist myself, I took every opportunity I could to take advantage of his incredible wealth of knowledge. During one trip down to Diani Beach on the Kenyan Coast, four of us sat on the terrace of our rented house and waxed philosophical deep into the night about income inequality in America (as we did). My friend Dylan and I argued one side, while Sean, Ravi’s roommate at the time, argued the other. Ravi sat quietly, and, whenever we would reach an impasse, which happened often, Ravi came in to break the tie. After all, he knew way more than we did and was probably amused at how badly we skewed the facts to our favor.

Another funny thing to me about Ravi was that, somehow, he was a phenomenal dancer. I could never figure out how it was possible that he was able to bust so many incredible moves on the dance floor. I remember one night a big crew of us went out to a club in Nairobi called Gallileo Lounge, which, other than having a star in the logo, had nothing to do with astronomy. I was standing on the dance floor, not dancing, because I’m a terrible and highly self-conscious dancer, watching Ravi dance with our friend Woubie, and thinking to myself “My God – this is amazing.” In a somewhat legendary story, he was supposed to have a dance-off with one of the cab drivers who had been told of his prowess. It never came to fruition, I’m told, but everyone knows who would have won.

Ravi and Woubie getting down with a few of our friends

When I heard the news, I was crushed. I was with my friend Sharon, who lived with Ravi for a few months in Nairobi. For two days, we felt helpless, having to watch from afar. Being together made it easier to deal with the news. We decided to get dinner at an Indian restaurant to honor his memory, and spent the dinner sharing stories. Like his plan to start a hot sauce company, or his nickname, “The Lion of Mumias”, after a halloween costume from years prior, or the fact that he blasted the same Bollywood song all of the time. Even among the crew we’d assembled in Nairobi, which contained some of the more unique people I’ve ever met, he was in a league of his own.

I find it deeply ironic that Ravi would end up having his life taken by the people he most wanted to help. He spent a good part of his life studying economics, training himself to not only understand, but quantify the impact of development interventions on poverty alleviation. If you implement a project – whether it is microfinance, clean water, or education – it might work, and it might not. But, more importantly, if you don’t understand the results, you are destined to potentially throw money and people at the wrong solution. Ravi’s work, in particular, uncovered the true impact of these interventions, providing the academic foundation to replicate them around the world.

On this blog, I have spent many posts pontificating about the links between poverty and terrorism. I thought a lot about why this work is important, and what broader impacts it would have beyond just improving lives. 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 Al-Shabab, 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 young man to become a cold-blooded mass murderer.

Unlike incomes or educational attainment, likelihood of radicalization is not something you can quantify. But I do believe that its real. And, though I never talked to Ravi about it, I’m sure he’d agree. He committed himself to serving the poor, and made the choice to move to Kenya for years to help the less fortunate. He moved to a small town in Western Kenya to study the roots of poverty, and returned to Nairobi to work for an organization whose mandate was to promote financial inclusion across the country. I have no doubt that Ravi would have continued this journey, taking it to the highest levels and influencing global development policy in one way or another.

But his life was cut short by evil men. Whether they’d been manipulated or radicalized doesn’t matter much to me. They took from the world a great person who wanted to make the world a better, more inclusive and equitable place for the most downtrodden and marginalized people. He could have done anything, but he chose this life. He chose to help people he’d never met to attain something better for themselves and their families. A nobler cause, I do not know.

Over the last few days, the outpouring of support has been overwhelming. While the good works he did will remain, the community that has rallied around him over the last few days perhaps reflect his greatest legacy. As the people who knew him – from his youth in Trinidad and Tobago, his college and grad school in London, or his years in Nairobi, when I came to know him – have moved to different parts of the world, they have kept him in their memories. And this week, the diaspora of people whose lives were touched by Ravi are getting together all over the world to remember him. That, to me, is a source of comfort.

Impromptu gatherings to remember him have popped up in Boston, New York, and Washington DC. When I tried to organize one in San Francisco, I was worried Sharon and I would be the only ones around. Within a few minutes, I was added to an email chain of 10 people who had already begun to plan one. Right now the count stands at 25.

So, if you are in San Francisco this Friday, we are going to celebrate his life over dinner, and then go dancing at Little Baobab – a fitting tribute for such a great guy.

My deepest condolences go out to his family and the friends who loved him.

A few weeks ago, I competed in a social enterprise business plan competition called the Hult Prize. The competition is ambitious in scale and scope, giving a broad mandate to competitors and rewarding the best ideas with the chance to win $1 million in seed funding. This year’s challenge was developing a solution to the problem of urban hunger by 2018.

The catch is that the business needs to be scalable and financially sustainable. The product or service needs to be culturally relevant enough to be useful, while culturally agnostic enough to work anywhere. It needs to address the root cause of urban hunger, facilitating access to nutritious food at affordable prices. With those marching orders, we went to work.

My team consisted of some seasoned industry veterans. Aleem Ahmed spent three years at LEK Consulting before moving to Western Kenya to implemented a clean water program for Innovations for Poverty Action, and later Ethiopia to work with the Agriculture Transformation Agency. Ahmed El Mahi had a stint as a trader in London before sourcing investments in Mali for D.Capital, Dalberg Global Advisors’ impact investing arm. Caroline Mauldin spent four years at Accion International, one of the largest microfinance organizations in the world, before heading to the State Department to write speeches for senior officials in the Obama Administration and and set up the super cool Open Government Partnership. We are all MBA students at the MIT Sloan School of Management, and the other three are picking up a Masters of Public Administration from the Harvard Kennedy School along the way. Our team was stacked, and it was great to work with such an accomplished crew.

After tossing around a couple of dead-end ideas – including one proposed by me around vitamin-enriched flavoring packets – Aleem first proposed the idea of “slum meal plans.” When you dig down to the root cause of hunger in the urban slums, the availability of food is not necessarily the issue. Generally, there is enough food to go around in most countries (with the exception of places plagued famine, like Somalia in 2011). The problem is that food is expensive to purchase in small quantities. We started to think about why this was the case, and came to the conclusion that there were two problems: finance and distribution.

On the financing side, people in the slums have irregular income that can be volatile throughout the month. It is common to hear about people living on less than $2 per day. But one of the most interesting insights to come from the research into the financial lives of the poor came from a book called Portfolios of the Poor. After analyzing financial diaries collected from people living in slums in South Africa, Bangladesh, and India, the authors realized that income fluctuates wildly from week to week, and the poor use a variety of informal financial instruments to smooth consumption. From this realization came their central conclusion:

“The poor are as diverse a group of citizens as any other, but the one thing they have in common, the thing that deines them as poor, is that they don’t have much money. If you’re poor, managing your money well is absolutely central to your life—perhaps more so than for any other group.”

