iPods don’t exploit people, people do…

Update: Read this first. It turns out that Mike Daisey was making stuff up.

Chris Blattman finds himself on the horns of a familiar dilemma:

Mike Daisey was a self-described “worshipper in the cult of Mac.” Then he saw some photos from a new iPhone, taken by workers at the factory where it was made. Mike wondered: Who makes all my crap? He traveled to China to find out.

That is the tagline from this week’s This American Life, freely available as an mp3 this week. Often funny but also often horrifying: Child workers, terrible workplace injuries, and police state tactics. They have released reports on the Apple subcontractor from October 2010, May 2011, and September 2011.

I am of two minds. If even a tenth of the abuses are systematically true, then even the most ardent capitalist among you should be incensed.

On the other hand, I am in the midst of a randomized control trial of factory labor in Ethiopia. One reason is because I believe–and the early results suggest–that the improvements in poverty and work conditions and risk and well-being are huge. Huge huge.

When this choice is presented as a simple binary it is a very unappealing one. Buy iPods and support a system that is exploitative and abusive. Don’t buy iPods and leave people condemned to rural poverty. It’s an agonising choice. For what it’s worth I think the least worst option here is to buy the iPod. But the least worst option in this binary is not the same as the actual best available option in reality. There is a third way. It’s simple.

Continued global trade but with workers’ rights. Workers in factories in China and Ethopia would still receive low wages but they probably wouldn’t be quite as low as is currently the case, and their working conditions definitely wouldn’t be so bad.

And how could this happen? In a world of developing countries that were democratic and well governed, it would be easy: trades unions to offset the bargaining advantage of bosses; and the progressive implementation of some workplace safety laws brought about via the democratic process.

Trouble is, neither China and Ethiopia are democratic or well governed (although I guess the situation is slightly better in Ethiopia???).

Then what? This is where I think there is a very real role for consumer activism in developed countries. As much as possible, avoid products produced in situations where workers’ rights are violated. As much as possible, buy fair trade products. Write to companies to let them know that you’re doing this and why you’re doing this. Don’t tell them “don’t make stuff in China?”; tell them “make stuff in China but protect your workers?” Share this information. Fund entities devoted to obtaining this information.

This is an imperfect, partial solution. But it’s better than either of the horns of the dilemma presented above.

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As a footnote. The other potential improvement here is to write labour standards into trade agreements (and actually follow up on this). Most economists hate this (“oh noes don’t limit teh free trade!”). Me I’m kind of in favour: I think in theory it would work. Although in practice, in the messy world of enforcement, political economy, unequal power, and trade agreement negotiations, it may well not.

I wanna hold your hand…

I’m no homophobe, but I would find it very hard to hold the hand of another man. I don’t think men holding hands is wrong and I believe gay people, everywhere on Earth, deserve the same rights to relationships as everyone else. And yet if you asked me to walk down the street holding the hand of my best friend I would feel distinctly uncomfortable. Holding my wife’s hand, on the other hand, feels every bit as normal and natural as holding a man’s hand feels wrong.

Why is this the case? One possible answer is biology — holding hands is part of the spectrum of romantic interaction that culminates in reproduction (he says, trying to find suitably prude words for the internet). So it feels natural to hold the hand of your mate (i.e. lover) but wrong to hold the hand of your mate (i.e. Australian word for friend). This being for the simple reason that you don’t want to mate with your mate (reproduce with your friend).

That sounds plausible but as five minutes walking the streets of Honiara will show you it can not be the case. Following the norms of social behaviour here, heterosexual couples never hold hands or engage in public displays of affection. On the other hand you see many men (and to a lesser extent women) walking down the street talking and holding hands. These aren’t people in same sex relationships (alas Solomon Islands society is not gay friendly) they’re simply friends. For whom it is completely normal to engage in some physical conduct.

So what is going on here?

In a word: norms. A lot, but not all, of our social behaviour reflects our instinctive desire to conform to the informal rules (norms) of the social group that we are situated amongst.

This makes sense evolutionarily – we are communal animals so it stands to reason that mechanisms will have evolved within us to make collective action possible by leaving us inclined to behave in predictable, and not entirely self-centred, ways. Absent this we could have never lived in groups.

