Minor Thoughts from me to you

Tyler Cowen, on the slow improvements in agriculture and the difficulties that Africa faces.

Consider Africa, which is often considered to have turned a corner and to be headed toward steady growth. The expansion of the African middle class and the decline in child mortality rates are both quite real, but the advances have not been balanced — and agriculture lags behind.

In a recent address, Michael Lipton, an economist and research professor at Sussex University in Britain, offered a sobering look at Africa’s agricultural productivity. He suggests that Rwanda and Ghana are gaining, but that most of the continent is not. Production and calorie intake per capita don’t seem to be higher today than they were in the early 1960s. It remains an issue how Africa’s growing population will be fed.

... On top of all that, many African nations have unhelpful policies toward agriculture. Malawi, for instance, subjects corn to periodic export and import restrictions as well as to price controls, all of which thwart development of a well-functioning market. When market speculators save corn in anticipation of greater scarcity, they may be punished by law. These restrictions of market incentives exacerbate the basic supply problems.

What can we do about these problems?

... the United States government should stop subsidizing its own corn-based biofuels, mainly ethanol. Today, about 40 percent of America’s field corn goes into biofuels, thanks to a subsidy and regulatory policy dating from 2005. With virtual unanimity, experts condemn these subsidies as driving up food prices, damaging land use and costing the taxpayers money. Once the energy costs of producing the biofuels are taken into account, it doesn’t even appear that this policy helps slow climate change. It has become a form of crony capitalism, at great global expense.

Perhaps Christians should take up the elimination of ethanol subsidies as a "social justice" issue. Is it just to funnel money to American farmers at the expense of hungry, poor people worldwide?

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For the last couple of years, I've been unhappy with the "short term missions" model that many churches use. It seems to involve a lot of good feelings about going somewhere else to experience "true poverty", working there for 1-3 weeks, coming home, showing lots of pictures of really poor people, and talking about the great need for Christian generosity. Now, I am a fairly generous individual. And I don't like seeing poor people suffer in poverty any more than you do. Despite the vast concern for social justice that's put into most trips, I don't think poverty will ever be reduced by them.

Poverty will be eliminated in the 3rd world the same way it was eliminated in the 1st world: growth. And that growth often involves taking the best scientific know-how we have, training people to understand how and why it works, and then letting them get on with the business of making themselves richer. (Growth often involves a strong rule of law and a government that doesn't steal from its own people, but I'll leave that topic for another post.)

I quoted from an article, just a few minutes ago, about the need for appreciating the "modern, science-intensive, and highly capitalized agricultural system" that we have her in America. But what about Africa? Will that really work over there?

Yes (from later in the same article).

Africa faces a food crisis, but it's not because the continent's population is growing faster than its potential to produce food, as vintage Malthusians such as environmental advocate Lester Brown and advocacy organizations such as Population Action International would have it. Food production in Africa is vastly less than the region's known potential, and that is why so many millions are going hungry there. African farmers still use almost no fertilizer; only 4 percent of cropland has been improved with irrigation; and most of the continent's cropped area is not planted with seeds improved through scientific plant breeding, so cereal yields are only a fraction of what they could be. Africa is failing to keep up with population growth not because it has exhausted its potential, but instead because too little has been invested in reaching that potential.

One reason for this failure has been sharply diminished assistance from international donors. When agricultural modernization went out of fashion among elites in the developed world beginning in the 1980s, development assistance to farming in poor countries collapsed. Per capita food production in Africa was declining during the 1980s and 1990s and the number of hungry people on the continent was doubling, but the U.S. response was to withdraw development assistance and simply ship more food aid to Africa. Food aid doesn't help farmers become more productive -- and it can create long-term dependency. But in recent years, the dollar value of U.S. food aid to Africa has reached 20 times the dollar value of agricultural development assistance.

The alternative is right in front of us. Foreign assistance to support agricultural improvements has a strong record of success, when undertaken with purpose. In the 1960s, international assistance from the Rockefeller Foundation, the Ford Foundation, and donor governments led by the United States made Asia's original Green Revolution possible. U.S. assistance to India provided critical help in improving agricultural education, launching a successful agricultural extension service, and funding advanced degrees for Indian agricultural specialists at universities in the United States. The U.S. Agency for International Development, with the World Bank, helped finance fertilizer plants and infrastructure projects, including rural roads and irrigation. India could not have done this on its own -- the country was on the brink of famine at the time and dangerously dependent on food aid. But instead of suffering a famine in 1975, as some naysayers had predicted, India that year celebrated a final and permanent end to its need for food aid.

What if the American church committed to getting over the West's passion for antiquated farming methods and decided instead to take up the mantle that the U.S. government dropped 35 years ago? We might find that we're far more likely to be of some use that way than we currently are. Instead of sending people over to marvel at poverty why don't we fund the same kinds of projects that enabled India to be self-sufficient?

I talked earlier this week about capitalism and its blessings, in regard to cleanliness. Consider this, about the blessings of capitalism in regard to food.

