Your Eating Habits Determine Your Health – Choose a Good Diet To Avoid Diabetes And Cardiovascular Disease – It Is All Within Your Powers

By Paolo von Schirach

December 31, 2011

WASHINGTON – Given an anemic economy in slow motion, millions of Americans are not that happy. Those out of a job feel especially helpless and probably depressed. Beyond a certain point, not much that one can do to fight lack of opportunity. But there is another very important area in which people can do a lot to help themselves, or they can instead choose to be their own worst enemies: personal health. Indeed, it is time to grasp the simple but crucial fact that, on balance, the life style we choose and keep is the leading factor in determining our general health and longevity.

The food you eat may land you on the operating table

Here is how Dr. Mehmet Oz, a trained surgeon, and an Emmy award winning TV host, put in an essay published in TIME magazine (The Oz Diet, September 12, 2011): “[As a surgeon] my objective was to heal with steel. That in some ways was the easy part. What confounded my colleagues and me was how and why our patients landed in our care in the first place –lying on a gurney, about to have their chest opened with a band saw. The biggest reason was often the simplest one: the food they ate.[…].A dietary free for all in the US is producing not the healthiest generation in history but one in steady decline, with epidemics of obesity, cardiovascular disease and diabetes. More than two thirds of US adults, and more than a third of kids, are overweight or obese“. (Bold added).

Diet matters a lot, and you can change it

So, there you have it. If you will ever need major surgery to unblock your congested arteries, chances are you did this to yourself. It is not bad luck and it is not genetic predisposition. It is all about the cumulative effects of a bad diet combined with a sedentary life.

But, as Dr. Oz and so many others declare, you radically change your eating habits –for good– and you can reverse the damage. But please bear in mind that this has nothing to do with going on a temporary diet to lose some weight. This is about embracing healthy eating habits and adopting them –for ever. The commintment required is significant, but not that onerous. Eating healthy stuff is not that hard.

Choosing healthy food is not that hard

The basic point is that all this is doable, and well within the powers of each individual. What would you rather do, eat burgers, french fries and gallons of ice cream until your cholesterol clogged arteries land you on the operating table, or live a long and healthy life eating fish, whole grains, spinach, beans and berries? You can choose. So, you may not control the jobs market, but you can control whether you will get type two diabetes, and many other diet caused ailments, or not.

Keystone XL Pipeline Carrying Canadian Oil To Texas Is In Limbo – Short Term, Project Would Be An Economic Boost – Long Term, It Would Improve US Energy Security

By Paolo von Schirach

December 30, 2011

WASHINGTON – TIME magazine recently reported that California Governor Jerry Brown, with difficulty, is trying to bring down the retirement costs of state employees. If the package he proposed were implemented, the state would save about $ 900 million a year. And this is good, if you are bent on reducing public expenditures in a perennially broke state.

California high speed rail?

But frugality is not across the board. The proposed California high speed rail network now is estimated to cost $ 98. 5 billion, (a century of pensions savings). And the cost projections keep going up. The current estimate is double the previous one. All this money for a project with extremely shaky economic fundamentals.

High speed rail needs high traffic to recover large upfront costs

High speed rail makes sense when it links major, (and not too distant), population centers, so that projected high traffic volumes justify the significant upfront cost. Otherwise it is is pie in the sky. Stuff that makes you proud, nice to look at, but a money sinkhole.

Even with some federal funds, this California rail project is an unsustainable financial disaster. Once he is done with state pensions, Governor Brown may want to revisit and help bury this zany idea.

Why Pay Attention To Iowa? Small State, With A Small Number of Mostly Elderly GOP Caucus Goers – It Is All About The Assumed Magic Of Momentum

By Paolo von Schirach

December 29, 2011

WASHINGTON – The Iowa caucus is finally about to take place on January 3, 2012. As it represents the very first real event of the Republican primary season, it deserves some attention. But there is something really wrong in the obsessive coverage of every poll and every minor twist in Iowa Republican politics. There is absolutely no correlation between the size of the state, the number of likely caucus goers, their demographics and the inordinate attention paid to this otherwise small event.

Iowa: small population, tiny number of caucus goers

Let’s step back for one minute. Iowa has a population of only about 3 million. Out of a total US population of more then 310 million, this is a tiny slice of the American electorate. Besides, as American politics expert Michael Barone observed in a WSJ op-ed piece, (As Iowa Goes, So Goes Iowa, December 27, 2011), there are 645,000 registered Republicans in Iowa. Of these it would appear that may be less than 119,000 (this was the 2008 turn out) will participate in this contest. Worse yet, the median age of the 2008 Iowa caucus goers was around 60. If this basic picture does not change in 2012, what we are going to have in Iowa is a small minority of elderly Republicans within a small state expressing its preferences. This sample hardly represents America. So, why should anybody care that much?

