What is Democracy? (67): The Form of Government That Offers the Best Protection Against Human Rights Violations

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There is a clear correlation between the presence and quality of democratic government in a country and the level of respect for human rights in that country. That may sound obvious but it’s good to have some measured results. This paper for instance offers some clear evidence:

There is a substantial body of research devoted to understanding the relationship between democracy and government human rights performance. Most research centers on physical integrity rights but does not analyze the broader civil liberties encompassed by the category of “empowerment rights.” The dynamics of the relationship between the degree of democracy in a state and protection of empowerment rights might be different and improvements may take longer to emerge. This study examines the effects of democracy and democratic duration on empowerment rights scores, and it also uncovers time thresholds at which different scores are attained. The results show that regime type is more critical to the protection of empowerment rights than it is to physical integrity rights. Even in the earliest years of democracy there is a positive relationship between democracy and empowerment rights, but empowerment rights strengthen as countries gain democratic experience. …

Thus, countries with more institutionalized democratic regimes, as determined by the quality and longevity of democratic experience, are significantly more likely to respect both fundamental human rights and broader classes of civil liberties. … [A]lthough human rights protection is present in early years, it will usually be even greater after countries have had extended experience with democracy. (source)

Two graphs to back this up:

correlation between democracy and human rights

(source, click image to enlarge)

Here and here are other papers giving some further evidence.

The interesting thing about all this is not that there is a correlation – anyone following the news could have guessed as much. What we should care about are the reasons why there is a correlation. From the studies cited above we can see that the most important causal link is the one going from democracy to respect for human rights. In other words, there is a correlation because democracy causes respect for human rights. Vice versa may also be possible, although the argument is probably weaker. And then there may also be a hidden variable that can partially explain the correlation. For example, it may well be that prosperity and high GDP promote both democracy and human rights.

But then the next question is: how does democracy cause higher levels of respect for human rights? I guess this can happen in several ways:

• Democracies are more likely to be systems based on the rule of law and the rule of law is necessary for the protection of human rights.
• Democratic rulers know that they can’t get away with repression. They’ll be voted out if they try, or, worse, they’ll suffer the consequences of the rule of law, imposed on them by other branches of power in a system of checks and balances and separation of powers.
• Democracies have systems of judicial review which allow courts to void legislation that contradicts basic constitutional rights.
• Democracies have powerful non-violent mechanisms for dispute settlement, such as well-functioning courts. People don’t need to take the law into their own hands. Internal peace and limitations on violent behavior have beneficial effects on a number of human rights.
• Democracy is correlated with high levels of prosperity, and prosperity makes it easier to promote respect for human rights. Rights cost money.
• Democracies need human rights to function adequately (no democracy without free speech, free assembly, free association etc.), so they have an added incentive to respect them.

None of the above is meant to imply the following:

1. That we can delay the implementation of human rights norms in non-democratic states. Remember the remark at the beginning that the causal link probably goes in two opposite directions and that human rights can promote democratic government. After all, if people are allowed to express themselves, they will express themselves about the workings of their government, and that is the first step towards democracy.
2. That rights are never violated in democracies or never respected in non-democracies. It’s merely a matter of probability.
3. That there are no elements other than democracy that promote human rights. Of course there must be. I mentioned prosperity a moment ago. Democracy is not a sufficient condition, although probably a necessary one, at least in the long run, for the full set of human rights and for the equal enjoyment of all rights by all people.
4. That the beneficial effect of democracy on human rights is equal for all human rights or for all types of democracy. Well-developed and long-lasting democracies do better, as mentioned above, but perhaps also deep democracies, meaning democracies that provide a wide range of opportunities for democratic say.

More about the link between democracy and human rights here, here, here and here. More posts in this series are here.

What is Democracy? (59): A Money Hole

At least in the US, it seems:

election costs include all major candidates' spending and cost of primaries, when known; they do not include outside spending

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Barack Obama felt that he had to spent $730 million to win the 2008 election. That’s roughly the GDP of Timor-Leste.

The so-called killer argument of those in favor of unlimited election spending is that the cost of a ticket to the White House hasn’t kept up with US GDP, as if it should keep up with US GDP:

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I see absolutely no reason why a slower growth of campaign spending compared to the growth of GDP should automatically deflate our worries about campaign spending. After all, it’s not as if a country needs to spend more on elections as it becomes richer. On the contrary. If campaign spending is defended as a means to inform the public, then one could counter with the fact that people in wealthy countries tend to be better educated and to have good access to modern information sources. Hence, they don’t need to be “informed” by political parties or candidates, especially not if this “information” takes the form of a deluge of hatefilled ads and lying propaganda. The absolute level of campaign spending should remain a worry, wether or not it’s higher or lower than GDP or any other unrelated indicator.

And before you ask: yes, money in politics is a problem, and more money means more problems. If you’re not convinced try some older posts here, here, here, here and here.

Also, it goes without saying but I say it anyway: money is an issue in all types of elections, not only presidential ones. A record $6 billion will be spent on the 2012 elections, according to the Center for Responsive Politics. Adjusted for inflation, that’s 60% more than the 2000 elections (source).

More posts in this series are here.

The Causes of Poverty (53): Poor Economic Growth

“Wall Street in Panic” from 1929. Photograph: Hulton Archive/Getty

As an update of this previous post, here’s some more information about the nature of the relationship between economic growth and poverty reduction.

In a recent paper, Lane Kenworthy has compared growth and income data for 17 developed countries. Specifically, he looked at the ways in which the incomes of people in low to middle income groups benefit from economic growth. “Growth” here means increases in the amount of per capita GDP – this caveat is necessary in order to filter out economic growth that is the result of population growth and that doesn’t make the average person better off (although it obviously can make some persons better off, immigrants for instance). “Income” includes both wages and welfare benefits or other government transfers. Another preliminary remark: it’s wrong to think that growth automatically and by definition makes everyone – and hence also the poor – better off. It just makes the average person better off. That means that it can also in some circumstances make some people – e.g. the poor – worse off. Growth numbers are silent about the distribution of the effects of growth.

The question which the paper tries to answer is the following. Given that poor people can benefit from economic growth in two ways:

1. either growth “trickles down“: more aggregate national income or production means more jobs, better paid jobs etc.
2. or growth can increase the government’s tax base so that the welfare system can be made more generous,

which of these two mechanisms has been most prominent in the 17 countries examined in the paper?

The answer is “number 2″. Why? Well, in some of the selected countries economic growth was accompanied by a significant rise in low-to-middle household incomes, while in the other countries the effect of economic growth on the incomes of people in low-to-middle income groups was much smaller or zero. If economic growth trickles down (1), then one would assume it trickles down in all or most countries. After all, if growth results in more and better paid jobs for the poor, then there’s no a priori reason why this result would occur in one country but not in another.

The nature of government transfer systems is the reason why the effect of growth on the incomes of the poor is not the same in all countries:

when households on low incomes got better off, it was due most often to a rise in net government transfers. Where net transfers increased, incomes tended to increase in concert with economic growth. Norway, the UK, Sweden, Finland, and Denmark illustrate this pattern. Where net transfers were stagnant, income trends were decoupled from growth of the economy. We observe this in the United States, Canada, and Switzerland. This is an important finding. It means that, as a general rule, growth has not trickled down to low income households through wages or employment. And it means that, when government transfers haven’t grown, wages and employment haven’t stepped in to take their place. (source)

Looking at all this from the perspective of the causes of poverty: it’s clear that poor economic growth in wealthy countries cannot, by itself, explain poverty, because these countries can witness both growth and stagnation of the lowest incomes (as a result of their failure to implement the necessary transfer programs). Hence you can have growth without poverty reduction. If lack of growth is the main cause of poverty, then growth would by itself and automatically reduce poverty. We see that this is not the case.

In poor countries, on the other hand, growth can perhaps be sufficient. Those countries start from a lower base and more can trickle down. A lack of growth can, therefore, explain the persistence of poverty in developing countries, but probably not in developed countries. The latter have a basis of wealth that is large enough to fund welfare programs even if growth is poor. Growth helps to make this funding easier, but it’s not really necessary. A more progressive tax system, coupled with some good legislative will, can also do the trick.

More here.

Political Jokes & Funny Quotes (106): The Rise of Dictators

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More here on the reasons why countries are dictatorships rather than democracies, or vice versa. More on the Gini coefficient and on the link between GDP and democracy.

The Causes of Poverty (44): Bad Institutions

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Botswana is a largely tropical, land-locked country with insignificant agriculture in a geo-politically precarious location. When the British granted independence, they left 12 km of roads and a poor educational system. Making headlines for its devastatingly high HIV rate, Botswana suffers from high inequality and unemployment. Officially a democracy, it has yet to have a functioning opposition party. 40% of Botswana’s output is from the diamond industry, a condition that in other countries casts the resource-curse.

Zimbabwe and Botswana GDP per capita

Still, Botswana is a growth miracle. Between 1965 and 1998, it had an average annual growth rate of 7.7%, and in 1998 it had an average per capita income four times the African average. Rule of law, property rights, and enforcement of contracts work; the government is efficient, small, and relatively free from corruption. Indigenous institutions, persisting through colonization, encourage broad-based participation, placing constraints on elites. Institutional quality and good policies are responsible for success against the odds. (source)

Of course, high GDP growth rates don’t always imply low poverty rates, but often they do. About a third of the population still lives in poverty, but this rate has been declining sharply, from 59% in 1985 and 47% in 1992 (source).

(image source)

More posts in this series are here.

Lies, Damned Lies, and Statistics (35): Sample Sizes, Ctd.

cherry picking

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This isn’t the first time I mention sample sizes as a common problem in statistics. Usually, the problem is one of survey design: insufficiently large sample sizes for respondents produce unreliable survey results.

However, the same error – or fraud, when the error is willful – can occur in data interpretation. Take a look at this graph by John Taylor:

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The problem?