What's so tragic about this is that we know from experience how to fix the problem. Wherever the rural poor have gained access to improved roads, modern seeds, less expensive fertilizer, electrical power, and better schools and clinics, their productivity and their income have increased. But recent efforts to deliver such essentials have been undercut by deeply misguided (if sometimes well-meaning) advocacy against agricultural modernization and foreign aid.

In Europe and the United States, a new line of thinking has emerged in elite circles that opposes bringing improved seeds and fertilizers to traditional farmers and opposes linking those farmers more closely to international markets. Influential food writers, advocates, and celebrity restaurant owners are repeating the mantra that "sustainable food" in the future must be organic, local, and slow. But guess what: Rural Africa already has such a system, and it doesn't work. Few smallholder farmers in Africa use any synthetic chemicals, so their food is de facto organic. High transportation costs force them to purchase and sell almost all of their food locally. And food preparation is painfully slow. The result is nothing to celebrate: average income levels of only $1 a day and a one-in-three chance of being malnourished.

If we are going to get serious about solving global hunger, we need to de-romanticize our view of preindustrial food and farming. And that means learning to appreciate the modern, science-intensive, and highly capitalized agricultural system we've developed in the West. Without it, our food would be more expensive and less safe. In other words, a lot like the hunger-plagued rest of the world.

(Hat tip to Wilson Mixon, at Division of Labour.)

The National Center for Policy Analysis published a press release from the HealthPlanWire today, showing the grow in private insurance world wide.

HPW follows health insurance markets globally, and is projecting that total covered lives will exceed one billion by 2012. Single-payer systems are declining world-wide because they are primarily based in countries which have static or declining populations, while private insurance is growing rapidly in countries with the fastest population growth.

Most of this is coming from developing countries which are for the first time ever building out a health financing system, choosing to encourage private health insurance over single-payer on five continents. Examples include China, Columbia, South Africa, Mexico, India, Australia and most of eastern Europe. Most of these countries considered and rejected a single-payer system in favor of a private insurance system, and more than a dozen more are following suit in the same regions.

Private insurance is the chosen system for several reasons. In developing countries in eastern Europe there is a strong aversion to the former Soviet-style model, and western European global insurers like Allianz and Vienna Insurance Group have actually acquired the entire single payer system from the government and turned it private.

Cool.

I finished listening to an old EconTalk podcast, during my commute this morning. Russ Roberts was talking to Karol Boudreaux about her fieldwork on property rights and economic reforms in Rwanda and South Africa. They spent the first half of the conversation talking about Rwandan reforms and the second half talking about South African reforms. I was most fascinated by the South African portion. (It starts at about 30 minutes into the podcast.)

Karol talked about Langa township in South Africa. It was established as a place for blacks to live, but they weren't given any rights to the properties whatsoever. They had to get permission from the city government even to paint or repair their homes. By 1994, the government had started to turn over ownership to the people who lived in the homes.

I was thrilled to hear the story of Sheila, a very entrepreneurial woman in Langa township. (Her story starts about 39 minutes into the podcast.) Sheila had been a domestic helper in Capetown when she saw a receipt for two glasses of wine and a plate of cheese. She was stunned to see that that sold for more than she got paid in a month. She knew she was worth more than that. So, she decided to prove it.

After a few false starts, she hit on the right business plan. Tourists had been driving through Langa Township for years, to see the results of apartheid. But they never got out of their tourist buses. Sheila decided to give them an opportunity to start getting out. She opened up a restaurant in her house (after she'd received the title to it). She now serves meals to tourists, while telling them the story of her life and her experiences under apartheid. Her restaurant is well known for "authentic" South African food. It's primarily advertised through word of mouth and bloggers (how great is that?). The restaurant doesn't just support Sheila. She also employs five other people to keep things humming along.

Does South Africa have more economic freedom than the U.S.? In some ways, it does. Try opening a restaurant out of your home and see how long it lasts before the local authorities shut it down. But, in South Africa, Sheila was able to use her home to create a living for herself, create income for others, create something for tourists to see and do, and educate many people along the way. And it all happened because she had the economic freedom to use her property in the way she saw fit. Her tourist guests use their freedom to eat where they see fit and her desire to keep her restaurant's reputation protects her customers as they eat.

Sheila's story is a perfect example of the win-win results that come from letting people make their own economic decisions and bear both the profits and losses that they generate. It's also an example of how far you can go if you decide to change your circumstances instead of complaining about them.

For the past two years, I've been slowly trying to figure out my opinion about U.S. foreign policy and the U.S. military. There are a lot of very bad people in the world. The thuggish mullahs of Iran and the even more thuggish dictator of North Korea jump immediately to mind. But one shouldn't forget about the thugs in Africa (Robert Mugabe and the like), the thugs in Latin America (Hugo Chavez and friends), or the thugs in Europe (Vladimir Putin).