National momentum out of Iowa?

Well, all the candidates and the pundits care a lot because everybody is desperately trying to establish trends, even when the numbers of voters involved are ridiculously small. Iowa has the inordinate power an mystique of being the first state to make an official statement about the Republican race. Assuming that one candidate comes out of Iowa as the front runner with a very strong lead, this fact alone would generate an enormous amount of national media coverage that would probably sway some undecided to cast their primary ballots for the one who already has the title of front runner and thus is assumed to be the favorite to win the race. “I vote for the front runner, because…well, because he is the front runner“.

“Iowa with me, you just follow the lead”

And of course the candidate who is in the lead out of Iowa will furiously sell this support nationwide by saying: “Look, this is almost a done deal. Iowa is with me. You should follow this trend”. Of course this would be totally preposterous, given the very small numbers of Iowans expressing their preference. But in a political universe dominated by symbolism, candidates can actually say this without being laughed at.

And this is the really worrisome part. If Iowa had the population of California, (37 million), a good mix of urban and rural and diverse demographics, then it would be very wise to pay a lot of attention. But it is only a small state with mostly elderly GOP caucus goers.

Implicit assumption that there is a herd mentality in America

Sadly, the only plausible reason why we pay so much attention to the very first contest, no matter its puny size, is because we implicitly assume that in America people have the independence of thought of a herd of sheep, and so they are likely to follow the lead determined by others, no matter how insignificant the numbers of those who made the first selection. But if this is indeed so, then this democracy is not working that well.

The Economic Importance Of American Natural Gas – Huge Benefits Include Lower Electricity Costs and A Boost For The Plastics And Chemical Industries That Use Gas As A Key Ingredient

By Paolo von Schirach

December 28, 2011

WASHINGTON – A recent The Wall Street Journal story reported that newly exploitable, abundant and cheaper US natural gas is fueling now a renaissance of the American chemical and plastics industries, since they both use natural gas as feed stock. New plants are coming on line, workers are hired. This is really great news, with wide ranging, positive implications for an otherwise battered US economy. Significantly lower costs for a key industrial component translate into better pricing power and enhanced competitiveness for US chemical products, fertilizers and plastics products. Gas producing states like Ohio, West Virginia and Pennsylvania will get new investments, as manufacturers will want to locate their facilities close to the gas supply.

The US natural gas revolution

Let’s say this once more: the veritable “natural gas revolution” made possible by the hydraulic fracturing (“fracking”) and horizontal drilling technologies that make shale gas (gas trapped in rock formations) accessible is by far the best energy and economic news of the last three or four years.

Given its magnitude and wide ranging implications, I frankly cannot understand why, aside from occasional articles like this one in the WSJ, the US shale gas revolution is a surprisingly under reported story.

Washington silence

Even more amazing is the almost complete Washington silence regarding this gas renaissance. For the Obama administration all this might as well not have happened. Is it because natural gas is a fossil fuel and therefore “bad” compared with the “good” green energy provided by wind and solar? Is it all about bias?

Ideological bias against fossil fuels

May be. May be policy makers wedded to the “green economy” idea, (or should I say ideology?), do not want to revise their plans in the light of abundant and really cheap natural gas. Indeed, it may be painful to have to admit that all the rosy projections regarding the benefits of solar panels and wind towers have to be reconsidered, at least for the time being, in the light of much lower natural gas prices that require no subsidies. In fact, the market is providing the cold shower anyway. Even with subsidies, the US solar industry collapsed as it cannot stand on its own foundations. The Solyndra (a promising solar company funded by the US Government) debacle is just one example of failed Washington industrial policies through which policy makers try to pick winners and losers in a still uncertain energy environment.

Policy makers’ negligence

Still, even with renewable energy technologies showing their current limitations, policy makers’ failure to recognize this new fossil fuel bounty and to take it into consideration in framing a solid energy policy that industry and the public can understand and embrace is negligence. This US natural gas phenomenon is not just a blip. Most estimates indicate that shale gas exploitation now guarantee supplies for another 100 years. In fact, recent revisions indicate an additional 25 years.

Immense implications of abundant American gas

If we take all this in, even though president Barack Obama mentioned at some length natural gas in only one major speech, the energy security and economic implications of these vastly expanded gas reserves are immense. America now has more gas than Russia. And the benefits are augmented by the luck of geographic locations of the largest deposits.

Indeed, this new American gas is not in some remote, underpopulated areas from which it needs to be transported to end users at additional costs. On the contrary, much of the new gas is in Pennsylvania (Marcellus shale) and Ohio (Utica shale), that is to say right in the middle of the highly populated and industrial North East. No need to build major new infrastructure, Gas can be supplied to existing utilities and there is no need to construct new transmission lines to send the electricity to the customers. Abundant natural gas, right next to factories and tens of millions of consumers, means cheaper electricty for households, businesses and factories. All this is like supplying precious oxygen for an out of breath US economy.

