Owen abroad

Archive for February, 2007

According to the Press Assocation, Gordon Brown is going to suggest that migrants should be obliged to carry out community work:

Immigrants should undertake community work before they are granted UK citizenship, Gordon Brown is due to say. The BBC reports that Mr Brown is expected to tell a seminar on Britishness the move would help newcomers settle.

And according to The Independent they will need to prove that they can speak the language:

Spouses hoping to migrate to the UK should face English language tests before being allowed to join their partners, a commission advising the Government has suggested.

I wonder what the 750,000 Britons now living at least part of the year in Spain would make of these suggestions?

According to Nyasa Times:

Nearly a third of the £2m spent on Scotland’s Malawi programme has gone on running costs, rather than helping those in need, BBC Scotland has found.

The amount is about five times the running costs for similar work carried out by a Westminster department [DFID].

The details followed a BBC request under the Freedom of Information Act.

The Scottish Executive insisted value for money was still being provided and said that costs were likely to be higher at the beginning of the project.

Take a look at Clive writing about Food Miles:

Food miles are useless. There is no doubt that transport intensity in the food supply system has been increasing – driven by forces of globalisation, consolidation in retailing, larger shops with more choice meeting demand for year-round supply, car-based shopping etc. But “food miles” are barely useful in capturing or articulating any of this interesting complexity.

Absolutely.

A new, open source, distributed identity management service called OpenID is making waves in the online community.  We need user-centric, trusted identity management system, and this could be it.

On Friday I visited a school, clinic and vocational training centre in Burkina Faso in a village in Bazega province, about an hour south of Ougadougou.

La Fondation pour le Développement Communautaire de Burkina Faso supports government schools and clinics, and it operates an agricultural training college. The programme in schools aims to increase school standards and performance, in part by providing health care for the children while at school.

The school was pretty good; though there were 85 children in a class, with just one teacher (and no assistant) and a total of 20 textbooks. The children were sharing desks and benches, and learning by rote; but at least they were in school and the teachers seemed genuinely interested in them.

The work of FCD in the schools – which is funded by the EC taxpayers – is impressive. By administering de-worming tablets in school, they have reduced the incidence of intestinal worms, increased school attendance and improved graduation rates. (There is robust evidence from elsewhere in Africa that deworming is one of the most cost-effective ways to reduce school absenteeism. If you are a taxpayer in a country that contributes to the European Development Fund you should be proud.)

The health clinic nearby was more disturbing. The photo to the left is where mothers give birth (about 1-2 a day). As you can see, the facilities are rudimentary. This is a clinic only an hour from the capital of Burkina Faso, so you would expect that it would be a bit better resourced.

A number of people we spoke to offered the same explanation for the parlous state of the clinics. Much of the money and some of the best staff are diverted to disease-specific programmes – such as for AIDS and malaria – and this is starving the basic health system of funds. (Laurie Garrett writes about this problem in the current edition of Foreign Affairs magazine.)

Sadly I had to return to London for work, so I couldn’t stay for the Le Festival Panafricain du Cinéma et de la Télévision de Ouagadougou (FESPACO).

Ougadougou is a very relaxed, easy city to visit, and has a great nightlife, as well as an agreeable climate.

I have just learned from DFID’s Chief Economist, Tony Venables, that the grain required to fill a 25-gallon SUV gas tank with ethanol will feed one person for a year.

The British High Court has ruled that Zambia has to make substantial payments on its debt now held by Donegal International, based in the British Virgin Islands. Donegal International is a so-called vulture fund – that is, a financial organization that buys at a discount bonds that are very unlikely to be repaid, and then tries to sue the issuer for the full amount.

Ordinarily, I would be in favour of allowing markets to trade securities, and for companies to be able to enforce contracts against governments. Well-functioning and liquid secondary markets help to reduce the cost of capital when it is originally borrowed, and the subsequent trading at below par enables debt and risk to be priced.

