But how do we value diversity in the aid business, when the prevailing consensus, embodied in the Paris Declaration, is that proliferation of aid agencies is a growing problem which is making aid less effective?

The aid system could in principle benefit from the emergence of new kinds of donors (specialised multilaterals such as GAVI, new donors such as China and Brazil, philanthropic foundations such as Gates, private non-profits such as Marie Stopes) working alongside conventional bilateral and multilateral aid.  Different kinds of organisations could bring particular strengths which complement each other’s work.

However, in practice these different types of organisation do not seem to be playing to their strengths. Like kids playing football, everybody follows the ball instead of holding their position on the pitch.

Proliferation is a significant problem

We will come to the benefits of diversity among donors. But first let’s acknowledge that proliferation is causing real problems on the ground. Developing countries are having to deal with a large and growing number of partners, each with separate agendas, priorities, and requirements. Meetings, reports, milestones and systems multiply. Skilled staff are hired away to serve in local agency offices or NGOs. Funding is fragmented and unpredictable, which means that developing countries are often unable to bring together the scale of long-term, predictable finance needed to undertake significant institutional reform and service delivery. Donors lose influence, because they undermine each other; and yet developing countries are not able to keep track of, let alone exercise sufficient ownership and control over, an increasingly fragmented system of aid delivery. Public accountability is impossible, since nobody has a clear view of what resources are being used, by whom, or for what purpose. Donors face rising administrative costs when agencies proliferate, and the costs of coordination and harmonization rise exponentially with the number of aid agencies.

Here are three real life examples of the problems that are caused by the proliferation of aid agencies:

• In Vietnam, it took 18 months and the involvement of 150 government workers to purchase five vehicles for  a donor-funded project, because of differences in procurement policies among aid agencies. (source: Knack/World Bank)
• In 2007 alone the EU countries launched 22,000 new aid projects inn developing countries, with an average budget of €0.7-1 million. The total costs of preparing new projects by EU donors (not the money needed to fund them, just the administrative cost of putting them in place) is estimated at between €2-3 billion per year. (source: EU)
• In the aftermath of the tsunami disaster a local doctor in Banda Aceh, one of the most affected areas, wrote: “In February, in Riga (close to Calang) we had a case of measles, a little girl. Immediately, all epidemiologists of Banda Aceh came in, because they were afraid of a propagation of measles among displaced people, but the little girl recovered very fast. Then, we realized that this was not a normal case of measles and we discovered that this girl has received the same vaccine three times, from three different organizations. The measles symptoms were a result of the three vaccines she received.” (source: Djankov et al)

(For more examples of proliferation badness, take a look at ‘The Governance of the aid system and the role of the EU’ by Owen Barder, Simon Maxwell, Mikaela Gavas and Deborah Johnson.)

Different types of agency could make different contributions

These problems are caused by a growing number of aid agencies doing broadly the same thing.  That proliferation imposes substantial costs on donors and on recipient countries and this makes aid much less effective.  The question is whether there are also benefits to having this large number of agencies, compared to delivering the same amount of money through fewer channels.

In principle a greater variety of different types of donor, if they focused on their specialisms, could strengthen the aid system, because they can make different kinds of contribution which could complement both existing donors and each other.

Here are some ways in which different types of donor can make different contributions:

• Philanthropic foundations, such as Gates, Ford, Hewlett and Rockefeller, are still tiny in comparison to government aid agencies, but they are increasingly important in particular sectors, notably health.   In their recent book, Philanthrocapitalism, Matt Bishop and Mike Green argue that the growth of philanthropic giving should be welcomed, because these foundations bring a “businesslike approach to solving society’s problems”.  According to this view, philanthropic donors bring new attitudes and ways of working. Foundations are frequently founded by successful entrepreneurs, so they may be more inclined to operate along business principles, such as making decisions based on evidence, tightly controlling overheads, adopting new technologies, and focusing more sharply on results. They may be willing to take more risks and accept more failures in return for bigger success than risk averse governments. Foundations may be more able and inclined to work closely with the private sector, which plays a key role in development, which official agencies have not found easy to do.  Because foundations do not depend on public support for future funding, they may be willing to support unpopular causes, or investments which do not easily capture the public imagination (e.g. supporting statistical systems in developing countries).
• New government donors such as China and Brazil are playing an increasingly important role (though the Economist was wrong to suggest that Brazil’s aid budget is comparable to that of Canada and Sweden).  This has caused concern among traditional donors, who worry that their implicit cartel is undermined by donors that are less concerned about governance and human rights, and that are prepared to be more open about its desire for access to raw materials and minerals. These new donors do not feel constrained to follow the DAC development model, and in many ways developing countries prefer the approach which tends to respect the sovereignty and ownership of developing countries. These donors rarely poach skilled staff; and they do not overstretch developing country governments with meetings, reports and workshops.   They are also willing to invest in sectors that the DAC donors have moved away from, such as infrastructure, irrigation and university scholarships.
• The number of private charities is also growing, funded both by institutional donors and by private giving. Here in Ethiopia there are about 3,500 NGOs, spending about $1.5 billion a year (compared to the Ethiopian government budget which is about $4 billion a year). Private aid through charities tends to focus on supporting communities and individuals rather than governments. It tends to be more opportunistic and closer to the ground. These organisations can bring about results more directly although it is harder to bring about systemic change this way.
• Specialised multilateral global organizations – such as the Global Fund against AIDS, TB and Malaria (GFATM) – continue to grow in number. In principle, they can bring apply specialist skills and expertise, they can learn more systematically and spread knowledge more quickly, they can bring together a number of different donors, the public and the private sector to work in a more joined-up way on a particular issue, and they can raise money from the public because they can be more specific about what they do.

This changing landscape could benefit the aid system …

In an ideal world, if these different development actors played to their strengths, and stuck to their specialities, this growing diversity could strengthen the international aid system as a whole. Foundations could act like venture capitalists: taking bigger risks, and backing it up with rigorous evaluation and evidence, but leaving long-term financing of scaled up successes to official aid donors. Official aid agencies could focus on long term funding and resource transfer, and they could provide sustained support for institutional change and capacity. Private aid could focus on achieving community and individual level results. Specialised global organizations could provide particular expertise not available through generalist support. The growing number of official donors could build up expertise in particular countries or topics, and specialise in these, and they could respond to evidence generated by foundations and NGOs about what works, by taking those activities to scale.

If these actors could all focus on their strengths, and if the aid system enabled them to work together well, these changes in the development landscape might substantially improve the effectiveness of development assistance.

… but in practice it does not work like that

That’s all very well in theory, but most people working in the aid business will tell you that back on planet earth, it doesn’t work like that.

Rather than differentiate, development organisations have strong incentives to converge.  So instead of specialisation we get duplication.  The philanthropic foundations say that they have a more entrepreneurial, risk-taking approach; anecdotal experience suggests that in many cases they prefer the implicit validation of being part of a multi-donor group.  (This may be a form of political correctness: agencies seem to think that the Paris Declaration on Aid Effectiveness requires that they be part of a shared funding arrangement rather than doing anything alone.)

For example, consider the bandwagon on restoring funding of health systems.  Increasing the funding of health systems is something of which all right-thinking people should approve.  The arrival of the big global health initiatives, particularly GFATM and GAVI, coincided with a collapse in funding for health systems which led to many unnecessary deaths in developing countries. Donors are now seeing that the shift away from health systems to vertical funds was an error (one which was predictable and predicted), and the pendulum is swinging back to funding health systems.  The institution with the mandate and greatest capacity for supporting developing countries to strengthen their health systems is the World Bank. So why are the Global Fund and GAVI being allowed on the health systems bandwagon?  The logic of establishing these specialised multilateral agencies was that they would bring particular depth and expertise to specific activities which would be available from more generalised aid agencies. If we offer competition to World Bank concessional loans in the form of grant finance through GAVI and and the Global Fund, most developing countries will look to these institutions instead.  As a result of the proliferation of health funds offering grant finance for health systems, the core role and capacity of the World Bank is eroded, and we put at risk the benefits of specialisation by GFATM and GAVI.   Similarly, the International Finance Facility for Immunisation (IFFIm) was set up to enable donors to secure the benefits of front loading spending on vaccination, for which there is a clear economic rationale.  Now it is proposed that it should also finance health systems: if there is an economic rationale for using IFFIm on health systems, I’d like to hear about it.

What’s missing?

The growing number and diversity of development organisations could be a source of strength in the aid system, if different organisations could stick to their specialities and if they worked in an aid environment which enabled them to work together effectively.

In competitive markets, firms tend to focus on their strengths, because this is how they make the biggest profits. Firms that diversify into another line of business either need to make a success of that new work, or they will start to make losses and eventually decide to withdraw or they will go bust. So appropriate specialisation is the consequence of individual decisions by profit-maximising firms, and not a result of a collective compromise.

Unfortunately, the political economy of aid encourages the opposite behaviour.    The “operating system” which supports the work of aid agencies creates pressures against specialisation.  For example:

• Organisations which work collaboratively and holistically across a wide range of activities are likely to attract more donor funding than organisations which are effective in a particular niche.  One reason for this is that many donors either don’t have, or don’t systematically use , information about impact and cost effectiveness when they make resource allocation decisions – so there are rewards for aid organisations getting involved in as many activities as possible, and no penalty if this mission creep makes them less effective.
• Lack of transparency and access to information about who is doing what means that organisations cannot make sensible individual decisions about how they can increase their own impact with finite resources and avoid duplication.
• There are no mechanisms by which innovative ideas can be pioneered by foundations or NGOs and, if they are successful, taken up and taken to scale by official donors and multilateral funders. There too little venture capital to support innovation; too little rigorous analysis of what actually works; and the mechanisms for taking successful programmes to scale are too unpredictable and capricious.
• Donors, NGOs and foundations are all under pressure from well-meaning activists to be engaged in everything everywhere.   For example, last year the Lancet criticized the Gates Foundation saying that it should “do more to invest in health systems and research capacity in low-income countries, leaving a sustainable footprint”.  DFID is criticised for a perceived lack of investment in agricultural research.  In a sane world it would be perfectly sensible for the Gates Foundation, which has very little in-country presence, to fund technological research in health and agriculture, but not to invest in health systems in developing countries; and for DFID, which has an extremely professional presence on the ground in developing countries, to invest in developing country systems but not to spend money on research, in which it has no discernible comparative advantage.  We could have the same total spending on both research and systems, managed by organisations specializing in those activities and reducing coordination and transaction costs.  But development activists and politics apparently make such a division of labour impossible for both organisations.
• The Paris Declaration on Aid Effectiveness and Accra Agenda for Action are being implemented in ways which create strong peer pressure on donors to collaborate and harmonise, to engage in pooled funding and joint activities, rather than to diversify and specialise.  Where there are efforts towards a better division of labour (e.g. this EU initiative), the approach is based simply on getting down the numbers by committee, rather than creating incentives which push development agencies towards focusing on the areas in which they have a comparative advantage.