Taylor’s conclusion: The data on spending shares show that the most effective way to reduce unemployment is to raise investment as a share of GDP. But why begin the scatter plot in 1990? There’s no good reason. In fact, most folks typically download the entire history of available macro data. … The chart below goes back to 1948:

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This is a form of cherry-picking data that allows you to “prove” a strong correlation where there’s actually none at all. In this way, you’ll find a correlation in almost all data sets, as long as you pick a sufficiently small sample of the set. In this example, you can only limit the selection to the last two decades if you have a good argument about why the economy is different now compared to some decades ago, and why there’s a correlation now when there wasn’t before. However, that argument – which would be interesting – seems to be lacking. And if it’s lacking,  there’s no excuse for cherry picking the last two decades.

Other examples of cherry-picking are here. More posts about lies and errors in statistics are here.

Human Rights Maps (99): Economic Freedom

First, why is economic freedom a human rights issue? The most important reason perhaps is that there is a correlation between economic freedom and GDP growth, and GDP growth or economic growth in turn is a prerequisite for the fight against poverty. (If you’re wondering why poverty is a human rights issue, go here). Secondly, international economic freedom, or free trade, also helps to alleviate poverty. And, finally, there is a link between economic freedom and freedom more generally: economic freedom goes hand in hand with property rights, the rule of law and democratic transparency which are all human rights issues.

There’s an interactive map here with an index of economic freedom by country (methodological information is here). This is a screenshot:

(source, click image to enlarge)

More human rights maps here.

Related Articles

• Recession drove down economic freedom: study (ctv.ca)
• Recession caused global decrease in economic freedom: Report (canada.com)
• Ontario’s growth slowed by low economic freedom, think-tank says (canada.com)

Migration and Human Rights (31): Illegal Immigration and GDP

I’ve argued before that immigration – even illegal immigration – is economically beneficial for the host country, contrary to widespread belief and propaganda. There’s some new evidence for this claim in the following graph:

(source, source)

These figures suggest that illegal immigrants in the US – or undocumented workers – are making a substantial contribution to the U.S. economy and to U.S. prosperity, given what would happen to U.S. GDP were they to be deported.

Comprehensive immigration reform – in short, legalizing undocumented immigrants (the dreaded “amnesty”) together with a review of the rules regarding future flows – would be very beneficial for the US economy.

The graph above clearly shows the devastating economic impact of one very severe anti-immigration policy, namely deportation (“impact” here means on the host country; the impact on the migrants themselves doesn’t need spelling out). But there are numerous other types of restrictive policies.

A wave of local anti-immigration laws has swept the country… The laws take different forms – some authorize local police to enforce federal immigration laws, some restrict benefits like housing and employment to those with legal immigration status, and some require all government transactions to be conducted in English only. … [What] is the economic impact of these laws: are jurisdictions with them better off economically than those without them? (source)

Because these laws were enacted in some counties/cities and not elsewhere, you have a natural experiment in which you can compare counties/cities with restrictive regulation to more hospitable counties/cities.

The results show that the restrictive laws had a negative but small economic effect on the jurisdictions where they are enacted. Specifically, we find that these laws had a 1 to 2 percent negative effect on employment; for the average U.S. county, this translates to about 337 to 675 jobs (40 to 80 jobs for the median county). Consistent with the effect on employment, payroll was also negatively affected. This drop in employment includes both authorized and unauthorized workers. We also find that the laws reduced employment in some industries, such as the restaurant industry, while increasing employment in others, such as the grocery and liquor store industry. This suggests that affected workers may be switching jobs, rather than leaving a particular jurisdiction altogether. (source)

More here.

Why Do Countries Become/Remain Democracies? Or Don’t? (13): Prosperity

I already mentioned in a previous post how democracy is correlated with prosperity. There’s a much higher proportion of democracies among rich countries than among poor countries. The level of national income is the most important factor explaining inter-country variations in the degree of democracy. If we assume from this correlation that there is a causal link from prosperity to democracy, then low income is the most important barrier to democracy. But the causal link probably goes in both directions. Countries aren’t just democratic – or remain so – because they prosper (among other reasons), but it’s also the case that countries prosper to some extent because they are democratic (disproving the often heard claim that economic development requires authoritarian government). I gave an overview of the reasons why prosperity promotes democracy here, and why the opposite is also the case here.

The correlation between democracy and prosperity is obvious from this graph (at least for non-Muslim countries):

(source)

The stronger one of the causal links seems to be the one going from prosperity to democracy rather than vice versa. If you accept that, there’s an additional question (it’s one made famous by Przeworski and Limongi): are there more democracies among rich countries than among poor countries

• because economic development increases the likelihood that countries will undergo a transition to democracy (this is often called modernization theory), or
• because economic development makes democracies less likely to fall back into dictatorship?

Przeworski and Limongi found that affluence makes it very unlikely that a shift from democracy to dictatorship occurs, while Boix and Stokes find that there is an effect of affluence on the likelihood of a shift to democracy. Both effects are visible in this graph:

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It’s likely that the economic effect on transition towards democracy is a bit smaller than the effect halting the opposite transition. The reason is probably the fact that the transition from democracy to authoritarianism is in se much easier than the other way around. Some even say that democracy is inherently suicidal. Whatever the merits of that claim, it’s obvious that an authoritarian leader has the resources and the necessary lack of scruples to cling to power. Especially when his country becomes more prosperous. He can then use this prosperity to bribe the population into submission, and buy the arms and security forces when this doesn’t work.

Again, economic development isn’t a sufficient or even necessary prerequisite for democracy to appear or to survive. Things are more complicated than that and many other factors are in play, including conscious human activity and volition. People can decide to make or destroy a democracy at any level of economic development.

More posts in this series are here.

Measuring Poverty (9): Absolute and Relative Poverty Lines

There are many ways you can measure how many people in a country are poor. Quite common is the use of a so-called poverty line. First you decide what you mean by poverty – for instance an income that’s insufficient to buy life’s necessities, or an income that’s less than half the average income etc. Then you calculate your poverty line – for instance the amount of income someone needs in order to buy necessities, or the income that’s half the average income, or the income of the person who has the tenth lowest income if the population was one hundred etc. And then you just select the people who are under this poverty line.

I intentionally chose these examples to make a point about absolute and relative poverty. (I thinks it’s important to distinguish types of poverty and different definitions of poverty). In the U.S., people mostly use an absolute poverty line, whereas in Europe relative poverty lines are used as well. As is clear from the examples above, an absolute poverty line is a threshold, usually expressed in terms of income that is sufficient for basic needs, that is fixed over time in real terms. In other words, it’s adjusted for inflation only and doesn’t move with economic growth, average income, changes in living standards or needs.

A relative poverty line, on the other hand, varies with income growth or economic growth, usually 1-to-1 since it’s commonly expressed as a fixed percentage of average or median income. (It obviously can have an elasticity of less than 1 since you may want to avoid a disproportionate impact on the poverty line of very high and very volatile incomes. I’ve never heard of an elasticity of more than 1).

Both absolute and relative poverty lines can be criticized. Does an absolute poverty line make sense when we know that expectations change, that basic needs change (in contemporary Western societies, not having a car, a phone or a bank account can lead to poverty), and that the things that you need to fully participate in society are a lot different now than they once were? We know that people’s well-being does not only depend on the avoidance of absolute deprivation but also on comparisons with others. The average standard of living defines people’s expectations and when they are unable to reach the average, they feel excluded, powerless and resentful. Can people who fail to realize their own expectations, who lose their self-esteem, and who feel excluded and marginalized be called “poor”? Probably yes. They are, in a sense, deprived. It all depends which definition of poverty we can agree on.

It seems that people do think about poverty in this relative sense. If you compare the (rarely used) relative poverty line of 50% of median income in the U.S. with the so-called subjective poverty lines that result from regular Gallup polls asking Americans “how much they would need to get along”, you’ll see that the lines correspond quite well:

(source, click on the image to enlarge)

So if relative poverty corresponds to common sense, it seems to be a good measure. On the other hand, a relative poverty line means moving the goal posts for all eternity. We’ll never vanquish relative poverty since this type of poverty just moves as incomes rise. It’s even the case that relative poverty can increase as absolute poverty decreases, namely when there’s strong economic growth (i.e. strong average income growth) combined with widening income inequality (something we’ve seen for example in the U.S. during the last decades). (Technically, if you use the median earner as the benchmark, relative poverty can disappear if all earners who are below the median earner move towards the median and earn just $1 or so less than the median. But in practice I don’t see that happening).

Some data on relative poverty in developed countries:

relative poverty, cross country comparison

(source, the relatively dismal number for the U.S. is partly due to very high incomes at the top)

More posts about poverty measurement are here.

Why Do Countries Become/Remain Democracies? Or Don’t? (11): The Relative Cost of Freedom and Dictatorship

When dictatorial governments come under international pressure to improve the human rights situation in their countries, they often react by stating that they govern developing countries and don’t have the resources that are necessary to make improvements. Such statements have some plausibility. A judiciary, a well-trained police force, a functioning system of political representation etc. all require funding. (I pointed this out some time ago in a post about negative and positive human rights).

However, to some extent this explanation is no more than an excuse: you don’t need money to stop persecution of dissidents, to lift restrictions on the media, to allow demonstrations etc. On the contrary, you save money by doing so. You don’t need a large police force or paramilitary force; you don’t need strong government controls of every aspect of society and the economy; you don’t need to bride your citizens into acceptance of the state etc. But obviously the goal of dictators isn’t to save money and make the country better off by investing that money in the economy.

On the other hand, it remains true that the adequate defense of freedom, rights and democracy requires money, which is probably why rich countries usually score higher in freedom indexes (see also here). And, consequently, governments can save money by limiting freedom and by oppressing people.