But there is an obvious market failure here: it is the collective action problem of dealing with defaults. We have a solution for companies: when a company can no longer meets its debts, it goes bankrupt. This is an orderly procedure to ensure that the creditors receive their share of the debtor’s assets. In particular, bankruptcy prevents free riders from holding out for full repayment of their debts once other creditors have settled. But as Walter Wriston famously remarked, countries don’t go bust. Once a country’s debts become unsustainable, it is in everyone’s interests to restructure those debts. If there is no collective mechanism for restructuring, then creditors will scramble to be repaid at the first sign of trouble, which is in nobody’s interest. And if free-riders hold out for full repayment, then there will be less money for the other creditors and less prospect of an equitable and sustainable settlement. That is why we have the London Club (for private creditors) and Paris Club (for public creditors). But the Vulture Funds hope to free-ride on these collective mechanisms, and seek the repayment of debts in full once the other creditors have bailed out the country and restructured its debts.

There is a possible solution to this, which is related to the idea put forward by Michael Kremer and Seema Jayachandran. First, laws in creditor countries such as the UK and US could be changed to disallow seizure of a country’s assets for non-repayment of so called ‘odious debt’. In other words, we could change the law so that odious debt contracts are legally unenforceable. Second, foreign aid to successor regimes could be made contingent on non-repayment of odious debt. This would encourage successor governments to repudiate odious loans, which will encourage banks to refrain from originating them.

Who would determine what debts are odious? Kremer and Jayachandran suggest that we give a mandate to an international institution such as the UN or the IMF to declare a regime odious. For example, Mr Mugabe’s government in Zimbabwe would be declared odious. Any organization considering lending money to that government would know that the debts would be legally unenforcable. In addition, I suggest that we agree that any outstanding sovereign debts of a country that receives HIPC debt relief would also be automatically declared to be odious. This would mean that lenders today would be wary of making any sovereign loans to a country that might in the future run into a debt crisis.

An automatic mechanism to make debts unenforcable if they were lent to a government that was corrupt or incompetent, or if they contributed to a debt crisis, would impose a much stricter market discipline on lenders to make them think twice before making such loans; and it would also close down the free-riding activities of vulture funds.

Romania lent $30m to Zambia in 1999, when Frederick Chiluba was President of Zambia. Chiluba is under multiple charges of corruption and bribery. If those charges are made to stick, then the country’s debts which were incurred under his regime should, in my view, be declared odious and unenforcable in international courts. And that would mean that the vulture funds would not get paid.

I heard Des Smith on the BBC this morning. He said:

“I was literally hung out to dry by Tony Blair”

It seems he said the same to the Scotsman.

I find it hard to believe that he was literally hung out to dry. Metaphorically, perhaps?

You would think a former head teacher would know what ‘literally’ means.

The BBC is considering changing its “listen again” service to include Digital Rights Management so that it can only be used by people using a recent version of Windows:

The only system that currently provides this security is Windows Media 10 and above. Further, the only comprehensively deployed operating system that currently supports  Windows Media Player 10 and above is the Windows XP operating system. As a result of these DRM requirements the proposed BBC iPlayer download manager element therefore requires Windows Media Player 10 and Windows XP.

This means that those of us who use an Apple Mac, Linux or an older version of Windows will not be able to listen to programmes stored on the BBC site. 

This will screw me up: I use Linux to download programmes from the BBC site and convert them to MP3 files so that I can listen to them on my MP3 player on my way to work.

If you think the BBC’s proposals are a bad idea, please respond to the consultation saying so.

Hat tip: Glyn Moody

This week’s Economist has a stupid article about vaccinations for diseases in poor countries. The print edition (page 67) says:

Amid the figures cited in Rome, one stood out. It was Ghana’s per capita health budget, calculated by the World Bank at $31 per day.

If only! Ghana’s public health budget is in fact $31 a person a year. Total public and private health expenditure in Ghana is just 27 cents a day.

It is striking to me that the journalist thought that $31 a day stood out – presumably as being a very low level – even though it is overstated by a multiple of 365. How much more does it stand out when we consider the real figure? It also just goes to show that even a journalist working on this story has no idea even what the correct order of magnitude is for health care expenditure in a developing country. (Update: the online edition has been nearly corrected, I see – though it should now say that this is the public health figure, which is about a third of the total spending on health).

