.@Give_Directly to 1,300 Poor Households in Kenya

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Give Directly are my favourite charity and they should be yours too. They give money to poor people. Not just any poor people, but really poor people in East Africa. There’s a minimum of bureaucracy and they are innovating new ways to remove the bureaucracy which currently exists. It is simplicity itself, and it works. And you can donate this month and double your donation.

Supporting Give Directly gives you the warm glow of helping the most needy people imaginable, but more importantly it also gives you the warm glow of having your ideological predispositions confirmed. If you’re anything like me you just can’t beat it. Donate and you too can bask in the heroin-like glow of confirmation bias.

They regularly audit and they get amazing results. Business and agricultural income increased 28% of the average grant size, implying a 28% annual rate of return. With a doubled donation you’ll be getting a 128% rate of return. Plus mental health improves, crime and conflict doesn’t change, it doesn’t cause localised price inflation and it reduces domestic violence and increases female empowerment.

They’ve also begun using community-based targeting: in a subset of villages, they got the community to help them categorize households by poverty level. Wherever there’s cost and bureaucracy they’re looking for ways to remove it. Wherever there is local knowledge they’re looking to use it. So far:

  • Most people think housing materials are the best indicator of poverty — reaffirming the criteria we already use. Furniture and source of income were also popular.
  • People generally agree on how to apply the housing criteria. When we asked communities to categorize each household as “rich” or “poor”, they agreed in 9 out of 10 cases.
  • Engaging local leaders in the process can help, but also raises a risk that they will ask for “compensation” for tasks they are supposed to do for free.

Honestly, if you’re not supporting this charity (I think this would particularly suit Jackart, Chris and Frances) I don’t know what’s wrong with you. Oh, and they have no marketing budget, so yes, you will have to put up with regular half press release, half begging letter posts here, essentially, forever. Or until we end poverty. So its up to you really.

Will Half The UK Be Obese Before 2050? Are The Press Credulous Nincompoops?

No. Yes. For fucks sake, what is wrong with the media? Lots, I suppose, but I’ll concentrate on their innumeracy and credulousness for now. I will also cover their prejudice and scientific illiteracy. Which is a lot to do in under 1000 words, but when you’ve such densely packed stupidity as our Obesity Crisis Bleughly etc. you can really go to town.

First, a little history lesson: in 2007 a report commissioned by the government stupidly predicted that if people continued getting obeser at the same rate by 2015 36% of males and 28% of females would be obese. By 2050, 60% of males and 50% of females would be obese. By the end of the century everyone would be obese and robots would need adamantium reinforcements to maneuver the nation’s vast bulk. A nightmare scenario, I’m sure you’ll agree. Here’s the chart:

British fat

Yesterday, the National Obesity Forum stupidly updated that stupid extrapolation. Rather than half of Britain becoming obese by 2050 they believe this will happen much sooner and that we need to something about this. Especially for the children. It’s always for the children (or the women). Their report helpfully recommends negging on fat people, bullying children who don’t like PE and the creation of government sinecures for ex-Forum busybodies. 

To come up with their dread warning, they’ve used an extra five years of data from the UK to update the projection above. It’s a projection not a prediction because of the data they leave out. If they included data from the US their scaremongering would fail and these busybodies might have to get real jobs: America’s stopped fattening. We don’t need to hypothesise about how fat we could get, we know. None, none more fat.

America fat

Something that can’t go on forever, won’t. That’s a simple thought, but scaremongers know when you’re scared you don’t think. Waistlines can’t expand forever. Eventually a population has to stop getting fatter and now we now know when this happens. America, the land where everything’s big, is no longer the land where everything’s getting bigger. When a third of a society get obese obesity levels off.

Predicting that half of Britain will become obese, when we’ve recently discovered the obesity event horizon should earn you derision. Instead it gets you wall to wall coverage. Incapable of crunching the numbers, the press report as fact a ludicrous projection using incomplete data and biased methods. I don’t want you to confuse my anger with surprise, this is par for the course. Innumeracy and credulousness covered, let’s talk about the press’s prejudice and scientific illiteracy.

Being fat is unhealthy right? Wrong. Okay, not fat, but being obese is bad, right? Wrong. Dead wrong, in fact. And I have a meta-study to prove it.

final_cochrane_logoThe words “I have a meta-study” should inspire joy or dread, depending on your position. A meta-study is a study of studies and they’re incredibly useful. You can read more halfway down this old post on how they save lives and reveal truths that might otherwise be hidden.