What should we do?

The proliferation of development organisations, which could be a great strength, is instead becoming a growing handicap for the aid system, because the system is not well adapted to taking advantage of that diversity and encouraging appropriate specialisation.

Some possible measures that might address this are:

• a step change increase in transparency about aid.  The International Aid Transparency Initiative offers the promise of this, as it will provide up-to-date, detailed information about aid projects in an accessible form.
• agreement to an international standardized system for describing and measuring outputs and unit costs, to facilitate cost-effectiveness comparisons across development organisations;
• explicit use of unit costs and cost-effectiveness in aid allocation decisions, in a way that penalises organisations which are engaged in activities in which they are relatively ineffective
• the development of a mechanism for “venture capital” funding with an associated process for scaling up success;
• self-restraint by development activists who do more harm than good by trying to push every development organisation to be involved in everything.

As ever, I’d welcome further suggestions in the comments section.

You can think of patents as a kind of prize.  When you invent a new product, the government gives you the right to operate a temporary monopoly. This enables you to charge more than the marginal cost, and the premium is your “prize”. This arrangement has the huge advantage that it links your reward to the amount people are willing to pay for your invention, so it encourages innovations that people actually value.

This kind of prize as a reward for innovation may be fine for a new kind of vacuum cleaner, or for Lady Gaga’s latest album. But it has two big disadvantages which are especially relevant for people who live in developing countries.

First, the use of patents prevents some people from benefiting from the new technology if they are unable to pay the higher price.  If a company develops a drug for heart disease, or a more efficient form of solar panel, the patent will enable them to charge much more than marginal cost for their product. That’s how the inventor gets paid. But the result is that millions of people will not be able to afford that product – though they might be able to afford it at marginal cost. The temporary monopoly results in fewer people benefiting from new technologies than ought to benefit, in the sense that those people would be willing and able to pay the marginal cost.  This is potentially a big welfare cost to society as a whole. It means, for example, that people may die of heart disease because they can’t afford the high price of the drugs, even though they could buy the drug if it were sold at marginal cost; or they can’t use new fertilizers or seed technologies, even though the benefits to them of doing so exceed the cost.

Second, if we reward inventors by granting them temporary monopolies, we only create incentives to develop products for which there are likely to be enough consumers wealthy enough to pay a monopoly price.   Nobody will invent a vaccine against malaria, or a cassava plant that resists mosaic virus, based on the possible rewards they will get from charging high prices to its consumers.  So the patent system is a prize for people who invent cures for baldness, but not a prize for people who invent ways to prevent the spread of malaria.

For these reasons, other incentives, such as prizes, Advance Market Commitments, and similar mechanisms, may be effective either as alternatives or complements to the patent prize of a temporary monopoly, especially for technologies that would have benefits in developing countries.

The Economist quotes Tachi Yamada, the president of Global Health at the Gates Foundation, as suggesting that Advance Market Commitments or prizes may not work well for drugs that require a long time to develop:

Tachi Yamada of the Gates Foundation is a big believer in giving incentive prizes, but gives warning that it can take 15 years or more to bring a new drug to market, and that even AMC’s carrot of $1.5 billion for new vaccines may not be a big enough incentive. No prize could match the $20 billion or so a new blockbuster drug can earn in its lifetime. So, in some cases, says Dr Yamada, “market success is the real prize.”

This seems to reflect the suggestion that is sometimes made that Advance Market Commitments may not be appropriate for for early stage drugs, but the economics of this argument is faulty.

It is clearly true that the reward for bringing to market an early stage medicine, such as an AIDS or malaria vaccine, would need to be higher, both because of the greater uncertainty and risk of failure, and because the rewards are further in the future.  So an AMC for an early stage product would probably need to be larger than for a late stage product that just needs some tweaking for use in developing countries and some investment in bigger production facilities.  But let’s not overstate this.  The median total market size for new chemical entities that pharmaceutical companies actually bring to market is about $3-$4 billion.  Most medicines are not $20 billion blockbusters.  So $3-$4 billion is roughly the market size that the private sector considers sufficient reward to develop new medicines.   We don’t need to match the blockbusters.  An AMC of $4 billion might well be enough to incentivize the development of a malaria vaccine: and let’s not forget that if it turns out not to be enough, it won’t have cost the funders anything.

Furthermore, just as the firms discount the prize by the risk of failure, the funders should similarly discount the cost.  If there is a 25% chance that no vaccine will be developed (because the technology is uncertain) then firms will discount the “prize” – that is, the value of the committed market – when they make their investment decisions.  But in this case, the expected cost to the funders of a $4 billion pledge is $3 billion, and this is what they should include in their value for money calculation.  That means that even though the nominal amount that has to be promised for an early stage product needs to be higher for a given impact on R&D, to take account of the probability of failure, the expected cost to funders is not higher.

The same point can be put another way.  A high probability of failure makes all investment in R&D less attractive, but it does not make AMCs relatively less attractive than other forms of funding.  When the probability of failure is high, the expected return from each dollar spent encouraging innovation is lower. This is true if that dollar is spent up-front in the form of research grants of the kinds normally given by aid agencies and foundations (since the higher probability of failure reduces the expected benefits of the grant), or in the form of a prize or promised market (since the higher probability of failure reduces the expected benefit to firms, and so reduces the incentive for them to invest in R&D).  The effect is the same either way. Higher probability of failure is clearly bad, but it does not make AMCs relatively less efficient as a way to pay for research for early stage products.

Whether an AMC for an early stage product is good value for money depends ultimately on the value of the product.  If donors were to spend $4 billion buying a malaria vaccine for use in developing countries, it would be a hugely good investment, saving millions of lives a year at a fraction of the price of many other interventions. It would result in huge savings on trying to prevent malaria in other ways, or treat to treat malaria; and the resulting reduction in the burden of malaria would have huge economic benefits for developing countries. Given that there is no question that donors would want to spend at least $4 billion paying for a malaria vaccine to be used across the developing world, it is inefficient for them not to say so right away, and thereby create incentives for private sector investment in accelerating its development.  The risk of poor value for money in aid spending comes not from making the commitment, but from failing to do so.

When Dr Yamada says that “market success is the real prize”, he seems to be missing the point that market success is not a good way of rewarding innovation for developing countries.   If we rely on market success, in the form of a temporary monopoly, to reward innovation then we will exclude half the world’s population from being able to access technologies developed with rich markets in mind, such as drugs against cancer and heart disease, clean energy, new agricultural technologies, or new software.  And “market success” creates no incentive to develop technologies which primarily benefit the world’s poor such as a vaccine against malaria or a variety of cassava that resists the mosaic virus, because inventors know that the people in poor countries cannot afford the monopoly prices that would enable inventors to recover their costs.

I’m glad that Duncan and Chris, his Oxfam colleague,  endorse a key argument of the paper, which is that the development industry will improve through evolutionary change rather than grand design; and that a driver of this change will be better mechanisms feedback from the citizens of developing countries about what is working. The paper points out that this kind of evolutionary change comes from variation and selection – and that the aid business does not have enough of either to ensure evolution towards more effective aid.

Duncan and Chris  have reservations about the word “beneficiary” to describe the people in developing countries whom aid is intended to support.  I think that is a good point, and I’d be happy to use a different word if we can find a suitable alternative (I don’t think that “primary stakeholder” or “rights holder” takes the trick, since neither is sufficiently specific about who we mean).

I don’t want to put words in Duncan’s mouth, but I detect from his review that he is more sceptical than me about the value of markets. He dismisses without much fanfare the  the idea of giving more choice to the, er, “intended beneficiaries” (aka primary stakeholders and rights-holders):

Where I think he is wrong is a largely market based philosophy for creating incentives based on New Public Management theories of expanding choice more than voice. … This in turn requires some quite fundamental organisational change with in aid agencies, as well as establishing more citizen to citizen links possibly using new social media.’

That is an unfair characterisation of my view: I am in favour of choice AND voice.  A large part of the paper, especially when talking about networks, is precisely about how citizens can have more voice, and I talk explicitly about citizens links through new social media.  But there are huge problems to overcome in achieving this, because the “intended beneficiaries” are geographically and politically remote from decision-makers in aid agencies, which means their voice is dimly heard, if at all.

While I agree with Duncan on the need to ensure that people have voice, I find it surprising that he (in common with many people who regard themselves as progressive) is so reluctant to give choice where possible as well.   Duncan’s (excellent) book is called From Poverty To Power – and I believe that giving people direct control of resources and allowing them to choose what services they want, and from whom, can be one of the most important ways of empowering people.  Duncan calls this a “technocratic/new labour enthusiasm for using market mechanisms” – but the idea of giving the poor more direct control of resources goes back long before New Labour:  Oxfam’s honorary President, Amartya Sen, got a Nobel prize for his 1982 book, Poverty and Famines: An Essay on Entitlement and Deprivation, which argued that it would be better to give people money than food in a famine.

I have not swallowed the New Public Management story hook, line and sinker, but I do believe that there have been positive experiences (for example, from the publication of league tables, and the distinction between purchaser and provider).  While I think we should learn from new public management, my paper describes in some detail the shortcomings of a market-only approach, especially as it relates to foreign assistance.  I hoped my paper would be an elegant synthesis of some of the best (and proven) tools of this school of thought with lessons from other approaches, especially the use of complementary mechanisms of networks, voice, regulation and planning.

