A provocative piece from Foreign Policy magazine by Abhijit Banerjee and Esther Duflo claims that “global hunger” is fundamentally mischaracterized:
Are there really more than a billion people going to bed hungry each night? … What we’ve found is that the story of hunger, and of poverty more broadly, is far more complex than any one statistic or grand theory; it is a world where those without enough to eat may save up to buy a TV instead, where more money doesn’t necessarily translate into more food, and where making rice cheaper can sometimes even lead people to buy less rice.
In a nutshell, in many cases (and their piece notably omits the conflict-driven famine) even those on less than a dollar a day can afford a theoretically adequate diet. However, other things – the aforementioned television, better-tasting but not necessarily more nutritious food, and the occasional celebration – are often prioritized, even when family members are objectively malnourished. The reasons for this are complex, but a major one appears to be that the payoffs for improved nutrition are often nonobvious and take some time to emerge.
While I wouldn’t take everything this article claims as gospel, I personally don’t have any trouble believing that the solutions to global hunger aren’t just a matter of simply dumping subsidized calories on the market, just like the story with clean cookstoves.
I think it also talks to our desire for some form of equity, not just ending poverty by reaching an arbitrary notion of ‘calories required’ or ‘US$ per day’.
We need to add culture to our understanding of poverty.
Haha. This reminds me of my years in borderline poverty where we struggled to makes ends meet but got lectured because we actually owned some stuff despite the fact that they were from charities or otherwise given to us. “You have an old black and white TV from the 50′s that takes ten minutes for the tube to warm up that no pawn shop in their right mind would buy? Then you must be able to afford food, you aren’t poor at all!”
Waht we’ve found is that the story of … [X] … is far more complex than any one statistic or grand theory
True for most values of X.
If you look at studies of deprivation in australia (see, eg, this very good one) you’ll find that the same is true in developed societies – poor people don’t necessarily focus their spending on what we, in our middle class comfort, assume are the bare necessities.
Before we make judgement from this about the moral fecklessness or budgeting incompetence of the poor, we might do better questioning some assumptions we make from that comfort. I’ve always thought Maslow’s hierarchy of needs was prescriptive rather than descriptive.
Robert,
The payoff from eating when you are hungry is pretty obvious and immediate. So I cannot imagine anyone goes to bed hungry unless they are extremely poor or trying to lose weight. It doesn’t sound very complex.
But you might go to bed without eating food containing sufficient iodine, iron, or other essential nutrients.
I&U, you are already making some assumptions about who within a household has the financial discretionary power, and their relationship to the distribution of resources. It is possible for the daughters in a family to go to bed hungry while the sons do not, or for everyone else to go hungry while the father eats out with his friends.
In fact, investigating who makes the spending decisions seems the crucial component of this research, if it is to be useful. Remember when they started giving microloans specifically to the women in Bangladesh, because when they gave them to the men it got blown on a night out?
(Must get me an avatar. Will try to get my act together.)
Yes, that’s the big one: hungry people fill themselves up on cheap calories which don’t cover all the nutritional bases, and end up with chronic malnutrition disorders even when well-fleshed.
I’m very uncomfortable about that article and what it’s trying to say. In some parts it deliberately conflates very disparate political movements as if to suggest that they’re all simplistic and naive. e.g. it links the UN’s first development goal – to eradicate hunger – with Egypt or Indonesia’s subsidized food programs. Those programs were around long before the MDGs and are about political patronage, not preventing malnutrition.
Why do economists do this all the time? Why do they always boil a complex political problem down to a slander? Linking the people who planned the MDGs with Mubarak? It’s just rhetorically shit, is what it is. And if we look at the stats on hunger we can see that there is very definite real hunger still stalking the world: 20 million children suffering severe acute malnutrition, 171 million children under 5 suffering stunting. These are not the consequence of poor diet choices, but of protein-energy malnutrition. i.e. of not having enough food to eat.
The linked article gives an example of this: when rice prices dropped in a study in China, the local villagers ate more shrimp and meat. The writers mention this as if it’s a surprise, but they nowhere mention the possibility that previously the villagers couldn’t afford meat, and were using the drop in prices to balance protein and carbohydrate intake. Lack of access to decent protein supplies is a well-established phenomenon in poor countries, and this is also borne out in the stats: 90% of the world’s stunted children live in just 36 countries.