We’ve been looking at obesity for a very long time, and lots of individual studies have been done, but each has its own problems and each has its own margin of error. Collating several studies allowed researchers to look at 3 million subjects, from 12 countries, and use only the best data to assess the effects of weight gain on health.

The results might surprise you. They found that people with a Body Mass Index of 18.5-25, the “healthy” people, have higher mortality risk than every group of people up to BMIs of 35. The obese were less likely to die than the “healthy” people and the overweight people were significantly less likely to die than the “healthy” people.

Pick a random 5’4″ woman weighing 8 stone (remember to say hello). She has a higher mortality risk than a 14 stone woman of the same height (say hello to her too). You might be incredulous, you might even be angry: but I have a meta-study.

The below table isn’t very layman friendly, but click through to the paper, or read this op-ed, if you don’t believe me. I’m not saying you should gain weight, or lose weight, I’m saying that weight is a particularly poor indicator of health and that you should care about your weight a lot less. Especially care less about other people’s weight.

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Not only are predictions of a looming obesity crisis based on nonsense maths, they’re based on nonsense science and reported by a nonsense press. The press are incapable of holding people with a shiny pdf and a slick press release to account. Because of this its all too easy for people to be bullied and for public health (physical and mental) to suffer.

Policy Bullshit Bingo: Robert Rubin in the @FT edition

I wanted an early night. But Nooooooo. Robert Rubin had to publish something stupid and now I’ve had to stay up to mock it. Scheduled to land at 9am. I hope you’re all feeling bitter this morning.

Debates persist in the US and eurozone about growth and job creation versus fiscal discipline. This false choice diverts fiscal focus away from a balanced approach that could achieve both imperatives.

Yes, it’s a false choice and that is why literally nobody on earth is proposing it.

The US recovery remains slow by historical standards – even if recent signs of improvement are borne out. One reason is that our unsound fiscal trajectory undermines business confidence, and thus job creation, by creating uncertainty about future policy and exacerbating concerns about the will of Congress to govern. Business leaders frequently cite our fiscal outlook as a deterrent to hiring and investment.

Actually, in the US policy uncertainty has come from Republic malfeasance in the legislature. It has nothing to do with fiscal policy.

A sound fiscal trajectory is also a prerequisite for interest rates conducive to growth.

Interest rates are zero, and are low a long way out. I don’t think its the 1990s anymore Mr Rubin. Although your glasses are!

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Continued unsound fiscal conditions will almost surely destabilise markets at some future point.

Oh, it will “will almost surely destabilise markets at some future point”? That’s a concrete foundation on which to make policy decisions…

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Recent reductions in deficit projections do not change the basic structural picture – except that healthcare cost increases are slowing – and are partly based on sequestration, a terrible policy that already looks too onerous to stick.

Policy successes which address exactly what I worry about do not count. For no specific reason.

In the eurozone, the threat is more immediate. Bond markets in troubled countries were in dire conditions until the European Central Bank’s famous – and as yet unimplemented – 2012 promise to do “whatever it takes”.

The promise was the action. You want to bet against the ECB? No? Then it worked, the plan was implemented.

The right criterion for action, however, is not the absence of alternatives, but an assessment of costs and benefits.

This sentence stands apart as a magnificent example of self-parody.

In the US, there are widely posed questions about the benefits of QE3, but the risks are significant. One is that central bank action will reduce market pressure on political leaders to act.

You read that right. The danger is this policy might work. Then people won’t listen to Robert Rubin’s terrible advice. Never waste a good crisis eh Robert?

Yet waiting too long to tighten heightens the risk of inflation at some point. The Fed’s dramatic expansion of bank reserves could feed excessive credit growth. Along with the possible erosion of Fed credibility on inflation, that could also feed inflationary expectations.

If they are feed inflationary expectations nobody is doing much about it. The TIPS spreads on US debt doesn’t show anything. You can lend money to the US government and get a nominal return guaranteed, or an inflation protected return guaranteed. The difference tells you a lot about expected inflation. If inflation was coming you could sell one and buy the other. But that hasn’t happened. Look at expected inflation from 5 year bonds:

fredgraph (1)

Such a regime should be enacted now to stabilise, or preferably reduce, the ratio of debt-to-gross domestic product over 10 years, and protect discretionary spending. Implementation, designed in ways difficult to undo, should be deferred for a limited period to allow for recovery. Fiscal discipline could provide room for reasonable stimulus to create jobs. The partially cancelled sequestration should be fully rescinded to eliminate its fiscal drag. Fiscal funding should come largely from revenue increases and beginning the entitlement reforms necessary for long-term sustainability – as President Barack Obama has proposed.