Lower prices

Consider this. As the WSJ reports, now 1/3 of all US natural gas production is coming out of newly exploited shale gas deposits. As a result of this additional supply, (coming on line at a time in which it was estimated that the US had to become a net importer), US natural gas prices have fallen dramatically. Six years ago natural gas cost $ 15 per million British Thermal Units, (BTUs), now future prices are around $ 3.20. This is incredible. This means much lower power generation costs and therefore lower electricity costs. And it is also a major boost for states like West Virginia now trying to convince Shell to open up an ethylene plant there, relying on a steady supply of shale gas, (necessary to produce ethylene).

Lowest world costs outside of the Middle East

Outside of the Middle East, the US has now the lowest natural gas cost in the world with obvious benefits for the entire US economy. And natural gas can also be used as transportation fuel, as T. Boone Pickens has been saying. Here the low hanging fruit is represented by heavy trucks. The technology exists to build trucks running on natural gas, as opposed to diesel fuel. Even taking into account the upfront large investment necessary to switch to new trucks, there will be huge savings down the line for fleet operators because of the lower cost of natural gas. Not to mention the added environmental bonus of natural gas lower emissions. Large vehicles running on comparatively much cleaner natural gas emit a lot less.

So, let’s consider this: American shale gas is good for US energy security, for the economy, for many industrial sectors and for transportation, while it reduces US greenhouse gases emissions. It is about time to tell this story.

A US College Educated Salesperson Does Not Know Elementary School Math – Not An Isolated Case, Scores Of Statistics Point To Scary Gaps In Math And Science – Americans Can Do Better

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By Paolo von Schirach

December 27, 2011

WASHINGTON – While shopping in a specialty store in Washington a young saleswoman showed me what seemed like a good deal on Italian olive oil. A 1 liter bottle for 7 dollars. Not bad for what seemed to be extra virgin, cold pressed, olive oil. But then I noticed on a lower shelf a large 3 liter can of the same brand of oil for 20 dollars. And I pointed out that the bigger container was a little cheaper per liter. The young lady appeared a little confused. “What do you mean cheaper?” “Well –I replied — the 1 liter bottles are 7 each. If I buy three, that’s 21 dollars. If I buy the three liter can for 20, I save a dollar. So it is a bit cheaper”. The sales woman seemed uncertain. “I was never good in math”, she told me. “The last math course I took was in college. And I was so glad to be done with that subject”.

College level math

So there you have it. This is what college level math gets you in America these days. A young sales woman cannot figure out that three bottles ( 1 liter per bottle) of 7 dollar oil amount to a total of 21 dollars and that 21 dollars is a bit more than a 20 dollar can containing the same three liters. (I know that in America we do not use the metric system. But the containers clearly indicated the quantities in quarts and in liters).

Many statistics show huge education gaps

True enough, one person is not a national statistic. But we have seen plenty of scary national statistics about math and science proficiency, or lack thereof, I should say.

And we have seen the international comparisons done through the Organization for Economic Co-operation and Development, (OECD), sponsored “Program for International Student Assessment” (PISA) in which US students routinely score towards the bottom in most subjects, and especially so in science and math. These statistics tell us that we have a major national problem.

US cannot be a leading economy with a semi-illiterate work force

It should be self-evident to all that we simply cannot continue to be the leading world economy with such low education levels. Surely there are many kids who go to good private schools and then to the best colleges. Most likely they know more. And then we are blessed with all these Ph.D graduates from India and China who start great businesses in Silicon Valley and beyond. Fair enough.

But at least half of America is severely under educated. And this is a big problem today and it is going to grow into a bigger one tomorrow. Ignorant people, even with degrees, cannot aspire to good, high paying jobs in this arch competitive global economy. We should all think about the far reaching implications of this education crisis.

College level math does not teach that 2o is less than 21

In any event, now I I have first hand evidence of the outcomes of the US higher education system. At least in this one instance, college level math does not provide the skills to appreciate that three times 7 is 21 and that 21 is a higher number than 20. May be that college should look again at its math courses content.

In the end, if this small example is indeed an indicator of the level of general knowledge in America, (and other data suggest it is), then we are in real trouble. (By the way, I bought the three liter can, because I love olive oil and the bigger container was a slightly better deal).

Africa Is Slowly Changing – Tribal Kings In Zambia May Have to Go

WASHINGTON – He was just another participant in the Livingstone Workshop aimed at discussing foreign investment issues with many officials representing the Zambian Provincial and District Governments. He was an elderly gentleman wearing glasses, dressed very informally and somewhat reserved.