So we took this as a starting point and applied it to the problem of food consumption. What if we could construct a micro-savings program that could allow people to put money away for food when they earn income, in order to buy food when they don’t? There are plenty of mobile-based savings platforms that exist around the world. Safaricom, the East African telecom that developed M-Pesa, recently released M-Shwari, a savings platform that has seen swift uptake among the poor. Our idea was to use a food-oriented savings account to take advantage of what is called an “illiquidity preference” – putting cash where you don’t have have instant access to it in order to prevent it from being spent on unnecessary purchases. In order to incentivize people to join, we would need to offer some sort of discount or loyalty program. To that end, we started to the think about distribution.

The second part of the equation is what we called the distribution problem. Disparate suppliers outside the cities and fragmented vendors and retailers in the slums makes achieving economies of scale for any product, let alone food, difficult. On a per-unit basis, people in the slums pay more for basic goods than their comparatively wealthier counterparts. If we could develop a network of food vendors in the slums and effectively become a wholesaler of certain products, we could potentially shrink the existing margins between supplier and customer. We could then distribute a portion of the savings to our customers, and reinvest the remainder in growing the business.

And with these two components, our idea took concrete form. We called the idea M.yala – taken from the name of a town in Western Kenya and the Arabic word for “Let’s go.” We spent weeks putting together our presentation and practicing our pitch.

On the day of the competition, we went head to head with 46 teams from schools around the world. We were selected as one of four semi-finalists, and invited to present to 18 judges and 300 spectators. Unfortunately, we just missed winning the regional final. But there is a great team from Hult San Francisco that will be competing at the final round at the Clinton Global Initiative in October, and we wished them the best of luck.

All in all, it was a great experience. Best of luck to all of the other competitors, and hopefully one of them makes a dent in the problem of urban hunger.

Anyone who has worked in the education sector in Kenya knows about an exam called the KCPE. It stands for Kenya Certificate of Primary Education, and it is the most important exam for not only students, but also teachers, school owners, and just about anyone involved in primary education in the country.

Students take the exam during their final year of primary school. It lasts four days and tests students’ knowledge in basic subjects taught in primary school. Most importantly, the test determines which secondary schools students will be eligible to attend. Unfortunately, for many students, secondary school is not actually an option, since only primary education is free and many poor families cannot afford the fees. Nonetheless, the KCPE exam, to many, is a gateway to success and vehicle for economic mobility. Because of the disproportionate importance placed on the exam, the time when KCPE scores are released is always fraught with tension.

When I worked at Bridge International Academies, I often had discussions with coworkers about the KCPE exam. During my time in Kenya in 2011 and 2012, Bridge only offered up to class 4 and 5. The KCPE exam, which takes place at the end of class 8, was far enough in our future that it would not necessarily pre-occupy parents who were considering sending their kids to a Bridge academy. But once those children reach class 8, parents in the communities we serve will be closely watching the results of the KCPE exam.

Unfortunately, such a system is fraught with inherent inequality. Students attending overcrowded and under-resourced schools are naturally at a disadvantage in preparing for the KCPE exam. It serves as a further barrier to socioeconomic mobility, where poor students will never be able to compete on the same level. And that is where M-Prep comes in.

Now, just for full disclosure, I know the founder of M-Prep, Toni Maraviglia, from my time in Nairobi. We briefly worked together at Bridge, where she developed the school manager and teacher training materials. A Teach for America alum, business school dropout, and true social entrepreneur, Toni discovered while developing an education program in rural Western Kenya that, despite the best efforts of teachers, students lacked access to adequate test prep materials and, as a result, were struggling with the KCPE exam. Fortunately, with mobile penetration at more than 70%, cell phones offer an ideal platform for disseminating material to students studying for the KCPE exam. Here is an overview of the problem, and how it works:

In Kenya there are currently 9 million students registered in primary school and less than half of those students pass their primary school exit exam. We’re talking about 5 million kids who do not receive a basic education, 5 million kids with few options for career paths. Most become subsistence farmers or slum laborers; some even become criminals. The poverty cycle continues. Limited study materials exist, but all are low quality or too expensive. Additionally, teachers are overburdened by crowded classroom of 40-80 students and cannot give individualized feedback to students. Most importantly, little interaction exists among educational stakeholders – teachers, parents, schools, and students – and often, nuanced data is nonexistent until a student fails. These stakeholders don’t know what students need to do to improve until it’s too late. If information were widely available and learning was high-quality, accessible, and fun, far fewer students would fail.

MPrep helps kids learn, review, compete and collaborate through accessible and fun mobile applications. We also give teachers data about their students and help parents stay informed – all on simple mobile tech. Basically, we make it easy and fun for an educational community to communicate and share information.

It is a massively scalable model, and they have already made inroads with many school districts. Parents love the fact that their kids are receiving extra tutoring, and the kids find the product interactive and fun. Teachers and school headmasters appreciate the fact that they kids are gaining an advantage, which not only translates into prestige for the school, but also real dollars. Schools that have higher than average KCPE scores are hugely popular, and frequently see a big jump in enrollment. And, in the latest round of KCPE testing, M-Prep saw real results:

The Head Teacher of Malanga Primary, a school way out near Kisumu said, “Our pupils have improved from a 210 to a 234 average, and we attribute this growth to MPrep. Thank you.” The Head Teacher then told our Sales Manager, Peter Sereti, that they’d like to renew their MPrep data subscription.

The Head Teacher of Muthurwa expressed the same. Their scores jumped from a 199 average in 2011 to 230 in 2012.

M-Prep has a great model that has the potential to effect real change in the primary education system not only in Kenya, but really anywhere where people have access to cell phones.

Now, they are trying to get into the Unreasonable Institute, an accelerator and incubator for social enterprises that offers access to funding, mentors, and a network of other entrepreneurs who are making a difference. So please support them.

A little more than a year ago, someone from Gale Cengage publishing emailed me to ask if I would be willing to allow them to publish a blog post I had written many moons ago, titled “Why DIY Foreign Aid Amateurs Are Necessary.” It was a response I had written to another blog post in Foreign Policy titled “Don’t try this abroad,” which, incidentally, was a response to an article from the New York Times Magazine by Nicholas Kristof titled “The DIY Foreign-Aid Revolution.” The Foreign Policy article was written by Dave Algoso, author of the thought-provoking and prolific development blog, Find What Works, which I highly recommend (warning: it is wonkish). (Interestingly, I later met and hung out with Dave in Nairobi, where we both worked – the development blogosphere is small indeed).