I WANT A PONY.

Structural deficit reduction would address growing deficits in the decades beyond the next 10 years. The eurozone, too, should reject false choices. Instead, it should strike the right balance between fiscal discipline to win market and business confidence, and macroeconomic room for growth.

Unconventional monetary policy and stimulus can be part of a successful economic programme for a period of time. But they are no substitute for fiscal discipline, public investment and structural reform.

Welcome to your policy elite, they’ve literally learned nothing in the last 15 years. They’ve especially learned nothing in the last 5.

Thank god the police don’t shoot people more often

I’m with the rodent in thinking the Duggan Inquest verdict deserves a healthy dose of scepticism. I’m not saying it’s a stitch up, but giving the police 8 hours to confer in private before submitting their evidence doesn’t fill me with confidence. I don’t find it comforting either that a lawful killing can follow from an operation completely botched at every stage.

But the Duggan Inquest is above my paygrade, so I won’t pontificate. I haven’t followed the case too closely and I don’t have a legal background. That won’t stop lots of other people. But they’re twats who probably haven’t read the jury’s statement. The maximum I could offer is my opinion and you know what people say about opinions.

What I can offer though is surprising stats. Since 1990,  1,475 people have died in police custody or following contact with the police. However, in this country the police almost never shoot at people. Which is a blessed relief given how they’ve handled Duggan’s killing. I was surprised by how often the police shoot people, so I’ll reproduce the yearly tallies for you.

From April to April 2001-02 the police fired their guns eleven times.

In 2002-03 ten shots were fired.

In 2003-04 four shots were fired.

In 2004-05 five shots were fired.

In 2005-06 nine shots were fired.

In 2006-07 three shots were fired.

In 2007-08 seven shots were fired.

In 2008-09 five shots were fired.

In 2009-10 six shots were fired.

In 2010-11 four shots were fired.

In 2011-12 five shots were fired, one hit Mark Duggan’s arm then one hit him in the chest killing him and sparking a weekend of rioting. These 85 shots killed 44 people. My sympathy goes out to Mark Duggan’s family and the families of the other 43 dead people.

But over the last decade fewer than 0.1% of all incidents involving police guns see them fired. While the police are discharging tasers thousands of times a year, they almost never use guns. I am very glad they don’t know we know what happens when they do.

For grisly context,  in 2011 American police shot 1,146  people and killed 607. However, they don’t even collate stats on how often the police discharge their weapons, so we can’t make a like for like comparison.

As usual the conclusion is: our system is pretty fucked up, but at least we’re not American. 

UPDATE: The NYPD fired their guns 92 times in 2010, 13% less than the 106 shootings in 2009. It’s the lowest number in the 40 years that the NYPD has tracked such data. That’s about 20 times more than Bris did, for a population a third of the UK’s. Pretty scary stuff.

To the surprise of absolutely no one the British public have no fucking clue what the country is really like

IPSOS-MORI Year in Review

IPSOS-MORI Year in Review

The whole slideshow from IPSOS-MORI’s year in review is instructive, have a look. Long story short, the public systematically think things are worse than they are.

The reassuring takeaway is that if you think the public hold odious views its only because they have no idea what they’re talking about. This brings to mind the aphorism that people should get what they vote for, good and hard.

Pessimistically, the public are massively biased against benefits claimants, single mothers, immigrants and engage in “emotional innumeracy” and motivated reasoning to make themselves feel reasonable about their dickishness.

That this means the public would think they were being dicks if they knew the truth. However, campaigning on the “you’re really a dickhead, mate” platform is a one way ticket to lostdepositville.

Dissolving the people and educating another is also a terrible policy because it’s not going to work. Bad news sells and fact checking is a pretty loveless hobby.

All in all, this is pretty terrible news anyway you cut it, although it does make me like the public a little more and wonder at the human mind. Faced with dickhead beliefs your brain totally warps reality so that you become reasonable. It explains a lot actually.

A #longread for your weekend: Karl Polanyi in Beijing

Thank you for reading last week. If you would like this week’s posts collated as an essay you can download a pdf of “Karl Polanyi in Beijing.” You can also download a pdf version of Karl Polanyi’s The Great Transformation itself here. I recommend you do both. The collated posts also follow below the fold. I hope you’ve enjoyed reading these as much as I enjoyed writing it.

