Arbitrage in Action

You say smuggler, I say arbitrager (HT:Poverty News Blog):

Social Solidarity Minister Gouda Abdel Khaliq cited smuggling to Libya and Gaza as a reason for [gas] cylinder scarcity in Egypt… . "Smugglers benefit from the difference in the price of the cylinders in Egypt," said Hossam Arafat, chairman of the petroleum section at the Federation of Commerce Chambers. "What makes this possible is that the government subsidizes the cylinders to the tune of 90 percent here."

Arbitrage in … used t-shirts?

Now along comes the notion of Project Repat that wants to exploit hipster demand for the double-irony of used t-shirts from Africa by buying these shirts at developing world markets, shipping them back to the United States, and using the profits to finance charitable activities.

Arbitrage in … investment opportunities

The arrival of large numbers of Chinese over the past few years is not something that Africans are so worried about (compared to the fixation in the western press). A Minister in Angola looked at us incredulously asking why we were so obsessed with the Chinese. He said they were only one amongst a range of new investors, and his country was open for business to all of them. …

A Chinese businessman in Accra told us “I don’t think I will be able to make more money in China than I can do here. The conditions in China are getting quite bad, and will be worse with this world crisis”. Commonly businessmen talked about earning anything up to three times what they could make in China for the same investment.

You say “misuse of scarce development funds,” Moss says “development” (emphasis added):

The project will also turn a disused old hotel site into an active hive of economic activity.  If that’s not development, then what is?  … When President Bill Clinton visited Ghana in 1998 he couldn’t spend even one night in Accra because of a shortage of suitable hotels.  Today, Ghana has several world-class business hotels, but if the country is going to live up to its ambition to become a regional business hub, then it needs places for business elites and tourists to sleep, eat, and meet.  Even if this is somehow distasteful to critics who may imagine that poverty-reduction is only about romantic notions of selfless activists helping peasants, development is really about building a vibrant business sector

While staying at one of these more luxurious estates for a development conference for the first time, I proposed a research agenda to my advisor: measure the importance and attention of development institutions in a country based on the presence or absence of luxury hotels. It seems there is some interest in coming to more of an answer of that question. Now if only I can get a grant to stay at a few more of them so I can do some data collection....

Mubarak Steps Down!

HT: Easterly

The vice president announced that power has been handed over to the military.

"In these difficult circumstances that the country is passing through, President Hosni Mubarak has decided to leave the position of the presidency," Suleiman said. He has commissioned the armed forces council to direct the issues of the state."

Read more: http://www.foxnews.com/world/2011/02/11/egyptian-president-hosni-mubarak-steps/#ixzz1DfeGF47b

From CNN:

Egyptian protest leader Wael Ghonim sent out a Twitter message saying "congratulations Egypt the criminal has left the palace." 

Iran takes some credit:

The crisis that is roiling a regional ally of the United States dominated the celebration. Ahmadinejad said that a revered 9th-century Shiite saint, the 12th imam Mahdi, is managing the uprisings in Egypt and Tunisia.

Tavalodet mobarak, Egypt!

What Have You Done for Me Lately?

The BBC on the visit of China's foreign minister to Zimbabwe and four other African countries:

The Chinese use of its veto in 2008 was "a landmark diplomatic decision where it basically saved Zimbabwe from punitive sanctions instigated by an irate and sulky former colonial power", the Chinese news agency Xinhua quoted Mr Mumbengegwi as saying.
"So, now this visit will give an opportunity for Zimbabweans to finally thank China for this act," he said.

Schiller on Adam Smith on self-interestedness (HT: Thought du Jour)

Smith also talks about a selfish passion, which is a desire for praise. He argues that people instinctively desire praise, but that, as they mature, this feeling develops into a desire for praiseworthiness. …. He uses that to show that what people really want is to be deservedly praised. And that turn of mind, which develops as people mature, is what makes us into people with integrity. ….
I think this underlies how the economy works. We start out with selfish feelings, which are intermixed with feelings of empathy for others, and then we develop this mature desire to be praiseworthy. I think it is central to our civilisation that people do that.

The Economist on the West's hypocracy: (Aid Watch on the same: one entry, another)

If the West cannot back Egypt’s people in their quest to determine their own destiny, then its arguments for democracy and human rights elsewhere in the world stand for nothing.

Well-Placed Skepticism

Easterly mourns that his and others' critiques are not heeded and the same, tired arguments appear in the same manner as before. In studying the effectiveness of aid criticism, he begins to despair of its usefulness. It's mostly the Millennium Villages Project not listening at the moment, with another, British-led MVP preparing to strike out in a non-randomized fashion in an area of Ghana chosen by the Ghanan government (endogeneity, anyone?).

Barder, who is much more optimistic about what aid accomplishes than Easterly, is also skeptical. He's skeptical that we even need to convince people that development is a good thing. Therefore, the arguments that we need more aid in the national interest are missing the target. People need to be convinced that the aid is effective, and then they jump in gladly, he argues from past focus group sessions. Part of that conviction comes from greater humility in promising what aid can do: we can build schools (ensuring high quality education is harder); we can vaccinate people; we can produce improved seed varieties ethically that increase production; we can do very specific, small-sounding interventions. "The more we defend aid mainly on the basis that it is in our national interest, the more likely it is to be bent to our short-term commercial and strategic interests, the more ineffectively it will be used, the harder it will be to demonstrate its benefits, and the greater the justification for public scepticism." The comments are well-worth reading, particularly the argument that the national interest argument is needed in convincing many US conservatives to work with multilateral organizations.

On net-positive spillovers from emigration (aka Brain Gain, the opposite of the Brain Drain).

Easterly has argued that it was a mistake to give so much aid to Egypt, though the evidence for the conclusion is nothing but a pie chart showing that a lot of aid went through government hands. Birdsall says the question is pretty difficult to answer. "As Nicolas van de Walle shows here, leaders get worse at leading the longer they stay. He recommends donors exit if a leader stays more than 12 years." But does that mean that things (which ones?) would be better in Egypt, Israel, and the Middle East if the US had stopped sending aid that direction 18 years ago? Or as Douthat puts it:

“But history makes fools of us all. We make deals with dictators, and reap the whirlwind of terrorism. We promote democracy, and watch Islamists gain power from Iraq to Palestine. We leap into humanitarian interventions, and get bloodied in Somalia. We stay out, and watch genocide engulf Rwanda. We intervene in Afghanistan and then depart, and watch the Taliban take over. We intervene in Afghanistan and stay, and end up trapped there, with no end in sight.”

Oh, and if you're going to forecast the future, make sure you aren't wrong in Romania just in case they decide to try you as a witch.