That wasn’t the main reason the article was stupid, however. It peddles some half-baked criticisms of the scheme which could easily have been answered, if the journalist had bothered to do some homework.

So here are the answers which the journalist could have got if he or she had bothered to read any of the documentation:

Q. “Some sceptics have questioned whether this “jerry-rigging” of markets can work.”

A. You say “jerry rigging”, I say “correcting two market failures”.

Q. “This test … is skewed: a general vaccines for pneumococcal disease exists … and the only challenge is to tackle some extra strains”

A. The vaccine that exists protects against the strains common in America and Europe, but not the strains common in developing countries. The reason that there is no vaccine to protect against those strains is that the market for such a vaccine is not sufficiently large or certain. And the existing vaccine is not being produced for use in poor countries. Based on past experience of introducing new vaccines, such as Hib and Hepatitis B, there will be no vaccines in those countries before about 2023. So without an advance market commitment, there will be neither the development of an appropriate vaccine, nor will it be produced and sold in developing countries. And that means that more than 1.6 million children will continue to die every year from Streptococcus pneumoniae. So much for “the only challenge is to tackle some extra strains”.

The Financial Post reports that the Canadian Senate has challenged the future of the Canadian development agency

“Given the failure of the Canadian International Development Agency (CIDA) in Africa over the past 38 years to make an effective foreign aid difference, the government of Canada should conduct an immediate review of whether or not this organization should continue to exist in its present non-statutory form,” says the Senate foreign affairs committee in a report that was two years in the making and heard from hundreds of witnesses. …

The report’s top recommendation is for the government to create an Africa Office that would include aid workers, diplomats and security staff with the goal of stimulating economic development. Unlike the current distribution of labour, 80 per cent of its staff should work in Africa.

The Senate recommends that if it continues to exist, CIDA needs clear objectives that can be monitored.

Chris McGreal has a piece in the Guardian today about DFID's work in Africa. (Disclosure: I work for DFID).  Chris McGreal says:

The result, say DFID officials in Africa, is that they are able to direct large amounts of money to areas of greatest need, including putting millions of pounds directly into government budgets. Speaking on a visit to Malawi, Mr Benn added that routing aid through African governments makes them more accountable to those it is supposed to benefit.

Tim Worstall agrees in part.  He likes the direct payment to the poor, but dislikes paymens through government budgets:

Given my views on governments, this doesn't strike me as all that good an idea. Most especially given my view that most poor countires are in fact poor because they have grasping, venal and incompetent governments, this really doesn't strike me as a good idea. But I'm aware that there are those who hold different opinions on this matter. 

There are indeed those who hold a different opinion on this.   The main reasons that we give money in the form of Budget support are:

• all countries, rich and poor, need governments that are accountable, capable and responsive to their people.  If services such as education and health are provided directly by other agencies – such as international donors – then there is no accountability of the providers to the intended beneficiaries; the results will be weak and marginalized governments, and unresponsive services;
• though there are short-term needs to get essential services to people, the only long run, sustainable solution for these countries is to run the services themselves; if we set up parallel systems that hire the trained people away from government, we delay, rather than accelerate, the day when these countries can build sufficiently strong and effective systems for themselves;
• the services can only be delivered cost-effectively as part of a joined-up system; you don't want an AIDS clinic separate from a vaccination centre in the same town: you want a single health centre; if you are building schools then you need to train teachers or procure text books.  So a bunch of separate initiatives to provide specific services in particular places will be very inefficient compared to building an effective, joined up service.
• in the past, we have ignored and bypassed poor financial management (or even corruption) in governments in poor countries because we can work around them; we cannot do that if we are going to put British taxpayers' money into those systems, so giving budget support forces us – and everyone else – to tackle one of the long-term causes of poor government.

My view is not just speculation or ideology.   Here is an independent, international review of Budget Support.  There is a lot of evidence gathered there.  The summary says:

when a developing country’s government has the political will to reduce poverty, budget support can be an effective way for donors to deliver aid. Overall, it has helped to strengthen the relationship between donors and developing country governments, and encouraged better coordination between different donors. It has helped to strengthen planning and budget systems, making them more transparent and therefore accountable. It has also helped to prioritise areas of expenditure that target the poor like health and education.The team of evaluators found no clear evidence that budget support funds were, in practice, more affected by corruption than other forms of aid.

