All entries for January 2006

January 30, 2006

Education, Budgets, Patricia Hewitt

In yesterday’s Times Patricia Hewitt wrote a sharp reply to economics correspondent David Smith who had earlier criticised the effectiveness of Labour reforms in various areas. On education, she says the following

He may be almost right to say that 60% of pupils failed to gain at least a C grade in maths or English. The figure is actually 55.7%, which I accept is not good enough. But the same figure was 64.4% in 1997. The biggest improvements have come in primary schools where pupils have had the benefit throughout their education of the extra investment and reforms we have put in. We need to do better still but we are going in the right direction.

The number of 11-year-olds achieving the right standards in English have improved from 65% in 1997 to 79% and in maths from 59% to 75%. It is misleading to criticise the performance of city academies without explaining that they are sited deliberately in the areas of lowest educational performance. Far from “faltering”, they are improving GCSE results three times faster than the national average.

Unfortunately, her letter was published on the same day the Telegraph reported growing deficits in the education sector –

Last night, teaching unions and Conservatives warned that teacher shortages were a renewed risk because head teachers were struggling with debt and complex ring-fenced Government funding. Previous school funding crises – notably in 2000 and 2003 – saw four-day weeks and classes of 90 pupils in the worst-affected areas. They are seen as a significant blot on Mr Blair's record in education.

The latest figures from the DfES, obtained by the Sunday Telegraph, show that state-run nursery schools across England had debts totalling £277,081 in 2004–05. Primaries were £34 million in the red while secondaries were responsible for the lion's share: £86 million.

Taking into account the debt being built up and Brown’s promise to curb public spending post 2008, Blair and Kelly certainly have a mammoth task ahead of them. Nobody expects perfection or instant change, but to say we’re ‘going in the right direction’ seems weak. Hand a few billion pounds to any sensible teenager and she’d probably implement policy that would take the system in the ‘right direction’. That’s not to say total spending should be lower, but consistent failure of budget increases to meet expected standards suggests that there are structural problems to be addressed. One can question the proposals Ruth Kelly has put on the table, but at the very least they're a recognition that cash isn't a cure-all.

January 26, 2006

Political Bias

An MSNBC article comments on a study looking at political bias and mental activity –

Democrats and Republicans alike are adept at making decisions without letting the facts get in the way, a new study shows. And they get quite a rush from ignoring information that's contrary to their point of view.
Researchers asked staunch party members from both sides to evaluate information that threatened their preferred candidate prior to the 2004 Presidential election. The subjects' brains were monitored while they pondered.
"We did not see any increased activation of the parts of the brain normally engaged during reasoning," said Drew Westen, director of clinical psychology at Emory University. "What we saw instead was a network of emotion circuits lighting up, including circuits hypothesized to be involved in regulating emotion, and circuits known to be involved in resolving conflicts."
The test subjects on both sides of the political aisle reached totally biased conclusions by ignoring information that could not rationally be discounted, Westen and his colleagues say.

Read it in full here (via 3quarksdaily)

Yet more evidence that we’re pretty good at deluding ourselves. See this previous post on the issue, and this wikipedia entry on confirmation bias.

Those taking part in the study probably didn’t intend to distort reality. If asked whether they were objective, they’d answer in the affirmative. I like to think I deal with comments here and normal conversations rationally without totally ignoring or misrepresenting issues, but one can’t be sure.
It may be difficult to consciously determine whether you’re dealing with an issue reasonably but it’s probably not impossible given some effort. An impartial third party would help matters. The level of frustration being displayed by whoever you’re talking to is another gauge of how fair you’re being. Deliberately questioning existing views every so often wouldn’t go amiss either. Opinions are worth having but they shouldn’t be so linked to your sense of self-worth that learning becomes impossible.

January 24, 2006

Poor Nations & Negotiations

I came across an old post from Ben Muse quoting an FT article on the practical constraints of poor nations when it comes to participation in world trade discussions. From the point of view of Zambian trade minister Dipak Patel, it highlights how lack of money/staff staff and the resultant reliance on NGOs and foreign donors makes life difficult.

Patel starts working on a speech for the launch of a new handbook about a special preference scheme for African, Caribbean and Pacific countries,... He cites a computer simulation showing that EU demands for cuts in Zambian tariffs will lose the government $15m in precious tax revenue.

But Zambia’s ability to do such research is limited. It has access to an online computer model developed by the World Bank, which allows it to do simulations. “But I don’t have the bandwidth, so I often get cut off,” Patel says. He wanted to do a simulation of the effect of possible cuts in goods tariffs on the LDCs in time for the Livingstone conference, but had to run round the donors asking them to do it for him. It arrived just a couple of days before the meeting, undermining its usefulness.