I think it’s a political hit job, intended to suggest that the aid community and food thinkers don’t know what they’re doing. But if you look at the FAO homepage, there is no evidence there that they’re driven by simplistic models of hunger. The main article is about post-harvest waste in poor communities, and they’re running an excellent program on agricultural heritage systems. The linked post just wants to dismiss the whole system of aid as useless meddling.
It’s just yet more proof that economists should just … shut up.
While it’s entirely anecdotal I did find an SBS doco about poverty in Lagos, Nigeria, gave me an interesting view of life below the breadline. As a middle-class westerner when I hear ‘poverty’ and ‘Africa’ I’m culturally predisposed to see images akin to those used in Live Aid; deserts, distended stomachs and the rest. What the doco (Welcome To Lagos) revealed was a thriving sub-culture in Nigeria where people lived in brittle shacks with barely enough to scrape by, yet they owned mobile phones. Despite the abject poverty in which they lived you saw proud and dignified young Nigerians who would have sawed their own arms off if it gave their favourite English Premier League team an advantage in a game. Really amazing stuff.
Whatever about the research referenced above it certainly put paid to my rather lazy assumptions about poverty and the people who suffer it.
In another life, when I read Oz Yearbook statistics for elucidation, I noted that from WWII until the mid 90s (when I got better) household expenditure on alcohol & tobacco was in excess of 70% what was spent on food. I doubt that it is much different today.
sg @8,
I’m very uncomfortable about your comment and what it’s trying to say. In some parts it deliberately conflates very disparate economic theories as if to suggest that all economists are simplistic and naive.
It’s yet more proof that…
haha, very funny I&U. Unlike the linked post, though, I’m right.
If you start with the simple assumption that: better fed=able to do more work=more money to be better fed, some of the actions of the poor may seem illogical and may well be in the longer term. However, you might equally say that: better networking= more work opportunities=more money to help networking (or pay for food.) Or you could say that higher status=etc.
It would have been interesting to have seen an analysis of how some of the “irrational” expenditure stacked up when you looked at what factors (other than health) helped a family to survive and thrive. For example, if the supply of work is limited, spending money on networking (meals with your mates), alliances, appearance etc. may have made more sense than spending money on going to bed better fed.
Interesting too to have an analysis on the benefits of life satisfaction. For example, someone who feels more satisfied with life because they spend some of their money on “luxuries” may be more likely to get work or simply be less likely to fall sick.
Not sure what this says about aid. Understanding why people are doing things and the logic behind it may help focus aid on things that count or perhaps the things, (like iron pills) that have long term benefits that people ignore because surviving the day is challenge enough.
sg – you should actually take a look at the poverty action lab homepage. These guys have done enormous amounts of empirical and field work in developing countries, including running more natural experiments on which policies work and which don’t than any other set of researchers. Indeed, most aid policies and programs run by NGOs are not rigorously evaluated to determine whether their effects are in line with the intent, which is part of the problem in devlopment and poverty reduction. Their central thesis is simply that people respond to incentives in ways that policy designers don’t always expect and that this has to be better taken into account in initial policy design. Anyway, they have also written a book on their views, which also summarizes a lot of the empirical work they have done over the past decade. Their argument is a lot richer than implied just from that article. You should read the book and more of their research before passing judgement. One thing they certainly do not say is that the poor are acting illogically.
Finally, do all of your posts have to disparage economists in some way? I should equally say that until you take the time to actually familiarise yourself with the relevent literature, including the work of the authors you are simplistically disparaging, then perhaps you should shut up instead.
I read that article a couple of weeks ago–(somewhere) and something about it seemed a bit dubious to me. Something along the lines that we shouldn’t feel so bad about world hunger because these people are also stupid and/or human.
Sustained racist propaganda ensures none of us really end up caring enough!
I&U (emphasis added):
.
I see what you did there.
“…unless they are extremely poor.”
That is, rather, the point, isn’t it? Extreme poverty leads to hunger. If you want to magic away the extreme poverty with word games like “unless”, I guess you can kid yourself that people aren’t starving.
Just because you “cannot imagine” it, doesn’t mean it isn’t happening.
Heck, I know there are kids in my town who go to bed hungry. Still, I guess it is kinda their fault. They shoulda picked better parents!
Channelling Andrew Bolt:
NO! There are only 999,999,999 people going to bed hungry each night! Those deceitful, lying deceiters at UNESCO are deceiving you! These professional do-gooders in the poverty industry trot out claims like “a billion” when it’s actually one less than a billion! And some of them spend money! Hypocrites!
Mercurius @17,
You have completely missed my point. But then again, I completely missed Robert’s point. So, it’s probably best just to move on.
