Ravinder Casley Gera

Policy, not capitalism, is to blame for the income divide

Fri, 15 Aug 2014 23:10:00 +0300

Policy, not capitalism, is to blame for the income divide:

I’m somewhat confused by James Galbraith:

We did not set out to make, prove or disprove any grand theoretical claim. Our main goal was to provide information, to clarify a factual record that was sparse, inconsistent and noisy. Our data on pay inequality, with estimates of income inequality, now cover most of the world from the early 1960s until (in some cases) as recently as 2012. We also find that inequality, measured within countries, rose in recent decades. But we do not find anything inexorable about this. We think that global circumstances and national policies were largely at fault. When policies and circumstances change, the rise of inequality can be stopped.

If “capitalism leads to inexorably increasing inequality” is a “grand theoretical claim”, how come “capitalism does not lead to inexorably increasing inequality” isn’t?

Growth without poverty reduction: the case of Tanzania

Sat, 19 Jul 2014 17:51:14 +0300

Do we know that growth is good for the poor? It’s perhaps the most fundamental question in development thinking. After all, if growth can take place without lifting people out of poverty, the policy prescriptions necessary for poverty reduction change completely.

Conventional economic wisdom holds that growth is, almost invariably, good for the poor. And, most of the time, conventional economic wisdom is right. Extreme income poverty of the $1.25 PPP is unheard of in developed countries. Economic growth can not only increase the incomes of the poorest directly, by creating new employment opportunities, raising wages, and increasing returns to business activity; but it can also decrease poverty by increasing governmental resources and enabling increased spending on social services and protection. But this doesn’t stop NGOs, activists and academics worrying that growth in developing countries primarily benefits the well-off and can ‘bypass the poor’.

I’m instinctively sceptical of the idea that growth can somehow leave the poor behind. Look at the difference between China and India. One has liberalised rapidly, allowed the rich to get rich, and achieved vast poverty reduction as a result. The other has remained heavily regulated, supposedly to limit inequality, and has suffered low growth as a result – and, concomitantly, slow poverty reduction.

However, Tanzania provides an instructive example of how growth can leave the poor behind – not so much because the benefits accrue to the rich, but rather because they are limited to cities and to certain economic sectors.

Tanzania possesses one of the largest poor populations in the world. It has enjoyed an average rate of GDP growth of 7% in recent years in the wake of extensive economic reforms, substantial aid flows, and participation in the HPIC debt relief programme. Despite rapid population growth, economic growth has been rapid enough to increase mean GDP per capita by 33% between 2000 and 2007 (World Bank).

However, this growth has happened with minimal reductions in poverty. Basic needs poverty incidence – assessed using a consumption estimate broadly equivalent to the $1.25/day line – fell from from 35.7 to 33.6% between 2001 and 2007, according to the Government. That’s not even statistically significant. Growth in Tanzania appears to have, in the words of the local NGO Twaweza, “failed… to reduce income poverty for most people”.

How come? Because the growth in Tanzania’s economy hasn’t come in the sector which employs most people, agriculture. 74% of households, and 81% of poor households, depend on farming or fishing for their livelihoods. This gives growth in the agricultural sector particular power to reduce poverty, but growth in the agricultural sector has lagged behind the overall economy: the sector grew at an average annual rate of 4.6% between 2000 and 2008. GDP growth was dominated by the industry and service sectors, which grew at an average rate of 8.6% and 7.5% respectively over the same period; but employment generated by these sectors represents approximately just 0.3% of the population. The situation is exacerbated by higher-than-average population growth in rural areas, further depressing per-capita incomes.

This creates a dilemma for policymakers: it is better to prioritise economic sectors with the most growth potential, maximising overall growth and government revenues, and redistribute wealth to the poor through social spending and protection efforts? Or is it more effective to invest in sectors which employ large numbers of poor people – providing less headline growth and potentially raising less revenue, but directly raising the incomes of poor households?

In Tanzania, the government has gradually shifted from the former towards the latter approach, boosting investment in agriculture from 2.05% of government spending in 2001/02 to 7.78% in 2010/11. But in 2011/12, agriculture investment fell again to 6.8%, and there’s growing doubt Tanzania will meet its commitment to investing 10% of its budget in agriculture by 2015.