And in the case of hand-holding, our instinct to group conformity means that those of us raised in societies where friends don’t hold hands, don’t hold our friend’s hands, while those of who were raised in societies where lovers don’t hold each other’s hands don’t do that.

From a development perspective the importance of norms matters for a lot more than hand holding. The role of informal institutions (social rules or norms) in determining development outcomes has been on the rise since the work of Douglas North and other economists revitalised the area of study and it’s hard not to spend time in a developing country and not end up concluding that this aspect of human interaction might be a key piece currently missing in our understanding of development and under-development.

Why are bureaucracies in many developing countries dysfunctional maybe (not definitely, just maybe) this has to do with the absence of norms necessary to instil commitment to the outcomes of an entity to which employees are only professionally linked to. Want to understand why nepotism is rampant in many developing countries, possibly this has to do with very strong norms of familial obligation? Want to understand how markets actually work in the developing world? Then maybe you need to understand the normative rules that shape them? Want to understand the persistence of clientelist politics? Then possibly you need to understand norms of leadership within communities. Want to understand how ideas and practices propagate within NGOs and aid agencies? Have a think about norms, too. Norms are everywhere and while they aren’t everything in development they are almost certainly an important component of it.

An intellectually appealing aspect of norms is that there is an apparent logic or rationality to their functioning too. They aren’t completely random and can be modelled into intellectually pliable frameworks such as rational choice. This is a good thing and leads to much fruitful thinking such as that in the work of Akerlof and Kranton, discussed by Tom Slee here (HT Luis in comments a while back – thanks!) Lots of irrational behaviour becomes rationally explainable if you allow that we have a natural (and itself reasonable) preference for conforming to group norms.

That’s great intellectually, models of reasoning agents are infinitely easier to use than those positing more complex or unpredictable actors, and yet we need to be careful. Not only would I find it very hard to hold the hand of a friend on a busy street. (Which you can explain via reason and calculation – he knows that by doing this he will break a group norm and so, through fear of consequences, calculates that the utility maximising strategy is to resist the urge to hold). But, I would find it equally hard to hold hands with a friend on a deserted island. No group to catch us there – no rational calculation involving norms. Just an instinctive aversion.

In many instances norms aren’t reasoned at all, they are instinctual. And while that doesn’t totally negate the merits reason based modelling exercises it does mean that norms are likely to be sticky (persist even when all actors involved can see that they are harmful) and that they are likely to change in strange, erratic ways.

And what does all of that mean?

Development is complicated. And aid is complicated.

Development happens and aid can work – but both are a lot less predictable and understandable than we usually admit.

3 Roles For Aid (and let’s stop kidding ourselves)

Thinking about this earlier…

There are effectively three types of aid (excluding disaster relief), each with it’s own different type of success.

1. Development aid. In this, aid is a somewhat effective tool for sustainably transforming countries. For shifting them from a sub-optimal state to a better one. This is the aid of Jeffrey Sachs books and development agency rhetoric. This is the ideal.

2. Band-aid aid. This is aid that makes no pretence at changing societies. It’s simply about improving people’s welfare in the absence of systematic change. This is the sort of aid that might ensure that people get basic health care over many years, even as their country stays poor. I don’t use the term band-aid pejoratively here: if you’re bleeding, a band-aid helps. And, even if you never significantly change the development trajectory of a country, if you help its people, by reducing the number who die from disease or who are crippled by it, then you’re likely making the world a better, happier place.The improvements generated by this aid aren’t usually sustainable in the sense that they stop when the aid stops (although, arguably vaccinations fall into this category and their impacts can be sustainable.)

3. Keeping it together aid. This is aid which aims higher than band-aid aid, but which doesn’t pretend to be transforming anything. This is aid which tries to keep states together and functioning even if it’s not transforming them. It’s aid that works in the short term (when it works) and which may have a long term impact, not through developing anything but through providing at least a little bit of space for development to occur indigenously.