Well judging by some of the comments here why not have a look at this?
http://www.tnr.com/article/environment-energy/89377/poverty-escape-psychology-self-control
LO, I did look at the poverty action lab homepage. I also checked out duflo’s website and she seems to not have many publications in peer-reviewed journals – is this common for economists? Have her ideas been tested beyond the “working paper” forum?
That article has some interesting points but it uses the standard economist trick of pretending that everyone else thinks it’s all very simple and then suggesting the economists have the complex answers. But if you look at the FAO, WFP or WHO webpages and read their work on this, none of what the linked posters are saying holds. e.g. do you accept that the WHO believes problems of world hunger are simply due to lack of money, or purely a problem of protein-energy malnutrition? Because they don’t and anyone who bothers to read their material will know this.
I’m suspicious that they’re just another hammer in the aid-bashing toolkit. Which is very convenient for so many economists who think that all these problems can be hand-waved away with a bit of economic development.
And yes LO, I will continue to bash economists until they can learn to stop pretending they were the first people ever to think about a topic, and actually gain the ability to predict an outcome in their core area of expertise with any degree of accuracy. Until then, they remain in my view simply ideologues.
sg,
Amartya Sen and the late Julian Simon – both economists.
and Hitler was a vegetarian.
…and Stalin a Bolshevik. QED.
BBB
I guess Roger’s point is that not all economists make the kind of fatuous statements that lead one to suspect they think the real world is a special case, but I’m not sure what sg and BBB are driving at.
Maybe my point is the same, David Irving. Exceptions don’t always prove rules.
sg is trying to prove that all economists are ideologues because Hitler was a vegetarian, and in solidarity I am trying to prove that all economists are ideologues because Stalin was a Bolshevik. Simple stuff, really. Oh no, wait, I was mocking sg’s incoherent ramblings.
BBB
@ John D – spending money networking i.e. dinner with your mates is a fine ideal, especially when it’s not you going to bed hungry. Unfortunately this is more often Dad down at the pub spending all the money on alcohol and cigarettes or putting it through the pokies, and sometimes Mum at the pub with him or less often instead of him, while the kids are going to bed hungry at home. No networking involved, just simple selfishness.
Actually, sg, exceptions always prove the rule (in the sense of falsifying it).
[/maths_pedant]
incoherent, BBB? If you’re so sure the linked post is right, why don’t you address any one of my points? Why is it that they conflated Mubarak and Suharto’s food aid and the MDGs? Why don’t they consider protein-energy imbalance in their Chinese example? Why do they accuse the FAO and WFP of having simplistic models of starvation, without any evidence? Do you think that the WHO stats on malnutrition I linked to indicate a failure to understand the various systemic causes of malnutrition? Do you think there might be a reason why a couple of ecnomists with an axe to grind about aid might be oversimplifying what the international organizations do?
sg,
“a couple of economists with an axe to grind about aid might be oversimplifying…”
That’s better sg.
On the bit about rice consumption falling as its price dropped, the economist actually have had a technical name for this – a Giffen good – since the late 19th century, when the same phenomenon was observed with potatoes and the Irish. And it is a commonplace enough to be taught in first year courses in microeconomics.
The reasons are well understood – it is indeed because the lower price frees funds up for more desired things (in slightly more technical language, the income effect outweighs the substitution effect). Giffen goods are often what a sociologist would call “inferior goods” – goods whose consumption signals to everyone you are poor.
We aren’t all unscientific rightwing ignoramuses, sg.
Mindy @28: In some cases networking with your mates will yield nothing more than a good time. However, intentionally or not , networking with your mates sometimes does help get work, promotion, business and help when you get into trouble. It is important to understand how various cultures work before condemning.
Mindy/Mercurius – a good explanation of one reason why income management was introduced. But I rather doubt it applies to those in extreme poverty
BBB
Stalin stopped being a Bolshevik about 1924, and H|tler was no vegetarian, which obviously refutes all dependent claims …
Actually Fran I think the Big H was very close to vegetarian. And Stalin was a bolshevik, which is enough for BBB’s little contra-point, I think.
You really are a hack sg. Duflo won the John Bates Clark medal last year. She also has numerous peer reviewed publications, and is co-editor of a prestigious development journal. She only completed her PhD 12 years ago. Economists publish working papers in advance of publication in peer reviewed journals as a way of distributing new research quickly, as well as getting feedback. There is nothing unusual in her pattern of publication. And she definitely is not a right wing economist.