It’s important to note that this isn’t about the benefits of growth accruing just to the rich. Urban poverty in Tanzania has fallen. It’s just that the benefits aren’t spreading out into the countryside, where the vast majority of the poor live. In theory, urbanisation and migration to cities can bring the horses to water, as it were, as with China’s vast migrations West to the coastal manufacturing cities. But China’s manufacturing growth has been built on prior achievements in raising agricultural productivity and rural incomes, freeing up labour for the trip West. In Tanzania, traditional farming still requires extensive labour to meet food needs – and the mining and tourism industries that are driving growth could never absorb labour on a large enough scale to produce widespread poverty reduction.

If you want rapid poverty reduction in a poor country, then, sure, you want economic growth. In fact, you need it desperately. But you need growth in the sectors where the poor live and work. For most poor countries, particularly in Africa, that’s agriculture. That calls for a very different set of interventions that a strategy that simply prioritises top-line growth.

This is a blog-ified version of an essay I wrote for my MSc at the London School of Economics. If you like, you can download the original. (It got a distinction!)

For a detailed analysis of the recent Tanzanian growth experience and the importance of agricultural growth, see this 2011 IFPRI research.

Brazil: achieving low-carbon growth in an emerging giant

Wed, 06 Jul 2011 14:31:53 +0300

Deforestation in the Amazon basin

Low-carbon development isn’t always about expanding renewable energy and public transport. The World Bank recently published a report laying out how Brazil can meet its aims for economic development while reducing greenhouse gas emissions - and its main recommendations are in the areas of agriculture and land use.

With over 190 million people, Brazil is the world’s fifth-largest country and expected to be one of the economic giants of the 21st Century. The Brazilian parliament has adopted a voluntary goal of reducing emissions in 2020 by about 37% against current predictions. The World Bank study designs a ‘low carbon scenario’ for Brazil which sees emissions between 2010-30 reduced 37% against projections, and leaves emissions in 2030 20% below the level of 2008.

Brazil’s economy is already relatively green, with renewables - mostly hydropower - already accounting for much of its electricity generation and biofuels, mostly ethanol, providing a large proportion of transport fuel. Brazil’s greenhouse gas emissions per person each year are less than half the global average. The World Bank’s report recommends a familiar list of steps to further reduce Brazil’s emissions, including further expanding renewable energy, improving urban public transport, and further increasing the proportion of transport fuel provided by biofuels to 80%.

But Brazil has one very big source of greenhouse gas emissions: deforestation. The basin of the Amazon river, which lies mostly within Brazil’s borders, has suffered from extensive logging in recent decades. Deforestation releases carbon trapped in trees, and prevents future trees from extracting carbon from the atmosphere. The Brazilian government has made considerable progress in reducing deforestation in the last few years, but it still accounts for two-fifths of Brazil’s greenhouse gas emissions. Furthermore, the activities which tend to lead to deforestation - livestock farming and the farming of corn for ethanol biofuel - need to expand significantly in the next few decades if Brazil is to meet its targets for development. Agriculture accounts for another quarter of Brazil’s emissions.

How do you expand agriculture while freeing up space to return to forest? You increase the land efficiency of your farming.

The World Bank recommends “shifting to more intensive meat production” as a way of increasing the productivity of agriculture. Instead of allowing animals to roam around and eat grass, the Bank recommends encouraging Brazilian farmers to use 'crop-livestock’ farming - where animals live on fields that are also being used to grow crops - and feedlot-finishing, where animals are moved from pasture to pens and fed grain in the last few months before they are slaughtered.

Using techniques like this to increase agricultural production will, the Bank says, Brazil could reduce the amount of land required for agriculture in 2030 by 21%. Much of the land freed up could be used to prevent deforestation and expand ethanol production. In total, the Bank belives deforestation between now and 2030 could be 68% less than under current trends, and emissions from deforestation by 63%. But such changes don’t come cheap - the Bank estimates the investment needed over the period to upgrade agriculture at $157 billion.

The report is a useful reminder that the technologies and strategies that will enable low-carbon development differ widely from country to country. But its focus on agricultural productivity could face an angry reaction from some environmental groups. The use of feedlots, which is central to the Bank’s recommendations, has been criticised as cruel to animals and likely to increase the spread of diseases like e.coli. It’s ironic, given that greens have been the biggest driver of the organic movement, battling climate change in one of the world’s biggest countries might mean expanding the very intensive farming techniques that green consumers have largely turned their backs on in rich countries.