The aid industry has almost entirely evaded the reform of public services over the last decade.   There is no measurement of results; no distinction between purchaser and provider; no customer choice.  Presumably the lack of reform is partly because the shortcomings of the industry are felt by people with no political power or voice in the political systems of donor countries. The incumbent service providers are politically powerful, well organised, and deeply conservative about any change that affects their interests.  The aid system has, over time, drawn to it people who are sceptical about the value of markets and choice, saddling developing countries instead with five year plans and long coordination meetings.  No politician in a donor country is enthusiastic to take on these vested interests, in order to improve services for people they will never meet and who have no vote in the election.

Michael’s approach is an enviable combination of analytical rigour and strong ethicaal principles.  This 25 minute video is a powerful argument for why we can, and should, remove government restrictions on where people can live and work.

The most important step in his argument is the first one.   Wolf says:

I, for one, have no difficulty with arguing that immigration is a privilege, not a right. Most people agree.

The assertion that “immigration is a privilege not a right” seems to me to be the wrong starting point.  I would begin with an opposite premise that seems to me to be much more basic and compelling:  “The burden of proof rests on those who would restrict human freedom.” If someone wants to move from one part of the planet to another, to live and work and raise their family, then we ought to have a very good reason before we set up a system to stop them.

To construct his argument, Martin Wolf wants us to believe both the following claims:

1. Immigration has a negative impact on the existing population; and
2. We ought to pay more attention to the interests of the existing population than the interests of the migrants.

On the first leg of this argument, Martin Wolf (under the guise of “calling for a debate”) claims that immigration is harmful to the economy, environment and society of the existing population.  As it happens, I don’t agree with any of this, though since that is not the point I want to focus on, I shall restrict myself to pointing to the economic and social success of countries that have been open to large-scale immigration.   But while I think the first leg of the argument is wrong, it is the second leg of the argument that I most want to challenge.

I doubt if anyone would seriously contest the view that even if if immigration causes some harm to the existing population, this harm is in total is far less than the very significant benefits to the migrants themselves.   So the case for restricting the freedom of people to live where they choose can only be made if you accept that we should pay more attention to the interests of the existing population than to the interests of the migrants.

There is no question that it is a widely-held view that we should give more weight to the interests of the existing population.  For example, Wolf says:

My view is that the interests of the existing citizens are of decisive weight, though we should also place some weight, too, on the interests of immigrants.

Perhaps I was born with faulty wiring, but I simply do not understand this view.

I believe we should give equal weight to the rights and interests of every human being. The idea that the interests of people born in our own country should weigh more in our moral calculus than the interests of people born elsewhere is, in my view, indefensible.  To say that we will less attention to the interests of another human  because they happen to have been born far away is organised racism, directly comparable with the pass laws under apartheid.

The United States Declaration of Independence asserts:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

The Declaration of Independence does not limit its assertion of equality to people born within a single country. Nor is the pursuit of happiness bounded by national borders created by man. (This is just as well, as in the period following US independence one third of Europe’s population migrated to the Americas.)

Of course, the view that we should give equal weight to the interests of all human beings is unlikely to get very far in political systems designed to represent the interests of the citizens within existing borders.  But just because a political system makes it possible to ignore the rights and interests of a group of people who are weakly represented in it does not mean that it is morally right to do so.

My view is that the burden of proof lies with those who would restrict the freedom of people to live anywhere they choose.   This argument would require, at minimum, weighing up the costs and benefits of a restriction to show that we are better off in total if we curtail this freedom.  A case could only be made by placing more weight on the interests of the existing population than on the interests of other people.  I understand that there is a a widely-held view that we should do exactly that, but I nonetheless think it is profoundly wrong.   When we weigh up the argument for a policy to restrict people’s freedom based on the benefits that such a restriction will bring, we should place equal weight on the rights and interests of all people, and not privilege the interests of some people who happen to be like ourselves.  The case for restricting immigration rests on denying the equal humanity of people born abroad.  I hope that, over time, we will come to see this with the same moral outrage as we now view slavery and apartheid.

When I was a teenager, I visited Berlin, and read the grafitti on the Berlin Wall that said “No wall can stand forever”.  Now on the twentieth anniversary of the fall of the Berlin Wall, we look back with horror at the way the wall was used to keep people in.  Perhaps in another twenty years we will look back with equal disgust at the walls we build today to keep people out.

Though they come from quite different points of view, there is quite a lot of convergence between them. They agree that there is much more corruption in poor countries than in rich countries; that nobody should put too much faith in econometrics to decide whether corruption is a reason that poor countries remain poor; and that you do not fight corruption by fighting corruption.  But whereas Daniel Kaufmann believes that you have to tackle corruption to create the conditions for markets to work and to to create economic growth and prosperity, Mushtaq Khan believes that you should focus on policies to promote growth and that a certain amount of corruption is an inevitable (albeit undesirable) corolloray of the transition to a capitalist economy. I hope you find the discussion between them as interesting as I did.

What strikes me about all this is that this is a topic on which there is a serious gap between mainstream public opinion and the opinion of many (but by no means all) development “experts”.  Most people believe that corruption is a one of the most important reasons why poor countries remain poor; and yet a lot of people working in development seem to be willing to tolerate some corruption as an inevitable fact of life in poor countries.   My view is that this is a topic on which we need to see much more convergence of thinking, based on sound evidence and analysis, and that this is an important step if the development business is to regain and retain the trust of the people paying for development assistance.

Where do I come down?  I guess somewhere in between. Corruption is clearly a very serious problem which robs the poor most of all, and deprives millions of people of access to service and of the opportunity to earn a living.  In some countries, it is a major obstacle to economic growth (I think Nigeria is such a country). But there are many different causes of poverty, and there are some poor countries that have very little corruption (Ethiopia, where I live, is such a country).  And there are striking examples across history of countries that have experienced rapid industrialisation despite having quite high levels of corruption at the time (including Indonesia, Thailand, Korea, Japan) – in many cases, corruption is something that is tackled after the establishment of an industrialised capitalist economy with a strong middle class, not before.

I do think that many people working in development are too complacent about corruption.  The poor, like all of us, have dreams of a better life, and they are not helped by a poverty of aspiration on our part.

There are some countries – such as Nigeria – in which corruption is clearly a major obstacle to investment and growth.  There are other countries – such as Ethiopia – in which there is very little corruption which are nonetheless very poor, so it cannot be the case that eliminating corruption is the main driver of development.  And a lot of industrialized countries had long periods of rapid economic growth despite widespread corruption – which in many cases they sorted out after they became rich, not as a pre-requisite to growth.

Pause for a moment in silent thanks to the staff of the GAVI Alliance which works to get immunisation to children in developing countries.

If you pay taxes in Italy, the UK, Canada, Norway, or Russia, pat yourself on the back.  Your government has contributed to a market-based financing mechanism called the Advance Market Commitment, or AMC.  This provides  an incentive for vaccine makers to produce suitable vaccines in the necessary quantities at an affordable price for developing countries. The result is that GAVI has been able to reduce the current price of existing pneumococcal vaccines by up to 90%.

In the past, it often took 15 or 20 years before vaccines developed for rich countries were sold at affordable prices in developing countries.  Because of the Advance Market Commitment, four vaccine suppliers are now offering pneumo vaccines, specifically developed for the the developing world at affordable prices.

This is aid at its best: creating financial incentives for companies to bring their expertise and innovation to the table to solve some of the world’s most pressing problems.  Donors only pay for vaccines that actually get delivered and used. This money will save the lives of about seven million children over the next 20 years.

We owe a debt to Michael Kremer and Rachel Glennerster for the idea, to the Center for Global Development (especially Ruth Levine) for developing a practical proposal, to Carlos Monticelli from the Italian Finance Ministry who steered a group of donors to make it happen, to the Bill and Melinda Gates Foundation for paying for background research, to Orin Levine, Gargee Ghosh, Amy Batson, John Hurvitz, Andrew Jones, Susan McAdams, and many others for making it happen.

And to the countless bureaucrats and nay-sayers who thought it could never happen: yah-booh-sucks.

Here’s a sample:

This common idea that skilled emigration amounts to “stealing” requires a cartoonish set of assumptions about developing countries. First, it requires us to assume that developing countries possess a finite stock of skilled workers, a stock depleted by one for every departure. In fact, people respond to the incentives created by migration: Enormous numbers of skilled workers from developing countries have been induced to acquire their skills by the opportunity of high earnings abroad. This is why the Philippines, which sends more nurses abroad than any other developing country, still has more nurses per capita at home than Britain does.

When is innovative finance good?

Innovative finance can improve the effectiveness of aid spending. There are at least four ways this can work.

First, innovative finance can improve intertemporal optimisation.  Aid budgets are often given from year to the next, which makes it difficult to spend the money at the best time.   For some spending, it makes sense to spend today to save money tomorrow (for example, spending money to eliminate smallpox reduced the need for health care spending later on).   It is not always sensible to bring forward spending – particularly if you believe that there are diminishing returns to some kinds of aid spending. The International Finance Facility for Immunisation is a good example of how spending tomorrow’s aid today can be sensible, because future generations benefit from the increase in herd immunity in today’s beneficiaries.

Second, innovative finance can create a commitment technology.   There are many benefits to being able to make commitments – which is why in normal life we have mechanisms such as contracts and warranties.   We need commitments to deal with dynamic inconsistency and to allocate risks.  But constraints on aid agencies make it very hard for them to make commitments about aid.  A good example of an effective forward commitment is the Advance Market Commitment, which guarantees manufacturers a more lucrative price if they develop and produce a new medical product for developing countries.  Forward commitments enable governments to invest in reforms which have costs over several years, or firms to invest in new products for developing countries.

Third, innovative finance can change incentives both for donors and recipients.  For example, funding schemes that link payments to results may reduce the incentives of donors to micromanage the way aid is used.  If payments to organisations are linked to demand (eg through a virtual voucher scheme) they may improve their services for beneficiaries.

Fourth, innovative finance can improve the allocation of risk.  Insurance pools may diversify risk, and permit rapid increases in funding in the case of disasters.  We can pool medicines, for example, so that they are available to whoever needs them first.  Stabilization funds with automatic disbursement criteria can ensure that finance is rapidly available, without strings, where and when it is needed.

In each of these four cases, well-designed innovative finance can increase the productivity of aid spending.  As aid becomes demonstrably more effective, so in the long run we can make the case for greater investment.

When is innovative finance not good?