But I digress. Gale-Cengage sent me the following email:

Dear Josh Weinstein:

Plans are now underway for the introductory volume of At Issue: Is Foreign Aid Necessary?, volume 1 (AIFAN-1) scheduled to be released in fourth quarter of 2012. AIFAN-1, with 112 pages, will be published by Gale, a part of Cengage Learning, (www.gale.cengage.com), a provider of high quality educational and reference materials to libraries. We are expecting to produce 2,500 hardcover copies of this reference work to sell at $33.71 and 1,500 paperback copies to sell at $23.85 each.

Books in this anthology series focus a wide range of viewpoints onto a single controversial issue, providing in-depth discussions by leading advocates. This series provides a quick grounding in the issues and a challenge to critical thinking skills. The viewpoints are selected from a wide range of highly respected sources and publications. To help students more easily access the material, we title the articles, insert subheads, omit notes and references, and, if necessary, do some minor editing (for style, to clarify time references and names, etc.; any deletions-usually done because of our length requirements-are indicated with ellipses), and insert an editorial cartoon, graphic, or quotation from another source, which will be identified and set so as to be obviously from another source. We credit the original source on the first page of each article.

We seek your permission for non-exclusive, all-language use for print, online, and e-book in the global market for this edition and for future editions of AIFAN-1, and for incidental promotional pieces. Attached is a Permissions Agreement which identifies the material we wish to use.

Needless to say, I was somewhat shellshocked. What sort of low-rent, bush-league operation would ever in their right mind want to read, let alone publish, the mindless dribble that makes the pages of this blog? I felt a bit like Woody Allen (or Groucho Marx), dismissing the legitimacy of any publication that would publish material written by me.

Regardless, the prospect of being published in a real book that would be read by real people was enticing. I emailed a friend of mine and asked him what the thought. His response:

Obviously let them publish it. It makes your blog seem so much more legit.

Typos courtesy of my IPhone.

Of course, when he says that it will make my blog seem “more legit”, he doesn’t know just how un-legit it actually is. For example, take a look at this comment that was left on a post I wrote called “Crisis in Cote D’Ivoire: How Political Instability Alters Trade Patterns”:

Faced with the reality you see above, I decided to do it. So I took a look at the edits they had made and cleaned it up a bit more. Normally, articles posted to this site are, by rule, never checked for spelling or grammatical mistakes. Given that this article would be preserved in eternity for all time, I needed to make sure that future generations didn’t have hard evidence that Develop Economies is a barely literate joke of a development blogger. So I made a cursory review and send the following email to my contact:

Hi Nicole,

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Here is the final version and the signed release. Please make these final edits and go ahead with the article posting. Apologies for the delay. I will be looking forward to taking a look at the final product. Please let me know if you have any questions.

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Also, is there is a standard fee that you pay contributors? I was ideally hoping for $100. Please let me know and I will send the permission form as soon as I hear back.

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– Josh

Until that point, it hadn’t occurred to me that I might actually get paid for something like this. As it stood, I would have been happy to simply have been plagiarized, much less paid for my writing. So I asked for $100, skeptical that they would even oblige me that.

Remember that, by this point, they explicitly told me that they would be selling 2,500 copies at $33.71 and 1,500 at $23.85, which totals $120,050 in revenue for Gale Cengage. Now, I did a little research on gross margins for publishing companies, and the only data I could find said that the publisher earns profits of about 15-20% of the retail price. Using the more conservative estimate – which could be total BS, since I settled on it after 5 minutes of Google searching – the gross profits for the publishing company would be about $18,000. At the time, I hadn’t performed this calculation, which would have made my $100 request equivalent to a modest 0.5% of profits, and 0.08% of revenues. Fortunately, Develop Economies writes for the thrill of it.

To my surprise, the publisher then took mercy on me and actually negotiated up my fee. I received the following email the next day:

Hi Josh,

There isn’t a standard fee, but the average fee is about $200. 🙂

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As you will be paid as an individual, not a corporation, the publisher will need a W9 to issue you a check – please find a copy of the brief form attached.

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I’ll also note that you are to receive a complimentary copy of the book – please be sure to include the address to which it should be sent.

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Thanks,

_

Nicole

Now, I am not sure why she included the smiley face. Perhaps it was because she had forwarded the email around to everyone in her office with the heading “Look at this moronic rube!” That, or she thought she was actually dealing with a child who did not grasp the concept of money. Either way, I was stoked that, despite my terrible negotiating skills, they decided not to take complete advantage of my ignorance. So, thank you Gale Cengage publishing for not completely taking me to the cleaners. Or, if you did take me to the cleaners, then thank you for not telling me and making me feel like a moronic rube.

_

Unfortunately, that email was sent in May of 2012. After at least a dozen emails asking me to kindly send them a copy of my W9 and me making excuses about how I didn’t have access to a printer, I finally submitted it yesterday. I felt a bit like Ty Webb in the movie Caddyshack, with uncashed checks for $75,000 strewn around his apartment. But, finally, it is done and, in 4-6 weeks, I am going to hopefully get a big check like the ones in Happy Gilmore, which I will frame and put on my wall to constantly remind me to heed the advice of Maury Ballstein in Zoolander: “Screw ’em. Hold out for more!”

_

In any case, hopefully the book will hit stores soon, so it wouldn’t be a bad idea to camp out for a few days to make sure you get your copy. Given that it is titled “At Issue: Is Foreign Aid Necessary?” I would imagine it is going to fly off the shelves.

Product design is all the rage in poverty alleviation, and has been for the past few years. By applying the principles of lean manufacturing and waste minimization to the challenge of designing products for people living on less than a dollar a day, we can now create stripped-down products at a fraction of the cost. But product design is only one small component of the process. The two other challenges in bringing these products to market – financing and distribution – are just as critical to solve.

There are plenty of companies and organizations that are trying to develop great products at a very low cost. Cookstove companies are racing to the bottom, trying to engineer alternatives to inefficient clay stoves at the lowest possible price. The Engines and Energy Conversion Laboratory at Colorado State University partnered with Envirofit, a manufacturer of clean cookstoves, to design the most efficient-burning stove possible. Dozens of solar companies offer lanterns, water heaters, radios, and mobile phone charging stations. These off-grid energy products provide an energy source to the billions of people living without access to electricity. In just about every industry, from sanitation to transportation, companies are redefining low-cost manufacturing.