Geo-engineering: potential saviour or menace? (Obviously, somewhere inbetween)

Fri, 24 Jun 2011 14:34:00 +0300

Forgive the tabloidy title. It’s hard for us journalists to ditch the habit of writing about everything as if it’s a black and white issue. But that kind of all-or-nothing view is the way the debate on geo-engineering that’s blown up in recent days is in danger of being conducted. Actually, it’s much more complex than that.

What is geo-engineering? At its simplest, it means direct manipulation of the Earth’s systems to reduce climate change. As you can probably tell, that definition covers a multitude of sins. More on that later.

The possibility of geo-engineering as a response to climate change has lurked in the background – like a sinister movie villain or a knight in shining armour, depending on your perspective – for years. Every now and then a newspaper runs an article pointing out that if we don’t succeed in preventing climate change by reducing our emissions of greenhouse gases, we can simply shoot cooling sulphates into the atmosphere, or giant mirrors into orbit, to reflect the sun’s warming rays. But the ‘serious’ climate change scientific community – embodied by the Intergovernmental Panel on Climate Change – have largely ignored it, preferring to focus on conventional solutions such as renewable energy.

Indeed, last January, the signatories of the Convention on Biological Diversity – which include most major developed nations, though not the US – signed a moratorium on all large-scale geo-engineering projects.

But now, alarmed at the lack of progress in reducing global greenhouse-gas emissions, the international community is looking at geo-engineering with fresh eyes. The IPCC has convened a meeting of scientists expert in geo-engineering to assess what contribution such projects could make to fighting climate change. The Guardian newspaper last week published leaked documents relating to the meeting, which showed that the measures under consideration include “depositing massive quantities of iron filings into the oceans” and “suppressing cirrus clouds.” And Christina Figueres, executive secretary of the UN Framework Convention on Climate Change, appeared to endorse geo-engineering when she told the Guardian: “We are putting ourselves in a scenario where we will have to develop more powerful technologies to capture emissions out of the atmosphere.”

The result is that the debate over geo-engineering, long simmering quietly, has blown up in the mainstream. A slew of environment, development and human rights groups have co-signed a letter to the IPCC objecting to the discussion of geo-engineering, saying:

The potential for accidents, dangerous experiments, inadequate risk assessment, unexpected impacts, unilateralism, private profiteering, disruption of agriculture, inter-state conflict, illegitimate political goals and negative consequences for the global South is high. The likelihood that geoengineering will provide a safe, lasting, democratic and peaceful solution to the climate crisis is non‐existent.

Pat Mooney, an executive director of ETC Group, one of the signatories of the letter, wrote an op-ed for the Guardian stating: “Geo-engineering does not deserve serious consideration within climate policy circles. It should be banned.”

Meanwhile, supporters of geo-engineering research have taken the IPCC meeting as an opportunity to speak up. Ecologist Thomas Lovejoy wrote a piece for the New York Times, arguing:

We also need to use non-biological means to reduce atmospheric carbon. The barrier to the latter is simply cost, so a sensible move would be to initiate a crash program to find more economical ways… It is in our own self-interest to manage ourselves, the planet and its climate system in an integrated fashion. We can do so, and there are abundant economic possibilities in doing so, but the window of opportunity is closing rapidly.

It seems we are on the verge of a major row between advocates of action on climate change, over the place of geo-engineering in a low-carbon world. It looks a lot like the row on nuclear power which has been loudly going on for several years. But needless to say, the issue is far more complex than it may appear at first glance.

A multitude of sins (or solutions)

The heading ‘geo-engineering’ covers a vast array of possible interventions. Broadly speaking, they fit into two categories. The total climate change the Earth experiences will depend essentially on two key factors: how much sunlight is absorbed by the planet, and how much of of that heat – when it radiates out again – is trapped by greenhouse gases in the atmosphere. Conventional climate change mitigation efforts try, in one way or another, to reduce the amount of greenhouse gases – and particularly carbon – we put into the atmosphere.