While there are excellent reasons to identify innovative ways to give aid, the need to increase funding is not one of them.  I am in favour of a large increase in aid, but not in favour of achieving it by distorting rational decision-making on taxation and spending.   Many development advocates support schemes to tax financial transactions (a so called “Tobin Tax”) or airline tickets, or a new global lottery (a tax on the poor), if these are used to pay for increased foreign assistance.    I understand the desire to get aid any way we can, but I don’t respect this kind of opportunism.

We should determine the structure and level of taxes on the basis of evidence about the most effective (or least damaging) ways of raising the revenues we need; and we should decide the level of spending on the public’s various priorities based on how we will do the greatest good.  Linking a particular kind of spending to a particular revenue  cannot improve choices about spending or tax, and may unnecessarily constrain them.

Conclusion

Some particularly misguided proposals involving introducing taxes on goods or services we would not normally considering taxing (such as investment in information technology).  By linking these proposal to the (rightly appealing) goal of increasing aid spending, we are in danger of being seduced into doing the wrong things for the right reasons.

Innovative finance holds rich possibilities for accelerating poverty reduction by making aid money work better.  If we can find ways to relax the institutional constraints on spending money at the right time, or increase our ability to make rational commitments, we can make aid money work harder.  In time, this may mean that taxpayers and donors are willing to spend more.  But we should not invent mechanisms whose main effect is to bypass our existing processes for making sensible decisions about tax and spending.

But it is  less impressive to see people come to this issue only after they themselves need an organ.  I don’t recall Mr Jobs using his celebrity to promote this issue before.

I think it would be a good idea to introduce the presumption that people who register as organ donors will jump the queue if they themselves subsequently need an organ.  Perhaps that would focus some minds.

For the record, if I should die, please use anything that still works; and sent the rest to med school for dissection training or whatever they do.  I won’t care then, and as a person living today I like to think that I might be useful.

Traditionally it has taken up to 20 years for new vaccines to reach children in developing countries. The AMC can fix this inequity. Through the pneumococcal AMC, and with the support of the GAVI Alliance which administers it, children in Rwanda and the Gambia are benefiting from pneumococcal vaccines even before children in wealthy countries such as Austria and Japan. What’s more, the mechanism is spurring development and deployment of two newer vaccines that extend protection against strains of pneumococcal disease most common in the developing world. Thanks to such advances, the accelerated use of pneumococcal vaccination is projected to save 5 to 7 million lives by 2030.

The idea (which is mainly down to Michael Kremer at Harvard) is simple: donors promise in advance that if somebody invents and delivers a vaccine that meets certain requirements, then donors will  pay for it to be bought in large quantities.  That promise may provide sufficient certainty for the private sector to invest in developing new products, and to build large-scale manufacturing facilities.  Take a look at this video to see what a difference Michael’s idea is already making.

From a public policy point of view, a nice feature of this schemes is that if it doesn’t work, it doesn’t cost anything.  If you make a promise to purchase an AIDS vaccine when one is developed, but scientists are unable to crack the puzzle, then you have not spent a dime.  You are only committed to buying an AIDS vaccine when it is developed – which, let’s face it, you would have done anyway. By making a firm commitment in advance, you change the incentives for the private sector.  (The economics is set out here in an article in The Economists’ Voice.)

This scheme is designed to tackle an economic problem that runs deep in most market  economies. We typically set up incentives for firms to innovate by promising them a temporary monopoly (through patents) if they are successful. This enables a firm to charge a premium for a limited period to recoup its investment and to compensate it for the risk it has taken.  But this scheme only works if the consumers are willing and able to pay that premium.  (And even then, it has a social and economic cost because it excludes consumers too poor to pay the premium).  The scheme doesn’t work at all for products most of whose consumers are very poor – such as people who get malaria or who need cassava plants that are resistant to attack by the mosaic virus.  That’s why firms spend ten times as much hunting for a cure for baldness as they do hunting for a cure for malaria.  The Advance Market Commitment makes investment in those products much more attractive to the private sector, because now there is an opportunity to charge a premium (paid by the donors) even though the ultimate consumers are poor.

We will be in a better position to judge the effectiveness of the pneumococcal AMC when kids are actually getting injections paid for under the AMC. An important test will be whether we see pharmaceutical firms returning to the development and large-scale production of vaccines for developing countries (and there are some early signs that this is happening).

But the Pneumococcal AMC has already taught us that it is possible to navigate the legal, financial, commercial and political waters to put in place a legally-binding multi-donor commitment to buy a future product. This is the result of outstanding work done by the Center for Global Development (in which I am proud to have played a small, walk-on part).  Early nay-sayers complained that an AMC was theoretically attractive but impossible in practice.  CGD played a critical role by developing a practical way of implementing the idea, which opened the door to the implementation of the pneumo AMC.

Now that it has been shown that an AMC is technically possible, we should be looking at:

• designing an AMC for an “early stage” vaccine such as AIDS;
  It is occasionally said that an AMC works for a late stage product – ie one that has already been largely developed but needs incentives to get it produced – but that it would not be appropriate for products still requiring substantial research and development.  There is no logic to this argument. The original modelling for an AMC was done for an early stage vaccine, and I have never seen a cogent case against using the approach (alongside conventional government funding for basic research) for products at an early stage of development.
• how to get the United States involved
  This approach – of providing incentives for private sector entrepreneurship and risk taking  to be involved in products for developing countries – ought to appeal to US policy-makers, and I have never understood why the US stood aside from the first AMC. There are some technicalities involved making commitments in the US budget process but these are not insurmountable.  Let’s hope the US will be part of the next AMCs.
• using the AMC approach for other health products
  In principle, the AMC could be used to encourage the development and manufacture of a range of other health products such as drugs, diagnostics and surgical instruments
• using the AMC to promote other forms of other research and development
  we should consider whether the AMC might be a good approach for donor funding of other forms of research and development for products mainly used in the developing world, such as new agricultural varieties, solar energy products, and ways of providing clean water.
• the possibilities for other forms of “pull” incentive for research and development
  The AMC is not the only possible pull mechanism to incentivise research for products needed in developing countries. For example, donors might set up schemes to buy out patents, prizes or other rewards for success (e.g. payments linked to DALY’s averted or social rates of return). We should look again at the costs and benefits of these different ways of getting the private sector involved.

We are a group of dedicated animal lovers, and atheists. Each Eternal Earth-Bound Pet representative is a confirmed atheist, and as such will still be here on Earth after you’ve received your reward. Our network of animal activists are committed to step in when you step up to Jesus.  We are currently active in 20 states and growing. Our representatives have been screened to ensure that they are atheists, animal lovers, are moral / ethical with no criminal background, have the ability and desire to rescue your pet and the means to retrieve them and ensure their care for your pet’s natural life.

I wonder if anyone is actually buying this insurance?

There are three questions to answer:

• should we spend more on reducing global poverty?
  (my answer: yes, if we have to)
• should we tax transactions in financial markets?
  (my answer: maybe, though I am not persuaded)
• should we link aid budgets to revenues from such a tax?
  (my answer: definitely not)

My answers are explained below the fold.

I can see why some people are attracted by a combination of extra money for the world’s poor and a poke in the eye for the unacceptable face of capitalism.  But to support the Tobin Tax on these grounds is at best opportunism, and at worst reveals a hostility to the functioning of markets which will, in the end, not serve the poor.

a. Should we spend more on reducing global poverty?

Regular readers of this blog will know that I believe that aid works, though not as well as it should.  I believe we have obligations to our fellow human beings around the world, and that we have it within our power to alleviate suffering and promote shared prosperity.  Aid is not the measure of our common humanity, but it may be the cost of it.   I would much rather promote the well-being of the world’s poor through more open trade policies, open immigration policies, changes to intellectual property rules, reductions in environmental damage and changes to our policies on peace and security.  But (a) we aren’t in fact doing any of those things; and (b) we should be giving aid at the same time, especially as it is a natural complement – e.g. to more open markets.   We should spend what it takes to eliminate global poverty – it is easily affordable – and if we can do it with less aid, all well and good.  So yes, let’s spend more on aid, but let’s remember this is a means to an end, not an end in itself.

b. Should we tax financial transactions?

Adair Turner apparently believes that there are financial activities which are “a socially useless activity” and which should therefore be discouraged by taxation. However, the test for imposing a tax on an economic activity should not be whether it is socially useful, but whether it imposes costs on the rest of us.   Presumably somebody wants the financial transactions in question, which is why they are willing to pay for them.  If we want to impose a tax on them to discourage them, we have to explain what harm that does the rest of us.   (Readers may be able to think of other activities undertaken by consenting adults that have no wider social benefit, but also do no social harm: should we tax all these too?)

Tobin believed that a tax on transactions might increase financial stability.  That is the makings of a case for taxation, because financial stability is a public good.  (Tobin explicitly distanced himself from the anti-globalisation supporters of his tax.)  But it is not obvious that a Tobin Tax would increase stability.  Are markets with fewer, larger transactions likely to be more stable than markets with more market players, and more frequent, smaller transactions?

In the end, this is an empirical question. If it really is true that markets with higher transaction costs are more stable than markets with lower transaction costs, then a Tobin Tax looks attractive. If not, not.

c. should we link aid to revenues from a tax on financial markets?

This is where I part company most sharply from those who think that it would be a good idea to use a Tobin Tax to finance international development.

My reservations are part theoretical, part practical.

The theoretical objection is this.  Good public policy demands that governments spend the taxpayers’ money in the most effective ways to increase the sum of human happiness; and that they raise the money in ways which are either beneficial (e.g. by taxing bad things such as pollution) or at worst, in ways that do least harm.   These should be separate decisions: linking a particular form of revenue to a particular form of spending unnecessarily constrains those choices.   We should evaluate the case for aid spending on its merits; and we should evaluate the case for a tax on financial transactions on its merits.   If we link one to the other, we may find ourselves pushed into less effective forms of spending, or less effective forms of tax.

And here is the practical objection.  It has been clear from the current financial crisis that we need aid to be counter-cyclical – that is, we need more of it in a downturn; whereas in fact it is proving to be cyclical – that is, industrialised countries find it convenient to cut back on aid when things are tough.  Turnover in financial markets is pro-cyclical. That means that if a tax on turnover is a primary source of aid finance, aid will become more cyclical, which is the opposite of what we need.