His Royal Highness

But when we started our proceedings it was obvious that he was different from the others. When the Provincial Minister formally opened the meeting, the elderly gentleman was deferentially addressed as “Your Royal Highness”.

Yes, he is a King, in as much as he is the Chief of one of the tribes. A Chief is a King. Hence the deferential form of addressing him. And so it went. “His Royal Highness” sat with all the others for two days. No special seating or other arrangement. But nobody would fail to use the formal and ceremonial title when addressing him.

Kings have legal status

While informality and jokes were fairly common among all the others, no one joked with the King during the proceedings. And, in truth, the title “Your Royal Highness” is not just a remnant of the past.

The role of tribes and chiefs is enshrined in the Zambian Constitution. For one thing, the tribes own most of the country’s land. Therefore, anybody wishing to do business in their territory, including of course foreign investors, (investments was the topic of our workshops series around the country), has to deal and negotiate with the Chiefs.


And so, as we continued our discussions about investment issues, “His Royal Highness” was addressed many times. But, as we went along, the stiff and longish English title “Your Royal Highness” was more and more frequently replaced by the local language word “Mwami” in addressing the Chief. And I was intrigued, as this word sounded nice and soft, in the way they pronounced it. There is a slight pause on the “w”…And so it sounded more like “Mw…wami”….And the sound of this word is more like a gentle pleading…It is just like a child saying “Ddaa…ddy”

I found out later on that “Mwami” in the local languages is the equivalent of “Your Royal Highness”. But it is a bit more informal, I was told. And so the tribal Chief, without any problems, attended the donor sponsored Workshop, mixing with his people and with me, the foreign consultant. And at our first lunch he engaged me saying: “So, it appears that China is growing as an economic power, soon to surpass the United States…”

Mwami, caught between tradition and modernization

As the work progressed, the formal or not so formal addressing of the Chief as “Mwami” resonated with me. And this local language word that sounds a bit like a pleading or a prayer describes an important element of the complex transformations that Africa is going through.

On one side tribal leaders and a communal society; and on the other, still hazy but progressively more real, economic development plans, founded on principles of individual accountability, and laws guaranteeing individual property rights.

Kings still matter…

This new capitalistic approach at least conceptually collides with the communal society and its recognized institutions, the Chiefs first and foremost. In the still existing context, the Chief is the authority within the communal society.

He presides and adjudicates within a system that is somewhat cumbersome. The solution to any problem is to call everybody to a meeting. Issues are resolved at the communal level. Not exactly the best way to have swift action within a modern or modernizing economy.

But this was and to some extent is still is the way.

Clearly, honoring Mwami is more than just nodding to old traditions. Today, Mwami has a real role, side by side with “modern”, westernized governmental institutions.

…But they have to go

And here is the issue and the contradiction. In this changing Africa that modernizes itself by moving away from the old communal system, today there is still a legitimate place and perhaps a yearning for the old paternalistic system where the tribe elders decide and provide for all the others.

Uttering the word “Mwami” to me sounds like a pleading to a gentle, higher authority. An authority that embodies indulgence, understanding, help, fair administration of justice.

Caught in the middle of the transformation of a society that would like to go beyond the old tribal system but is not in a new place as yet, Mwami is still there –with the full force and authority of his office, prestige and functions. And yet, with his cell phone and special food prepared especially for him, he takes part in the donor sponsored workshop –just like all the others involved in discussions about investment promotion. Still, for all those present there, for the time being he is and will continue to be “Mwami”, the authoritative but gentle Chief.

Modernity requires modern institutions

Yet, for Africa to really develop and take off, Mwami –and all the heritage and tradition that his role as Chief embodies and represents– will have to go.

Mwami will have to go in the same way in which monarchies and aristocracies in Europe have gone; may be not formally –as there are still Kings and Queens in Spain, Great Britain, Denmark and elsewhere — but certainly in terms of real functions and governing power. What is left of the old monarchies is at best a symbolic, ceremonial role; but no real authority.

And yet, in this slowly growing Zambia that still honors Mwami and is deferential to him, who or what will take over the substantive role of this soft-spoken, articulate and dignified gentleman? Who will take the office and perform, in a new and meaningful way, the important functions of this representative of the tribal past?

Massive Anti-Government Moscow Rally – Intense Public Anger – Gorbachev Advises Putin To Retire From Politics

WASHINGTON – The IHT reports that Aleksey Navalny, a blogger who is a recognized leader of the protest movement called the Russian government “crooks and thieves” who steal from the people. He also said that there were enough people in the streets to go and storm the Kremlin. His contempt for Putin and the entire Russian power structure is open and absolute. These are pretty strong words of defiance in a country used to deference to power.