Continue reading

Karl Polanyi in Beijing, or There and Back Again

In this post we’ll finally talk about the Third Plenum, but first a little anecdote.

An important landmark on the road towards a labour market was the remarkable change in government policies that took place in the mid-1990s: A reform of the state sector that had as its centrepiece a programme of mass redundancies which was intended to eliminate or reduce surplus labour in the state sector. This policy was forced on the government by the falling profits and rising losses of the state-owned enterprises (SOEs), which threatened to curb economic growth and government revenues. The 1999 urban survey, analysed in Chapter 6, showed that the incidence of job loss was widespread: 19 per cent of households and 11 per cent of workers had experienced a retrenchment. This remarkable shake-up meant that suddenly there were millions of unemployed urban-hukou workers searching for jobs in competitive conditions. As though in a deliberate experiment, a labour market had been created by decree!

In a book entitled “Towards a Labour Market in China” two academics announce their astonishment that labour markets were created, rather natural. I hope you now realise that this is very silly. The problem with economists is they expect man’s propensity to “truck, barter and exchange” to do a lot of leg work. Polanyi’s point, in its most sanitised form, is that this isn’t true. All economics needs supporting by institutions which have nothing to do with truck, barter or exchange.

Polanyi’s point is more complex than that. I want to discuss his thought first as The Great Transformation is a rich book which deserves discussion. He argued that redistribution and reciprocity were just as important to economics as exchange. I think modern literature has borne him out.

Adherents of New Institutional Economics, of which both David Cameron and I are fans, have criticised Polanyi. The argument is that he over diagnoses. What he sees as reciprocal or redistributive relationships, they claim are actually coasian “side deals.” I think this is economic imperialism. You can think of them as side deals but nobody receiving unemployment payments thinks of it as a side deal to stop them rioting and nobody who gets disability support thinks they’re getting a bung to keep them off the conscience of hand-wringing liberals. Or perhaps they do. But what they hope they’re receiving is something which attests to their worth as a human being.

A man is lost after visiting a new town. He walks up to a stranger and asks him the way to the station. “Right that way” says the man pointing towards the post office, “would you post this for me on the way?” He asks handing over a letter with a smile. “Of course!” says the man, as he walks away, opens the letter and pockets the £20 inside.

A useful concept is that of a low trust society, Francis Fukuyama has written that a lack of trust acts as a tax on all economic activity, it’s a deadweight loss that makes every transaction more difficult. The self-regulating market has few processes for creating high trust societies. Societies dominated by large intrusive states are similarly burdened. Alex has written lots about the UK’s transition to a low trust society and its economic damage. Jamie has written about the idea of China as a low trust society. Here three decades of communist rule (an over emphasis on redistribution) has been followed by the destruction of those institutions and the elevation of exchange. It’s resulted in situations like this:

On the morning of Sept. 4, in the riverside boomtown of Wuhan, Mr. Li, an 88-year-old man, fell in the street and injured his nose. People passed him by, but no one raised a hand to help as he lay on the ground, suffocating on his own blood.

This week, China’s netizens have expressed an outpouring of sympathy — for the bystanders. This is nothing new here. In recent years, there have been several high-profile cases of elderly men and women who have collapsed or suffered accidents in public spaces who then sue the good Samaritans who have tried to help them. These cases have created a genuine and widespread fear that helping a person in need will lead to personal financial loss.

Inequality of market outcomes can drive a decline in trust and make economies perform poorly. This effect isn’t a big as Polanyi would have predicted because it’s pretty hard to smash reciprocal relationships, but its there.

What I’ve documented is that there are lots of way to conduct economic activity and that there are a variety of capitalisms, sometimes all in the same country. More than that, I hope that thinking about Karl Polanyi can give you a deeper  understanding of the necessary and inevitable institutions that surround society and the economy.

Moving on to the specifics, Polanyi argued that a countermovement was inevitable, necessary and would be led by a class. I don’t think this has been the case in China.

1) Polanyi placed class at the centre of his analysis. In China, class power has been weakened by the CCP. From the 1950s the state not only became the solitary organiser of production but it also chose to intervene into every aspect of its citizens lives. The brutality of the CCP in stepping away and demanding a market function has been stronger than Polanyi could imagine. For example, institutions which demand workers are paid on time have been slow to form because workers are weak.