Read it in full here.

January 21, 2006

Business and Social Responsibility

Yesterday’s One World Week discussion was "Business and Social Responsibility: Do Good Values Equal Good Business?". The list of speakers is here. There was pretty much zero tension between any of the speakers and nothing to really disagree with. They stressed the gains society has seen as a result of the profit motive and that ultimately power is determined by how well they serve the customer. They were also eager to emphasise the role of law and voluntary/mandatory codes of conduct to prevent harm; like individuals not all firms seem to have a conscience. Just a couple of points:

– It wasn’t mentioned, but most people are or will be shareholders of some sort though voluntary savings and pension schemes. With luck, the increased value of such investments will help us fund spending later in life. Some shareholders are already incredibly wealthy, but many others just want some money to fund their retirement, pay for medical expenses and help their children through university. No sense in demonising them all. Beyond the provision of ipods, phones, cars and drugs, this is another helpful way in which we gain from having soundly run firms. Of course, we all have different ideas of what it means for a firm to be 'soundly run', so there's a role for ethical investment trusts, aligned with the varied preferences of individuals.

– Maybe there are conflicts in the stated desires of CSR proponents. A firm that goes beyond its legal obligations and donates all profit to various stakeholders won’t generate jobs, puts existing jobs at risk and won't develop/improve existing products and services. Charity isn't costless and extremes in either position are harmful. This uncertainty suggests that laws creating more positive obligations aren’t necessarily in society’s long term benefit.

– A recent example of a voluntary choice to become more socially responsible is the decision by US firm Whole Foods to embrace renewable energy. See here.

Natural food grocer Whole Foods Market Inc. said it will rely on wind energy for all of its electricity needs, making it the largest corporate user of renewable energy in the United States..The decision follows the publicly traded company's mission of environmental stewardship without losing sight of the bottom line, Whole Foods regional president Michael Besancon said Tuesday.

The firm is known for its commitment to stakeholders and has yet to suffer as a result. See this report on its stock performance. See here

The ability of Whole Foods to essentially establish a high-end niche market in the humdrum grocery business — where innovative ideas tend to be rare — has earned comparisons with coffee titan Starbucks. So have heady growth plans of Whole Foods — it aims for $12 billion in sales in 2010, up more than 150 percent from last year.

If efforts to be take care of stakeholders are well publicised, negative financial effects may be lessened somewhat.

January 18, 2006

Talk on aid

Yesterday evening’s One World Week discussion was on aid effectiveness. The list of participants can be found here.

Two interesting points mentioned were –

a) The complicity of donors in perpetuating corruption: Aid has not always been conditional on quality of governance. Withholding aid on the basis of corruption may increase willingness of states to reform, but people will die as a result. Perhaps the moral imperative to assist outweighs concerns of value for money. Additionally, the optimal level of corruption is not zero. Eliminating corruption is prohibitively costly, which is why it exists in the developing world too. Donors decide on an acceptable level of money misuse.

b) Progress in the Doha trade round: David Loyn (BBC Developing World Correspondent) and a member of the audience criticised Economics professor Kent Jones for saying developed nations should make concessions too. They said that given the wealth of OECD nations and their historical misuse of power, responsibility for progress fell on their shoulders and poorer nations should liberalise at a rate of their choosing. Jones said that one-way liberalisation would be better than nothing, but it’s just not feasible politically. In the real world, countries won’t give things up for free. Poor nations should thus compromise if discussions are not to be a complete waste; they have the most to loose. Underlying this point was the probably erroneous assumption that protection is a necessary condition for progress. Chomsky has aired this view before

Furthermore that's true of every single developed society. That's one of the best known truths of economic history. The only countries that developed are the ones that pursued these techniques. The ones that weren't able… There were countries that were forced to adopt "free trade" and "liberalization": the colonies, and they got destroyed. And the divide between the first and the third world is really since the 18th century. It wasn't very much in the 18th century, and it's very sharply along these lines.

The fact that we’re trying to persuade the richest nations in the world to eliminate barriers is a testament to the persistence of trade distortions. It’s thus odd to see people encouraging the poor to hold onto theirs.

The panel were pretty positive towards aid, so a more vocal opponent would have been interesting. In defence of aid, David Loyn and Sam Sharpe (DFID) mentioned many projects that had proved beneficial to different groups. However in itself, that means little unless contrasted with the number of failed initiatives. Additionally, they correctly reconciled any observed decline in performance by saying that aid limited the extent of the decline. Still, I said here, that it'd take incompetence on an immense scale for billions of dollars in aid not to have some positive impact.