If you read the book, rather than one brief article, you will see the empirical basis of their claims sg. And until you read their peer reviewed material and the book, I’m not going to engage in more detailed debate with you.
Finally, the authors don’t have an axe to grind against aid. They have an axe to grind about aid programs that are not evaluated properly. There is a big difference between those two things. Evaluation matters (as even you must acknowledge) because otherwise we can’t know whether a given program achieved its aims or not.
A hack, LO? I checked her website and the publications list there didn’t seem to lead to any peer-reviewed publications. They open pdfs of working papers. Should I be to blame for that?
I have made some completely reasonable points about the article, and if your defense of the article is that I should read the book and the peer-reviewed material, then you must be well aware that the article itself is flawed. i.e. a hack job. Do you dispute that they conflate Suharto’s use of food for patronage with the MDGs? Do you think most people who read that article are going to check their peer-reviewed work to validate their points? If not, what are they doing with that conflation, what is their political purpose?
At some point you have to accept that the profession of economics is heavily tainted by the political axe-work that is the preferred modus operandi of most of its public face. Instead of being defensive about this, and pretending it’s not an issue, economists who care about their profession need to take on their colleagues rather than begging for an understanding of context. If you can’t explain this article – the public face of these guys’ work – then don’t accuse others of being “hacks.” Slate it home to the authors, instead.
And until you can establish that these people are acting in good faith, don’t expect me to listen to their lectures on evaluation. Modern aid programs are generally evaluated, and aid has come on in leaps and bounds since the 90s. This is patently clear from the websites I mentioned earlier. If these guys want to write an article about how nobody in the WFP understands hunger, they need to do a little better than comparing food aid with patronage politics in early noughties Indonesia.
sg – aren’t you supposed to be a researcher? Even 2 minutes on google scholar will lead you to references in some of the best economic journals. The website leads to working papers to make the papers more accessible (because of gating) and because the lead time to journal publication is so long (and thus the most recent papers have not been published in peer reviewed journals yet). This should be obvious.
Modern aid programs are generally subject to very poor evaluation – only someone without any understanding of this policy area would claim otherwise. Aren’t you a statistician? Take a look at what passes for statistical evaluation methods of most aid programs run out of large international institutions, as well as most NGO programs and tell me whether you find the methodologies valid or not. Banerjee for example was a lead figure in evaluating (and heavily criticising) the World Bank’s evaluation mechanisms and research methodologies a few years back.
The authors do not say that nobody at the WFP understands hunger, just that the poor often respond to interventions in ways that are different than organisations such as the WFP expect. Again, their point is more nuanced than you seem to understand.
Just accept that you aren’t familiar enough with these researchers’ work to comment and we can move on.
And you don’t have to read their peer reviewed work – just get a copy of their book, which is pitched at interested non-experts such as yourself. I guarantee you will learn something.
I call you a hack, because you regularly comment on economic topics without displaying any evidence that you understand enough about economics to do so in an informed way. For the most part your critiques are just recycled from somewhere else. When I read what you have to say I feel like I’m back in a political economy tutorial arguing with some undergrad who once read a book about what economists supposedly think.
It’s an interesting thread. I thought one or two comments a bit callous, but that’s the times we live in.
I doubt whether Mercurius considers me a friend, but I’ll compliment him on the comment at seventeen, that made me sadder than some, but at least I wasn’t forced to cringe in embarrassment.
Watching 4 Corners, I wondered, why would any one want to live in the dire poverty of mortgage belt Australia- three macmansions per person, something that like, or is that one nuclear yuppie family per Macmansion, at any rate- when they could migrate to earthly paradises like Yemen or Indonesia.
Also DD’s interesting comment, later, on the scrap poor people have to put up, for a bit of self respect.
Am looking forward to that new show coming up (SBS or ABC), where a number of average Aussies are put on a leaky boat and sent to Africa, to simulate conditions experienced by boat people, amongst the poorest of the poor. Judging by the trailor, some weren’t quite so joyous about living the rich people’s lifestyle, after a little bit and seemed to be yearning for the humble squalor and dire deprivation of OZ suburbia.
One more point. The authors do not really conflate programs to eradicate hunger with programs about political patronage. The authors are well aware that food subsidisation programs existed well before the MDGs and that the “advertised” intent of policies is not the same as their real intent. But this is a brief article and there isn’t space to go into all the political and policy specifics of each program in each country. You know that. The more general point is that a lot of aid money and programs has been channeled into programs that haven’t had the intended results. The authors here are simply saying that the reason for the divergence is that the decision making process of the poor is often different from that expected by the policy community.