So, both oppression and freedom cost money, and both a reduction of oppression and a reduction freedom save money. The question is then: what is, overall, the cheapest? A dictatorship or a democracy? And how can we know? Well, one possible indicator could be government spending as a percentage of GDP. If democracies have a systematically higher percentage, one could say that freedom costs more than oppression (on the condition that there isn’t a third variable explaining why democracies spend more).

However, one look at the data tells you that there isn’t much of a correlation between freedom and government spending, or between oppression and government spending. There are some countries that oppress a lot with not a lot of money – “not a lot” in relative terms compared to GDP. China and Saudi Arabia for example. And there are others that do need a lot of money (a large share of the economy) to keep the bosses in place. Cuba and Zimbabwe for example. But perhaps that is because their GDP is so low, not because they need a lot of money to oppress. In other cases, such as Saudi Arabia we may think they don’t spend a lot on oppression but we are fooled because their GDP is relatively high. And anyway, even dictatorships use some part of their state budget for things that aren’t quite so bad.

Likewise for freedom: freedom comes “cheap” in the U.S., and is “expensive” in Sweden. Between quotation marks because government spending over GDP is a very imprecise measure of the cost of freedom or oppression, for the reasons just given. It’s not because a country’s GDP doubles thanks to higher oil prices that the cost of freedom also doubles. Freedom (like oppression) costs money but not money as a fixed percentage of GDP.

Alternatively, you can also look at the tax burden. Here, the data show that countries that impose the highest taxes are also the ones that are most free (Scandinavia obviously ranks high on both accounts). But is that because freedom costs so much more than oppression? Perhaps the answer is “yes” if you include in “freedom” the things that make freedom possible, such as good healthcare, education etc.

But perhaps a more interesting and useful question would be: what cost considerations or economic incentives would produce a move towards democracy or away from democracy? It’s clear that a crisis of some sort – 9/11, a war, or, more appropriately in the current context, an economic recession or depression (see the Roosevelt cartoon below) – encourages democratic leaders to abridge certain rights, freedoms and democratic procedures. In the case of an economic crisis, the claim is that freedom and proper democratic procedures are just too expensive economically. A swift resolution of the crisis requires strong centralized intervention.

It’s also widely accepted that one of the causes of the demise of the Soviet Union was the unbearable cost of oppression. I think it’s better foreign policy to try to make oppression as costly as possible, rather than trying to make freedom as cheap as possible. Freedom tends not to be very cheap, I guess. And when it is, it’s probably not really freedom.

More about Putin. More on the determinants of democracy.

Why Do We Need Human Rights? (12): The Economic Case against Human Rights and Democracy, Ctd.

After completing my older post on the topic – in which I argued that the case is very weak – I found this quote by Bill Easterly which I thought would illustrate my point:

Democracy doesn’t attract as much love as it deserves in aid and development circles. Many wonder if benevolent autocrats might be better for development than messy elections, even though there is no evidence to support benevolent autocracy. There is a strong positive association between democracy and LEVEL of per capita income, which at least some authors argue is causal. (It’s true there is no robust association between democracy and GROWTH of income, but then there is no robust association between GROWTH and ANYTHING.) But even if there had been SOME material payoff to autocracy, why don’t we care more about democracy as a good thing in itself? (source)

Some data about the correlation between democracy and GDP (both level and growth) are here. My argument for democracy is usually instrumental (see here) and prosperity is one of the values that can and should be promoted by instrumental democracy. But I’ve also written about democracy as a good thing in itself. Go here if you care about that sort of argument.

Measuring Poverty (5b): Poverty in Africa

Here‘s an interesting paper by Sala-i-Martin and Pinkovskiy on the evolution of poverty in Africa, and it contains exciting news: African poverty is falling and is falling rapidly since 1995 (this contradicts some older research). Moreover, this evolution is remarkably general across African countries, and not just explained by good news in a few large countries. Poverty is falling even in countries which are believed to burdened by geography, bad agricultural prospects, a history of slave trade, war, or lack of natural resources. And, to make the good news complete: income inequality has also decreased, and the Millennium Development Goal of halving the proportion of people earning less than $1 a day will be achieved on time.

You can see the reduction of the poverty rate in Africa in the graph below. From a “high point” of almost 45% of the population surviving on less than $1 dollar day in the late 1980s, that rate has fallen to 32% in 2006. How come? As you can also see in the graph, at the time poverty began to decline around 1995, GDP began to grow (after three decades of zero or negative growth). The graph shows a striking correlation between poverty reduction and economic growth, something I have written about before in another context, see here and here).

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Of course, poverty reduction isn’t the automatic result of GDP growth only. Other factors are at work as well, but the paper is silent about those.

What’s interesting is that this African growth spurt since 1995 (probably briefly interrupted by the current recession) isn’t just caused by growing oil prices. If that had been the case, we would have seen increasing income inequality, since revenues from the oil industry are typically appropriated by elites. But that’s not the case. Poverty reduction has gone hand in hand with a reduction in income inequality. You can see the extent of this reduction in the following two graphs from the paper:

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This means that growth has benefited the poor. However, although the reduction in poverty is impressive, it’s not quite as impressive as poverty reduction in China.

More on poverty measurement. More poverty statistics. More on Africa.

Economic Human Rights (32): The Economic Cost of Taxing the Rich

Taxation is linked to human rights in several ways:

• It’s usually correlated with government accountability and hence democracy (i.e. political rights). States that don’t tax their citizens don’t have an incentive to be accountable. And citizens who have to pay taxes usually demand representation in return.
• Taxation is a means to reduce income inequality, and income inequality creates a number of human rights problems.
• Taxation is, in part, intended to fund a social safety net, which in turn is a means to protect certain economic human rights.
• And tax money is also used for education and healthcare, two human rights.

I personally belief that a progressive tax is best in light of the last two concerns. In a progressive taxation system, higher earners pay a larger percentage of their income on taxes. Compared to a regressive taxation system (people with higher incomes pay less in percentage of their income, as in the case of a consumption tax or VAT) or a flat tax (the tax percentage is the same for all income groups), a progressive tax reduces income inequality: it makes incomes more equal in a direct way because it reduces the income of higher-earning families by a larger percentage than the income of lower earning ones; but also in an indirect way because this system – under certain conditions – yields more tax revenues which can then be spent on poverty reduction and the safety net. Also, it seems to be a good example of a just and fair system. The strongest shoulders should carry the most heavy burden. Someone earning a low income can end up in poverty after paying a small percentage in taxes; a wealthy person will perhaps not even notice paying a relatively large sum in taxes.

The counter-narrative states that high tax rates discourage people; they are a disincentive to hard work and effort. High tax rates for high incomes discourage people who work relatively hard (they work hard supposedly because they earn a lot). Because high tax rates punish the most productive elements in a society, the whole of society suffers. More productive people will limit their productivity because they don’t want to fall into a higher tax bracket, and the money they pay in taxes can’t be invested in the economy. Taxing the rich therefore has an unacceptable economic cost. Conversely, low tax rates for the rich produce benefits for all (this is trickle down economics, read also about the Laffer curve).

But this narrative doesn’t quite stand the test of data:

top marginal tax rates and gdp growth, US data

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As is clear from this graph, high tax rates obviously don’t slow down economic growth, and low tax rates don’t speed it up. This paper also supports the claim that moderate, as opposed to dramatic, increases in marginal rates don’t have any impact on the willingness of the wealthy to participate in the economy. They won’t go Galt. Atlas won’t shrug, except to signal indifference.

The top income tax rate was 91% (beginning at taxable income of $400,000) … [in] the period from 1951 through 1963. Those were the golden years of the U.S. economy, in which the average annual rate of productivity growth was 3.1% (compared with about 1.5% after 1981). Of course, the growth might have been even faster had the marginal tax rates been lower, but the coincidence of high rates and high productivity raises challenging questions for those who believe that high marginal tax rates carry an unacceptable cost. (source)

To be fair, marginal tax rates are a crude measures of tax burden. There’s a difference between marginal tax rates and effective tax rates.

• A marginal tax rate is the tax rate that applies to the last dollar of the tax base (taxable income or spending, usually income). It’s not the rate at which all your dollars are taxed. It’s the maximum rate you’re paying on any of your dollars of taxable income.
• An effective tax rate refers to the actual rate, i.e., the rate existing in fact, for the entire income, after tax deductions and credits and taking into account lower rates for lower income brackets (see here). It’s your total tax obligation (including your income tax and any other additional taxes and/or credits), divided by your total taxable income.

But even if we look at the effective tax rates of the rich, we see that this has steadily decreased over the decades, with little or no positive effect on overall economic performance:

effective federal tax, US data

(source)

And when there’s no positive effect of decreasing tax rates, there’s probably also no negative effect of increasing tax rates. To the extent that the wealthy (and productive, although those groups obviously don’t overlap completely) respond to changes in the tax system, their responses focus not on increased/decreased labor, productivity or investment, but on tax avoidance (see here).

The Causes of Poverty (30): Lack of Economic Growth

As stated in a previous post on the same subject, when a country achieves a certain level of economic growth – or, more precisely, rising levels of GDP per capita because economic growth as such can be the result of rising population levels – it is assumed that this reflects a higher average standard of living for its citizens. Economic growth is therefore seen as an important tool in the struggle against poverty (if you wonder why poverty is a human rights issue, go here). If a country is richer in general, the population will also be richer on average. On average meaning that GDP growth isn’t necessarily equally distributed over every member of the population. That is why GDP growth isn’t sufficient proof of poverty reduction. Separate measurements of poverty and inequality are necessary.

So in theory, you can have GDP growth and increasing levels of poverty, on the condition that GDP growth is concentrated in the hands of a few. However, that’s generally not the case. GDP growth benefits to some extent many of the poor as well as the wealthy, which is shown by the strong correlation between poverty reduction and levels of GDP growth (always per capita of course). It’s no coincidence that a country such as China, which has seen strong GDP growth over the last decades, is also a country that has managed to reduce poverty levels substantially.