I know lives are at stake, but the issue of value for money deserved a mention. Other issues not mentioned were micro-credit, convergence towards ‘quality’ governance or the relative importance of the different issues aid is directed towards.

In all, it was a good discussion which highlighted the very real effect beneficial effect aid can have on its recipients.

January 17, 2006

Education Vouchers

Reason magazine discusses a John Stossel programme on public schools in the US and their performance relative to other countries.

For "Stupid in America," a special report ABC will air Friday, we gave identical tests to high school students in New Jersey and in Belgium. The Belgian kids cleaned the American kids' clocks. The Belgian kids called the American students "stupid."

We didn't pick smart kids to test in Europe and dumb kids in the United States. The American students attend an above-average school in New Jersey, and New Jersey's kids have test scores that are above average for America.

The Belgians did better because their schools are better. At age ten, American students take an international test and score well above the international average. But by age fifteen, when students from forty countries are tested, the Americans place twenty-fifth. The longer kids stay in American schools, the worse they do in international competition. They do worse than kids from countries that spend much less money on education.

Read in full here.

The show made the expected points about the homogeneity of public schools, lower incentives to improve poor performance, bureaucratic structures which make firing teachers difficult, etc. It went on to discuss the case in favour of education vouchers.

This case for vouchers isn’t based on dubious claims about the automatic superiority of private solutions. There are many great public schools in the UK; they may even outperform their independent neighbours. However fact remains that some children must endure bad schools. Poor families in bad neighbourhoods can’t afford tuition fees; they can’t afford to move to a better area. They’re stuck. While we have Oxbridge politicians talking about respect, reform and results in schools the pupils are leaving without basic literacy and numerical skills. David Cameron will likely reject the idea because it ‘can’t be sold’ to the public.

A voucher system may not cure all ills, but it would give pupils a choice. Giving control of funds to the pupils themselves would permit access to better schools in other areas, allow the development of new schools and give bad public schools a real incentive to change. That some public schools would be forced to close can only be a good thing. After all, why would parents leave a school that is doing its job? Our goal is not the existence of public schools, but the existence of institutions that prepare children for later life. If those institutions are owned by profit/non-profit firms, churches and mosques, then so be it.

An objection to a universal voucher scheme is that the only new schools to be developed would cater for middle class students, leaving the poor and those with special needs behind in sink schools. I don’t think this is likely and it hasn’t been the experience elsewhere. I’ll link to some info on other countries in another post. In any case, a second-best solution would be to grant vouchers only to these vulnerable groups.

Some say that they don’t want choice. They’re not interested in carrying out research into which school has the best IT equipment, ratios of teachers to students, plans to develop sporting facilities, etc. They just want to send their child to the nearest school in the knowledge it’ll do its job. That’ fine. But just as having many different car manufacturers raises the average quality of cars, even for those uninterested in the details, a voucher system should increase the probability of the local school being a decent one.

January 16, 2006

Environment: Different paths

Madeleine Bunting writes in today’s guardian on Kyoto protocol and the environmental movement in general. She thinks too much attention has been focused debt and trade issues relative to the EU emissions trading scheme and post Kyoto terms.

Looked at objectively it makes no sense. Climate change will dwarf the damage the common agricultural policy subsidies wreak on African farmers; it is already costing at least 150,000 lives a year as warmer temperatures encourage disease, and erratic rainfall will starve millions in coming years. Here is an issue that makes all the aid and debt deals of 2005 look like an afternoon parlour game. Yet such was the momentum of the Make Poverty History campaign that climate change slipped off the public radar and environmental groups felt they couldn't compete.

Contrast with the supposed pro-growth, pro-technology stance of the Asia-Pacific Partnership for Clean Development and Climate. From

The first meeting of the Asia-Pacific Partnership on Clean Development and Climate, which comprises Australia, the United States, Japan, South Korea, India and China, was hosted in sunny Sydney this week. Together the countries came up with a scheme to address climate change that they say will be good for both the economy and the planet.

Their plan focuses on the creation of eight government-business task forces, which will concentrate on cleaning up power generation and distribution, the building trade, and the industries of steel, aluminium, cement and coal mining. These task forces are to devise action plans, time frames and performance indicators, but details are vague at present. The plan does not specifically mention nuclear power.

January 14, 2006

Outsourcing Primer

The Foundation for Research on Economics and the Environment hosts an easy to read document on outsourcing which answers some frequently asked questions. On this issue what jobs will take prominence in the US & Europe as many tasks are carried out elsewhere, it says the following

Uncertainty frightens people. Imagine telling a farmer in 1900 that in 100 years, farm jobs will only be 2 percent of the workforce. What jobs could possibly come along to replace the farming jobs?