Imagine a person seconded from Inland Revenue in New Zealand to the tax department of a Pacific Island government. Let’s say, for the sake of the argument, that she’s not aspiring to build the capacity of her replacement. Rather she’s just tasked with getting the tax system working somewhat. She does it for 10 years, and her (New Zealander) replacement does it for 10 years and his replacement does it for 10 years. That’s 30 years in which life has been just that little bit easier for local businesses and when just a little bit more money has made it from domestic tax returns to the ministry of health and out to medical clinics. And over that time the growth of businesses has changed the economy, and with it the political economy. And ongoing provision of services has changed people’s expectations. (As well as increased their education levels and the like).

Like I said, it’s the first type of aid that most aid agencies and politicians talk about. This is also aid that rarely, I think, succeeds on its own terms. It turns out that development is too complicated, aid too cumbersome, and the ability of external agents to effect change too weak, for this type of aid to succeed often. Not often isn’t the same as never – it probably sometimes works. But success is less common than one would think from the rhetoric of aid. And I think we kid ourselves much of the time regarding the potential for type 1 aid to work, and end up wasting money.

I’m a big fan of the second type of aid. This, I think, can work — and it’s probably where aid has had its most major success in improving welfare. The main argument against it is that you have to give it in perpetuity, or at least for a long time. But, hey that’s what we do with our own welfare state. No one in New Zealand says “we’re funding a health service now so that one day we won’t have to have one”. I’m comfortable with aid as a global social safety net, as part of a global social contact of sorts.

I’ve never really thought about the third type of aid but, if we were being honest with ourselves, I’d say that much of our ‘capacity-building governance-strengthening’ aid, when it works at all, works — while it works — in this way. It holds things together. And by doing this probably improves people’s quality of life and enhances the space in which development can occur.

Success in aid type 1 would be ideal but success in aid types 2 and 3 does still help. And I think we’d be a lot more successful in aid across the board if we were much clearer, and realistic, in what we were trying to achieve.

Better, I think, in most instances, to concentrate on type 2 aid, and use the modalities most likely to make it effective. And maybe devote more time and thought to type 3 aid too.

Most of all though we need to be realistic. ‘Perfect,’ as the old saying has it, is often the enemy of ‘good’. Likewise, in development the ideal is understandably tempting, but it’s also too-often the enemy of at least getting something done.

The Pendulum Swings

From an Upside Down View of Governance [PDF] (page 21)…

For years, developing countries have been on the receiving end of well intentioned advice from international donors about how to increase economic growth. As is often the case, the prescriptions have fluctuated widely according to prevalent donor fashions: enthusiasm for state-led development gave way to urgent advocacy of liberalisation, privatisation and retrenchment of government, followed by a rediscovery that public institutions matter for growth.

…and so the pendulum swings.

It strikes me that there is one simple intellectual change to the world of aid likely to make it a lot more effective. This is for policy advice and prescriptions to developing countries to cease being dictated by intellectual fashion in the donor community. Instead, before aid agencies do anything new in a country, they ought take time to carefully learn about the place. Both to try and figure out what its ‘binding constraints’ to development are and, importantly, which of these constraints might be addressed. And then act.

In some countries maybe the state is needed to drive growth, in others perhaps markets do need to be freed and the state shrunken, in others institutional reform could be critical, in others still tackling disease might be the best thing we could do.

The point is: context matters. Both to what can be done and to how it should be done.

Context matters but you’d be surprised how often that fact gets forgotten in the pendulum-esque world of development ideas.

Kindness, Cruelty and the Better Polity Through Suffering Theory

Call it ‘Better Polity Through Suffering Theory’. It’s nasty, common and it comes in various forms. On the far left there are those who dismiss the market mitigating effects of social democracy as impediments to real political transformation. People who argue that if we would just stop providing the masses with some security they will eventually rebel, leading to left wing utopia.

The right has it’s own versions. Witness Helen Hughes and Gaurav Sodhi [PDF] arguing against a seasonal migration scheme for Pacific Island workers because it will reduce the impetus for political reform back home. Similarly, opponents of aid sometimes claim that the negative shock of aid withdrawal will lead to pressure for positive political reform.

The common thread in such ‘theories’ (both from left and right) is that you have to be cruel to be kind: deny people benefits now and you will provide the incentive for positive change.