Paul@9
Paul mentions mobile phones in Lagos.
Mobile phones are being used in developing/ southern nations in ways that are; saving lives, improving health outcomes, and helping guarantee fair prices to farmers via RSS feeds of market rates for crops. They occupy a very different role to how they are used here.
Reports this week on rolling out virtual phone numbers to Nigerians in conjunction with community phone hubs,
http://www.afronline.org/?p=16547
and of using real mobile phone to save mothers’ and infants’ lives in Senegal….
http://www.afronline.org/?p=16510
Also they are not too bad for documenting violence and oppression when there is no free press.
I grew up in the generation before mobile phones, but I rocognise that these days lack of a mobile phone may not only be a sympton of poverty but also a cause of poverty or worse.
Food security is a big big issue for the working poor in North America. I couldn’t believe how much it is until I got here. It must be much worse for the not-working poor. I never went without at least two meals a day no matter how broke I was back in Australia but I suspect there’s more then a few battlers on welfare who are literally going without.
Things are, I fear, only going to get worse on this score.
Labour Outsider, I’m not familiar with researcher websites that don’t have peer-reviewed references listed. It certainly doesn’t happen in statistics or public health. But anyway, in regard to that I asked a question, I didn’t make a statement. I asked if her ideas had been tested beyond the working paper forum. I also made it clear where I looked.
The rest of your comment is just plain wrong, though at least you’ve tried to engage with the article now. You say
but the article starts with a quote from the WFP (about a billion hungry people) then asks at the start of the next paragraph “But is this really true,” presents a more complex answer, and then goes on to say
Who am I supposed to conclude they’re referring to here? They’ve just contrasted their “complex” view with that of the WFP and now they’re saying experts don’t view things in a complex way. Hmmmm…
This is the classic economists shuffle, of pretending that all established wisdom is wrong before going on to misrepresent some supposedly more complicated model they have that explains everything.
You also say they aren’t conflating food subsidies by dictatorships and the MDGs. Shall we look at what they say?
They start one paragraph with this:
and then go on to describe the definition of poverty in terms of hunger [a definition that, incidentally, they back up with their own data later]. Once they’ve got the definition of hunger out of the way, their next paragraph starts
You see how they linked that paragraph to the previous one, and how they deliberately made Egypt’s food program sound like it was an effort to help the poor? This is the very fine art of conflation here. They have even used the “so it is…” construction to leave us under no illusions that that this paragraph is linked to the previous one, i.e MDGs and Egypt’s food patronage. Their first two examples are cute too, making sure to choose an unpopular dictator when they do the comparison.
I’m sure it was an accident though right? And the use of the “no surprise” language to make everyone across the globe seem equally stupid is just an accident, right?
Of course it’s also obvious that the first MDG has no connection to the majority of their argument – it’s about extreme poverty and hunger, which are suffered by a small number of people around the world in a small number of countries, and are not the supposedly “nuanced” problems the authors are touching on.
Now, you say that they are railing against lack of evaluation but I think they’re actually railing against the theory of hunger alleviation, and they also evaluate their own examples very poorly. The best case of this is their “evaluation” of Sak Polin’s explanation of his poverty trap. Their analysis consists entirely of the phrase
which, given the very detailed explanation he has presented of exactly what happened and why, is, well, it’s just shit isn’t it?
Maybe you’re so inured to reading this “smarter-than-thou” condescension that you’ve lost the ability to notice, but this is a political axe job from start to finish. It’s founded on empty questions and false comparisons, with leading language to get you thinking no one else has ever thought about this stuff. It certainly doesn’t get down into the rigor and nitty-gritty of “evaluation methodologies” or any other such boring everyday facets of aid work. And it doesn’t discuss at all the difficulties of food aid in a world of corrupt governments and complex problems. Its most concrete teaching example consists of a bland statement of mistrust for the person whose story we hear.