Conclusion

We concede too much ground when we advocate a Tobin Tax to pay for international development.   We have profound obligations to help our fellow human beings, and we can do so at little cost to ourselves.  Our obligation is to see to it that people have the  food, water and shelter they need, access to security, health care and education and to a decent quality of life.    If this costs more money than we are spending, so be it.  The sums are small.  If we can achieve these things with less aid, or no aid at all, all well and good.   This is solid ground which we should defend.  When we argue that the money should come from a Tobin Tax, or an airline duty, we implicitly move the debate to measuring our solidarity by the amount of aid we give, rather than what we seek to achieve, and implicitly concede that aid at the levels required to achieve these simple things cannot be afforded without additional taxation.

Lord Turner, head of the Financial Services Authority, said it was “economic illiteracy” to expect his organisation to be able to dictate to banks what they paid their staff.

He complains that is is beyond the remit of the FSA:

“My message was . . . stop telling the FSA to go beyond its remit and to start imposing limitations on the level of bonuses, which it is neither within our legal power or our practical ability to do,” he said.

Well, up to a point, Lord Copper.

It all depends on why you want to curb city bonuses:

• concerns about social inequality
  If inequality is your motivation, Adair Turner is right. This is for the Government to sort out, not the FSA.
• concerns about the cost to the banks
  If you are worried about the cost of salaries, this is for the shareholders to sort out. Again, since the Government is a big shareholder in a number of the banks, the Government could take steps to address it.
• concerns that bank staff have incentives to take unnecessary risks
  But this is squarely the business of the regulator.  If you think that the bonus culture leads city folk to take risks with our money because the bonuses reward short term payback and do not sufficiently penalise long run losses, then this is something the FSA should sort out.

So it is not economically illiterate to think that the FSA should look at city bonuses, if there are concerns that they might create incentives for risky behaviour that we want to avoid. (I have no idea whether the FSA  the legal powers to do so: but that is a different point.)

Imagine that your daily earnings were less than the price of this newspaper. Would you consider buying private education and private healthcare?

Before you make up your mind, here are a few considerations: government healthcare and primary education are free; the private-sector doctors are ignorant quacks and the teachers are poorly qualified; the private schools are cramped and often illegal. It doesn’t sound like a tough decision. Yet millions of very poor people around the world are taking the private-sector option. And, when you look a little closer at the choice, it’s not so hard to see why.

Now there is a dilemma here.

On the one hand, we know that charging even a very small amount massively reduces the take-up and impact of services such as health and education. (This survey by Holla and Kremer summarises the evidence.)  So charges excludes many people from access, and it seems likely that the poorest and most vulnerable will be excluded most of all.

On the other hand, we know that public services in developing countries are often poorly managed and badly delivered. That’s why, as Tim points out in his FT article, many of the very poorest people choose to go private instead.

Apologies if this is anecdotal, but I see this dilemma in practice every day. My partner works for Marie Stopes International, which operates 21 clinics for women (providing contraception and abortion) here in Ethiopia.  They charge their clients for services – a small amount which is just enough to pay for the cost of running the clinics.   The result is that they are very focused on delivering services that will bring their clients into the clinics every day – that is, services that they actually need, at a price they can afford.  My feeling is that, as a result, they are more focused on their customers than most public services in developing countries, and indeed in some developed countries, whether financed by aid or by taxation.

So how can we disentagle ourselves from the horns of this dilemma?  Here are three thoughts:

• First, we should take seriously Tim’s observation that “a little accountability goes a long way” and think  much harder about how we can make public services more acountable.  You have probably heard about the way more funding reached Ugandan schools as a result of greater transparency (though the details have been disputed (pdf)). The work of my team on aid transparency is a modest contribution to this effort.
   
• Second, we should not be ideological about whether the public or private sector actually provides services, as long as the government takes steps to ensure that there is universal access. For example, governments (with the support of donors) might issue vouchers to the poorest, enabling them to choose for themselves whether to use public or private services.
   
• Third, in the long run this problem will be reduced if and when there is equitably shared economic growth which gives people sufficient incomes for these kinds of choices to be more reasonable.

I have a personal interest in this because I travel a lot by air (boo!) but I have not eaten meat for 25 years, nor do I own a car.  I also live in a house that has neither any heating nor air conditioning; nor (unlike many ex pats in Addis Ababa) do we have a generator.  So if we are fixated only on air travel, my carbon footprint looks horrendous; but it looks a lot better if you take account of other aspects of my lifestyle. I am sure I should do more, probably much more, to reduce the damage that I do to the environment: but let’s look objectively at the overall impact of a person’s lifestyle, rather than focus on any single measure.

The fixation with air travel annoys me because I think that there is public good in air travel.  The world would, in my view, be a better place if more people were able to travel and meet people in other countries and learn about other cultures.  We would have a stronger sense of solidarity with other people around the world and a greater willingness to act collectively to solve global problems.  We would probably be more worked up about the need to tackle global warming if we saw first hand how it is already affecting communities affected by rising temperatures and rising sea levels.  Air transport also enables farmers in Africa to grow flowers and beans for sale in Europe, with an overall carbon cost that is much lower than if these products were grown in greenhouses in Europe, and that trade provides livelihoods for more than a million people who desperately need it so that they can trade their way out of poverty.

I do not see a similar “public good” argument for eating meat.  I did not become a vegetarian 25 years ago because of climate change, which hadn’t been invented then, but because I thought then and continue to believe that it is wrong to eat animals purely for pleasure.  As well as being bad for the animals themselves, and for the climate, the meat industry is destroying our health and our countryside.

Yesterday Tristram Stuart Hunt in The Guardian calculated how much we should reduce our meat consumption:

Based on the global food production figures published by the FAO, I did a few preliminary calculations. Global average consumption of meat and dairy products including milk was 152kg a person in 2003. Average EU and US consumption, by contrast, was over 400kg, while Uganda’s was 45kg. In order to reach the equitable fair share of global production, rich western countries would have to cut their consumption by 2.7 times – and this doesn’t include the fact that the butter will have to be spread even more thinly if the global population really does increase by another 2.3 billion by 2050.

However, still further reductions would be necessary because global meat production is already at unsustainable levels. The IPCC among other bodies, has called for an 80% reduction of greenhouse gas emissions by 2050. Since high levels of meat and dairy ­consumption are luxuries, it seems reasonable to expect livestock production to take its share of the hit. For rich ­western countries this would mean decreasing meat and dairy consumption to significantly less than one tenth of current levels, the sooner the better.

So let’s try to focus less on air travel – which has positive benefits for the world – and more on changing our diet, which we should be doing even if there were no impact from livestock on climate change.

I suspect that the environmental movement focuses on air travel partly because it appeals to an instinct for class war. The kind of people who fly several times a year on long-haul flights are the kind of people we love to hate.  This makes a campaign against air travel much more popular than criticising people for eating meat, which would mean taking on “ordinary” people.

Of course, as a vegetarian who flies a lot, I would say this, wouldn’t I?

As well as an interesting way of working, this threatens to be a very interesting topic. David is not starry eyed about the role that microfinance (and other financial services for the poor) can play in development – he’ll bring an unsual degree of rigour and balance to this debate.

These missions are a major burden on developing countries. Each mission ties up many hours of ministerial and official time. The policies pressed on governments are often contradictory, lack evidence and have little or no legitimacy in local policital processes. That is why donors promised in the Paris Declaration on Aid Effectiveness to reduce the burden of missions.

Yet in the 18 months since that declaration there were 11,000 missions to 31 countries surveyed by the OECD – an average of about 350 missions per country per year. Each mission lasts about a week, so on average each country will have about 5 donor missions in country at any one time. This is a huge cost to the scarce administrative capacity of developing countries: costs which are imposed by well-meaning donors but borne by the recipient government.

The costs of missions can be thought of as a negative externality – which suggests that developing countries should adopt the polluter pays principle as a way to control the burden. Using the analogy of cap-and-trade in environmental pollution, developing countries could issue tradable missions permits. Here is how it could work:

• Developing countries would each decide how many donor missions they can absorb in total each year. Suppose that a country decides to accept 50 donor missions a year (a seventh of the number they now receive on average!). The government would then issue 50 tradable missions permits, which they would sell to donors in an online auction.
• Development agencies designing aid programmes that require a donor mission would have to include in their budget the cost of buying one of these permits, either in the auction or in a secondary market. This would mean that the budget of the aid project would include explicitly not only the cost to the donor of providing the resources, but also the cost to the recipient that the project will impose. The donor thus bears the full cost of its decisions.
• Donors would have an incentive to coordinate their programmes and send joint missions, since they could then share the costs of mission permits.
• Donors would also have a financial incentive to decentralize their operations to resident staff, rather than sending missions from HQ.

The key to making this work would be for developing countries to be rigorous in limiting donors’ access to ministers and officials to teams holding a mission permit. There would be strong pressures – including financial – on them to accept an additional meeting without a mission permit. This could be avoided to some extent through the visa regime (visiting staff from donor agencies would have to quote their mission permit number), but to some extent the donors would need to police the system themselves.

In general, it seems to me that many of the challenges in the development industry relate are the consequence of negative externalities of donor decisions. As the number of donors increases, the prospects for solving these problems through coordination and committees seem more and more remote – and we should look instead to decentralized, market-based mechanisms to align incentives to deliver better results.

some recent research by Cranfield University – who compared the emissions from producing 12,000 rose stems in Kenya with those in Holland, including transporting them to Hampshire – and found that the emissions produced by Kenyan rose and flying them here can be less than a fifth of those grown in heated and lighted greenhouses in Holland. Why? Because Kenya is warm and sunny, and heating greenhouses in Holland uses enormous amounts of fossil fuels.

Furthermore, even if it were not better for the environment to buy African flowers rather than Dutch flowers, we should still consider buying flowers, fruit and vegetables from Africa:
people living in the vast majority of African countries are responsible for a tiny amount of carbon emissions. In Kenya, carbon emissions are 200 kg a head; here it is fifty times that. We should bear that in mind when making our choices.

This is social justice on a global scale. If we boycott their goods that are flown to the UK we deny our fellow human beings their chance to grow; their chance to reduce poverty. It’s like saying, we messed this planet up, but you can take the consequences.

So do the right thing on Valentines Day: buy flowers from Africa.