2) Polanyi relied too heavily on formal institutions. The system of guanxi instituted by working people has created an odd, but powerful, informal countermovement and illustrates that, when possible, society will always attempt to insulate itself from the market. This is different to the process Polanyi describes, but not too radically so to invalidate his work. Similarly, capitalists rebelled against the market in the UK and demanded cosy cartels and regulation to keep out competitors. In China tight but more informal state-society institutions are more the norm. Again, probably because of the historic role of the Party in the state and production.

3) Polanyi has also been proven half-right concerning land. He insisted that a countermovement was inevitable; however, this essay has shown that if class interests prove too weak this may not, in fact, be true. Although the tide may finally be turning. He was ultimately correct when he argued that commodifying land would lead to “annihilating the… natural substance of society.” Pigou taxes are one way you can embed the economy in society, but without the necessary institutions or a class to push for them they won’t happen. This is a problem for mainstream economics, just because a solution exists economically doesn’t mean it will be implemented politically.

I’m still concerned that China will implode but I’m more confident that it  could muddle through. It seems that unembedded markets work much better than Polanyi thought. Before I concede that the big man was wrong, I want to propose a theory. Unembedded relations work quite well for manufacturing, but not services. Manufacturing exhibits unconditional convergence in productivity. This means that even in basketcase countries the manufacturing sector’s productivity will converge on the production possibility frontier.

When Polanyi wrote The Great Transformation, England was a dozen times richer than the poorest countries, today the richest counties are 100 times wealthier. Now it is possible to trash your environment and annihilate the human and natural substance of society and get 10 times the return you used to. So long as China could find replacements for the broken men and shattered earth to pour in as commodities to its satanic mills it would get a good return and the unembedded economy would hum along nicely. Well, nicely according to the headline figures. That trend isn’t sustainable, but as we’ll see in a second it looks like it won’t be sustained thanks to The Third Plenum. Food for thought. But it’s only a theory for now.

I’ll repeat that the one thing Polanyi isn’t is an advocate of state planning. The Great Transformation offers, an account of the deleterious effects of statist intervention, as well as an attack on market liberalism. He saw the state as necessary to guarantee justice, regulation and recognition and the market as an important sphere of exchange. But neither state nor market can be relied upon to be the sole method of ordering the economic life of society. It lots of ways China has attempted to swing from one to the other extreme and getting a bit of the worst of both. Its clear that a market society is superior to a state society, but there are lots of ways to get the balance wrong.

Polanyi was not a pessimist. He argued that there has never been a stark choice between capitalism and communism — between the callousness of the market and the clumsiness of the plan — he demonstrates that, in fact, many different worlds are possible. Amid a vast, growing, and contradictory literature on China’s rise, there have been both fears of its ascendant power, and assurances of its imminent collapse. Neither account truly satisfies; this is because China is an economy in flux. Chinese society is faced with a balancing act, it obviously still desires economic growth, but it must weigh this interest against what it has witnessed in the last thirty years. Its productive organisation has achieved

The Third Plenum made its announcements last month to much head scratching. But there’s some meat to the proposals, even if nobody’s sure whether the market’s move from “fundamental” to “decisive” is good news or not. A clear pattern emerges though to confront the problems discussed in the last week’s post. There are institutional solutions to market problems, a double movement is evident.

Farmers will be granted more property rights and it will be more likely they’ll be enforced. A real-estate property tax will be introduced to create a formal system of managing land use in urban areas. The government will accelerate the reform of the household registration system which will facilitate urbanisation and bring more of China’s migrant workers back within the formal institutions of the state. Together these reforms create institutions to support land and labour. Perhaps more importantly the Chinese state is giving the judiciary more independence from local government. Jamie has pointed out this might just mean more central control,  but its through this process of institutional evolution and bargaining that we get anywhere. The developments all make sense in Polanyian terms and all focus on creating rules and institutions which better manage the market and state.

The Chinese are often characterised as passive and obedient, but they have a long history of rebellion1989 saw the outbreak of a movement which actively tried to challenge the ruling class. The militant strike waves seen in China illustrate that internal stability is not guaranteed. In China the market has been planned, and it has been startlingly successful, but the reactions have been spontaneous and they aren’t happy with the status quo.

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Coda: These posts have been a collaboration. The other author is me, but me aged 21, the same age I was when I started this blog. If any of you remember him then four and a half years and several hundreds of thousands of words later he and I would like to say “thanks for reading.” I’ll probably have the weekend off blogging, but I’ll be back on Monday.