In short it’s the age old story of blaming the poor and the do-gooders who try to help them. Maybe the book is better and their peer-reviewed work is very nuanced, but that doesn’t excuse them from righting a piece of propaganda in a magazine. And if you think it’s not an axe job, then defend it on the terms of the magazine rather than crying out for context.
sg – the article is a summary of a much richer argument that is contained in their book, which in turn represents their own original research and evaluation of the relevant literature. I’m finding it a little difficult to believe that you think that they ought to back up all their claims in a brief summary article when that is in fact done in the book itself. Of course they have a political axe to grind. But that is directly connected with their own research, which has found aid programs in this area wanting and based on, what they see, as a flawed model of how the poor behave and respond to policies. They are certainly not anti-poor and I cannot believe you could get that impression from the article itself. The truth is precisely the opposite. But I don’t really think you care about understanding their argument. You have made your mind up already. So, as I said, go and read the book. You will be better for it. There is an entire chapter devoted to deconstructing the theory of poverty traps and the ways in which it isn’t consistent with the empirical evidence. Come back to me when you have read it and we can discuss whether their critique is reasonable or not.
sg,
I agree with you that the article is badly written and is smug and condascending – to the poor, to aid workers and to other economists. I don’t agree that it is an “axe job”, I just think that the authors attempt to sex up the article by making it counterintuitive and contentious has backfired and obscured their main message. Which, AIUI, is that the causes of malnutrition are complex and the obvious solutions are not necessarily the right ones.
It does not show that they are bad economists, just bad writers.
I agree with you that there is too much rubbish like this in the public domain from economists. If economists have an important point to make to the public, they should make it clearly and unambiguously. If not, they should stick to their day jobs.
In non-westernised countries the hungry generally do not need aid but instead guaranteed access to untainted ancestral lands.
“When I feed the poor, they call me a saint, but when I ask why the poor are hungry, they call me a communist.”
Dom Helder Camara
LO, I had never heard of these people before I read their article, so how could I have “made up [my] mind already”? I read the article and it contained all the usual aid-bashing methods. If your only defense is to tell me to read the book and refuse to address the points about the article, you are conceding the point.
As for not being able to address their theory clearly in the space provided, how about this for starters? They could drop the entire paragraph about political food subsidies, and instead of spending a paragraph asking us whySak Polkin can’t eat if he lives in a village full of food, they could address the three paragraphs of story that he just told about why he can’t eat even though he lives in a village full of food. They chose to present a rich and detailed account of his life and then dismiss it in a sentence. Perhaps they could have done better than that in the available space, if they had set aside a few less paragraphs for bashing the WFP and the “experts”?
Economists like to talk about priorities, and the priorities of this article are clear: imply dubious motivations for the poor through the central story they present, and bash the WFP. If you think that’s not their motivation, perhaps you could explain why they spent half of their “brief summary article” doing just that, instead of presenting their actual research?
Incurious and Unread, you could be right that I’m too sensitive, but I’m thoroughly sick of seeing this kind of politically-motivated stuff in the public domain. Why is it that in an article on hunger they haven’t once mentioned the words “war,” “diarrhoea,” “inequality” or “clean water”? The MDG on hunger does. The MDG on hunger also clearly separates the causes of underweight from malnutrition. Yet the authors deliberately imply through their framing that the MDG is all about “1.2 billion people are hungry.”
It’s the framing I don’t like, and I’m not inclined to assume good faith on their part if this is how they publicly represent their work.
From “The dismal science is bereft of good ideas”
For you, sg.
Joe, you are quoting there from one of the dumbest comment pieces I think I have ever read in the FT. Just take a look at his paragraph on Spain, where he bizarrely claims that economists have offered no practical advice on how to reduce unemployment. Please! The OECD devoted an entire chapter of its most recent economic survey of Spain explaining how the combination of the recession and some of the most poorly designed labour market institutions in the world combined to produce very high unemployment rates. The author also seems to be completely unaware that the Bank for International Settlements (staffed by economists) gave plenty of warnings about financial imbalances and various housing bubbles that developed in the mid-2000s. Finally, he seems to be of the strange view that the main purpose of an economist such as Paul Krugman should be to offer practical advice to people that run businesses. Ring true to you? The piece is simply an ill-informed rant that appeals mainly to people such as yourself that clearly don’t know any better.
It’s amazing how the media barons have the nerve to attack poor people for consuming their electronic output.
It’s also interesting to see other groups not singled out, middle class welfare, subsidised farmers, the military industrial complex, or CEO’s of corporations that pay no tax. How is it any worse for someone poor to decide how their income is spent than any of these other welfare recipients?
It’s an old article and has been around for ages, I hope Abhijit Banerjee and Esther Duflo paid the copyright holders.
LO,
I have to admit, I don’t know the author. He’s making two points:
1. Entrepreneurs are the saviours of the universe (and, you guessed it, he’s an entrepreneur.)
2. Economists are morons making theories and models which have nothing to do with economic reality. He also slyly links economists to politicians:
+ Paul Krugman (vs the Republicans.)