Rogue development aid by Moisés Naím:

States like China, Iran, Saudi Arabia and Venezuela have the cash and the will to reshape the world into a place very unlike the one where we want to live. By pushing their alternative development model, such states effectively price responsible aid programs out of the market exactly where they are needed most. In place of those programs, rogue donors offer to underwrite a world that is more corrupt, chaotic and authoritarian. That sort of aid is in no one’s interest, except the rogues.

This probably overstates the difference between China and the behaviour of western countries in Africa.  I don’t recall all the newspapers complaining about our oil companies and mining companies pumping money into governments in Africa over the last forty years to buy licences to extract mineral resources.  And all that money was just as chaotic and corrupt, and just as free of strings, as the money that China is now spending to get access to Africa’s mineral wealth.  Why would we expect China to behave any differently from what we have been doing for decades?

Ed Prescott, the joint winner of the 2004 Nobel Prize in Economics, writes in the Wall Street Journal today (behind paywall):

Of all the thankless jobs that economists set for themselves when it comes to educating people about economics, the notion that society is better off if some industries are allowed to wither, their workers lose their jobs, and investors lose their capital — all in the name of the greater glory of globalization — surely ranks near the top. This is counterintuitive to many people (politicians among them), because they view it the government's economic responsibility to protect U.S. industry, employment and wealth against the forces of foreign competition. …

Protectionism is seductive, but countries that succumb to its allure will soon have their economic hearts broken. Conversely, countries that commit to competitive borders will ensure a brighter economic future… This lesson should not be lost on the U.S., the paragon of competitive growth, where politicians and policy makers are contemplating whether to construct more protective barriers. It is openness that gives people the opportunity to use their entrepreneurial talents to create social surplus, rather than using those talents to protect what they already have (or to protect rents, as economists like to say). Social surplus begets a rising standard of living, which begets growth, which begets social surplus, and so on. Rent protection stops growth cold and keeps people poor.

(Prescott also wrote a book, Barriers to Riches, which argues that the main cause of difference of income between countries are barriers to the adoption and transfer of technology.)

A man called Roy Jenkins, who calls himself  "Right Reverend", was given an uncontested platform on The Today Programme this morning to peddle his wicked superstitions.  He said that Kelly Taylor, the brave, terminally ill woman who is fighting for her right to die in dignity, should instead die a painful, lingering suffering death.  The reason he gave was that we do not have rights over our lives because we were created by God and that ending our own lives, or anyone else's, would defeat the purpose for which we were created.  He opined that Kelly Taylor's 'pupose' was to inspire us by her bravery and suffering.

My thoughts about this are:

• it is astonishing that anyone in the 21st Century could subscribe to mediaeval superstitions which suggest that people are 'created' by somebody who has a 'purpose' for each of us; these views are both irrational and wicked;
• we do have rights over our lives; if Mr Jenkins chooses not to exercise his that is fine by me, but he has no business preventing Ms Taylor from exercising hers;
• the BBC, as a public service broadcaster, has no business giving this kind of cruel superstition air time in the middle of their flagship current affairs programme.  They would not invite astrologers, or flat-earthers, or paedophiles, to lecture us uninterrupted; so why should Methodists or Moslems be any different?

Over at The Guardian, David Hencke draws attention to a consultation about possible proposals which would restrict the use that can be made of the Freedom of Information Act:

what ministers want to do is to restrict any individual or organisation from asking more than four detailed questions a year – severely limiting the opportunity for the most socially active to get stuff from their local council or government department.  The second, more subtle restriction aims to load extra costs against a £600 notional fee (£450 for local councils) – used as a cut-off point by bureaucrats to say it is too expensive to get the information. Basically, the new charges cover time spent reading the information to see if it can be released and time spent by ministers consulting with each other and lawyers on whether to release the information. As you can see, the more contentious the information requested, the less likely it is that it will now be released. And major advances in the release of information – such as the disclosures of the huge agricultural subsidies received by Tate and Lyle and the royals – would never have been released under these regulations. Nor would all the new details of MPs' expenses either.