Russian Spring in Winter

So, there you have it. Here is the “Russian Spring” coming out in Winter. A bit out of season perhaps, (it is bitterly cold in Moscow), but in full force. According to the people, (well, at least some of them) the government of the Russian Federation is headed by “crooks and thieves” who tell lies and steal from the people. The People may very well decide to go and storm the Kremlin in order to evict the “little sneaky jackals”, although not just now. Just street bombast? I would not be so sure. Vladimir Putin should worry.

Advice to Putin from Gorbachev: do not run for president

The same IHT story quotes former president Michail Gorbachev saying that Putin should let go and not run for re-election. Something like: “Quit when you are still ahead“. A good word of advice from a man who tried to salvage the old USSR and then was swept away by events he set in motion but could not control.

Yet, somehow, I suspect that Vladimir Putin does not get that Russia no longer accepts his own idea of a piloted democracy obeying his orders without questions.

Somehow autocrats never get it.

Development Work Is About Economic Growth Not About “Poverty Alleviation” – Part 2

WASHINGTON – International development practitioners focus more on ways in which they can eliminate or alleviate poverty, the visible manifestation of underdevelopment, rather than planting the seeds that may foster self-sustaining economic growth and therefore true development and –by the way–the only way for any society to really get out of poverty. This “poverty alleviation is our goal” approach, while well intentioned, encourages the misallocation and outright waste of limited resources, all in the name of the noble cause of the “fight against poverty”.

Non sustainable projects

For instance, it is considered good to create “economic” activities, whatever they may be, that will generate some new income for the poor. However, in the haste to make some positive changes now, donors all too often leave out any solid analysis of the reasonable chances for such activities to become self-sustaining after the donor initial funding and assistance is gone.

The consequence of incomplete analysis is that very substantial resources have been squandered in non sustainable activities –all of them justified as honest, good faith efforts to reduce poverty. Unfortunately, quite often when the donor leaves the poorly planned and under resourced activity collapses.

Focus on what it takes to produce sustainable growth

In fairness, absolutely poverty creates an environment so difficult that it may very well be impossible to engineer within its confines any kind of meaningful economic enterprises. Indeed, there can be a legitimate debate about what is at issue: “Poverty as lack of economic development”, or “The dreadful condition of poverty that, as such, prevents building the foundation for economic development”. True enough, it is obvious that the sick and the hungry, along with refugees displaced by conflicts, cannot possibly engage in any meaningful economic development.

Relief alone will solve nothing

Still, if we focus most of our resources on improving what is a very bad, sometimes horrible, environment, without recognizing the absolute necessity to create at the same time the economic wheels and help them turn as soon as possible, at best we have accomplished humanitarian relief. To be sure, this can have some positive impact in reducing the impact of poverty, or at least its worst consequences.

But in so doing we will not have caused any meaningful qualitative transformation. Qualitative change leading to real development consists in the creation of a workable process through which societies chart a path towards self-sustaining economic growth.

Poverty is reduced through self-sustaining enterprise

Contemporary examples reinforce this fact. Structural changes encompassing laws and incentives rolled out by governments in some important poor countries greatly improved the “enabling environment” for wealth creating activities, with the consequence of allowing hundreds of millions to be more productive and lift themselves out of poverty through their very own engagement in wealth creation activities that in preceding times were not accessible to them.

China and India

The different stories of what happened in China and India in the past twenty to thirty years have been told many times. But it is important to stress here that the activities of donors and aid programs have had very little impact on these gigantic, systemic changes. The key factors that unleashed these positive energies have been economic liberalization policies that allowed and indeed encouraged people to become more productive, to invest in education and new enterprises, and make money without penalties or fear of being dispossessed. Poverty reduction has been the byproduct of almost unprecedented rates of economic growth caused by policies that fostered new enterprise. It had nothing to do with policies that had as their primary goal the poverty reduction. Which is to say that in these successful examples poverty reduction is the welcome byproduct of successful wealth creation. 

Donors do not like to focus on economic growth

But, somehow, the notion of economic growth as the primary goal of development does not appear to be a noble enough purpose. At least for some development practitioners, economic growth conveys the images of rapacious businessmen, outrageous profits, corrupt practices, wheeling and dealing, profiteering, cronyism, child labor, domestic and foreign exploitation perpetrated by the unchecked powerful; and –worst of all– it means accepting growing economic disparities within societies.

Some of these critiques are justified. Unfortunately, some of these problems are often part of the picture of societies embracing enterprise, at least to some degree.

It is true that economic development, while crucially important, rarely occurs in a linear, harmonious fashion, with gradual, well-distributed benefits for all. To the contrary, it is a messy affair, especially in developing countries that usually lack the framework of laws and institutions that should at least limit excesses and protect people from injustices.