Unfortunately, growth isn’t a silver bullet. Poverty is a complex problem, requiring many types of solutions. Promoting economic growth will do a lot of the work, but something more is required. In a new paper, Martin Ravaillon gives the example of China, Brazil and India. The levels of poverty reduction in these three countries, although impressive, do not simply mirror the levels of economic growth. Although half of the world’s poor live in these three countries, in the last 25 years China has reduced its poverty level from 84% of the population in 1981 to just 16% in 2005 (see chart below). China is exceptional, but Brazil also did well, cutting its rate in half over the same period (8% of Brazilians still live on less than $1.25 a day). Regarding India, there are some problems with its statistics, but whichever statistic you use, there’s a clear reduction.

poverty reduction in China, India and Brazil

(source)

Ravaillon points out that the intensity of poverty reduction was higher in Brazil than in India and China, despite lower GDP growth rates.

Per unit of growth, Brazil reduced its proportional poverty rate five times more than China or India did. How did it do so well? The main explanation has to do with inequality. This (as measured by the Gini index, also marked on the chart) has fallen sharply in Brazil since 1993, while it has soared in China and risen in India. Greater inequality dampens the poverty-reducing effect of growth. (source)

Which is rather obvious: higher levels of income equality means a better distribution of the benefits of growth. So the “pro-growth strategy” against poverty is important but not enough, and should be combined with Brazilian type anti-inequality measures (focus on education, healthcare and redistribution).

Lies, Damned Lies, and Statistics (24): Mistakes in the Direction of Causation

Time for a more lighthearted post in this blog series. Suppose you find a correlation between two phenomena. And you’re tempted to conclude that there’s a causal relation as well. The problem is that this causal relation – if it exists at all – can go either way. It’s a common mistake – or a case of fraud, as it happens - to choose one direction of causation and forget that the real causal link can go the other way, or both ways at the same time.

An example. We often think that people who play violent video games are more likely to show violent behavior because they are incited by the games to copy the violence in real life. But can it not be that people who are more prone to violence are more fond of violent video games? (See also here). We choose a direction of causation that fits with our pre-existing beliefs.

Another widely shared belief is that uninformed and uneducated voters will destroy democracy, or at least diminish its value (see here, here and here). No one seems to ask the question whether it’s not a diminished form of democracy that renders citizens apathetic and uninformed. Maybe a full or deep democracy can encourage citizens to participate and become more knowledgeable through participation.

A classic example is the correlation between education levels and GDP (see also here). Do countries with higher education levels experience more economic growth because of the education levels of their citizens? Or is it that richer countries can afford to spend more on education and hence have better educated citizens? Probably both.

Another cartoon that expresses the same risk:

(source)

More posts in this blog series.

Economic Human Rights (30): Life Expectancy Throughout History

How is life expectancy relevant for human rights? High levels of life expectancy can mean a long life of oppression and cruelty, but it’s fair to say that a long life is generally beneficial for human rights, and that low average life expectancy rates are indicators of human rights violations. The longer people life, on average, the more they can do with their lives, and the more they can enjoy their freedom. If people’s lives are shorter, on average, it’s likely that this is because of human rights violations. For example, because:

• their healthcare isn’t provided for (and healthcare is a human right)
• their poverty traps them in a vicious circle of poverty and ill health (and poverty is a human right)
• their governments send them to war, etc.

So it’s useful to note that life expectancy, over the course of human history, has risen sharply, especially during modern times:

life expectancy through the ages

(source, click on the image to enlarge)

Life expectancy during much of pre-modern history averaged just below 30 years. Part of the reason for such a low figure is that many children died at a very young age, pulling down the average life expectancy. Those who didn’t die young had a good chance of surviving to what we now call “middle age”.

After the Industrial Revolution many more children survived into adulthood and by the beginning of the 20th century average life expectancy in the developed world was close to 50, whereas for the world as a whole it was only around 40 years. The figures now are 78 and 67 respectively. This graph shows the rapid and sudden improvement after centuries of stagnation:

Life Expectancy throughout history, long trend

(source)

The reason for this sudden improvement during and after the industrial revolution is a combination of improved medical technology and higher wealth. Not surprisingly, life expectancy is highly correlated with income levels – more wealth means higher investment in healthcare, less war etc. – but not in a linear fashion: the U.S. has very high GDP per capita but not higher life expectancy than some countries/regions with somewhat lower income levels (some blame the healthcare system, others the life-style choices of many Americans). And, compared to Africa, India has higher life expectancy with similar income levels (the HIV/AIDS epidemic is part of the explanation).

(source)

There’s a map comparing life expectancy in the world here. And there are some more statistics on life expectancy here.

Economic Human Rights (29): Unemployment Benefits in the U.S. and Elsewhere

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Strange as it may seem to some, unemployment benefits are a human right, and rightly so in my opinion. Poverty makes rights impossible, and unemployment benefits save many from poverty, especially during a recession in which unemployment isn’t just a phase between two jobs. Read for instance art. 22, 23 and 25 of the Universal Declaration:

Article 22: Everyone, as a member of society, has the right to social security.

Article 23: Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.

Article 25: Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

Three times! They must have meant it.

Compared to many other industrialized countries, the U.S. usually adopts a very critical attitude towards social and economic rights in general, and hence also to the right to unemployment benefits. Which is apparent from its relatively stingy system, something I already discussed here. Some more evidence of this in the graph below:

(source)

At just under $300, the average weekly benefit is less than half the average private-sector wage. Mississippi’s maximum benefit of $230 is not much more than the federal poverty threshold of $200 for an individual. (source)

And it’s not just the total amounts of the benefits:

Compared with the systems in other industrialised countries, the American unemployment-insurance (UI) scheme pays lower benefits for less time and to a smaller share of the unemployed. … States often require beneficiaries to have worked or earned an amount that disqualifies many part-time and low-wage workers. They also disqualify people seeking only part-time work – even though many people now work part-time for family reasons. Benefits typically last for only six months, more than enough time to find a new job in normal times but not in recessions. (source)

This isn’t only a human rights issue. Especially in a recession it can mean making things worse. When people lose their jobs, you don’t want them to lose a large part of their purchasing power since economic recessions are made worse by falling consumer spending.

However, making the system of unemployment benefits more generous would almost certainly require higher taxes. And although the U.S. is a low-tax country (compared to other industrialized countries, see graph below) that seems pretty utopian right now (given the already hysterical fears about the fiscal consequences of the healthcare proposals).

OECD tax revenue as percentage of GDP

(source)

Unemployment benefits are about “spreading the wealth around“, and we know that, for many Americans, this phrase sounds worse than “you have cancer and you only have 6 months to live”. So little hope of having a bit more of that.

Economic Human Rights (28): The Health Consequences of the Recession and of Unemployment

the cost of healthcare cartoon

(source unknown)

The Economist called it the “unsurprising research finding of the day“, but I think it’s a useful confirmation of an existing intuition: this paper finds that the recession can have a beneficial effect on the health of some people who lose their job because of it, namely those people spending their new leisure time in a healthy way. Other people, however, spend their leisure time cultivating some of their pre-existing unhealthy habits, or find themselves depressed and without employer-provided healthcare (especially in the U.S.). Because their healthcare has become more expensive now that they are unemployed, they decide to go without treatment or tests.

Results showed the body mass of the average laid-off food-lover increasing by the equivalent of more than 7 pounds for a 5-foot, 10-inch man weighing 180 pounds during unemployment. Similarly, frequent drinkers on average doubled their daily alcohol intake after losing their jobs and before finding another one. (source)

Elsewhere in the world, and especially sub-Saharan Africa, it seems that the health consequences of the global recession are more dramatic:

The financial crisis will kill between 28,000 and 50,000 babies in sub-Saharan Africa this year, according to this paper. The reasoning here is straightforward. For people on subsistence incomes, a fall in GDP can be fatal. The paper’s authors, Jed Friedman and Norbert Schady, estimate that a one percentage point fall in per GDP across sub-Saharan Africa is associated with a rise in infant (defined as under-ones) mortality of between 0.34 and 0.62 per 1000. If we multiply this increase by the number of births this year and by the 2.4 percentage point difference between GDP growth this year and last (a reasonableish estimate of the effect of the crisis), we get a figure of between 28,000 and 50,000. … Of course, you can quibble with the numbers. But the general story holds. For the poor, income is a matter of life or death. Which brings me to my question. If one-in-seventeen British babies were to die this year because of the financial crisis, it would be the biggest media story for years and there’d be rioting in the streets until the government did something. So, why the silence? Chris Dillow (source)

Since health and life are human rights, we have another human rights problem thanks to the recession. Previous posts on the (possible) impact of the recession on human rights are

• here (a general overview)
• here and here (on poverty)
• here (on the recession and the death penalty)
• here (on the recession and development aid)
• here (on the recession and antisemitism)
• here (on the recession and unemployment)
• and here (on the recession and crime).

Human Rights Cartoon (61): Corruption

(source, cartoon by Angel Boligan)

Corruption, or “the misuse of public office for private gain”, is not a human rights violation as such (there is no right not to suffer the consequences of corruption), but it is the cause of various rights violations. Notably, it has an impact on economic growth (see here) and hence also on poverty reduction (given the correlation between growth and poverty reduction,  see here). Corruption also has an impact on poverty on the level of individuals rather than countries (and there is a right not to suffer poverty). It’s obvious that individuals can make better use of the funds that they (have to) spend on bribes. As depicted in the cartoon, those that are forced to pay bribes are often people who are already vulnerable.

Moreover, corruption eats away at the rule of law. Even in the most corrupt countries, corruption is usually illegal. If illegal activity becomes normal practice, the rule of law is obviously undermined, with possible consequences for judicial protection in general, including protection of human rights. Even more seriously, corruption is associated with political instability since it tends to reduce citizens’ trust and faith in institutions.