Unfortunately, building the products is only part of the solution. Actually getting those products out to the customers, many of whom live in remote rural areas, can be a challenge. Similarly, creating a viable financing solution that allows for payment in installments is going to be more difficult when most customers do not have a bank account, let alone a credit card. Fortunately, technology is changing the game in a fundamental way, bringing solutions to these problems that most people never dreamed could be possible. And one company, in particular, represents a great example of how companies are leveraging the technology boom in low-infrastructure countries (H/T to Jon Evans for the term).

Re:Char is a company based in Western Kenya that sells “climate kilns” to convert biomass to biochar. To deal with the financing problem, it is using crowdsourced, peer-to-peer lending via mobile money to provide a source of credit to its customers. And to solve the distribution problem, the company built a “shop-in-a-box” – essentially a 20-foot shipping container with a laser cutter and 3-D printing apparatus – to bring the manufacturing process close to home.

When I was living in Nairobi, I met some folks from Kiva who were piloting a super-secret initiative called “Kiva Zip.” They were experimenting with the possibility of allowing lending directly to borrowers (as opposed to through microfinance institutions, which is how most business is conducted). The ubiquity of M-PESA, the mobile money platform in Kenya, made it possible to send money to people in the most remote parts of the country for a small fee per transaction. Kiva Zip needed partners on the ground that could pre-vet certain borrowers and provide a steady stream of investments. These partners ultimately became known as “trustees,” and Re:Char became one of the first organizations to sign up.

Re:Char staff and customers on Kiva Zip

Today you can go online and lend $25 to a Re:Char customer. In this loan, Helen of Makokha Farm lives in Bulimbo, Kenya. She needs $100 to buy a biochar kiln and additional inputs. Four Kiva members each lent $25 to Helen to fulfill the loan. Those four individuals used PayPal, an online payment platform, to transfer the money to Kiva. Kiva then transferred the money to a bank account in Nairobi, where it was then added to an M-PESA (mobile money) account. The $100 was then transferred to Helen’s M-PESA account. She received an update on her phone telling her that the money had arrived, and she went to the local M-PESA agent to withdraw the funds. She (likely) then used those funds to buy biochar kiln from Re:Char. And, today, she is in the process of paying them back over the course of the next year.

Kiva Zip is an experimental program and there is certainly no guarantee that it will be successful. Of the seven $100 loans Re:Char has endorsed, only one is currently paying on-time. This is the danger of doing direct lending without a physical presence on the ground to ensure timely payment. But, to me, this is less significant than the broad implications something like Kiva Zip has for the financing of small purchases around the world. If the Kiva Zip pilot fails, Kiva will learn and adapt. But the rubicon of direct-lending through the Internet and mobile money has been crossed. This is a great example of utilizing technology to solve the problem of financing.

In the next post, I will talk about Re:Char’s “shop in a box” and the implications it has for manufacturing and distribution in low-infrastructure countries.

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 (and the premier prep courses for the EA exam in particular) 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:

The long-term outlook for poverty reduction doesn’t look good either, unfortunately. We all know that there is a very strong link between education (or lack of education) and poverty—two-thirds of our poor families have household heads whose highest educational attainment is at most Grade 6. Well, the education statistics (all from the NSCB ) tell a very sad tale: elementary school net participation rates (NPR)—the proportion of the number of enrollees 7-12 years old to population 7-12 years old—have plummeted from 95 percent in school year (SY) 1997-98 to 74 percent in 2005-2006, as have high school NPRs.

Cohort survival rates (CSR) have also dropped: Out of every 100 children who enter Grade 1, only 63 will reach Grade 6, down from 69 children in 1997-1998. In high school, CSR have dropped even more: from 71 to 55. Which means, of course, that school dropout rates have increased. Which is one of the reasons why, in 2005-2006, for the first time in 35 years, total enrollment decreased in both elementary and high school: although private school enrollment increased, public school enrollment went down more.

The correlation is not difficult to see, but fixing the problem presents a challenge for several reasons. According to some observers, the Department of Education Culture and Sports (DECS) in the Philippines is one of the most corrupt government entities in the country. It has a budget equal to 12% of spending, but is riddled with graft from procurement (buying textbooks and other supplies), grease money, and bribes for just about any sort of movement within the bureaucracy. The impact on the education system is detrimental:

Embezzlement, nepotism, influence peddling, fraud and other types of corruption also flourish. Corruption has become so institutionalized that payoffs have become the lubricant that makes the education bureaucracy run smoothly. The result: an entire generation of Filipino students robbed of their right to a good education.

This corruption leads to poor allocation of resources. Teachers are underpaid and treated poorly. In 2005, the Philippine government spent just $138 per student, compared to $852 in Thailand, another developing country in Southeast Asia. But graft and corruption are not the only issues. Poverty is a vicious cycle that leads traps generations of families.

About 80% of the Filipino poor live in the rural areas of the country. These are towns located deep in the mountains and the rice fields. The population density in the rural parts of the country is low, and there is a corresponding deficiency in schools and classrooms. Public school is free, but families still cannot afford to send their children for a complicated network of reasons. In this editorial for the Pinoy Press, one author delineates the key issue:

With around 65 million Filipinos or about 80 percent of the population trying to survive on P96 ($2) or less per day, how can a family afford the school uniforms, the transportation to and from school, the expenses for school supplies and projects, the miscellaneous expenses, and the food for the studying sibling? More than this, with the worsening unemployment problem and poverty situation, each member of the family is being expected to contribute to the family income. Most, if not all, out-of-school children are on the streets begging, selling cigarettes, candies, garlands, and assorted foodstuffs or things, or doing odd jobs.

Beyond the selling goods on the street, children in farming families are expected to work in the fields during harvest time. In agriculture-based communities where farming is the primary livelihood, having children around to help with the work means more income for the family. In a recent trip to Valladolid, someone told me that children are paid 15 pesos for a day’s work in the blistering heat. They are pulled from school for two or three months at a time and are irreparably disadvantaged compared with their classmates. So, they may have to repeat the grade, only to be pulled out of school again next year.