Some geo-engineering projects build on this by trying to take some of the excess greenhouse gases we’ve already put in the atmosphere out again and store them elsewhere. In the common ‘greenhouse effect’ analogy, this is like taking a few panes of glass out of the greenhouse.

Other geo-engineering projects try to reduce the warming effect by reflecting more of the Sun’s rays so they don’t get trapped in the ‘greenhouse’ in the first place – the equivalent of putting some shade over the greenhouse when it gets too hot.

Instinctively, the former – carbon extraction - seems more reasonable, right? If we’ve put too much carbon in the atmosphere, it stands to reason we should take some out again. But carbon-extraction geo-engineering schemes can be highly controversial. For example, research into ‘seeding’ areas of ocean with iron in order to promote the growth of carbon-munching plankton has been the subject of protests by green groups.

Meanwhile, sunlight-reflecting geo-engineering conjures up images of giant space mirrors that will remain, most likely, in the realm of science fiction. But one of the least controversial and simplest methods of geo-engineering works by reflecting more sunlight: painting streets and buildings white.

So any conversation about the topic needs to bear in mind that some geo-engineering projects are far more complex and risky than others. Nevertheless, the IPCC’s research programme seems to include some pretty hi-sci stuff, such as bio-engineering crops on a global scale to be lighter and more reflective. So while we should keep in mind that some geo-engineering ideas are a lot more controversial than others, it’s nonetheless appropriate to consider the case against the kind of projects the IPCC is about to assess.

A dangerous distraction?

So what exactly are the objections that the opponents of geo-engineering put forward? You have to dig beneath a certain amount of posturing to find them, but there are essentially two main arguments.

The first is that geo-engineering is a ‘distraction’. Opponents of geo-engineering claim that research into geo-engineering solutions to climate change takes money, resources and attention away from research into clean energy, energy efficiency, and other simpler solutions. Some go further, actually claiming that geo-engineering advocates are deliberately trying to avoid serious action on cutting emissions. Another senior member of the ETC Group, Silvia Ribeiro, argues in a press release accompanying the NGOs’ letter that geo-engineering is “a convenient way for Northern governments to dodge their commitments to emissions reduction.”

This is nonsense, of course. There’s simply no evidence that rich countries are deliberately planning to use geo-engineering to avoid emissions cuts. One Malaysian activist criticises Figueres’ endorsement of geo-engineering thus: “It is completely misguided for Ms. Figueres to suggest that we work on sucking carbon out of the atmosphere rather than stop putting it in.” Of course, Figueres suggested no such thing. Rather, like geo-engineering advocates, she suggested that we need to have options in case mitigation efforts fail.

Of course, just because a case is overstated doesn’t make it wrong, and it is certainly true that geo-engineering research could potentially have the unintended effect of using up funds allotted to climate change research that would otherwise be used for improving renewable energy, or fuel efficiency, or cheaper home insulation.

But you might as well argue that we should stop researching biofuels because they distract from renewables, or stop researching wind because it distracts from solar. There will always be competing research priorities, and some will always be a better use of money than others. It’s the responsibility of research organisations to spend their limited funds wisely. But to call for an area of research to be simply banned denies those scientific agencies – those with the most expertise – the ability to make smart decisions about priorities. Better, surely, to campaign for increased funding for all kinds of climate research – and to allow some funds to investigate geo-engineering, so we have some options if emissions reductions strategies fail.

The second argument adopted by the opponents of geo-engineering is a much stronger one: that it’s simply dangerous. All our studies of the climate show it to be a highly complex and reactive system, where an input in one area can have unforeseen and destructive effects elsewhere. (The greenhouse effect itself is, after all, an example of accidental geo-engineering on a massive scale.) The idea that we can really engage in deliberate, controlled manipulation of the climate safely seems… well, let’s say ‘optimistic’.

“As the world watches the airline industries of Australia and New Zealand thrown into chaos by volcanic ash drifting from Chile nearly 10,000km away… it’s absurd that the IPCC would entertain the notion of doing something similar, on purpose,” argues Pat Mooney of ETC.

Furthermore, opponents point out, the side-effects of large-scale geo-engineering would likely fall on those who are already likely to suffer most from climate change – the world’s poor. “Blasting particles into the stratosphere could hurt Africa and Asia by disrupting precipitation as much, as or even more, than climate change itself,” says Mooney.