Some statistics on corruption are here, here, here, and here.

Lies, Damned Lies, and Statistics (8): Failure to Divide by Population

I often see graphs that contain a time series of some sort, but the numbers are just plain numbers, not normalized by population. Here’s an example of a graph from the Bush-era, flaunting the supposedly beneficial effects of Bush’s labor policy on job growth (green line, “jobs on the rise”, number of jobs in thousands):

(source)

Just presenting the numbers of job without relating them to the population, is meaningless. Maybe the population grew faster than the number of jobs, in which case the growth exhibited here is in fact a decrease. Or the population shrunk, in which case the growth in the number of jobs was even bigger.

Here’s the correct graph, showing that employment did increase under Bush, but decreased during the last years of his presidency:

employment-population ratio

“Population” can mean actual population (i.e. people or residents), but can also mean any other relevant basis of comparison. For example:

The following statistics suggest that 16-year-olds are safer drivers than people in their twenties, and that octogenarians are very safe:

(source)

As the following graph shows, the reason 16-year-old and octogenarians appear to be safe drivers is that they don’t drive nearly as much as people in other age groups:

(source)

Another example is the national debt statistic. Often the graph shows just the national debt in dollar, without relating it to GDP. Whereas the absolute amounts do have some relevancy, it’s better to express the debt as a percentage of GDP because a bigger economy can carry a bigger debt (a poor household may go bankrupt with a debt of $10,000, whereas a rich household can live with a debt of perhaps $100,000).

Take this graph for instance:

(source)

Now compare it to this one:

(source)

Or this, slightly more recent one, including the latest recession:

National debt as percentage of GDP

(source)

And a final example: looking at the relative safety of air travel and road travel and the probability of dying in either a road accident or a plane accident, you can also find divergent data depending on how you divide: number of casualties per trip, per miles traveled, per hours traveled etc.

More posts in this series.

Why Do Countries Become/Remain Democracies? Or Don’t? (6)

Vaclav Havel addressing the crowds during the Velvet Revolution in former Czechoslovakia

(source)

Democracy is a human right. If we want to promote universal respect for this right, we have to know how societies have achieved the transition from authoritarian forms of government to more democratic ones, and how democracies have avoided the opposite transition. Once we know this, we can promote the future emergence of democracies, and we can counteract the breakdown of existing ones.

Unfortunately, this is a very murky area of political science. The only thing that’s clear is that there is no silver bullet. There isn’t one thing we can do to transform societies once and for all into democracies. Things aren’t easy or simple. A huge number of factors have been identified as causes of or obstacles to democratic transitions, and existing democracies need constant nurturing and protection. A few of the factors that have been named as either promoting or inhibiting democracy are:

• economic growth or GDP per capita
• protestant culture versus catholic culture (a catholic culture is believed to be more hierarchical)
• levels of education and literacy
• income or wealth inequality (in very unequal societies, the wealthy have a lot to lose with democracy)
• levels of employment in agriculture versus industry (industrial societies are believed to more more urban and less attached to traditional and authoritarian social relationships)
• the presence/absence of neighboring democracies
• export diversity (countries with one major export product such as oil tend to be “resource cursed“)
• is a country a former U.K. colony or not? (former U.K. colonies are believed to be more sympathetic to democracy given their British colonial heritage)
• is there a large middle class or not?
• etc.

Statistical analysis to pinpoint which ones of these many variables really determine democracy – and which ones are merely guesses – has yielded contradictory results, not surprisingly given the low numbers of observations (societies or countries don’t change their political systems very often) and the relative lack of long time series (most classifications of regime types haven’t started earlier than a couple of decades ago). One interesting analysis is here.

So don’t expect me to have an opinion here. What I wanted to focus on in this post is the first in the list. There are two radically opposing views on the effect of economic development on democracy. One view, which I’ve defended here, is called modernization theory. Basically, the idea is that as countries develop economically, people will switch to other, higher needs, such as self-government, self-control, and political activity in general (see Maslow’s Scale, for instance). Poverty, on the contrary, forces people to focus on survival and makes democracy seem like a luxury.

However, the opposite view is also persuasive. Countries that do well economically are less likely to become democratic because the population is quite pleased with how things are going and will not revolt. The authoritarian rulers can claim that it’s thanks to them that things are going well. It’s not unlikely that economic collapse rather than success causes authoritarian regimes to break down.

So even if you isolate one of dozens of possible factors causing regime transition, things aren’t very clear. Should we starve dictatorships, or help them develop economically? As a result of this lack of clarity, it’s very difficult to frame foreign policy in such a way that it favors the development of democracies around the world. This may go some way to explain the traditional lack of ambition in diplomatic circles.

The Causes of Poverty (19): Does Better Healthcare Lead to More Poverty?

(source)

This may look like a stupid – or, more kindly, counterintuitive – question. The answer is obviously “no”. At least when we focus on the level of the individual, better healthcare seems like the best way out of poverty rather than a cause of more poverty. With better health comes better education, better and more productive work, and hence less poverty. Even a society as a whole seems better off if less of its members are unhealthy. Overall productivity and wealth increase when there is less disease. Healthy people produce more, innovate more and contribute in other ways to social wealth. (See this and this post for more on the influence of health - good and bad – on wealth and income).

However, many people believe – wrongly in my view – that the question should be answered in the affirmative, especially when the topic is development aid. When a country drastically improves its healthcare system – thanks to development aid for instance – life expectancy rates will go up and child mortality rates will go down. This results in population growth which often outpaces GDP growth (for example because scarce development resources have been targeted at healthcare rather than GDP). GDP per capita will therefore decrease, which means increasing poverty levels and perhaps even famine. (See here for more on such and other worries of Malthusians).

This type of reasoning is sometimes used to justify limits on development aid in the field of healthcare. However, it’s plainly wrong. Better healthcare doesn’t lead to high population growth, and this non-existing population growth therefore cannot result in more poverty.

Now, why doesn’t better healthcare lead to population growth? With just a few exceptions, it’s the poor countries of the world that have high fertility rates, and when countries become richer, these rates drop dramatically. (See this post). Poverty leads to high fertility rates for a number of reasons (see also here), but the most important one is that people tend to have more children to offset the risk of high infant mortality rates that are typical for poor countries. See these graphs:

(source)

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This is corrobated by the folllowing graph, showing that countries with high infant mortality rates also have high population growth (contrary to intuition):

(source)

Some other reasons why high fertility rates are correlated with poverty:

• More developed countries move away from agriculture and towards urban and industrialized economies, reducing the need for children as farmworkers.
• For the same reason, women become more active in the economy, increasing the cost (in money and time) of raising children.
• Also for the same reason, contraceptives and family planning become more common.

In this case, it seems that our initial intuitions are correct.

Human Rights Facts (27): Democratization and Economic Growth, Why Democracy is Good for the Economy

This paper, by Elias Papaioannou and Gregorios Siourounis, examines the effect of democratic transitions on economic growth. Since democracy and the absence of poverty are both human rights issues, and since poverty usually correlates with insufficient economic growth, it is encouraging to see that countries which have experienced a transition to democracy experience higher average growth after the transition.

The graph below, from the paper, plots the evolution of real per capita GDP growth in the years surrounding a successful democratization (the year of the democratization being T), compared to the global growth rates in each year. The average growth is the purple dashed line. The graph also shows that the transition itself may imply economic costs, but in the longer term democracy pays off.

Now, democracy is of course desirable for many reasons, and most of these are unrelated to the economy. But the fact that democracy produces economic gains will make it even more attractive.

Why does this happen? Why is democracy good for economic growth? For many reasons, some of which are the rule of law and respect for human rights (property rights, freedom of information etc.). More here.

Why Do Countries Become/Remain Democracies? Or Don’t? (5): The Aid Curse, or the Negative Effect of International Development Aid on Democracy

(source, INDONESIA Meulaboh, Aceh, Northern Sumatra: Indonesian army (TNI) soldiers unload aid from an American helicopter following the tsunami which struck South Asia in 2004, Photographer © Patrick Brown/Panos Pictures)

Via Bill Easterly’s blog, I discovered this paper on the so-called “aid curse“: just as dependence on natural resources has a negative effect on the quality of a country’s governance and democracy (a phenomenon called the resource curse), so has international development aid (or official development aid, ODA), especially in countries which depend heavily on aid (and in which aid represents a large percentage of GDP).

This is surprising, because one of the aims of international development aid is to bolster the quality of governance, directly through aid targeted at this objective, or indirectly on the assumption that better education, health care etc. will ultimately lead to better governance.

It seems now that there is a correlation (and perhaps even a causal link) between high levels of aid and low levels of democracy. The explanation is that foreign aid , like the revenue of natural resources, provides an opportunity for governments and leaders to appropriate funds illegitimately. And, because they benefit from aid, they will try to exclude other groups from power. This obviously destroys democratic institutions or makes it more difficult to establish them.

Foreign aid also reduces the need for a system of taxation. And without such a system, it’s a lot more difficult to construct a well-functioning government, and it’s less likely that forces for representation take root (historically, the principle of “no taxation without representation” has promoted democracy). When a government doesn’t depend on taxes for its revenues, then it will have less incentives to seek accountability.

These graphs from the paper show how the levels of democracy in countries decrease while the levels of aid (as official development aid – ODA - over GDP) increase:

None of this proves that we should give less aid to developing countries. Probably the opposite is true. What it proves is that aid is more than just sending money. Donors should check what happens to their money, should target the money, and should bypass the “sticky fingers” in government as much as possible. To some extent, donors should also make aid conditional on democratic reform because this reform is the way to avoid aid inefficiency. However, when doing so, they should be careful not to put the cart before the horse: one of the goals of aid is precisely democratization.