Transportation is another big problem. Kids walk 2-3 kilometers or more to and from school every day. They have to cross rivers and climb hills with their bookbags. The ones that can afford it take a tricycle, but that is a luxury. Schools are sometimes too far for the most remote communities to practically access. So the families can’t afford to pay and the children are pulled from school.

It seems like an intractable problem. Corruption in the education bureaucracy and a lack of resources make delivering a high-quality education to all Filipinos a challenge. Microfinance is one way to help. With the assistance of microcredit loans, women can pay for the education of their children – to purchase uniforms, textbooks, lunches, and rides to school. Also, by creating another source of income other than farming, the children do not have to come help the family work the fields. When I talk to NWTF clients about their dreams, they unfailingly say they hope for their children to “finish their studies.” History has shown that it is an achievable goal. But real systemic change needs to come from above. As long as corruption and bureaucracy paralyzes the system, the goal of delivering a decent education to children – which pays dividends to the country in the long run – will remain out of reach.

For the rural poor, non-profits exist to help in the mission of education. While looking up pictures for this post, I came across a Filipino organization called the Gamot Cogon (“Grass Roots”) Institute:

The Gamot Cogon Institute (a non-stock, non-profit organization) is an Iloilo-based cultural institution working to transform society through human development approaches including education and training. GCI also prototypes or demonstrates alternative approaches to education, agriculture, health, and full human development.

Very cool stuff.

In an article titled “Why You Should Travel Young,” Jeff Goins makes the case for seeing the world while you are unencumbered by the responsibilities of adulthood. Career, marriage, children – these all stand as barriers to experiencing the wide world. For the most part, I agree with a lot of the things he says about the merits of travel. But I think he misses the larger meaning and importance of the experience.

Goins begins by offering advice to some poor soul who is deciding between returning to graduate school and “moving to Africa.” Without hesitation, he tells the girl to blow off school and hit the road, for the personal growth she will achieve under the tutelage of experience beats the knowledge she will gain in school. Why? Because the excuses we make “allow us to be cowards while sounding noble.” Perhaps this person had substantial student loans or an obligation to provide for her family. Either way, it’s a bit harsh I think.

But I do think Goins’ final point – that travelling widens our perspective and generates empathy for things we might not have understood had we not sought them out – is valid. He sums up his thesis in the last few paragraphs:

Traveling will change you like little else can. It will put you in places that will force you to care for issues that are bigger than you. You will begin to understand that the world is both very large and very small. You will have a newfound respect for pain and suffering, having seen that two-thirds of humanity struggle to simply get a meal each day.

While you’re still young, get cultured. Get to know the world and the magnificent people that fill it. The world is a stunning place, full of outstanding works of art. See it.

You won’t always be young. And life won’t always be just about you. So travel, young person. Experience the world for all it’s worth. Become a person of culture, adventure, and compassion. While you still can.

These are all fair points, most of which I agree with. Like a picture worth a thousand words, seeing the conditions most of the world endures and the daily struggles of the poorest of the poor give you an appreciation for things you didn’t even know you were lucky to have. I don’t fully agree with the idea that you need to see works of art in person to become cultured. But I would say that being exposed to different music, clothing, dance, and food also gives you an appreciation for the breadth of tastes in the world, and a better understanding of how tradition and history influence culture and vice versa. And, lastly, I think the spirit of adventure is inherent to some degree in travelers. But the number of stamps in your passport is hardly an indication of your adventurousness. And it is in this last point that I think Goins misses the virtues of travel.

A couple of years ago, the American Psychological Association published a study explaining that people who had lived abroad tended to be more creative than people who stayed at home. Using a cognitive performance test called Duncker’s Candle Problem, researches demonstrated that current and former ex-pats thought about problems differently than their counterparts. There is the obvious problem of causality – does going abroad make you more creative, or do more creative people go abroad? Either way, the correlation is real.

But there is a caveat. To gain the benefits of travel, you have to not only live in a new place, but also immerse yourself in the culture. The Daily Telegraph explains:

According to the study, creativity levels were unlikely to be high in people who had travelled abroad for a short period of time, or who had not attempted to adapt to the culture they were living in. But creativity was far more prominent in people who had made efforts to learn the language of their new home.

“Interestingly, high levels in creativity only seemed to show in people who had lived abroad, and not in those who had a superficial exposure to foreign countries through travel, “said Professor Maddux.

“In order to widen their creative abilities, it seems that people have to really try and fit into a different environment, and learn how to do things in a totally different way.”

In other words, only by pushing yourself outside your comfort zone can you really expand your cognitive abilities. Goins is right that you can develop a strong sense of empathy and compassion from only a short stint in a place. But to establish habits that will outlast your time in the wild, you have to fully commit. Taking a walk in the streets of Paris or seeing the Great Wall of China will not cut it

Seeing the world and going to cool places is great. But, like Lao Tzu said, the journey is the reward. Living in France or China or Ghana does not inherently make you more creative, or adventurous, or compassionate, or cultured. The process of adapting to a new environment and opening yourself to new experiences is the real reward of immersing yourself in a new country. Adaptability and openness are the root of the attributes the author of “Why You Should Travel Young” values. One follows the other, but not always.

And this, I think, is the larger lesson I gained from my life on the road. I have a vivid memory of sitting at a chop bar in Tamale, the capital city of Northern Ghana, with a few friends who worked with Engineers Without Borders Canada, an innovative development organization. They were talking about how much the pigs in the villages they lived liked eating shit. One guy told a story about getting typhoid and having to get up every 10 minutes in the middle of night to relieve himself outside his hut in the pouring rain. Each time he returned to the spot, it was freshly cleaned, having been visited by the local pigs. Clearly, these kids were having a much different experience than mine. Here we were, living in the same small part of the same small country in the same small region of the world. And yet our experiences were completely different – the result of their willingness to go all in and immerse themselves in a life altogether unfamiliar and uncomfortable in the hope that, by living it, they would understand the life.

This brings me to my biggest problem with Goins’ article on travel. If the way to become compassionate, cultured, and adventurous is to become open and adaptable, then you don’t have to fly across the world to reap the rewards of travel. I would say that you can gain a lot of those same benefits just by moving to a new city, changing your routine, and making a concerted effort to consistently live outside your comfort zone. In doing so, you will open yourself up to new experiences, your perspective will change, and you will begin to see the world differently. And this, to me, is the best part of travel.

Over the past few weeks, social impact bonds have received a lot of attention. That is because New York City has partnered with Goldman Sachs to run a pilot program aimed at reducing recidivism among inmates at Rikers Island prison. But first, a little background on social impact bonds.

