07 September 2006

The public interest

A couple of interesting excerpts from the Oxfam Report, In the Public Interest – Health, Education, and Water and Sanitation for All:

The World Bank promotes the private provision of basic services through interlocking conditions on aid and debt relief to poor countries. This appears to be driven more by the Bank’s internal targets than by evidence of what works in each country — for example, the Bank’s Private Sector Development Strategy aims for private sector participation in 40 per cent of its loans to the poorest countries. (page 9)
Why 40 per cent? Why not 60 per cent, or 77.77 per cent? This is what happens when you get Mickey Mouse micro-targets. It probably took at least 10 minutes to think of 40 per cent. Probably the person who did so just looked up the current percentage, and added something plausible to it to come up with something nice and round. And why not? If anybody bothered monitoring the results of World Bank policies the meaninglessness of such figures might be challenged… but this is project management subordinated to ideology, not outcomes.

Later, discussing the rich countries’ recruitment of health workers from developing countries:

With the cost of training a general practice doctor [in Africa] estimated at $60 000 and that of training a medical auxiliary at $12 000, the African Union estimates that low-income countries subsidise high-income countries to the tune of $500 million a year through the loss of their health workers. (page 67)
The rich countries put up import barriers to the few goods – agricultural, textiles, clothing and footwear – that offer the developing countries their best chance for prosperity. This helps impoverish people in Africa (or even kill them). But we then freely import their most valuable personnel to prop up our own health services. This is a destructive and self-reinforcing trend. The worse we make life for people in the third world, the more desperate they become to escape to the west. If successful, they become reluctant migrants; leaving their cultures and, in many cases, their families behind. The only long-term beneficiaries of these absurd policies are the people who are paid to make and administer them.


Frank said...

Hi Ronnie,

since you keep referring to the article on "free-europe.org" I finally need to make some comments about it, especially for -I belive- the benefit of those people who only read the "key findings" and not the rest of the article.

The authors claim that "6,600 people die every day in the world because of the trading rules of the EU". This figure is purely base on assumptions and no attempt whatsoever is made to justify those figures. What's more the article does not even try to explain why people die because of trade barriers.
I am not speaking in favour for trade barriers, but if they are to be challenged, this can not be done by populist articles like the one in question.


Ronnie Horesh said...

Hi Frank, many thanks for your comment. I will agree the report is based on assumptions and that the authors of the study express this particular conclusion bluntly and almost offensively, probably in an effort to raise awareness. However, the assumptions seem to make qualitative sense to me. In economic theory, and on all the evidence, trade leads to financial prosperity, largely through specialisation and division of labour. Take a small country like Singapore: how many people could it support if it did not trade? Of if we don't like globalisation, what about trade within a country? I don't think anyone would say that autarky actually enhances quality of life. Or quantity of life, which is also important.

Now Oxfam estimates the financial costs of the rich world's trade barriers to the poor countries at £69 billion (2002 figures). I have seen similar estimates by OECD and other bodies. The methodology, I agree, is not described in the link I supplied, and it is open to question, but it is not widely considered to be controversial. Now, I am not sure whether you are questioning these financial costs (which seem to me reasonably robust) or the translation of such costs into people killed - which may be less defensible. However, I think that if, as the authors say, 24000 people in the poor countries die of starvation or malnutrition every day (and again, this seems close to reality) then the implication for human life of the cost of lost trade, as expressed in the link, doesn't seem unreasonable. And if it's not unreasonable, then I think it does deserve publicity: it is the cost of the selfishness of corporate lobbies in the west and spinelessness of their political friends.

I will of course agree that trade does have negatives: alienation and interdependence, for example. But here we are talking about barriers erected against people living at the very margins of subsistence. Most things in politics are rightly contentious and can be seen from many angles. But I am not the only one who makes an exception for trade barriers that affect the third world. They cost the rich countries (financially) even more than the poor countries - and they are also economic nonsense, socially inequitable and environmentally destructive.

Frank said...

Hi Ronnie,

thanks for your elaborate response.
Claiming that 20000 people die each day because of trade barriers is a rather serious allegation and I would deem it appropriate for the authors to explain how the link between the finanicial loss and the loss of life works.
But what bothered me most, was how they actually arrived at the figure of 6600 people dying each day from trade barriers. It is completly arbitrary but is announced to be _the_ outcome of their work ("This paper quantifies, for the first time, the cost to Africa of EU protectionism.").


Ronnie Horesh said...

Thanks Frank as always for your coment. You are right to challenge the allegation. The url I linked to I think pointed to a version of the report that excluded references. This includes them.

That said, I still think the authors have a powerful argument. The fact is that trade barriers do lead to loss of income, and that loss of income to people living in poverty does mean severe deprivation. There is not, nor can there be, proof that a particular trade barrier kills a particular person. But then neither is there proof that a small increase in atmospheric C02 generated the hurricane that wiped out this particular community, or that lowering the drinking age led to the deaths of this particualr family. These are examples of statistical deaths, and have plausible deniability at the individual level, which is one reason nobody bothers much about them. But they are real, and at the aggregate level the linkages are meaningful. They are the sort of figures that planners use when deciding where to allocate limited public funding. (You know all this, I am sure, but other readers may not.) So the argumentation may be ugly, or as the authors themselves say, may sound unreasonable. But I think the burden is on the upholders of trade barriers to disprove it. They certainly are wealthy enough to try.