Human Rights Facts (25): There’s No Reason For Anyone to Be Poor

The two graphs below, from Jeffrey Sachs’ “The End of Poverty”, show population growth and average per capita income growth over the centuries. Whereas both population and income stayed relatively stable during thousands of years, they took off during the last 2 or 3 centuries. (See this post for an explanation of the sudden an rapid rise of economic growth).

The interesting point is that per capita income grew much faster than the population. Population numbers in 2000 were about 6 times higher than in 1800; average per capita income was 9 times higher! Of course, the word to focus on is “average”. Income isn’t distributed equally, and there are huge and even “obscene” difference between income in the West and elsewhere. But if average incomes rise faster than the population numbers, everyone can – potentially – be richer than before, or less poor. Poverty is then no longer a problem of insufficient resources or scarcity, but a problem of distribution and justice.

(source)

It would also be interesting to hear the reaction of Malthusians: if the world’s problems, such as poverty and war, are caused by overpopulation and the pressure of population growth on the economy, then how do they explain income growth rising faster than the population? I do admit that population pressures on a very local level can cause temporary problems of scarcity, but globally they don’t seem to matter much.

Human Rights Maps (43): Dependence on Remittances

Remittances are money sent back home by migrant workers. Sometimes these amounts are more important than foreign aid and some developing countries are heavily dependent on them in the sense that remittances represent a large share of their national income or GDP.

(source)

More on remittances here.

The Causes of Poverty (17): Overpopulation

(source)

I’ve written about the population problem before on this blog (see here). It’s quite common to hear the claim that many human rights violations, such as wars, genocides, famines, poverty and unemployment, are caused by the fact that there are too many people in the world.

This simplistic explanation of the world’s problems is popular since at least the 18th century when Thomas Malthus published his works.

Thomas Malthus

According to Malthus, food and other resources are limited, and a population growth that exceeds a certain pace will inevitably hit a resource ceiling, and will result in decreasing standards of living, poverty, conflict over scarce resources, famine etc. (This is called a Malthusian catastrophe). Ultimately, population growth will halt because if this, and population levels will return to the “normal” equilibrium possible within the limits offered by nature (the so-called “carrying capacity”).

And if these disasters aren’t enough, active population control is necessary, including measures such as the abolition of social security (social security doesn’t incite people to birth control, see here) and even more extreme policies (many of which proposed by Malthus’ more enthusiastic followers rather than by himself).

(source)

Malthus agreed that humanity was capable of increasing its productivity, but believed that population growth would necessarily outpace this increase. The facts are, however, different. Standards of living have risen enormously over the last centuries, notwithstanding large increases in population numbers. GDP growth has even been faster than population growth, giving, on average, every human being more resources than ever before in history. Of course, these resources aren’t equally distributed, but that’s a problem of justice, not of population.

(source)

Blaming everything on overpopulation is simplistic. All major problems in life are multi-causal, and population isn’t a real or major cause in many cases (bad governance is often a more important cause). And when it is, population control isn’t the answer. Technology, productivity, consumer adaptation, better governance etc. are more promising solutions.

And three more cartoons (it’s incredible how popular this topic is):

(image source, image source, image source)

Children’s Rights (6): Index of Child Wellbeing

(source)

Save the Children has created a Child Development Index (CDI), a simple but convincing combination of three basic indicators measuring child welfare and wellbeing:

• Mortality rates for children under 5
• Rates of children under 5 who are underweight
• And the rates of children enrolled or not enrolled in primary school.

This index goes back in time so it provides an indication of which countries are doing better or worse. Globally, the trend is positive. Unsurprisingly, Africa isn’t doing very well, although some African countries are progressing. The entire data set is here (excel-file).

Interestingly, there are countries, such as India, with high rates of GDP growth but relatively low levels of child wellbeing. This means that specific policies and measures aimed at child wellbeing are necessary (investment in education and health etc.). One cannot just rely on growth and hope that all else follows.

(source)

Of course, there are other and more complex indicators of child wellbeing. Unicef has one. And there’s this one from the Annie E. Casey Foundation regarding the situation in the different states of the U.S. (needless to say, the U.S. isn’t one of the worst countries for child wellbeing):

(source)

Child mortality, child undernutrition and non-attendance at school are gross violations of children’s basic human rights, and are a scandalous waste of human potential. Children will suffer their entire lives from the rights violations they suffer early on.

More on children’s rights.

The Causes of Poverty (7c): Globalization

Dani Rodrik

(source)

Does globalization erode social safety nets? Economic theory and intuition suggest that as economies become more globalized, the ability of governments to undertake redistributive policies and to engage in social spending erodes. After all, a large part of the tax base – corporations, financial intermediaries, and skilled workers in particular – become internationally mobile and can evade taxes needed to finance those public expenditures.

… the lack of an obvious decline in the overall tax take in major advanced economies, has led many observers to think that the hypothesized decline of the welfare state has not in fact taken place. [However], as technological progress and multilateral trade liberalization have made borders less of a barrier to economic activity, the scope of redistribution policies has become smaller. Dani Rodrik (source)

Some of the evidence in support of this statement is in the chart below (comparing the ratio of foreign trade to GDP as a measure of globalization, with the amount of public social spending):

(source)

This doesn’t mean that globalization necessarily leads to more poverty. Redistribution on the basis of taxation is only one way to fight poverty (see here and here). In this post I discussed some of the ways in which more free trade and hence more globalization can reduce poverty.

Human Rights Maps (1): HIV, Nuclear Weapons, Wealth and Immigrants

From the Telegraph newspaper, the map of the world modified according to the number of immigrants living in a country, the projected wealth of a country in 2015, the number of people with HIV, and the number of nuclear weapons.

Human Rights Facts (16): The Yellow Peril

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The Yellow Peril (or Yellow Danger) refers to the skin color of the Chinese, and the belief that the Chinese nation is a threat to the West. The concept of Yellow Peril, as it first surfaced by the end of the 19th century (and also during the Second World War when it included Japan), was initially racist and anti-immigration. Today it is no longer explicitly racist. The threat is not racial, nor is it linked to population theories or immigration fears. The Yellow Peril is now an economic one. China is a huge industrial complex, producing cheap goods that force western goods out of the shops, and force western workers, with their relatively high wages, out of their jobs.

Many believe that China, the new superpower, will not only undo the economic supremacy of the West and erode its wealth, but also threaten its political culture. If a non-democratic country that doesn’t seem to believe in human rights, becomes the world’s superpower, then democracy and rights will be jeopardized.

However, the economy is not a zero-sum game. It’s not because a country progresses that others must lose proportionally. The growth of the Chinese economy also creates a giant community of consumers able to buy more western goods. In addition, when China grows, it may become more liberal. There is some evidence that countries democratize at roughly the same speed as they develop economically.

Furthermore, Chinese growth is not destined to last. China faces many problems that may one day slow down its development or even bring it to a halt. Although China has been able to lift hundreds of millions of its citizens out of poverty, rural and urban inequality has grown at alarming rates, stirring unrest amongst the many who remain poor.

With massive layoffs in the rust-belt provinces, arbitrary local levies on farmers, pervasive official corruption, and toxic industrial dumping, many in the countryside are highly agitated. Chinese police records indicate a sevenfold increase in the number of incidents of social unrest in the last decade. Pranab Bardhan (source)

Ethnic problems in the west of China may develop into violence.

For many centuries, the homogenizing tradition of Chinese high culture, language, and bureaucracy has not given much scope to pluralism and diversity, and a centralizing, authoritarian Communist Party has carried on with this tradition. There is a certain pre-occupation with order and stability in China (not just in the Party), a tendency to over-react to difficult situations, and a quickness to brand dissenting movements and local autonomy efforts as seditious, and it is in this context that one sees dark clouds on the horizon for China’s polity and therefore the economy. Pranab Bardhan (source)

There are also some economic worries about China’s growth.

China’s share in the worldwide manufacturing value-added is below 9 percent, less than half that of Japan or the United States. Domestic private enterprise in China, while active and growing, is relatively weak, and Chinese banks are burdened with “bad” loans. Pranab Bardhan (source)

Projections of China’s GDP show that it’s not likely to take over the West as the economic superpower in the decades to come:

(source)

China’s authoritarian form of government is likely to impede its future economic growth:

China’s authoritarian system of government will likely be a major economic liability in the long run. Pranab Bardhan (source)

Another element of the Yellow Peril theory are the worries about China’s military development (see this post). However, here as well the data tell a different story:

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The Environment and Human Rights (1): The Environmental Kuznets Curve

Simon Smith Kuznets

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It’s not uncommon to hear people worry about the economic development of the developing world: what if these billions of people start to drive cars, use airco, eat meat etc. to the same extent as the people in the West? Would that not spell the end of the earth? Isn’t there a contradiction between the fight against poverty and care for the environment? Are we forced to make some tragic choices? Leave people in poverty and save the earth, or save people and destroy the earth? Or radically change the Western life style?

The concept of sustainable development, development and economic growth which takes the environment into account, doesn’t seem to calm the fears. And then people start to discuss overpopulation and all the nastiness that comes with it, or they turn to cultural pessimism about the excesses of the Western consumer society.

A more hopeful sign comes from economics, and in particular the Environmental Kuznets Curve. This curve shows a U-shaped relationship between per capita income (GDP) and the quality of the environment. Measures of the quality of the environment do indeed fall in the initial stages of economic growth, but this trend turns around at about $5.000 per capita GDP, with many measures of environmental damage showing improvement from $8.000 onwards (source).

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Income Inequality (2): Inequality Between Rich and Poor Countries

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The following graph, from the Special Studies series of the World Trade Organization, shows the differences in annual per capita GDP growth between rich and poor countries. The vertical axis shows the average annual per capita growth between 1960 and 1990, and the horizontal axis the per capita GDP in 1960.