There are many social problems for which there is no clear-cut solution. Homelessness, foster care, inmate recidivism, and other issues are often expensive to control. Programs designed to address them are often part of large bureaucracies and susceptible to the same inefficiencies and perverse incentives endemic in other government agencies. And, despite best efforts to fix the problems, they will only get worse as social programs move closer to the chopping block.

Non-profits supplement government efforts by addressing specific problems. Halfway houses, community health clinics, shelters, low-income housing developments, and soup kitchens are all examples of non-governmental organizations serving the homeless. Many have developed innovative approaches that are effective in achieving specific goals – i.e. placing homeless in low-income housing, job-training, etc. – but are constrained by a lack of capital. Without access to greater resources, non-profits will never be able achieve scale.

So the government has lots of money, but not enough dynamic programs to fund. In contrast, non-profits run effective programs on a small scale, but lack the money to expand. This is where social impact bonds come in.

In a social impact bond, the government contracts an intermediary to put together a social impact bond to address a specific social problem. The intermediary then identifies non-profits with promising potential and connects them with investors. The investors provide multi-year funding to the non-profit, allowing them to scale their intervention. In return, the investor is reimbursed by the government based to the program’s success. A monitoring-and-evaluation firm is brought in to assess the impact, which is based on a pre-determined set of metrics. If the intervention achieves the targets, the investor makes a return on the bond. If not, it takes a loss.

The best way to explain the mechanics of a social impact bond is to provide a real-world example. In the case of New York City and Goldman Sachs, the city government wants to reduce the number of repeat offenders, which cost taxpayers money in the form of prison costs, increased law enforcement, and lost productivity. Here is how it works:

The Goldman money will be used to pay MDRC, a social services provider, to design and oversee the program. If the program reduces recidivism by 10 percent, Goldman would be repaid the full $9.6 million; if recidivism drops more, Goldman could make as much as $2.1 million in profit; if recidivism does not drop by at least 10 percent, Goldman would lose as much as $2.4 million.

It seems like a win-win situation, if investors see social impact bonds as a viable means of earning a financial return. I am mostly in favor of any programs that place greater emphasis on “outcomes over outputs.” But this emphasis is hardly new in the international development community, which has seen a surge in rigorous testing for interventions after economists like Dean Karlan, Esther Duflo, and Abhijit Banerjee popularized the use of randomized controlled trials (RCTs) to determine the efficacy of different approaches. And I have the same concerns about social impact bonds that I do about RCTs.

Tying financial returns to outcomes creates two potential problems. First, it risks incentivizing the wrong things, a la “teaching to the test.” Often, these problems are extraordinarily complex and difficult to address, and rarely lend themselves to a timeline that works with an investment. In microfinance, for example, most RCTs occur over 2-3 years, and have shown little improvement in the well-being of recipients. I would argue it takes much longer than 2-3 years to realize the fruits of microfinance. If that is the case, which timeline will be used for the social impact bond – the one that shows progress, or the one that doesn’t?

For some issues, this is not a concern. Recidivism, for example, is cut-and-dry. Chronic homelessness, however, is not. For social impact bonds to be successful, they will require metrics that truly reflect the success of the program.

The second problem is that the interconnectedness of institutions can mask success. Mark Rosenman of Caring to Change explains both of these problems (h/t Democracy in America):

Where does a nonprofit get the funding to provide the services from which they are to later show a monetized gain to government? How far out in time does the performance metric need to go before quantifiable economic value can be shown and the charity repaid its expenditures? What happens when a nonprofit is providing superb and highly effective services to individuals, but other institutions and variables deteriorate and affect its outcomes?

These are very real concerns that the international development community has been forced to confront (or avoid) in its work.

I am not as pessimistic as Mr. Rosenman or Mr. Steinglass. I think that social impact bonds are a pragmatic and innovative solution to a very real problem. In addition to capital, investors will bring human resources and technology to bear on the problem, which will infuse the sector with new ideas and perspectives. Social impact bonds are still in their nascent stages, but, if they can figure out a way to effectively capture success rates and avoid the pitfalls of “juking the stats,” I see no reason why they can’t be a game-changer in the fight to address social problems.

A few months ago, the White House released its “New Strategy Toward Sub-Saharan Africa,” which contains four key bullets summarizing its approach. The first, and most important, goal is one that has been a pillar of American foreign policy for decades: “Strengthening democratic institutions.” The State Department has tried to use a variety of carrots and sticks to make this a reality, including providing incentives for implementing democratic reforms in the form of of financial and in-kind aid. In the most recent Economist, one of the lead articles calls for Western nations (specifically, the United States and Great Britain) to withhold aid from Rwanda, in protest of the Kagame government’s alleged human rights abuses in his own country and in the neighboring Democratic Republic of the Congo.

But, in this post, I’m less interested in discussing how to achieve democratic reforms than explaining why they are important. With China’s model of “state-run capitalism” running circles around paralyzed developing-world democracies like India – a country whose legislative gridlock and inept bureaucracy produced a two-day blackout – and a largely-autocratic government in Rwanda producing remarkable reforms (I saw them firsthand in the beautifully-run capital of Kigali), some people have challenged the notion that democracy is the answer. But, if democracy is executed well, as it is in Ghana, the rewards are increased wealth, though not in the form you might expect.

There is a concept called “intangible wealth,” which refers to the wealth created by functioning institutions. And, according to a study by the World Bank, intangible wealth accounts for a huge part of a country’s overall wealth. In an article titled “The Secrets of Intangible Wealth,” Reason magazine explains the concept in greater detail:

Two years ago the World Bank’s environmental economics department set out to assess the relative contributions of various kinds of capital to economic development. Its study, “Where is the Wealth of Nations?: Measuring Capital for the 21st Century,” began by defining natural capital as the sum of nonrenewable resources (including oil, natural gas, coal and mineral resources), cropland, pasture land, forested areas and protected areas. Produced, or built, capital is what many of us think of when we think of capital: the sum of machinery, equipment, and structures (including infrastructure) and urban land.

But once the value of all these are added up, the economists found something big was still missing: the vast majority of world’s wealth! If one simply adds up the current value of a country’s natural resources and produced, or built, capital, there’s no way that can account for that country’s level of income.

The rest is the result of “intangible” factors—such as the trust among people in a society, an efficient judicial system, clear property rights and effective government. All this intangible capital also boosts the productivity of labor and results in higher total wealth. In fact, the World Bank finds, “Human capital and the value of institutions (as measured by rule of law) constitute the largest share of wealth in virtually all countries.”