He botched what could have been a critical point ["It's the economy stoopid"]. I don’t know why? He’s probably a contributor to the Tory party and that sure ain’t pro bono.
So, yeah, it’s not a great article. But you must also admit:
This kind of thing is slightly embarrassing for the dismal science. Talk about Monday’s experts!
Anyway, I think that economics should be in a crisis. This should be an incredibly creative period with people working on solving some fairly big economic problems which seem to be looming. In revolutionary ways. But nothing. Really nothing.
This should be getting screamed on the streets:
Joe,
It is a shame that your friend at the FT picks on Krugman, who was one of the few economists to predict the housing bust and credit crisis. It seems that he is too “gloomy”.
That is precisely why the cheerleading economists employed by banks are always so optimistic. Tell the financiers and entrepreneurs what they want to hear, because otherwise they will, at best, ignore you and, at worst, fire you.
Joe, economists have been pointing out the failings/unintended consequences of European labour laws for many years, since well before the GFC.
So LO:
Let me guess, an entire chapter of well-paid OECD hacks telling Spain to remove workplace rights and cut spending?
sg, not necesarily. The OECD’s economists have become far more nuanced in their advocacy of labour market “reform” in recent years than they once were. And, damningly for your thesis, this is precisely because the empiric evidence got a lot better. “When the facts change, I change my mind. What do you do Sir?”
I am NOT particularly an advocate of deregulated labour markets – IME such advocates tend to see all the disadvantages but none of the (very real) efficiency advantages of well regulated markets. The old Marxist in me says that this lack of perspective does indeed have something to do with who gains and who loses.
But to be fair to them, they have long argued that the trouble with “rigid” labour markets is that they do quite well in good times but they are brittle – they collapse more in (and recover more slowly from) recessions than “looser” ones. Given that, you’d have to say the OECD’s pre-crisis criticism of Spain’s arrangements looks prescient, not foolish.
And Spanish labour laws have long been considered the dumbest in Europe, even by those in favour of regulation. But you never knew that, of course – you prefer to just assume that economists are either evil or stupid.
derrida derider
Pretty much.
I followed the GFC fairly close to, or at least tried to. The way things are developing in Greece, Portugal and Ireland is also concerning. Politics and Economics is in an unhealthy symbiosis atm.
“When the facts change, I change my mind. What do you do Sir?”
I never say sir to anyone. That’s a ridiculous American anachronism.
So, just what exactly are the facts? Economics at the moment is actually functioning like a privatised politics. It’s a very bad metaphor. But take the current crisis in Europe wrt Greece.
What’s the solution? Is the problem really so difficult that there is no solution? But why are there so few opinions and why do most opinions not proffer a way forward just insecurity? It’s a bit like the reactor catastrophe in Fukushima, didn’t anyone know the truth? Now it’s revealed that one of the reactors had already melted down less than 5hrs after the Tsunami struck. We have become so enamoured with appearance that we can’t tell the difference between something that looks good and something that probably is good.
My intuition tells me that the closest I’ve been able to get to what the situation in Greece is and what it means for Europe etc is this article (in German):
http://www.bilanz.ch/gespraech/hans-werner-sinn-fass-ohne-boden
Seems pretty reasonable to me. Seems like when you squint your eyes together a bit and look at the indisputable facts that Hans Sinn is pretty much just saying how it is. The private creditors are going to have to accept taking a loss on their Greek investments. So, why isn’t that the main narrative, to use quite frankly a very poor term for report. Variations are still possible– but while we’re taking about the most probable outcomes (aka “the facts”) and trying to get to the detail it seems like a good starting position.
It is true to say that what politics can accomplish is related to economic situation. But how do we know and when do we know that the economic situation is not just manufactured to restrict politics– either by serving special interests or as an excuse for politicians to not do something which they think might not be in their political interests?
the problem here dd is not that they may have been right in this instance, but that if their single solution to every problem is to read from the same playbook, there is no predictive value to anything they have to say.
With a very few notable exceptions, economists failed to predict the GFC. There is no other field of “scientific” endeavour that has been so spectacularly wrong so many times as the economics profession. And every time they are wrong they just bounce back with the same analysis – this problem we didn’t predict happened because of poor people and too much government spending, and the solution is to cut government spending on poor people.
So yeah, evil or stupid – take your pick. A functioning field of intellectual endeavour it is not.