But what should the American response be? Is it our responsibility to throw them out and make the world a better place? Is it our responsibility to protect our friends (Israel, South Korea, Japan, etc) or should we only be concerned with the countries and individuals that pose a legitimate threat to our homeland? How big should the U.S. military be and how should we use it?

I still don't know what my opinion is. It vacillates between "nuke 'em all" and "let the world take care of itself", depending on the day and how recently I've read about foreign atrocities. So I was interested to read Jerry Pournelle's take on the question:

The British at one time had a naval policy of having a fleet able to defeat the next two fleets in the world; but at that time Britain had an Empire and relied on it for a number of things. The US is not an empire, and we don't seem to be learning how to be one. The question becomes.; how large a force does the US need to defend our legitimate foreign policy goals We already spend more on the military than the rest of the world combined. This may be excessive, depending on what we think we must do with that military.

I'm not at all convinced that we need NATO now that the USSR is gone. I am not sure what good it does us to have pledges from Germany to go to war if someone attacks us. I am thoroughly unaware of why we might need the Georgian army to help us if we are invaded. I can see that our commitment to them is valuable to them, but I am not certain I understand the value to the US of the US guarantee to Germany and potentially to Georgia.

I know that such guarantees are hideously expensive. And I'm inclined to make the snotty Europeans bear the cost of their own military defense. Overall, I think I favor downsizing the American military and getting out of Germany, South Korea, Japan, etc. But I'm not sure what the long term consequences of that would be. In 50 years, would we be facing a threat from a much larger and more expansionist Chinese or Russian military? It gives me pause.

Update (5:39PM): Via NRO, I see that, unless things change, China may not be too worrisome in the future.

China's Population Policy, and Ours - John Derbyshire - The Corner on National Review Online

China is not far behind Japan on the path to the demographic cliff edge. Fertility figures are no more dependable than any other Chinese statistics, but there seems to be general agreement that the current TFR is in the 1.7 to 1.8 range, somewhere between Sweden and Belgium in the international rankings.

For China, still a poor country with a huge peasant population, this is starting to throw up problems. With the one-child policy entering its fourth decade, the typical Chinese in his prime productive years now has two elderly parents to support. Elderly, and likely penniless, since those parents left their productive years without ever having had the opportunity to accumulate much.

The Mainstreaming of Demographic Alarmism (Cont.) - Mark Steyn - The Corner on National Review Online

On page 5 of my notoriously "alarmist" book, I asked, "Will China be the hyperpower of the 21st century?", and answered no: It will get old before it's got rich.

These opinions make me even more likely to take an isolationist approach.

In an interview with Spiegel Online, Kenyan economics expert James Shikwati made an impassioned plea for first world nations to stop sending aid to third world nations.

Shikwati: ... for God's sake, please just stop.

SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty.

Shikwati: Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor.

He explains why rich nations shouldn't be the ones helping poor nations -- and what happens to the corn when rich nations ship it over.

Shikwati: ... and at some point, this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unsrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the UN's World Food Program. And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year. It's a simple but fatal cycle.

SPIEGEL: If the World Food Program didn't do anything, the people would starve.

Shikwati: I don't think so. In such a case, the Kenyans, for a change, would be forced to initiate trade relations with Uganda or Tanzania, and buy their food there. This type of trade is vital for Africa. It would force us to improve our own infrastructure, while making national borders -- drawn by the Europeans by the way -- more permeable. It would also force us to establish laws favoring market economy.

The Cato Institute recently hosted an event about this very point. Pan-African Free Trade Agreement: Helping Africa through Free Trade. (If you visit the event's page, you can watch it, listen to it, or read a full transcription of it.)

African tariffs are some of the highest in the world.

While OECD countries cut tariffs from an average of 23.7 percent to just 3.9% in the 20 years from 1983, Sub-Saharan Africa only cut its tariffs from 22.1% to 17.7%.

And astonishingly, many African countries impose tariffs on the import of medicines, and even Tanzanian-made anti-malaria bednets.

These are, effectively, killer tariffs.

While the world as a whole cut tariffs by 84 percent between 1983 and 2003, Africa only reduced theirs by 20%.

For most Africans, it is harder to trade with those across African borders than with distant Europeans and Americans.

In 1997, the World Bank found that countries in Sub-Saharan Africa imposed an average tariff of 34% on agricultural products from other African nations, and 21% on other products.

The results are clear.

Only 10% of African trade is with other African nations.

The first world isn't doing the third world any favors with our generous aid packages and handouts. We're preventing the Africans from taking the tough -- but responsible -- steps to improve their own welfare. It's time to stop coddling the contintent and start expecting it to walk on its own.

Senator Bill Frist wrote about his ONE Vote '08 campaign over at Captain's Quarters this morning. He wants Presidential candidates to publically commit to increasing aid to Africa. While it sounds like a noble goal, I'm afraid that it would only enable the African nations to continue electing corrupt politicians and continue to duck responsibility for their own welfare.

Let's listen to James Shikwati and make our own tough decision. Just stop. Please.