Once one takes into account all of the world’s natural resources and produced capital, 80% of the wealth of rich countries and 60% of the wealth of poor countries is of this intangible type. The bottom line: “Rich countries are largely rich because of the skills of their populations and the quality of the institutions supporting economic activity.”

Intangible wealth helps explain why some countries are rich and others are poor. At some level, natural resources, climate, strategic geography, and proximity to water and coastline are important. But it is not hard to see why well-designed and functioning institutions are critical to growth. Let’s dissect the components.

According to the report, the rule of law accounts for 57% of a country’s intangible wealth – by far the largest percentage. So how does the rule of law facilitate economic growth? One big reason is the enforcement of contracts. Businesses and individuals need to have confidence that, when they enter into an agreement, the terms of the agreement will be respected by the other party. Contracts enable investment, which provides capital to allow business to expand. In the United States, the legal resources for lenders and negative repercussions for borrowers have led to a financial system that offers the cheapest credit in the world (perhaps too cheap). In contrast, in Africa, interest rates on a business loan might be 10-20% or more, since the legal channel for dealing with default is obscure or corrupt or non-existent. As a result, investment capital is difficult to source and businesses find it more difficult to grow.

Container volume by port

Another example is corruption. In Kenya, the port in Mombasa, a coastal city, competes with Dar es Salaam, the capital of Tanzania, for ocean cargo throughout East Africa. Both ports operate at a fraction of their capacity because of the corruption that has prevented their modernization and the streamlining of the process. Here are a few illuminating statistics:

• It takes 19 days to move a container from Singapore to Kenya, and another 20 days to move it by road from Mombasa to Nairobi. It takes 71 days to get a container from Burundi to anywhere in East Africa.

• The cost of shipping in East Africa is 70% higher than in the United States and Europe.

• The port in Singapore processes more cargo in one week than the Mombasa port does in a year.

If the government of Kenya invested money in modernizing the port, rather than embezzling the money intended for improvements, and ran the port at the same level of efficiency as Dubai, Singapore, or Hong Kong, it would add several points to the country’s GDP. Better yet, if it privatized the port, which is what most shippers would prefer, and enforce anti-corruption laws, the amount of wealth generated would be massive.

The second largest component is education, which accounts for 37% of intangible wealth. It is not difficult to see why investment in human capital pays dividends for an economy in the long-run. Providing a strong primary and secondary education to all students, and establishing a robust post-secondary education system prepares people to compete in an increasingly global marketplace. This, in turn, generates greater income and accrues more wealth for a country.

The American Enterprise Institute – a thinktank that I don’t typically agree with – provides a list of some other reforms that facilitate the generation of intangible wealth and alleviate poverty:

1. Establish and maintain the rule of law.

2. Focus the jurisdiction of government primarily on maintaining the rule of law, and limit its jurisdiction over the economy and the institutions of civil society.

3. Implement a formal property system with consistent and accessible means for securing a clear title to property one owns.

4. Encourage economic freedom.

5. Encourage stable families and other important private institutions which mediate between the individual and the state.

I do not think that democracy has a monopoly on producing a strong legal system and a good education system. I do, however, think that the United States has one of, if not the best, legal systems in the world, and a good education system, despite the glaring inequities I discussed the other day. Despite its shortcomings, of which there are many, the American democratic system has produced an immense amount of intangible wealth for the country. It is a good model for other countries to emulate. And, if executed well, the potential dividends are huge.

There are four reasons, says Peter Edelman, author of “So Rich, So Poor: Why It’s So Hard to End Poverty in America”:

With all of that, why have we not achieved more? Four reasons: An astonishing number of people work at low-wage jobs. Plus, many more households are headed now by a single parent, making it difficult for them to earn a living income from the jobs that are typically available. The near disappearance of cash assistance for low-income mothers and children — i.e., welfare — in much of the country plays a contributing role, too. And persistent issues of race and gender mean higher poverty among minorities and families headed by single mothers.

In the wake of the recession, with so many people currently unemployed, the poverty level in the U.S. continues to grow. And, while Edelman’s diagnosis is right, the fixes for at least some of the problems seem more difficult. The number of low-wage jobs in America reflects the spread of globalization and the movement of jobs overseas. This process has been ongoing for several decades, as manufacturing steadily moved abroad and, increasingly service industries, like call centers and business process outsourcing, followed suit. Ironically, America’s loss became the developing world’s gain, as hundreds of millions of people climbed above the poverty line in places like China, India, Brazil, and the Philippines. On a global scale, the trend toward low-wage jobs in the United States may actually reflect a global poverty reduction trend.

Still, working a low-wage job in the U.S. is no doubt difficult. More than 100 million people – nearly a third of the population – live below twice the poverty line ($38,000 for a family of three). Edelman says that this trend has been ongoing since the 80’s, but we only opened our eyes after the recession. This is true, but doesn’t tell the whole story. Amidst one of the longest, deepest recessions since the Great Depression, corporate profits have broken records for the last three years. As companies retrenched and laid off their employees to cope with a crash in demand, they became more nimble and cost-conscious. As the economy recovered, instead of hiring back old employees, they outsourced jobs overseas or automated wherever possible, lowering their operating costs and increasing profits. In the long-run, the U.S. economy will be stronger and more globally-competitive as a result. But, in the short-term, the number of people living below the poverty line in the US will surely increase.

Those jobs are not coming back. Edelman suggests investing more heavily in education and skill development, and I agree. Because the funding source is local, our current public education system is failing to educate huge swathes of the population in a vicious cycle that creates a poverty trap. Setting aside the fact that discriminating on the basis of zip code is morally wrong, as I have discussed on this blog, it will only exacerbate our competitiveness problem.

On the Program for International Student Assessment (PISA) test, a global test given to 470,000 students in 2010, the U.S. ranked 14th in reading, 17th in science, and 25th in math. But these numbers do not tell the entire story. When the results are segmented by the percentage of students participating in the subsidized lunch program, which is the most accurate gauge of poverty levels in schools, the level of stratification is striking. In schools where less than 10% of students apply for subsidized lunch, the U.S. has the highest PISA scores of any OECD nation. In schools with more than 50% participation, the U.S. sits between Austria and Luxembourg. Mel Riddle, the head of the National Association of Secondary School Principals, explains the other side of that coin:

The problem is not as much with our educational system as it is with our high poverty rates. The real crisis is the level of poverty in too many of our schools and the relationship between poverty and student achievement. Our lowest achieving schools are the most under-resourced schools with the highest number of disadvantaged students. We cannot treat these schools in the same way that we would schools in more advantaged neighborhoods or we will continue to get the same results. The PISA results point out that the U.S. is not alone in facing the challenge of raising the performance of disadvantaged students.