This, it seems, is why the signatories of the letter to the IPCC are mostly developing-country-based organisations, and are often development or indigenous people’s organisations rather than ‘green’ organisations in the traditional sense. There is a fear that rich countries will seize on geo-engineering as a solution to the climate crisis without proper concern for its effects on developing countries. The role of geo-engineering “is not primarily a scientific question; it is a political one,” argues the letter. “International peasant organizations, indigenous peoples, and social movements have all expressed outright opposition to such measures as a false solution to the climate crisis.”

This background in development and human rights means that at times the opposition to geo-engineering can sound rather radical. When the ETC Group’s news release points out that geo-engineering was “originally conceived as a military strategy” and has been “re-branded” as part of the response to climate change, they sound like pot-smoking conspiracy theorists rather than serious advocates for the people they purport to represent.

But the question of governance and regulation is a very real one. When you consider the glacial pace of progress in agreeing targets for emissions reductions, you don’t have to be a stereotypical sandal-wearing lefty to doubt that we have the global governance capacity to run massive geo-engineering projects in the common interest, rather than just that of wealthy countries and multinationals.

In this, the NGOs’ letter makes a valid point – that the IPCC, a committee of scientists, is hardly qualified to discuss the political and moral implications of these technologies, or the governance required to make them work safely. Clearly, if geo-engineering research does in fact continue with increased governmental support as a result of the IPCC’s attentions, the UN must take a co-ordinating role with sufficient powers to prevent countries from supporting or allowing research that could have unpredictable or unpleasant effects on the climates of other countries.

A ‘Plan B’ we can’t afford to reject - yet

The question the opposition to geo-engineering research poses is not whether these projects have risks – both in their own right, and as a distraction from emissions reductions effort. They do. Nor is it whether the risks outweigh the potential benefits. These are exactly the questions the IPCC’s meeting is intended to address.

The question they pose is whether the risks of geo-engineering solutions are so great, and the benefits so definitely minimal, that merely to give them is too dangerous. That geo-engineering is so risky and irresponsible that it must be “taken off the table”, as the ETC’s news release puts it.

This is surely to exaggerate the risks. While the international community has indeed been slow and weak in setting targets for carbon emissions, that is hardly the same thing as being gung-ho in giving the OK to large-scale risky climate mitigation projects. There’s surely just as much risk that the international community will be as slow to support geo-engineering as it has to support renewable energy. Without carrying out the initial process of evaluating and researching geo-engineering, we preclude any possible benefits, to avoid a risk that is theoretical and well down the road.

And the truth is that the likelihood that geo-engineering will need to be at least part of our response to climate change is increasing, every year that we fail to reduce emissions. As Thomas Lovejoy points out in his New York Times piece, “Scientists have determined that, if we want to stop at a 2°C increase, global emissions have to peak in 2016. That seems impossible given current trends.”

Nobody disputes that geo-engineering is an inferior solution to carbon emissions reduction. This isn’t like the debate over adaptation to climate change, where some advocates went around implying that effective adaptation could make mitigation efforts unnecessary – a view so far from the evidence as to be almost criminally irresponsible. Every piece of argument I have read in favour of geo-engineering research acknowledges that such projects amount to at best a ‘plan B’ in the event that mitigation efforts are too slow or unsuccessful.

But sometimes you need a plan B. And we may have reached the point where it’s too late to demand optimal solutions. Imagine being in a house surrounded by a forest fire: keeping the fire from your home may be a far superior solution to evacuation, but when the fire starts to creep up your garden to your door, you might nevertheless think about heading for the exit.

African history in ten seconds

Tue, 29 Jun 2010 22:15:00 +0300

The most notable success from my old development blog, this post received over 1000 hits in a few days and was linked to by several development blogs worldwide.

For those of you who found my chart summarising African history since independence too complicated, my amazing friend John has (amazingly) produced a simpler version. Rather than tracking country by country, it helps you see how the governmental composition of Africa has shifted over time.

The wider a section the more states were in that situation at the time. So we can clearly see how colonialism gave way to dictatorship and war, then in many cases to one or other level of democracy. But war and tyranny remain with us today.

Read more on African Development for the Completely Ignorant