Sadly, for too many farmers in poor countries today, they are trapped in not terribly voluntary co-operatives. Out in rural Kenya last week, I found that there was some scepticism towards the traditional view the co-operatives are always forces for good. In fact, in Kenya, the coffee co-operatives have suffered from significant mismanagement, with individual farmers often exploited by the leaders of the co-operatives. In fairness, Kenya has been trying to help rebalance the situation, for example introducing six year term limits on co-operative leaders. I do worry that spokespeople for the Fairtrade movement suffer from a myopic romantic vision of the coffee farmer in a co-operative, which the truth such an existence is backbreaking and mired in exploitation.

It would be a cruel irony if the fairtrade movement itself became a new form of expoitation.  The principle of fair trade – that people should be able to spend more buying products that they know to have been produced without exploitation – is a good one.  But the recent articles in the FT and Alex's report from Kenya suggest that more needs to be done to ensure that the fair trade certificate means what it says.

See also today's FT leader. 

Update: the Fair Trade Foundation replies here. 

G and I saw Radiohead on Friday evening.  The Greek Theater in Berkeley is a very intimate setting – the audience is close to the stage, and you can sit on concrete seats or on the grass.  I felt a bit old as I tucked my earplugs into my bag (in case it was a little too intimate) but felt years younger when G also insisted on taking seat cushions to sit on.  We were joined by Dave and Nathan.

It was a good set – lots of new material as well as old songs (including "Exit Music", "National Anthem" , "Whose Army" and "Idioteque" as a grand finale).  I didn't hear anything from Pablo Honey – certainly not "Creep"  but perhaps they don't play that any more. The new material – presumably destined for an album later this year – continues in the same vein as Amnesic – a kind of alternative Pink Floyd from the Syd Barrett years. There is nothing as simple (or as memorable) as a chorus in any of the new tracks; but lots of psychodelic build-up to a neruotic crescendo, which can be just as powerful.

Thom Yorke seems to get more whiny as he takes himself more (too?) seriously, but he writes good songs. Jonny Greenwood is better on the sound-board than his caricatured thrashing of lead guitar  – he is obviously very talented, and seemed to be doing much of the mixing live. There was only a skeletal support crew for a band of this stature.

I was struck how little chemistry there was between the band members during the set – I would not be surprised  if the rumours of a break up turn out to be true.  Even the Greenwood brothers scarcely acknowledged each other on stage. I have not seen Radiohead live before, so perhaps they have always behaved like this.

A national identity register of unique personal identifiers could make a significant contribution to improving government services.  We could introduce such a register without allowing the establishment of a surveillance state. 

The following five conditions would help to protect our liberties:

• government data should be stored in decentralized databases, not in shared data warehouses;
• citizens should have access to all data held about them by government
• citizens should be able to see a log of all government access to their data
• an independent information security ombudsman should police the systems
• there should be no identity cards and no collection of biometric data

If all these protections were put in place, I would welcome a national identity register. If the Government will not implement any of them, I should like to know why not.

The benefits of unique personal identifiers

Many bloggers and other tech-savvy folk hold two apparently inconsistent thoughts about government data:

• Governments should use technology to provide better public services, reducing the costs of administration and bureaucracy while providing services oriented around users rather than providers.
• It would be an intolerable erosion of civil liberties for the Government to establish a central database which holds important personal details of each citizen.

The tension between these concerns is evident.  Government could be much more effective if its different computer systems could exchange information electronically.  For example, when parents register the birth of a new child, the government could automatically confirm that they are eligible for Child Benefit by checking their residence and nationality, and then initiating electronic payments directly into their bank account. There would be no need for the parents to complete the claim form or provide further information.  The government could also adjust the parents’ income tax deductions to take account of the Children’s Tax Credit, book an appointment with a Health Visitor, and schedule the new baby’s immunizations. 

This may sound far-fetched, but it is exactly what happens in Estonia. Because each individual in Estonia has a unique identifier which is used by every government system, an interaction with any government agency can trigger appropriate responses by other government systems.

The role of information matching in government

A very large proportion of government employees are engaged in collecting and matching information, often involving collecting the same data again and again.  Entire government agencies are devoted to tracking whether someone is entitled to a driving license, the names of voters at a particular address, or whether a person qualifies for housing benefit.   The same information is duplicated again and again across government.

Here is a list that includes 15 government services that a citizen needs to inform when they change address.  Nearly a decade ago the Cabinet Office tried to pilot a joined up government service that would enable citizens to notify government only once when they moved house.  The idea was that a single change of address system would automatically update multiple government databases. After several years, they gave up: without a unique personal identifier, there was no way reliably to ensure that the correct record in each system was being updated.

There are multiple disadvantages to the lack of joined up systems. As well as being very expensive, the duplication imposes significant costs on users of government services, who have to provide the same information repeatedly in slightly different forms; it reduces take-up of government services; and it limits the ability of government to provide services effectively. To put it emotively, Ian Huntley might not have killed Jessica Chapman and Holly Wells if government information systems had been able to share information.

Arguments against a national identity register

The present Government proposes to remedy this by introducing a National Identity Register (NIR), which will be a new database holding personal identity information and biometric data.  The NIR would contain only identity-related information: it would not include medical records, tax and benefits information or most other government records. It would, however, include a unique Identity Registration Number (IRN) which would be used as an index field for records held in other government systems.

The proposed identity register has run into considerable opposition. There are four main concerns about it:

• the existence of unique identity numbers would make possible the creation of a massive virtual database including the national DNA Database, electronic surveillance data and phone and internet surfing records. Civil servants and secret services would be able to access and search through comprehensive files on every person resident in the UK, including current and previous jobs and addresses, tax and finances, family relationships, health, and religious or political affiliations.
• there is a danger that comprehensive personal information could fall into the hands of third parties if there is a breach in IT security;
• the database could be very expensive, especially given the history of government IT projects which overrun their budgets;
• the national identity register underpins of the proposed introduction of national identity cards, which many people oppose.

A national identity register without the surveillance state

It is simple to design integrated government services while limiting the opportunities for a surveillance state.  The national identity register could sit at the centre of a distributed government computing architecture of shared security, data and message-reporting so that every government service can use common data efficiently and securely, without creating central Big Brother databases about each citizen. 

By using decentralized systems communicating by means of encrypted messages, there would be no government-wide virtual database.  For example, suppose that a local education authority wants to check whether a new teacher is on the register of people who are not allowed to work with children. The HR system at the education authority would automatically send an electronic message to the child protection register, containing an encrypted version of the identity registration number of the proposed teacher, together with the public key with which the number had been encrypted. The child protection register would check whether any of the people listed as risky in its database had identity numbers which, when similarly encrypted, matched what it had been sent, and it would warn the employer if there is a match. This would enable the employer to check if somebody is on the re
gister; but no government computer other than the employer initiating the request would have access to the identity of the proposed new employee. Hence there would be no central record of all new teachers being employed: that information would be held, as now, by decentralized HR systems of local education authorities and schools. The child protection authorities would only be able to discover the identity of the teacher if he or she is already on the register.

This is a far cry from a central database that collects information about each of us, and which enables officials to see huge quantities of information about our lives. These encrypted requests could be exchange across government with no way for the systems to build up a general picture of citizens’ lives.

Decentralized systems of this sort could actually protect rather than reduce the privacy of the citizen.  Under present arrangements, many government offices and systems have to exchange (and store copies) of information to enable them to do their jobs. With encrypted messaging, the information passing between agencies could be both more limited and fully logged and audited.

A national identity register done right

The following five principles should govern a joined up network of decentralized government databases integrated using a single personal identity registration number:

• government systems should communicate over a common secure messaging layer by means of encrypted messages which limit and log the transfer of information between systems; in general requests made by client systems should be structured so that the request does not reveal additional information to the server systems;
• citizens should be able to access all information held about them by government databases through a single web portal, to enable citizens to check that government-held information is accurate and to get it changed if necessary;
• each database should log every time personal information is accessed by any government official or system; citizens should be able to see which information has been accessed, by whom and for what purpose;  an explicit court order would be needed in advance for a government agency to access personal information covertly (as it is now for telephone taps).
• an information security auditor should be appointed as a public ombudsman to check that these principles are being implemented by all government systems.
• the introduction of an identity register should be considered separately from the issue of national identity cards and the collection of biometric data.  In particular, the benefits of a national identity register, which may be considerable, should not be used to advocate the introduction of identity cards or the collection and storage of biometric data.

Answering the other criticisms of a national identity register

We listed above four criticisms of the national identity register. The proposals here deal with two of them: the risk of a surveillance state and the extension of the register to the introduction of national identity cards.  The other two are relatively straightforward to deal with:

• risk of compromise
  information systems can be made secure.  Commercial banks judge that it is safe to provide online access to bank accounts, which means that secure and trusted systems can be designed to protect personal information. A decentralized set of government databases communicating by encrypted messages would be safer than data warehouses.
• the cost and complexity
  designing a decentralized information architecture and building a national identity register is not, in itself, particularly complex and it need not be expensive.   A database containing a relatively small amount of information for 60 million people is a relatively straightforward IT project.  The complexity and cost comes in the corresponding changes to other systems that need to access the register (e.g. vehicle licensing, tax systems etc) – but this can be managed by encouraging those systems to evolve gradually as part of the normal cycle of upgrade and replacement, within a common architecture.

Conclusion

A properly designed, well regulated, decentralized architecture for government computing could provide hugely more efficient and effective services without introducing the Big Brother state that might result from the growth of common government databases.

There are five conditions for the introduction of a national identity register which would provide a high level of protection of basic liberties:

• use of decentralized databases communicating by secure messaging;
• guaranteed citizens’ access to all data held about them by government
• guaranteed citizens’ access to a log of all government access to their data
• the establishment of an independent information security ombudsman
• no identity cards or biometric data

The Government’s case for the introduction of a national identity register would be hugely more persuasive if it would embrace principles such as these.  If it won’t, then one can only wonder why not.

Here is me on my morning run in Boulder yesterday. This is at the top of Bear Peak, from which there are great views over the Rockies.

Unfortunately I lost Grethe’s phone somewhere down the trail coming down. But the views were definitely worth the cost of replacing it.

The right to religious freedom is the right to have and express beliefs and to worship as believe your religion demands.  But there is no right to be free from criticism or ridicule for what you believe.  Nor is there any right to require others to share your superstitions, or behave as if they did.