Hencke urges his readers to respond to the consultation to express their views about this change.

The comments are pretty interesting. A couple of civil servants there (under the names BackOfTheNet and RobertPeel01) say that the Freedom of Information Act is a huge waste of time for civil servants.  I just wanted to say that, as a civil servant myself, I don't agree with them: I am in favour of as much freedom of information as possible.  The government and public servants should be accountable to the citizens (as voters as well as taxpayers) and the public is entitled to know what is being done in their name and with their money.  Transparency also leads to better policy-making.  The additional burden on civil servants is a small price to pay.

Hilary Benn says that we should buy flowers imported from poor countries, even if we are concerned about the environment:

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.

Lord Nigel Crisp – who is also currently working on a review of DFID’s leadership capability – has called for a new system to help global health systems:

His report calls for an NHS scholarship scheme to help with training and recommends a set amount of aid funds to be set aside for health workers. It also says there should be a Global Health Partnership Centre to act as a “one-stop shop” offering information to individuals and organisations wanting to help global health systems.

I am not so sure. What developing governments need is systematic, long term investment in health systems. Capacity building should be based on a serious strategy for institutional development.  These volunteer schemes are sticking plasters, which risk diverting attention from addressing the underlying needs of the systems.

I am in Rome, at the launch of the Advance Market Commitment.  Under this scheme, a group of donors is promising to use $1,500 million to buy a new vaccine, if it is developed, which protects against the strains of pneumococcal infection that are common in the poor countries.

This is important because nearly 2 million children die of pneumo-related illnesses each year.  Children in rich countries are routinely vaccinated against these diseases.  But there is no vaccine for poor countries, for two reasons.  First, the vaccine has been developed to protect against the strains of the disease that are common in North America and Europe, and it is much less effective in poor countries.  The vaccine has not been extended to cover the strains of pneumo common in poor countries because the market is not big enough to warrant the R&D needed.  Second, even if such a vaccine existed,  the market is too small and unreliable for firms to invest in the high volume mass production that is needed to supply large volumes at low costs to cover the developing world.  The commitment made yesterday by rich countries to buy a suitable vaccine, meeting internationally recognized standards for efficacy and safety, could transform the economics of development of new vaccines.

Pause briefly on how radical this policy is.  There is a social need for extra R&D and investment in production facilities.  But instead of paying researchers to do that research – which might or might not succeed, they are creating market incentives and allowing competition to do the rest. The donors create a reward for the private sector – the prospect of a lucrative market for vaccines – which enables firms to invest in developing and producing the needed vaccines.  But if the research fails it will cost the donors nothing.  The taxpayer will only have to cough up if the vaccines are actually developed and used.  And if the vaccine is used, it will save more than 5 million lives over the next quarter of a century – at $300 per life saved, a bargain in development terms.  For firms, this is attractive because it creates a whole new market for their products, and enables them to serve poor country markets on a commercial basis, rather than as an act of corporate social responsibility.  And for developing countries, they have the prospect of access to new vaccines, which in the past have taken 15-20 years to be mass produced cheaply enough for them to be widely used in developing countries.  So this is an results-based, market-oriented, hard-headed partnership between donors, developing countries and the pharmaceutical industry which, if it works, will solve one of the most important health challenges on the planet.

This scheme was the idea of a brilliant economist, MIchael Kremer, who is an economics professor at Harvard.  (He is pictured to the right, at the launch yesterday in Rome).   Michael is unusual in developing economic ideas with important real-world application.

Michael's idea was developed into a policy proposal by a working group convened by the Center for Global Development (where I used to work). 

What was special about that group was that it brought together people from academia, development, industry, and the non-profit sector, and professional backgrounds including economics, law, public health and public policy. 

No individual member of that team could have devised the programme that they came up with together.  The interaction of public health expertise, economic theory, practical industry experience, and public policy lead to a proposal that addressed the possible challenges of this idea, and forged a strong shared understanding of how this proposal could work.