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Had the per capita incomes of the poorer countries (left side of the graph) been converging with that of the richer ones (right side), or had, in other words, the income inequality between poor and rich countries been decreasing, then the countries would have lined up from left to right along a downward-sloping line with the poorest country growing the fastest. This is not the case.

If anything, richer countries have been growing faster on average than poorer countries, thereby increasing global income disparity. (source)

Some poor countries – or countries that were poor in 1960 – have done much better than others. These are the ones in the upper left side of the graph. The ones in the left bottom half have seen low annual growth figures. Some countries, mainly in East Asia, have done well, and continue to do so.

More on inequality. And more on poverty.

Human Rights Facts (15): Putinism, or Putin’s Model of Successful Authoritarianism

Putin

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In a way similar to the leadership in China, Putin claims that authoritarianism and a state that rolls back democracy and freedom, are necessary for economic prosperity, growth, order and stability, and that the current economic upturn in Russia happened thanks to his autocratic reforms. (The situation in China is of course different in many respects, e.g. the role of Confucianism).

It is indeed a fact that the decrease of political and other types of freedom in Russia during the rule of Putin in the first decade of the 21st century, has coincided with strong economic growth:

(source: McFaul/Stoner-Weiss in Foreign Affairs)

Like China, Russia is an exception because there is a correlation between economic growth (especially long term and stable growth) and democracy (see also some evidence here).

The question, however, is whether the turn towards authoritarianism has in fact contributed to the increase in growth, and whether it was necessary for this growth to take place. The answer is no. Growth would most likely have been higher without Putin’s rollback of freedom in Russia. Before I substantiate this claim, I’ll first give a few facts about Putin’s attacks on freedom.

A list of Putin’s attacks on freedom in Russia

• Independent media outlets, including TV, radio and printed media have been muzzled by Putin in various ways: nationalization, indirect Kremlin control, control by Kremlin-friendly oligarchs etc. As a result, media coverage of Russian politics is now overwhelmingly one-sided and in favor of Putin and his allies. Opposition figures and parties are either ignored or heavily criticized in almost all Russian media.
• Russia is now the 3rd most dangerous place in then world to be a journalist (only Iraq and Colombia are worse).
• The autonomy of regional governments has been reduced. Governors are no longer elected but appointed by the Kremlin.
• Both Houses of the Russian Parliament have been emasculated. The Upper House has seen elected representatives being replaced by appointed ones, and the Duma is dominated by Putin’s party (United Russia) or straw men put in place by the Kremlin to create the illusion of opposition. The one-sided media coverage has contributed to this emasculation, but independent and real opposition parties have often been hampered in several other ways as well (restrictions on public assembly rights, spurious law suits etc.), or have simply been disqualified from participating in elections, often on shaky grounds.
• Local and foreign NGOs are either forbidden or heavily restricted.

A few facts about economic growth in Russia

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The immediate post-Soviet period in Russia saw the emergence and development (albeit slow and difficult development) of democracy coinciding with economic decline. However, this decline wasn’t caused by the development of democracy or the disappearance of communism. It started long before the 1990s and was a major cause of the collapse of communism and the Soviet Union.

By the end of the 1990s, before Putin’s take-over and long before his authoritarianism took full sway, the situation was already turning around (growth started in 1999) and many positive measures were taken – and not reversed by Putin later on. These measures benefited Putin enormously. But what benefited Putin most was the increase in oil and energy prices. It is not clear what proportion of GDP growth in Russia is caused by energy prices, but all economists agree that it is a substantial proportion.

Putin’s claim that Russia is economically prosperous because of his authoritarian rule can also be countered by comparing Russia’s economic performance with that of other postcommunist states, states which do not have the huge energy resources Russia has:

(source: McFaul/Stoner-Weiss in Foreign Affairs)

We see from this graph that Russia is in fact doing worse, notwithstanding it’s resource advantage. Other postcommunist countries, most of which have gone much further along the road to democracy, have done better with much less. So one can assume that Russia would have done better as well had it not rolled back democracy.

A few facts about the performance of the Russian government

Putin not only claims that his style of government has promoted economic prosperity. He also claims credit for stability and order in Russia today, and for the state regaining its strength after the breakdown of the 1990s. This, unfortunately, is also untrue. Some facts:

• The worst terrorist attacks in Russia took place under Putin’s rule.
• The murder rate in Russia has increased in the first decade of the 21st century.
• The population of Russia has decreased, mainly because of increasing mortality rates, a weak health system, increasing alcohol abuse and an HIV epidemic that is the worst outside Africa. Life expectancy in the “bad years” in the 1990s actually rose, whereas now it’s falling.
• Russia’s ranking in different international scoring systems has dropped (corruption and transparency, freedom, competitiveness etc.).

In some respects, there has been progress (it would have been very surprising to see a lack of progress in all domains of life): infrastructure has improved, spending on education has increased, unemployment and poverty rates have fallen, foreign debt and budget deficits have been eradicated … But overall, one cannot claim that Putin’s Russia provides better public goods and services to its citizens that Yeltsin’s.

(This post does not enter into the discussion about Russia’s recent foreign policy adventures, which are undoubtedly caused, at least in part, by Putin’s authoritarianism).

More on freedom and growth.

The Causes of Human Rights Violations (7): Corruption

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Forms of corruption

Corruption can take on many forms:

• From limited competition when awarding government contracts to the setting up of wasteful mega-projects designed specifically for the corruption opportunities these can yield.
• From small bribes by ordinary citizens “in order to get things done” to larger payments as a means to escape criminal justice.
• From the nepotism of a father trying to get his children in a good school to outright kleptocracy (“rule by thieves”) infecting an entire government administration and political class.
• etc.

However, it always means the use of governmental powers by government officials for illegitimate private gain.

Corruption in itself is not a human rights violation, and there is no right to live in a country that is not corrupt or that suffers no corruption. However, corruption does have consequences for human rights:

• It harms the economy and can create or exacerbate poverty.
• It destroys democratic government, even if it doesn’t take the very specific form of electoral corruption (hence it violates people’s political rights)
• Corruption in the judiciary compromises the rule of law and the effective enforcement of human rights law.
• etc.

Consequences of corruption

Corruption is anti-democratic :

• Decisions do not reflect the will of the people but the private will of individuals or corporations who bribe elected or unelected government officials. Government policies serve individual interests rather than the public interest or the interest of the public.
• Persons engaged in corruption are likely to inhibit the democratic systems that guarantee free flows of information. If these systems can be distorted, it becomes much more difficult to expose corruption, to hold officials accountable and to force them to justify their actions. Such actions can have disastrous consequence for freedom of speech in general.
• Corruption also undermines the legitimacy of government and can lead to revolt and the outright destruction of democracy.

Corruption is economically unsound and unfair :

• In a corrupt economy, resources tend to flow to those already in a position of power, while those at the bottom of the economy have to spend a part of their scarce resources on bribes.
• Corrupt officials lay their hands on a part of the proceeds of natural resources and other sources of prosperity that should belong equally to the whole population.
• Corrupt governments will be more inclined to set up grandiose but foolish and wasteful mega-projects, because this gives them more opportunities for corruption. They thereby divert public investment from sectors that need it more or that yield more benefits for ordinary citizens.
• Corruption is a tax on investment, which hampers investment and economic growth. Especially the often all-important foreign investments (the import of technology and knowledge) diminish as corruption increases.
• Corruption increases the cost of business.
• It distorts the level playing field, giving an unfair advantage to firms with connections. These firms are perhaps not the most efficient but are propped up by corruption. As a result, the overall economy is not the most efficient.
• It discourages people to start or expand businesses because potential profits are taken away.

The graph below shows the correlation between low levels of GDP and high levels of corruption (Corruption Perception Index, or CPI, of Transparency International):

Here’s another study pointing to the same conclusions:

(source)

In 2004, the global cost of corruption was estimated at $1 trillion a year.

Causes of corruption

• Lack of transparency and free flows of information
• Lack of a free press
• Lack of government accountability through a system of democratic elections
• Inability of civil society or NGO’s to monitor the government
• Weak rule of law
• Incentives, such as poverty or low wages
• Unclear rules of behavior for government officials
• Resource curse
• “Old boy networks”
• etc.

Pervasiveness of corruption

There is corruption everywhere in the world, but some countries perform better than others. This is the country ranking of the CPI (Corruption Perception Index of Transparency International) in 2007:

The CPI measures the degree to which corruption is perceived to exist among public officials and politicians. High numbers indicate relatively less corruption, whereas lower numbers indicate relatively more corruption.

Solutions

• Clear rules on what is admissible behavior rather than broad or poorly defined powers
• Rule of law, law enforcement
• Eliminate incentives (proper wages)
• Employee training, competence
• Free press
• Democratic accountability

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The Causes of Poverty (10): Lack of Economic Growth

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Economic growth is the increase in value of the goods and services produced by an economy or a country. It is the percent rate of increase from one year to the next in gross domestic product or GDP of an economy or a country. In order to correct for the population sizes of different economies and countries, GPD per capita rather than national or total GPD is used.

GDP per capita of an economy is often used as an indicator of the average standard of living of individuals in that country, and economic growth is therefore often seen as indicating an increase in the average standard of living. “Average” means that GDP growth is not the same as poverty reduction. GDP growth per capita does not provide information on the distribution of income in a country/economy. A rise in the average standard of living can be accompanied with greater inequality and poverty for some or even many.

Therefore separate measurements of distribution or inequality and poverty are necessary.

However, there is a strong correlation between these measurements. As an empirical matter, economic growth (annual growth in GDP per capita) and poverty reduction go hand in hand.

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Since growth and poverty reduction go hand in hand, it is of the utmost importance that those who care about poverty reduction do everything possible to promote economic growth. Even though our knowledge about the kinds of policies that stimulate growth is limited, we know that some things in some circumstances drive economic growth and others do not. Good institutions, good education, investments, respect for human rights and the rule of law, free markets etc. are generally considered to be good for growth.