If you want to believe that wine turns into blood, that it is wrong to turn on a light on Saturday,  that it is immoral to draw pictures of prophets, that virgins give birth, or that Taurus should not marry Pisces, that is fine by me.   Gather on hillsides waiting for the second coming, get together and sing songs, or throw salt over your shoulder if you want.  Such are your rights.

But do not think that, just because you hold those beliefs dearly, that they are immune from criticism or ridicule.   You do not have the right to expect others to respect your beliefs, even if you label them as your religion.  You may be insulted by the knowledge that other people do not share your beliefs, or by their behaviour; but that is their right.  You do not have the right not to be insulted.

I am offended when the Pope argues against using condoms in Africa, even though they would help to prevent the spread of AIDS.  I am offended by the treatment of women by Christian and Islamic religious traditions.  I am offended by the way that Judaism treats homosexuals.  But just because I am offended by these things does not give me the right to prevent others from believing them, or to try to stop them from acting in accordance with their beliefs.

The limitation on free speech is that there is no right to incite violence against you.   This limitation protects you if you have religious views, or if you have none.  It follows from respect for you as a person, not respect for your beliefs.

So what was Jack Straw thinking of when he said this?

Let me say this about these cartoons. I make no comment about their
original publication, that is a matter for the Danish public,
parliament and Danish law. But there is freedom of speech, we all
respect that, but there is not an obligation to insult or to be
gratuitously inflammatory, and I believe that the re-publication of
these cartoons has been unnecessary, it has been insensitive, it has
been disrespectful and it has been wrong. And if I may say so, I place
on record my regard for the British media who have shown considerable
responsibility and sensitivity in this regard.

What we also have to remember is that there are taboos in every
religion. It is not the case that there is open season in respect of
all aspects of Christian rights and rituals in the name of free speech,
nor is it the case that there is open season in respect of the rights
and rituals for the Jewish religion, the Hindu religion, the Sikh
religion, and it should not be the case in respect of the Islamic
religion either. So we have to be very careful about showing proper
respect in this situation.

(my emphasis)

It would be ludicrous to say that there is an obligation to insult or be gratuitously inflammatory. But there is a right to insult or be gratuitously inflammatory.

Straw’s metaphor of "open season" is unfortunate.  Open season is a hunting term denoting a time of year when it is lawful to hunt or trap.  It is never right to harm people, whether religious or not.  But as far as I am concerned, it is always "open season" if that means being able to criticize or ridicule rituals and superstitions, whether they are Christianity, witchcraft, Moonies, Judaism, Hinduism, Islam, astrology, belief in Santa Claus, or faith in homeopathic medicines.  I feel no tinge of regret about insulting people who hold these superstitions.

People who have been offended by the publication of cartoons have every right to boycott whatever products they like.  They do not have the right to call for violence against those who have published them.

I think it is a pity that the British newspapers have not reproduced the cartoons.  There is a charming myth that when the Nazi authorities instructed that Danish jews should wear a Star of David armband, the King of Denmmark appeared the next day wearing a Star of David himself, in solidarity.  I hope that every newspaper that believes in free expression of ideas will publish the cartoons, and that we challenge those who are offended by that to boycott products from every one of those countries. 

Update: The US State Department has joined the debate:

We all fully recognize and respect freedom of the press and expression but it
must be coupled with press responsibility. Inciting religious or ethnic hatreds
in this manner is not acceptable.

So much for our allies in the fight for freedom.

…In terms of our own policy and our own law, Hamas is considered to be a terrorist organization and we do not engage with terrorist organisations, we don’t have meetings with them, so as long as that remains the case we are not going to be having contacts with them …

Now that Hamas is the elected Government, how can it be a "terrorist organisation"?   How are we now definining "terrorist"?

Kristen, Amy, me and Gabor at the track this morning (photo taken by G).

We did 3 sets of 4x400m at 5km race pace, with a very short (40 second) recovery between efforts.

(Click the photo for more photos from this morning.)

In an unprecedented move, Stanford University is collaborating with Apple Computer to allow public access a wide range of lectures, speeches, debates and other university content through iTunes. No need to pay the $31,200 tuition. No need to live on campus. No need even to be a student. The nearly 500 tracks that constitute “Stanford on iTunes” are available to anyone willing to spend the few minutes it takes to download them from the Internet.

There is plenty of scope for greater global knowledge-sharing here.

Mr Kennedy’s statement was triggered by the intelligence that ITV News chief political reporter, Daisy McAndrew, planned to report the story on the ITV evening news.

So who is Daisy McAndrew?  In the 1990s, as Daisy Sampson, she was a freelance journalist, scraping a living by hanging around the House of Commons doing tedious profiles for the (unreadable) House Magazine. 

Her big break came in November 1999, when she became Press Secretary to none other than  Charles Kennedy.  In a gushing piece of self-praise, her (self authored) profile on the BBC website says:

Kennedy was widely credited as having by far the best
campaign of the 2001 General Election – in no small part down to
Daisy’s handling of his press and image.

Since the 2001 Election, Ms McAndrew has risen fairly rapidly, though without distinction, first co-presenting The Daily Politics with Andrew Neil (is it possible that Mr Neil chooses his co-hosts on the basis of something other than the size of their intelligence?) and then presenting the LBC evening radio programme.

At ITN, Ms McAndrew’s reporting has been pedestrian at best, and she has not broken any major stories. Her editors must have been beginning to wonder why they had appointed her.  Her ‘scoop’ yesterday, reporting the worst-kept secret in Westminster – may have lifted her reputation in the news industry.

I hope it does not.  This is not journalism, it is betrayal of confidence of a former employer.  In my view, there is little or no public interest in reporting the details of Mr Kennedy’s private medical condition. But even if there were, it was not the story that Ms McAndrew should have broken. Ms McAndrew owes a duty of confidentiality to Mr Kennedy, with whom she worked closely at a personal level.  Her career in journalism was given a significant boost by her two years working as his Press Secretary – indeed, if it were not for him, she would probably still be labouring over profiles in the House Magazine.  Now she has decided to give her career a further lift by spilling the beans on the man who gave her her first real break and whose trust she has now betrayed.

The proposed extradition treaty was signed on March 31, 2003 by US Attorney General, John Ashcroft, and the British Home Secretary David Blunkett. It was transmitted by the President to the U.S. Senate Committee on Foreign Relations in April 2004, and was considered by them on 15 November 2005. The Committee hearings were held in private and no transcript has been published, so we don’t know exactly what happened, but it appears that the Committee declined to vote on the treaty. This is a major problem for the passage of the treaty, as the the full Senate cannot consider the treaty until the Committee has approved it.

Opposition to the treaty in the US is based on fears that it removes the exception for political offences, allows for extradition even if no US law has been broken, removes any statute of limitations, applies retroactively, and allows the UK authorities to try a person for an offence other than that for which he or she was originally extradited. The  failure of the Committee on Foreign Relations to vote on the treaty is the result of opposition from American Civil Liberties Union (which probably doesn’t matter the Republican-controlled Senate) and from the Ancient Order of Hibernians and other Irish-American organisations (which probably does matter).
If the treaty removes liberties from US citizens it do so even more from people under the jurisdiction of the UK. Under the existing 1972 treaty, the US has to produce evidence sufficient to make a case to answer under UK law, whilst the UK has to satisfy a “probable cause” test for extradition from the US. (These are broadly similar in effect: the requirement for prima facie evidence is probably a little more onerous than the requirement to show probable cause.)  Under the new treaty American prosecutors no longer have to provide prima facie evidence in order to extradite a citizen from the United Kingdom. Article 8 of the treaty only requires the US to provide a statement of the facts of the offence only. By contrast, Article 8.3(c) of the treaty requires UK prosecutors to supply information in an extradition request providing a “reasonable basis to believe that the person sought committed the offence for which extradition is requested”.

Unlike many commentators on this treaty, I don’t think the main problem with it is lack of reciprocity. There are precedents for extradition treaties to contain provisions which are not entirely reciprocal (for example, different countries have different arrangements for the treatment of their own nationals in extradition proceedings). The problem with this treaty is that it removes the liberty of a person not to be extradited without the presentation of evidence, at least in respect of extradition from the UK.

The treaty has had to be asymmetrical because the US Bill of Rights protects US citizens:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

As a result, the US cannot agree to extradite to foreign countries unless the requesting country produces evidence on which it bases its request.   However, the UK Bill of Rights offers no similar protection, and so the UK Government has had no qualms about signing 47 extradition treaties (including with Russia and Albania) which permit extradition without requiring prima facie evidence of wrong-doing.  And that is the problem with this treaty.
The problem is compounded by the fact that the US takes a very broad view of its extra-territorial jurisdiction, as we have seen in recent cases of financial crime. This can result in extradition being sought by the US where the alleged offence was committed in the UK, the alleged victim was in the UK, the relevant documents and witnesses are in the UK, and the defendants whose extradition is sought are resident in the UK. If this treaty is ratified, the US authorities will be able to extradite people whom they consider fall under their jurisdiction, without providing any evidence, even if the legal authorities in the UK do not consider that a crime has been committed or that there is sufficient evidence to prosecute here.

This treaty may never be ratified if the Irish lobby is successful in convincing the Senate that the treaty will allow IRA sympathisers to be extradited to the UK, where they cannot be sure of facing a fair trial.  But the real problem here is that the Government has quietly given away, in this treaty and many others, the right of British citizens not to be forcibly removed to another country without the presentation of some evidence against them.  That is why this treaty should not be ratified.

This has been the year fans have increasingly taken music into their own hands, rejecting the over-processed diet served up by many major labels in favour of something a little more homemade. In the process they have notched up numerous high-profile successes, including Arctic Monkeys, Arcade Fire, Clap Your Hands Say Yeah, Spinto Band and Nizlopi.

It does seem to me broadly right that it is in the interest of songwriters and performers that people should be able to share music, rather as many of us did with cassette tapes many years ago.

Today we remember the men and women who have served their country.  I am not a pacifist and I am grateful for the courage and sacrifices that have been made on my behalf.

At the going down of the sun and in the morning, we will remember them.