Economic growth is a messy process

However, the existence of significant flaws in how economic development occurs does not disqualify the basic proposition of wealth creation as a precondition for any lasting improvement in the human condition.

In fact, unless we postulate really large-scale, donor-led activities in perpetuity, there is no other way to reduce and eventually eliminate poverty. There just isn’t.

But development practitioners are unconvinced. Many of them, contemplating the negative aspects of uneven economic growth, affirm that, unless this process can be properly regulated to ensure harmonious growth and fairness, then it is better not to have it all. So there you have it: better all poor but equally poor, if the alternative is wealth, but just for some.

Development practitioners often lack a business background

The inability to put economic growth front and center in the framing of development agendas in part can be explained by the cultural make-up of the practitioners. The development environment is managed mostly by functionaries who work for public “donors”: state-run development agencies or multilateral institutions.

They are accompanied by large, religious or lay, private charities. For them, development is a mission, not a policy goal that requires the mobilization of indigenous resources in a productive way. Furthermore, development programs are quite often administered by an ever-growing number of not-for-profit entities. Most of the actors in this system are civil servants, functionaries and well-meaning volunteers. Bottom line: most of them are not business people. 

They are part of large, public or private bureaucratic institutions depending on public funds or donations. As a rule, they do not like, know or understand business and what it takes to make economic growth happen and flourish. For many of them, fighting poverty is a moral, noble endeavor for the good of mankind.

Teaching people how to make a profit in a competitive environment — the indispensable lever for economic growth– is viewed as promoting self-centered and egotistical drives, therefore not at all a laudable effort. In fact many see it as morally questionable.

Poverty reduction alone will not do it

However, lacking a clear focus on economic growth as the paramount strategic objective, the goal of achieving development through poverty reduction is likely to be an endless and quite frankly fruitless task. True, with all these efforts, the poor may become a little less poor, but they will not learn much about getting richer through in competitive enterprises.

Asia grows, while donor supported Africa does not

Asia reduced poverty largely through the elimination of artificial barriers to economic activities, while at the same time promoting education as the ticket to a better life.

On the other side of the divide, we have the sad story of Africa as the paradigm of what has gone consistently wrong, despite decades of well-meaning, donor-led efforts aimed at reducing poverty and improving overall conditions. Whatever has been tried, it failed to create, (with few exceptions, of course), an environment in which enterprises could flourish, with the attendant positive outcomes of sustainable wealth creation activities and consequent diminution of poverty.

This massive failure, compared with the success stories driven from within Asian societies, should provide enough material for reflection on the validity of the current approach.

Still, as yet, this reappraisal has not taken place. Donors are still “fighting poverty“; instead of creating solid foundations for sustained economic growth.

Development Work Should Be About Economic Growth, Not About “Poverty Alleviation” – Part 1

WASHINGTON – International development is generally defined by practitioners of this craft as “the fight against poverty“. I totally disagree with this approach that focuses on poverty, the practical manifestation of lack of economic growth, instead of dealing with the real problem that I define as: “What does it take to get sustained growth”? Fighting poverty is about fighting the symptoms, the practical manifestation of a lack of economic growth. What we want is a healthy, productive person/society.

Fighting poverty

Indeed, how an issue is defined goes a long way in shaping the nature of the efforts aimed at dealing with it. The broad objective of the international development community vis-a-vis poor countries, (politely knows as lesser developed countries), has been defined as “poverty reduction”, or “the fight against poverty”. The World Bank, the most important multilateral lending institution focusing on development, is “Working for a World Free of Poverty”. Its Mission statement is “To fight poverty with passion…So, poverty as a condition, rather than promoting policies that will allow societies to get out of poverty for good, is the focus of donors’ attention. 

Public relations

To some extent, this emphasis on “fighting poverty, or poverty alleviation” is simply public relations. It is an attempt to deflect the critiques of the anti-global movement that, years ago, while elaborating its bizarre conspiratorial theories that would capture the root causes of all the planet’s ailments, bunched together the World Trade Organization, the International Monetary Fund, the World Bank, and Multinational Corporations. It defined them as a clique of demonic players working together to further mankind’s misery in general, and the exploitation of the third world in particular. Hence the desire on the part of the “development industry” to improve its image by presenting to its critics objectives that would humanize their institutions. “Hey, Mr. No Global, you are mistaken. We are the Good Guys. we are with you. We are fighting poverty. We are completely focused on helping the poor”.

Christians ethics encourage giving

Undoubtedly there are other factors that can help explain this “fight against poverty” focus. At least to some extent, the Good Samaritan attitude stems from religiously derived ethics that were shaped by the Christian cultures that shaped the values and therefore the policy inclinations in many of the Western countries which “invented” the development industry.