This is a travesty for a number of reasons. Not only are we denying huge numbers of children a decent education, we are also diminishing our own competitiveness as a nation in the future.

The other day, I talked about the first of the four reasons why we cannot end poverty in the United States. Now I will talk about the other three.

Single parenthood is another challenge. According to Edelman, poverty rates among families led by single mothers is an astonishing 40%. I don’t know enough about the problem to propose any solutions. In the past, I have discussed how the the problem is systemic and self-reinforcing. But, from a policy perspective, I am not sure there is much that can be done. And race and gender are also big problem. There are certainly policy prescriptions here, but the issue is so systemic that I won’t even try to address them in this post.

The last reason – the reduction of the safety net and elimination of certain assistance programs – is really troubling however. Edelman explains the implications:

The census tells us that 20.5 million people earn incomes below half the poverty line, less than about $9,500 for a family of three — up eight million from 2000.

Why? A substantial reason is the near demise of welfare — now called Temporary Assistance for Needy Families, or TANF. In the mid-90s more than two-thirds of children in poor families received welfare. But that number has dwindled over the past decade and a half to roughly 27 percent.

One result: six million people have no income other than food stamps. Food stamps provide an income at a third of the poverty line, close to $6,300 for a family of three. It’s hard to understand how they survive.

At least we have food stamps. They have been a powerful antirecession tool in the past five years, with the number of recipients rising to 46 million today from 26.3 million in 2007. By contrast, welfare has done little to counter the impact of the recession; although the number of people receiving cash assistance rose from 3.9 million to 4.5 million since 2007, many states actually reduced the size of their rolls and lowered benefits to those in greatest need.

During a recession, expanding the food stamp program and other TANF programs provide the greatest ROI in terms of stimulating demand. Unlike the stimulus checks of 2008, which most people used to pay down debt and squirrel away in a savings account, food stamps and other credits are spent immediately. Aside from the fact that we, as a country, have an obligation to make sure that people can eat, these programs make sense from an economic recovery standpoint.

The chart on the right shows spending on low-income programs, with and without Medicare and Social Security, as a percentage of real GDP over time. In the War on Poverty during the LBJ administration, federal spending increased significantly before leveling off until the recession in 2008. It has increased since Obama took office, primarily in response to the downturn, which increased the rolls of people in need. Despite this mini-surge in spending, there a danger that it could be reversed.

Edelman ends the article with a stark warning that the status quo, as inadequate as it is, may not last. There are long-term ways of dealing with the growing income and wealth gaps – simplifying the tax code, allowing the Bush tax cuts to expire, increasing the capital gains tax, regulating financial institutions, and investing in education and infrastructure, to name a few. But an easy short-term solution is to, at the very least, maintain the current TANF programs, if not expand them to include the growing numbers of people living at or below the poverty line in this country.

Poverty in this country is a challenge. But we can deal with the problem by reforming our education system and maintaining and potentially expanding the social safety net.

That is what Ilan Stavans and Joshua Ellison posit in the their essay, “Reclaiming Travel,” featured on the New York Times philosophy blog, The Stone. The literary professor from Amherst and editor of a literary journal lament the packaging of travel and its reduction to a commodity, rather than a unique experience marked by uncertainty. A cruise ship, like a guided tour through a historical site or an all-inclusive stay at a resort, is a known entity where the only action required is putting down a credit card and showing up. Not having to seek out an experience makes people complacent and prevents them from actually understanding the place they are visiting.

The result, according to the authors, is a dramatic shrinking of the world, where accessibility leads us to think we understand people and places, when, in reality, we are just consuming specific perceptions of the world. In their conclusion, Stavan and Ellison explain what they feel are the implications of this effect:

This lack of awareness is even more pronounced when it comes to different cultures. The media bombards us with images from far-away places, making distant people seem less foreign, more relatable to us, less threatening. It’s a mirage, obviously. The kind of travel to which we aspire should tolerate uncertainty and discomfort. It isn’t about pain or excessive strain — travel doesn’t need to be an extreme sport — but we need to permit ourselves to be clumsy, inexpert and even a bit lonely. We might never understand travel as our ancestors did: our world is too open, relativistic, secular, demystified. But we will need to reclaim some notion of the heroic: a quest for communion and, ultimately, self-knowledge.

Our wandering is meant to lead back toward ourselves. This is the paradox: we set out on adventures to gain deeper access to ourselves; we travel to transcend our own limitations. Travel should be an art through which our restlessness finds expression. We must bring back the idea of travel as a search.

For the most part, I agree with the authors in their distaste for pre-packaged travel experiences, but I also recognize that this isn’t for everyone. Most people travel to get away from the daily grind and relax, see the sights, and enjoy themselves. Most people don’t want to deal with the struggle that is really only enjoyable in retrospect and causes unnecessary stress (which, one can get under control, through stress management courses from a legacy rehab). So, while I enjoy the discomforts of travel as much as the next person, I understand why people would not want the same experience in the three weeks of vacation they get every year.

The authors get this point, and address it in the article:

Travel is a search for meaning, not only in our own lives, but also in the lives of others. The humility required for genuine travel is exactly what is missing from its opposite extreme, tourism.

Modern tourism does not promise transformation but rather the possibility of leaving home and coming back without any significant change or challenge. Tourists may enjoy the visit only because it is short. The memory of it, the retelling, will always be better. Whereas travel is about the unexpected, about giving oneself over to disorientation, tourism is safe, controlled and predetermined. We take a vacation, not so much to discover a new landscape, but to find respite from our current one, an antidote to routine.

They are right about why most people travel, but wrong in their judgment of the merits of modern tourism. The kind of travel experiences the authors advocate are difficult to condense into a week or two. It is possible in places where the comforts and conveniences of modern travel don’t exist, but, in more trafficked places, it requires a lot of effort to remove yourself from the grid and connect with the people in the places you are visiting, particularly when you don’t already know people who live there. It has been much easier for me to have more authentic experiences, since I usually have friends or friends of friends who can show me around. I am lucky in that respect.

I like the idea of travel as a journey. But sometimes people just want to relax take it easy. And who can blame them?