Federal Express and Motorola and Intel and Microsoft and General Motors; The farmer couldn’t imagine the products that these companies would make.

Imagine being told a decade ago that some people would make their living writing software for iTunes. “What’s iTunes? Oh, it’s a place where people download music into their iPods. What is downloading music?”

Think how much the world has changed in just 10 years, and all the jobs we couldn’t have imagined that are now here. A quarter of all Americans now work in jobs that didn’t exist in the Census Bureau’s occupation codes in 1967.

Read it in full here.

It’s understandable why smart individuals who see value in concrete plans and forecasts find such suggestions unacceptable; the desire to take control of proceedings and engineer an ideal state of affairs though intervention is irresistible though history suggests it’s misguided. Few politicians would stand up and admit that their knowledge of future technological developments, patterns of competitiveness and consumer preferences, both here and abroad, is severely constrained. Therefore actively preventing the outsourcing movement is at least as risky as embracing it, particularly when we consider the higher average living standards resulting from the latter policy.

January 12, 2006

Working on Important Problems

Just finished reading though an essay from Richard Hamming called ‘You and Your Research’ (linked to within this good Paul Graham article on the benefits of procrastination). A sample –

Now, why is this talk important? I think it is important because, as far as I know, each of you has one life to live. Even if you believe in reincarnation it doesn't do you any good from one life to the next! Why shouldn't you do significant things in this one life, however you define significant? I'm not going to define it – you know what I mean. I will talk mainly about science because that is what I have studied. But so far as I know, and I've been told by others, much of what I say applies to many fields. Outstanding work is characterized very much the same way in most fields, but I will confine myself to science.

In order to get at you individually, I must talk in the first person. I have to get you to drop modesty and say to yourself, ``Yes, I would like to do first-class work.'' Our society frowns on people who set out to do really good work. You're not supposed to; luck is supposed to descend on you and you do great things by chance. Well, that's a kind of dumb thing to say. I say, why shouldn't you set out to do something significant. You don't have to tell other people, but shouldn't you say to yourself, ``Yes, I would like to do something significant.''

Read it in full here.

The essay is geared towards researchers and how they should be concerned with the most important problems in their field. Those problems should be ones for which concrete progress is realistic; time spent on pie-in-the-sky issues isn’t so useful.

Clearly, most people aren’t professional academics and couldn’t directly solve important problems in psychology or engineering. But there are other important problems to be solved. In a broader sense these include how to ensure peace in a given region, how to secure energy availability for future generations, how to improve the welfare of society’s most vulnerable, etc.

The future for many of us involves jobs that may be interesting and necessary, but not important in the sense that they’re directly aimed at solving one a big global or theoretical problem. Though we may still face job-specific problems like how best to interact with clients or how best to structure a firm, they aren’t on the same scale and won’t win you universal acclaim or put you in contention for a Nobel Prize.

That’s not necessarily a bad thing. Choosing to work in other fields for motivations other than saving the world is fine. Not everyone is suited, or even interested in working in academia, politics, an R&D department or a think tank. The yearly financial reward for working in such places isn’t necessarily great and the work carried out isn’t guaranteed to yield concrete results any time soon if at all. Whilst others are working on saving the world, the rest of us must get on with the every day production and consumption that ultimately bankrolls them.

Still, there there’s something alluring about working on something that could have a genuine impact on others for years to come. Those who take an interest in important problems but choose not to work on them directly can make an impact by simply donating funds to relevant organisations. Over the course of a year most people will make many one-off charitable donations to disaster relief funds and television appeals. Perhaps it would be better to take a more structured approach to charitable giving and to make a long term commitment to some organisation that is helping solve whatever you think society’s most important problem is. An indirect contribution is better than none at all.

January 11, 2006

Political Systems in China

Here’s a short article from the American Prospect on China, capitalism and authoritarianism.

So where are the Chinese communists? They’re in government. The communist party is the only party there is. China doesn’t have freedom of speech or freedom of the press. It doesn’t tolerate dissent. Authorities can arrest and imprison people who threaten stability, as the party defines it. Any group that dares to protest is treated brutally. There are no civil liberties, no labor unions, no centers of political power outside the communist party.

China shows that when it comes to economics, the dividing line among the world’s nations is no longer between communism and capitalism. Capitalism has won hands down. The real dividing line is no longer economic. It’s political. And that divide is between democracy and authoritarianism. China is a capitalist economy with an authoritarian government.

Read it in full here. (via Political Theory Daily)

Does anyone know the extent to which limitations on freedom of movement, association and speech are disliked amongst the Chinese population in newly industrialised regions? Are growing incomes and lower poverty yielding enough satisfaction to compensate for an overbearing state?

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