On a personal note, I was named in part after Wilfred Owen,  the First World War poet.  He fought heroically  in the Somme, and after medical treatment (the subject of Pat Barker’s book Regeneration) he returned voluntarily to the front. He was killed on 4th November 1918, just a week before the Armistice.  He was a courageous patriot who understood at first hand the horror of war. In 1917 he wrote Dulce et Decorum Est, one of the most expressive condemnations of war ever written:

…
If in some smothering dreams you too could pace 
Behind the wagon that we flung him in, 
And watch the white eyes writhing in his face, 
His hanging face, like a devil’s sick of sin; 
If you could hear, at every jolt, the blood 
Come gargling from the froth-corrupted lungs, 
Obscene as cancer, bitter as the cud
Of vile, incurable sores on innocent tongues, 
My friend, you would not tell with such high zest
To children ardent for some desperate glory, 
The old Lie; Dulce et Decorum est 
Pro patria mori.

To his credit, Alex seems to be softening his position.  He says

But I’ve increasingly found being a critic of Fairtrade somewhat uncomfortable. … Let’s face it, the Fairtrade scheme – despite its provocative name – is not the opposite of free trade. It can go hand in hand with free trade – after all, it’s about consumers being free to choose to be altruistic when buying coffee.

Quite so.  It is a sign of his intelligence that Alex is willing to be convinced, and it reflects well up on him that he is open about changing his mind.  

The Globalization Institute’s new position will be set out in a report next year, including suggestions for improving the scheme.

I know it is unfashionable, but I am much less convinced than the GI that their beloved microcredit schemes do any good.  But that is a discussion for another day. 

A group of K-Stars ran the Silicon Valley Half Marathon this morning. All enjoyed it, and Tomas (1:29:53) and Dave O’Connor (1:24:50) achieved personal records. Christine (1:40:20) won her age group. Grethe ran 1:38:07 and I ran 1:21:49. Andy (1:22:56), Dave and I scored for the team. We were not the fastest team but don’t know if we were in the top three. (Update: we were third team.)

Now for a large breakfast.

In the photo (clockwise): Tomas, Mike (1:55:54), Owen, Andy, John (1:27:43), Dave O’C, Dave P (1:30:02), Christine, Grethe.  Missing from photo Heather (1:42:03 – second in age group).   In the 5km (not in photo) were Janet and Malinda.

Full results here.

The interview touches on the Government’s draft anti-terrorism legislation, the UN summit, development, Iraq, and Tony Blair’s legacy of reform of public services.

If I have time, I will post soon about the Government’s proposed anti-terrorism laws. In the meantime, I will let the Prime Minister’s words speak for themselves:

let’s be absolutely clear: there will be all sorts of people who say for all sorts of reasons: "look, I understand why the terrorists do it, and you know, you can sympathise with their motivation." Now I happen profoundly to disagree with that, but I am not suggesting that you make that a criminal offence. Er, what I am suggesting should be an offence is somebody who in effect by glorifying is inciting and is saying to people – particularly impressionable people – and we know, look,  that this is a modern phenomenon that we have, this extremism based on a perversion of Islam – is in effect saying to impressionable young people: this is something you should do.

I remain unclear what statements the Government wishes to make illegal. Are there statements which are not incitement, which is already illegal, and which are not merely expressing sympathy with a terrorist’s motivation, which Mr Blair does not think should be illegal. Can anyone think of an example of such a statement?

It is quite a common perception in America that it stood up for democracy and freedom in Europe.  Just this week, President George W. Bush compared the war in Iraq with the two World Wars

We defeated fascism; we defeated communism; and we will defeat the hateful ideology of the terrorists who attacked America. Each of these struggles for freedom required great sacrifice. From the beaches of Normandy to the snows of Korea, courageous Americans gave their lives so others could live in freedom.

I am not making a point about Republicans: a decade ago Bill Clinton said:

Our people fought two world wars so that freedom could triumph over tyranny.

I am an economist, not a historian, so doubtless somebody will put me right if I have got this wrong, but that isn't how I understand America's involvement in either of the World Wars.  The way I heard it, America was a determined isolationist in the run up to both wars:

• Britain went to war on August 4th 1914 in response to an unprovoked invasion of Belgium.  The US entered the war on April 6th 1917, nearly three years later, following aggression against American shipping by German submarines (and about two years after the sinking of the Lusitania on May 7th, 1915).  
• Britain went to war again on September 3rd 1939 when Poland was invaded. Canada, Australia, New Zealand & South Africa all immediately joined Britain by declaring war on Hitler in 1939, and the United States did not. It wasn't until more than two years later, following the Japanese attack on Pearl Harbor on December 6th 1941, that the United States entered the war. Hitler declared war on the United States, not the other way round. Though some brave and principled Americans chose to join the Canadian armed forces to help fight the Nazis, the US Government  remained officially neutral until it was attacked, and most Americans opposed joining the war until the attack on Pearl Harbor.

What's more, as the third volume of Robert Skidelsky's magisterial biography of J. M. Keynes describes, Britain paid a heavy price for US support. The United States demanded that in return for Lend Lease, which Britain desperately needed to sustain its war effort, Britain pledge itself to abandon any aspirations of post-war empire, dismantle the system of imperial preference and shrink the sterling area to prevent it from competing with the dollar.  Skidelsky describes the way that Washington managed the flow of Lend-Lease supplies which had the effect, and perhaps the intention, of leaving Britain dependent on US help after the war on whatever terms America chose to impose.  And the terms they imposed were not generous.  Did you know that, even today, Britain is still re-paying America for its World War II debt?  The British Treasury still has to write cheques to the US Treasury, year after year, to pay back the costs of fighting the Nazis. (Britain will make its final payment in December 2006.)  Not exactly the behaviour of a close friend and ally, fighting shoulder to shoulder for democracy and freedom.

Of course, I realise that without the help of America, Britain would almost certainly not have won either war; and I pay tribute to the brave American men and women who fought in those wars.  I certainly don't mean to belittle their sacrifice. (And we should also remember that without the superhuman efforts of the Russians, America might not have won the second world war either.)

The way I see it, Britain stood up for democracy and freedom, reflexively and immediately. The United States, by contrast, was dragged kicking and screaming out of isolationism.  When the US join the second world war, several years later, it exploited the opportunity to pursue its global objectives, including making sure that Britain's economic and military power would be sharply reduced, to strengthen America's position as a global power.

Now I don't hold this against America, or Americans, today. All water under the bridge as far as I'm concerned.  I understand the reasons for America's isolationism then, and, as I say, I'm glad they joined the war on our side eventually.  Better late than never and all that. I'd rather they hadn't screwed us on Lend Lease, but let's let bygones be bygones, eh?  But if Americans are going to boast about their involvement as an example of America's commitment to liberty and democracy, then they must expect to be reminded of the inconvenient facts.

I didn't say anything to the man from Mississipi about any of this, as I didn't (and don't) want to be rude to my hosts here in America. I didn't want to have a fight with a big man at the bottom of the Grand Canyon.

Maybe I've got this all wrong – I'm an economist not a historian. In which case, please put me right. 

Update: have a look at Neil Hall's interesting comment on this post which describes how the United States profited from the second world war. 

When I was 11 at boarding school, one of the boys in my dormitory (a lad by the name of Adam Wolf) had a cassette of Beatles Love Songs, a compilation double album released by Capitol Records in 1977. We listened to those cassettes all day every day.  Nothing reminds me more of my time in boarding school.

I bought the record myself when I was a bit older. But Beatles Love Songs was long out of print by the time CDs began to replace vinyl, and Capitol has never released the compilation on CD.  I sold all my vinyl records (which I had not played for many years) when I left for the United States. This is one of the albums I most regret saying goodbye to.

Now that all my records are stored on my hard disk, however, I have been able to recreate the album simply by making a playlist of the tracks from the original albums.  Though it was nearly thirty years ago, I actually remember the track order (though you can just make out the names of the tracks from the above picture of the cover).  For the record, here are the songs, and the original albums you will find them on.

Side one: Yesterday (Help!), I’ll Follow the Sun (Beatles for Sale), I Need You (Help!), Girl (Rubber Soul) , In My Life (Rubber Soul), Words of Love (Beatles for Sale), Here, There, and Everywhere (Revolver)

Side two: Something (Abbey Road), And I Love Her (Hard Day’s Night), If I Fell (Hard Day’s Night), I’ll Be Back (Hard Day’s Night), Tell Me What You See (Help!), Yes It Is (Past Masters Vol 1).

Side three: Michelle (Rubber Soul), It’s Only Love (Help!), You’re Gonna Lose That Girl (Help!), Every Little Thing (Beatles for Sale), For No One (Revolver), She’s Leaving Home (Sgt Pepper),

Side four: Long And Winding Road (Let It Be), This Boy (Past Masters Vol 1), Norwegian Wood (Rubber Soul), You’ve Got To Hide Your Love Away (Help!), I Will (White Album), P.S. I Love You (Please Please Me)

I’m listening to the album I’ve created right now. It sure takes me back.  This would have been possible, but time-consuming, in the days before digital music – I could have made a tape of the relevant tracks. Now it is a doddle.

I am going on the academic job market this year and some people have told me that it is unwise to have your name on the web with political comments linked to it, right or left. I have changed my blog to just have my intials, [...], so I can keep writing, but I am wondering if you could do the same [on comments].

This gives rise to two thoughts in my mind.

First, I am not very comfortable about re-writing the past in this way. For a start it is futile, as search engines keep archives, and you can get back-copies of this website (going way back) at www.archive.org. But even (perhaps especially) if it were not pointless, it feels like trying to censor history.

Second, can it really be the case that employers are less likely to employ someone who has expressed balanced and reasonable political opinions? Frankly, I don’t think I’d want to work for an employer that was expecting someone who does not have opinions about the world we live in, and is not willing to express them.

Anyway, I changed his comments. But I don’t think it will do any good.

WE BELIEVE that in the best American tradition of helping others help themselves, now is the time to join with other countries in a historic pact for compassion and justice to help the poorest people of the world overcome AIDS and extreme poverty. WE RECOGNIZE that a pact including such measures as fair trade, debt relief, fighting corruption and directing an additional one percent of the U.S. budget toward meeting basic needs – education, health, clean water, food, and care for orphans – would transform the futures and hopes of an entire generation in the poorest countries. WE COMMIT ourselves – one person, one voice, one vote at a time – to make a better, safer world for all.