On a society-wide scale this has never struck me as convincing for the simple reason that there are not many examples of countries that have weathered large shocks and become radically better as a result. On the other hand there are plenty of examples of countries that have weathered large shocks either by falling apart or by reverting to authoritarian hyper-nationalism. It’s much easier to break a country (or a community for that matter) than it is to build one. For this reason I’m very wary of any reforms that promise long term gains as a result of short term pain and I’m particularly sceptical of claims that see the pain itself as a tool.

And so, the following really doesn’t surprise me; although I hope it might cause proponents of Better Polity Through Suffering Theory to reconsider their own arguments for a bit.

From VoxEU:

While estimates vary between specifications, we find that roughly a one percentage point decline in growth translates into a one percentage point higher vote share of right-wing or nationalist parties.

Development: what’s the point?

[This is hoist from an old old blog I had - it still does a pretty good job of explaining what I think development is, or ought to be.]

Over the space of a couple of weeks in 1996 I travelled between two extremes of the public transport spectrum. At one end were the busses of rural Sumbawa – grumpy, diesel-spitting creatures that lurched their way around potholes taking interminable amounts of time to get anywhere, let alone their destination. As a means of transport they were inclusive though. Want to take your surfboard? no problem. Want to travel with freshly caught fish? fine. Want to move your goat – trussed up and still trying to kick? just pay your fare. And if the bus ever got full, you were invited to sit on the roof.

At the other end of the spectrum was the London Underground. Trains were frequent and – despite everyone’s complaints – mostly on time. You could only travel with surfboards off peak and, though I never tested the hypothesis, I suspect goats and fish were prohibited outright. Yet the tube got you where you wanted and it got you there quick. It was safe, efficient and no one ever asked you to ride on the roof. Compared to the bus riders of Sumbawa, all but the poorest travellers on the London Underground were wildly wealthy too. And healthy: no Malaria, nor cholera, nor typhoid; life expectancies in the mid 70s. Almost all of them were literate and many could expect to travel overseas. They got to elect their leaders (something denied to Indonesians during the Suharto years) and their human rights were reasonably well safeguarded.

And yet they were miserable. Or, at least, they appeared that way. Silent, pale, staring at their shoes. The Sumbawan bus travellers, on the other hand, were full of cheer. The bus rang loud with talk and laughter, and delays which would have driven Londoners to apoplexy were cheerfully dismissed.

For a long time contrast between these two scenes led me to question the very merits of development itself. If London was wealthy but glum and Sumbawa poor but happy, then maybe we should abandon development and all aim to live like the Sumbawanese. Over the years I engaged in plenty of this anti-development thinking. It’s common currency on the backpack trail and surprisingly prevalent amongst some sectors of the development community too.

It is also mistaken. My own error was to compare two snapshots of life that were both subtly different but also not representative. At least part of the boisterousness of the Sumbawan busses came from the fact that most everyone knew each other. On the Underground people are silent because they are among strangers. Of course, if Sumbawanese and Londoners lived their lives as they travelled (amongst companions in the case of the former; isolated and alone in the case of the later), this would be a real issue. And it is certainly easier to end up lonely in a large city than a small village, but London is hardly atomised – you only have to go into any bar, or restaurant, or football stadium to see people interacting amongst friends.

And, of course, a bus ride is not someone’s life. What I didn’t see on those buses were the dirt floors of people’s houses, or the absence of running water. Nor did I feel the anguish of loosing a child to Malaria, or the pangs of hunger at the end of the dry season, or the anxiety of living with only the barest social safety net. I didn’t feel the frustration of being unable to afford basic medicines or of having to deal with corrupt officials. On the other hand, much of what London has to offer – comfort, food, the NHS – I have had all my life. So I took it for granted.

None of this is to say, of course, that London is all good, or that village life in Sumbawa has no merits. All I’m saying is that the modern misery / happy poverty dichotomy, and its variants – views held by a considerable number of people – are wrong.

In other words, there is such a thing as Development, and it matters. Countries can be better or worse places to live and, taken as a whole, for the majority of their people, the best places to live aren’t those with per capita incomes of a few hundred dollars per year.

To say something exists and that it matters is not, of course, the same as saying that it is straight forwards or even that it can be easily defined. One has only to look at the many very real problems of London to realise that development can’t possibly be a nice linear journey from rural Sumbawa to the South-East of England.

So what is development? Let’s start with its purpose.