Therefore, over the centuries, within Christendom we have seen the proliferation of a vast universe of charitable initiatives –many of them run by religious institutions– aimed at aiding the poor. The moral obligation to give to the poor is the other side of a parallel moral bias against excessive wealth ever present in Christian ethics. The remedy to this inequality is for the rich to give away some of the excess wealth to the poor, sometimes called “the less fortunate”.

But, in general, the Christian moral obligation to give to the poor was never aimed at having a truly transformative economic and social impact. It was meant as a good deed that would somewhat alleviate the painful conditions deriving from a state of poverty that was, however, considered to be a permanent feature for some segments of society.

Plenty of relief activities that are not transformative

At a different level, it is difficult to evaluate the deep motives of modern day wealthy philanthropists who contribute to relief initiatives, whether defined as “poverty reduction” or otherwise. But it would appear that the likes of Bill Gates fall pretty much in the same category of those who attempted to redress and alleviate.

For instance the children immunization goal pursued, no doubt very competently, by the Gates Foundation, noble as it is, taken by itself, is not transformative. Immunized children will not die of common diseases. But chances are that, unless other critical changes will take place within their societies, they will be alive but still very poor.

(This approach based on limited interventions that do not help economic development may be changing. The Gates Foundation and other wealthy donors are now shifting to initiatives aimed at fostering the creation of opportunity in poor countries, for instance through upgrades in education. They begin to appreciate that a new mind set, new values and new skills can and should be the foundations for wealth creation activities that will help transform these societies).

Poverty as “bad luck”

More broadly, the issue of poverty is confusing for Western Christian culture, so much so that it has been explained away. Historically poverty has been regarded as a product of bad luck for some that can and should be somehow mitigated through charity performed by the rich. Indeed, even today in polite company in the Western World the poor are often described as “the less fortunate among us”.

Let’s think about it. We, the well off, “have” because we have been fortunate. The poor, alas, less so. Again, words have meaning. According to this definition, our economic station in life is determined by having been more or less fortunate. Which is to say that the possession of material wealth is all about random distribution of luck. The poor happen to be poor because –look at that– they have been less fortunate than we have.

Successful capitalism has nothing to do with luck

At some level this is true, especially in the case of children. Some are born in rich circumstances and some are born poor. Clearly those who were born in privilege have and enviable head start in life. But this is only a small slice of reality.

Most millionaires in the US are self-made people, as opposed to being mostly “lucky” beneficiaries of inherited wealth. This means that an open economic system, protected by free institutions and transparent rules and no artificial barriers to entry, encourages people to try and forge a better life for themselves. And all this has preciously little to do with “being fortunate”. And yet the use of these misleading definitions distracts us from confronting the real issues.

Poverty will be eliminated through successful enterprise

Poverty is mostly about the bad combination of lack of education, lack of economic opportunity and lack of entrepreneurial drive – all of them necessary preconditions to start wealth creating activities.

If we do not tackle these issues –education, opportunity, entrepreneurship– by creating at least an embryo of the institutional eco-system that opens up opportunity and by instilling the will and the ability to create enterprise, we shall continue to provide humanitarian relief to the poor, without offering a realistic new path to growth.

Borrowing from the old story about the qualitative difference between giving somebody a fish and teaching them how to fish, to date the fish hand outs continue, while the fishing schools are scarce, or non existent.

The eco-system

Even the most superficial analysis shows that wealthy societies did not become wealthy because of random circumstances, because people who live there won a major lottery.

Leaving aside all the defects of capitalism, at a macro level capitalistic economies have been successful because the institutions created by capitalistic societies allowed –or better yet promoted– a reasonably good functioning of the engines of wealth creation mobilized by private initiatives. As a result of the productive activities created through these engines, poverty, at least extreme poverty, has been eliminated.

Which is to say that prosperity is the outcome of a mind set focused on wealth creating activities on the part of many inventors, innovators and risk taking capitalists. The aggregate outcome, consisting in a vastly improved standard of living for most, has nothing to do with “being fortunate”.

Relief as opposed to growth

But this is not how the issue is framed by the development community. The development practitioners have identified “poverty elimination or reduction” as the core development mission. In so doing, wittingly or unwittingly, they focus (and make us focus) mostly on the effect of lack of economic development (poverty) and what we should do about alleviating it through donations and relief activities, rather than on a credible way out of it that can only be centered on a viable economic development agenda.