Ruth Levine at CGD, in particular, is brilliant at bridging gaps in understanding, perspective and motive, and at forging agreement among diverse groups.  John Hurvitz, a lawyer from Covington and Burling,, was able to translate between industry and activists, and his draft contract, which formed part of the CGD report, was the cornerstone of being able to show that it would be legally possible for donors to make this commitment.  Amie Batson at the World Bank worked tirelessly against short deadlines to manage the technical work that donors required.  Carlo Monticello at the Italian Finance Ministry led the work for G8 Finance Ministers, like the conductor of a huge, multinational orchestra.   Orin Levine, who heads up the group responsible for building understanding of and demand for a pneumo vaccine, brings unrivalled technical knowledge, passion for the mission, and a self-exaggerated naiivety about the byzantine process of international policy-making.  Andrew Jones, the urbane Canadian responsible for this work at GAVI, is ever-practical, looking for the way forward.  And many other people worked round the clock to build this idea into a clear, practical idea.

Apart from agreement among this group of experts, the other vital ingredient was the vision of a group of political leaders.  Finance Ministers are not known for their generosity – that isn't their job.  But finance ministers from Italy – from both parties – and Gordon Brown from the UK quickly grasped the simple elegance of this solution, to harness markets and the profit motive to address a challenge of huge social importance.  It was their leadership, more than anything, that focused everyone's minds and energies on how to make this happen. 

I cannot think of any comparable examples of how an idea has been developed by a brilliant academic, worked up into a policy proposal, and taken up by policy-makers.  I first heard of this idea in 1998, when Michael Kremer mentioned it to me over lunch one day. The simplicity of the idea – create incentives for the development of new vaccines by promising to buy them if they are developed – appealed to me then as it does today.  Since then, I have watched the idea evolve and take a more defined shape.  At times I have been partly involved in helping the idea along.  It has been fascinating and illuminating to watch it grow from a simple idea to a pledge yesterday of $1.5 billion to buy a pneumo vaccine if one is developed.

Some of the team were here in Rome yesterday for the launch.  We felt like a non-league side that has won the FA cup. It is a group of people that have argued, fought, laughed, cried, debated and persuaded amongst ourselves for three years.    We agree about much, and bring much passion to what we disagree about.   We have learned to trust each other.  We have learned that each of us is as committed to the same goal – saving lives by getting the best possible vaccines to as many kids as possible as soon as we can.  We have become great friends, across divides of geography, training, age and institution.  

We sat together having a celebratory dinner in Rome last night, chattering about the excitement of the day and tryng to forget how much work there
is still to do on the nitty gritty of making this happen. 

I realized then that the achievements I am most proud of in my life so far have all involved being part of a team.  The budgets we put together, working late into the night in the Treasury; the new system of budgeting and public financial management we developed for Nelson Mandela's government in South Africa; even the races I have helped organize in London – in every case, it was the satisfaction of achieving something together, much more than any of us could dream of doing on our own, that has been the most rewarding and memorable part of the experience.

I will never have children, so I will never know what it is like to lose a child.  My friends probably won't lose their children either, because we have developed and made available the vaccines for our own communities to protect against these common but preventable diseases.  This new Advance Market Commitment for a pneumo vaccine will advance by ten years or more the speed with which vaccines will be developed and used in poor countries. Not just one but millions of mothers will be spared the anguish and pain of losing their child as a result of this decision.

So to the team who has developed this idea, and seen it through to the launch yesterday in Rome – and you know who you are – I thank you, for letting me be a part of something very special, and giving me something to be proud of.  

Launch photos here 

More from:  the BBC, the Guardian,  the New York Times, Forbes, Bloomberg, Reuters, my blog entry at CGD, Pharmalot, Marginal Revolution, Alex Tabarrok, Technology Health and Development, Stop Aids, PrairieWrangler, Pienso.

I received today (February 7th) the “Government IT Profession Update (January 2007)”. (I am, strangely, a member of the Government IT profession, as well as being a member of the Government Economic Service.)

This month’s update begins as follows:

Here is the belated January edition of Government IT Profession Update. It was held up because we had server problems and were unable to access our database to send out bulk emails.

Not exactly the best way to inspire confidence in the Government IT profession, is it?