(Actually, I’ll grant you that quantum chromodynamics may be just as spectacularly wrong. But it doesn’t affect my workplace rights in quite the same way).
sg – there is not a single solution to every problem at all. That statement just reflects your lack of undestanding of economics. Tell me, if there is one solution to every problem, why is there so much debate within economic circles about policy questions?
On labor markets the regulated/deregulated dichotomy is useless for understanding which institutions work best. Spain and Sweden both have labor market institutions along some dimensions that would be called “regulated” but whereas the Swedish “regulations” tend to help thte labor market toward a good equilibrium, Spanish institutions do the opposite. The OECD has been pointing to the particular inefficiencies of the southern European labour market institutions for a long time and certainly well before the financial crisis.
Joe – what you are saying about Greece makes NO sense. There are myriad opinions about the right way forward. Large fiscal transfers from the core Euro Area countries; proper debt restructuring; further austerity; leaving the euro zone altogether; etc, etc. Perhaps you haven’t been reading widely enough. And far from Greece being a problem created by economists, it is primarily a problem created by politics (and currently being made worse by it). The Euro Area itself was put together more for political than economic reasons and the structural flaws within the zone (financial regulation has lagged behind financial integration, labour doesn’t flow enough across borders, there has been no central fiscal mechanism to help countries experiencing idiosyncratic shocks, etc, etc) also ran counter to recommendations by most economic policymakers.
Finally, Sinn’s recent opinion piece has been shredded by other economists because he got the functioning of Target2 wrong, and what it means for the solvency of individual central banks. Face it, you don’t know enough about economics to differentiate between a good and a bad argument. The issue of private creditors taking a haircut is complex. Most economists think that some type of restructuring will be necessary in Greece and elsewhere. But undertaking that restructuring without generating further credit events in other jurisdictions and creating a new financial crisis is difficult to achieve. That is why most of the debate is about how some sort of restructuring can be achieved without causing too much instability.
LO, you consistently speak in the most abstract possible terms, and always alluding to a higher level of academic debate amongst economists. The rest of us see the economics profession in their more mundane role, serving as paid hitmen for the rich, as we see in the linked piece (which you have still failed to engage with beyond pleas for “context.”) Do you think it might be a flaw of your profession that there is a perception that they do attack pieces aimed at the working poor? Do you think it might be something you could try and engage with at some point? Do you think that it’s a media issue only, or is it possible that the same flaws are actually prevalent in academic economics as well?
I’ve pointed out the many ways that the linked piece is flawed, and you have failed to engage them. The linked piece is hardly unusual in its flavour (hence my use of the term “the economists shuffle”). Do you think your profession might be at least slightly to blame for its own public image?
sg, if you think that the linked article represents “serving as paid hitmen for the rich” then you are even more of a fool than I thought..
The piece is nothing like an attack piece on the working poor…
And economists have always and will always come under attack from people such as yourself with belief systems that are threatened by inconvenient economic ideas.
There are a wide variety of theoretical, political and policy views within the profession…Only ignorant people such as yourself can’t seem to grasp that simple point…
I personally have engaged in detailed and specific arguments on this site on countless occasions on topics ranging from climate change, labour economics and macroeconomics…But those arguments can only go so far when you are engaging with the wilfully ignorant.
I’m quite happy to get into a detailed argument with you about the circumstances in which aid is effective and when it is not, and how better evaluation can help sort the good programs from the bad. But I’m not going to do that until you show some sign of being informed about the literature on which you are commenting.
Honestly LO, is this kind of language necessary?
And with respect to Greece, we will see. Europe certainly has a different political system than the US.
Joe – perhaps my language should have been more restrained. However, sg is referring to two researchers that have devoted their entire professional careers to trying to uncover which policies best help the poor in developing economies. Disagree with their conclusions, fine. But sg’s accusation about their intent has no connection with reality.
LO, I have disagreed repeatedly and in detail with their conclusions – as presented in the linked post – and you have refused to engage. You consistently say you won’t until I learn some economics. But you won’t answer a single one of the points I raised about the article. Yet then you complain that I am calling it an attack piece. If you can’t defend the article against criticism, what grounds do you have to berate me for judging its intentions?
The criticisms I have made don’t need any grounding in economics, either – they go to very basic ideas about the nature and causes of malnutrition that the article (in my opinion deliberately) avoids tackling.
And no, “read the book” is not an answer, and certainly doesn’t exonerate the authors from responsibility for this smelly little article.
And now Hillary Clinton is being discussed as the new head of the World Bank. Best person for the job, I’m sure.