(See the rest and conclusion in Part 2, to be posted tomorrow)

With US Forces Gone, Iraq Falls Into Chaos: Bombings and Sectarian Divisions – A Poorly Planned, Costly Occupation And So Little To Show For It

By Paolo von Schirach

December 22, 2011

WASHINGTON – “America is the sorcerer apprentice that got it truly wrong and made a huge mess in Iraq”. Worse yet, unlike the Disney story, there is no Master coming in to the rescue and fixing this. America is leaving Iraq. And this Iraq is an almost ungovernable morass, now tilting towards renewed sectarian violence. Iraq should be used as the perfect case study of “how not to do war and military occupation”. Indeed, it is hard to think of a case of bigger discrepancy between wishful thinking about one’s own power and reality on the ground, all laced with systemic errors in planning and execution. And now that America has just withdrawn its last soldier from Iraqi soil, it looks as if the perpetually immature Iraqis are back to the old script of brutalizing each other because of never resolved sectarian and ethnic issues.

Baghdad bombings

The Baghdad bombings and the suicide attacks have restarted with the old enthusiasm. And so the sad irony may very well be that, after a costly, if poorly conceived and stupidly executed, occupation, America is leaving behind a very unstable country that in the worst case scenario may be dragged down by another wave of sectarian violence or, in the best case, a dysfunctional, totally ineffective government.

Optimistic US assumption about an easy “regime change” operation

It all started, (have we forgotten?) with idiotically optimistic assumptions made by the top echelons of the Bush administration. They believed, with cause, that Saddam Hussein was a menace. They also believed (wrongly) that he had dangerous weapons of mass destruction, WMDs, in his arsenal that could be easily deployed ot turned over to terrorists. In the post 9/11 environment that threat seemed really too much. Hence the “regime change” mantra. Bt while regime change in Iraq was not such a bad goal, what was really strange is that senior people in the Bush administration thought that regime change in Iraq would be really easy.

Wrong plans

They believed (and in this they were right) that it would be easy to defeat Saddam militarily. But they also believed that the whole Saddam Hussein regime was just a veneer linked to a power structure dependent on the dictator. Take Saddam out, decapitate the regime, and the whole repressive and hated Baathist power structure would collapse. In this prediction they were spectaculrly wrong.

Easy to establish democracy in Iraq

And who take the place of the Baathist clique? Well, the good Iraqis, the pro-Western exiles eager to come back and establish a modern democracy. Besides, Iraq was swimming in it own oil. It would be easy to finance whatever transition from the old regime to this new beacon of Arab democracy relying on domestic financial resources funded by oil exports.

So, the game plan was rosy. Send in US forces to kick the door down, topple Saddam, and dissolve the Baath Party political structure. This would be quick. And the rest –building a new Iraq– would take care of itself. And so, with minimal effort, the US would eradicate the threat of WMDs from Iraq, eliminate a despot and introduce democracy in what could become a middle income Arab country that would be the new shining example of genuine Arab democracy.

The reality of the occupation

Well, we know what happened instead: collapse of the Iraqi state, civil war, sectarian conflicts, Kurdish separatism, al-Qaeda terrorism, Iranian meddling, huge losses for US forces, botched reconstruction plans, no electricity, low oil production and tremendous losss of international standing for the US.

And what happened, while it could not be anticipated in it totality, even in hindsight was quite forseable. What prompted this immense miscalculation of what it would take to bring Iraq from dictatorship to democracy? An inexcusable mixture of abysmal ignorance, lack of intelligence laced with a frightening level of hubris. The notion that Iraq could be dealt with as some sort of Wall Street corporate take over in which a few specialists direct operations and the master plan is carried out speedily was and is amazingly simplistic. But essentially this is how the whole affair was treated. And, worse yet, when things did not work out as planned, it took years and an imminent debacle to adopt a new course that brought about a modicum of (temporary, as it appears now) stability.

End of the long war, and so little to show for it

And, sadly, at the end of the military occupation, following a withdrawal timetable included in a Status of Forces Agreement, (SOFA), negotiated way back by the Bush administration, we have so little to show for this trillion dollar experiment.

True enough, there have been positive changes. Iraq has acquired democratic institutions. And this is a significant mile stone. But Iraq has yet to develop a democratic ethos. And who knows if or when it will ever acquire one. Right now, the country is an almost ungovernable mess. It may be just a coincidence, but, just as the last US soldier left, the bombings in Baghdad happily restarted. Meantime, Shia Prime Minister Nouri al -Maliki seems to be determined to silence the Sunni minority through questionable criminal charges against the most senior Sunni politician, Tarek al-Hashimi, now accused of terrorism. These accusations look a bit suspect.

US is leaving behind an unstable country

Who knows how all this will turn out. However, the fact is that the US, after almost a decade of immense efforts and untold losses, now has minimal leverage and little influence in a weakened country that may fall into chaos after all.

In the Disney story, the huge damage caused by the ill prepared sorcerer apprentice was quickly rectified by his Master. No such luck for America, Iraq and the world. We shall have to live with the consequences of an badly conceived and poorly executed military adventure that cost a fortune, while the ensuing instability may have created a security threat worse than what existed under Saddam.