This doesn’t mean that economic growth is all that matters, that poverty reduction follows automatically from growth or that only policies that are targeted on growth can generate poverty reduction. This kind of “invisible hand” theory, or “trickle down” theory has been discredited. Other policies such as redistribution are also necessary for poverty reduction, but it is precisely economic growth that delivers the means for redistribution. Conversely, policies specifically aimed at poverty reduction can benefit growth. It’s interesting to note that poverty reduction is one of the drivers of growth. So the causation goes both ways, as is often the case in correlations.

Policies that are effective in increasing the incomes of the poor–such as investments in primary education, rural infrastructure, health, and nutrition–are also policies that enhance the productive capacity of the economy in aggregate. (source)

John Rawls

So specific policy measures aimed at improving the lives of the poor are necessary. An exclusive focus on fostering growth is wrong. One could even say that the focus on the poor is the priority, and that measures aimed at growth are only a means to help the poor, and only one means among many. This has become known as the difference principle of John Rawls: social and economic inequalities are to be arranged so that they are to be of the greatest benefit to the least-advantaged members of society.

“From this perspective, it can be entirely rational and proper for a government to select, among two competing growth strategies, the one that has greater potential payoff for the poor even if the aggregate growth impact is less assured. (source)

There is a correlation between poverty reduction and economic growth, not because economic growth automatically and single-handedly reduces poverty, but because policy makers can use growth to reduce poverty and because these efforts in turn promote growth. Growth is good for the poor, but growth without poverty measures will be unequal growth, growth which doesn’t benefit everyone equally. Growth can indeed lead to lesser gains, no gains at all or even absolute losses for some people at the bottom of the income distribution scale, for example those people who were previously working in factories that were closed because of the industrial reforms necessary for overall growth (such as liberalization).

None of the above is meant as a denial of the possible negative aspects of economic growth: the costs to the environment aren’t factored in, disasters create economic growth because of the reconstruction etc.

More on poverty.

Why Do Countries Become/Remain Democracies? Or Don’t? (3): The Resource Curse

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Why do countries with lots of natural resources tend to do worse than countries with less resource wealth, both in terms of economic growth and in political, social and human rights terms? We see that countries which own lots of natural resources such as diamonds, oil or other valuables that are found in the ground, are often relatively poor, badly governed, violent and suffering from gross violations of human rights.

This figure shows the correlation between resource exports as a share of GDP for a number of countries and their GDP growth:

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Causes of the resource curse

There are many possible causes of this curse (also called “the paradox of plenty”):

1. Lack of economic diversification

Other economic sectors tend to get neglected by the government because there is a guaranteed income from the natural resources. These sectors therefore cannot develop and cannot become an alternative when the resources are taking hits. The fluctuations of the international prices of the resources can cause extreme highs and lows in national economic growth. This is bad in itself, but also makes it difficult for the government to do long term planning, since the level of revenues cannot be predicted. Dependence on one economic sector means vulnerability.

Another disadvantage of concentrating the economy on one resource sector, is that these sector often provide few jobs, especially for local people. The oil industry for example needs highly specialized workers, who are mostly foreigners. On top of that, these sectors do not require many forward or backward connections in the economy (such as suppliers, local customers, refiners etc.), which again doesn’t help the local job creation.

Even if the government tries to diversify the economy, it may fail to do so because the resource sector is more profitable for local individual economic agents.

Resource dependent countries also see their best talents going to the resource industry which pays better wages than the rest of the economy or the government sector. As a result, the latter are unable to perform adequately. See point 4 below.

2. Corruption

Corruption tends to flourish when governments own almost the entire economy and have their hands on the natural resources. More on corruption in a future post.

3. Social division

Abundance of natural resources can produce or prolong violent conflicts within societies as different groups try to control (parts of) the resources. Separatist groups may emerge, trying to control the part of the territory most rich in resources. This is often aggrevated by existing social or cultural division. Division may also appear between parts of the government (e.g. local government vs central government, or between different parts of the central administration).

The resources therefore may cause divisions and conflict, and thereby cause deficiencies in government, economic turmoil, and social unrest. But the resources may also prolong conflicts because groups which manage to take control of (parts of) the resources may use these to arm themselves or otherwise gain influence and power.

4. Government’s unaccoutability and inefficiency

Countries which do not depend on natural resources are often more efficient in taxing their citizens, because they do not have funds which are quasi-automatically generated by resources. As a result, they are forced to develop the government machinery in an efficient way, hence a reduced risk of government break-down. The citizens in return, as they are taxed, will demand accountability, efficient spending etc.

Conversely, the political leaders in resource-dependent countries don’t have to care about their citizens. They create support by allocating money, generated by the resources, to favored interest parties, and thereby increasing the level of corruption. And if citizens object, they have the material means to suppress protest. They don’t appreciate an effective government administration as this carries the risk of control, oversight and other anti-corruption measures (see point 2). So they have an interest in bad government.

It is obvious that bad government, rights violations and economic stagnation have many causes. The resource curse is only one. There are countries which are blessed with resources and which do well at the same time. And there are mismanaged countries that don’t have any resources. As in all correlations, the causation may go in the other way: bad government can create dependence on exports of natural resources.

“When a country’s chaos and economic policies scare off foreign investors and send local entrepreneurs abroad to look for better opportunities, the economy becomes skewed. Factories may close and businesses may flee, but petroleum and precious metals remain for the taking. Resource extraction becomes ‘the default sector’ that still functions after other industries have come to a halt.” (source)

What to do about it?

Leif Wenar has argued that a strict application of property rights could help reduce or correct the resource curse. When dictators or insurgents sell off a country’s resources to foreigners or multi-national companies, while terrorizing the people into submission, they are in fact selling goods that they stole from those people. They have no right to sell what they don’t own. The natural resources of a country belong equally to all the people of that country. Article 1 of the International Covenant on Civil and Political Rights states:

All peoples may, for their own ends, freely dispose of their natural wealth and resources.

And

“the people, whose resources are being sold off, become not the beneficiaries of this wealth but the victim of those who use their own wealth to repress them”. Leif Wenar (source)

One could take legal action in western jurisdictions to try to enforce the property rights of the citizens of resource cursed countries and to charge multinational corporations with the crime of receiving stolen goods.

Western countries, investors and consumers could also boycott companies that invest in resource-cursed countries, or try to pressure campaign them to get out of these countries, or they could stop to invest in these companies.

When people finally get a grip on their resources, they open the path to better government, a better economy and better protection for human rights. Perhaps then they will not have to die trying to recapture a tiny part of the resources that are their lawful property, as happened in many cases in Nigeria, for example, where people often try to tap some oil from the pipelines channeling their property to the west. In doing so, they risk their lives. As a consequence of their actions, the pipelines can explode:

The Causes of Poverty (8): Lack of Economic Freedom

Kofi Annan

Open markets offer the only realistic hope of pulling billions of people in developing countries out of abject poverty, while sustaining prosperity in the industrialized world. Kofi Annan

Bob Geldof

Africa must be allowed to trade itself out of poverty. Bob Geldof

Human rights do not include a right to have economic freedom or to have a free market. But one can argue that economic freedom is a necessary consequence of human rights and that the absence of economic freedom is an indication of a country’s disrespect for human rights. The right to do with your property as you like, to move freely and to associate freely are all human rights and are prerequisites and causes of economic freedom.

There’s also a strong case in favor of the theory that economic freedom promotes prosperity and hence also respect for economic rights.

Economic freedom consists of personal choice, the ability to make voluntary transactions, the freedom to compete, and security of privately owned property. This is the definition of the Fraser Institute. This institute tries to measure the degree to which the policies and institutions of countries support economic freedom. Their index measures:

• size of government
• legal structure and security of property rights
• access to sound money
• freedom to trade internationally and
• regulation of credit, labor and business.

They conclude that economic freedom has grown considerably in recent decades and that economic freedom is correlated with income. This is their most recent country ranking:

The complete list of countries is here. The following chart shows the correlation between economic freedom and prosperity measured in terms of GDP per capita. Although there are many elements promoting or discouraging prosperity, it is necessary to stress the importance of economic freedom in the struggle against poverty.

I don’t want to suggest that economic freedom should be absolute. There has to be regulation of markets (for health reasons, safety reasons, reasons of fair competition etc.) as well as political corrections of the effects of markets on issues of social justice, poverty and equality.

Moreover, when discussing economic freedom we shouldn’t only think of the internal structure of states but also their interaction: import tariffs, quota, subsidies and other protectionist measures also inhibit free trade, often at the expense of poor traders and farmers in developing countries.

I’ve written about economic freedom before.

Human Rights Facts (9): Military Spending

This is a follow-up of a previous post on the evolution of war in the world. Whereas the number of wars and their intensity seem to decrease over the last decades, the same cannot be said of the arms trade and the defense budgets. This makes it difficult to hope that the statistics on warfare will continue in the same positive trend for the future. The arms industry, the arms trade and defense budgets have traditionally been a strong driving force of violent conflict.

This post focuses on defense budgets and military spending. (The arms trade will be the topic of another post). Although one should not naively condemn all military spending – to use Bush-speak: there are many “evil” people in the world and we should be able to defend ourselves and our values – it is also the case that arms and weapons are a major factor in war dynamics. Their stocks tend to build up as enemies engage in “arms races”. And such races often cause war. War of course is a massive collection of human rights violations. Arms and weapons are also used in non-war situations, such as police brutality, private use, criminal use etc. where they also lead to rights violations. Arms and weapons that are originally part of the military often wind up in other sectors of society.

According to SIPRI, the Stockholm International Peace Research Institute, the governments of the world spent $1.4 billion on arms and the military in 2007, an increase of almost 50% compared to a decade ago. This is 2.5% of world gross domestic product (GDP) and $202 for each person in the world. (Compare: only 0.3% of world GDP is spent on development aid).

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The champion of military spending is the U.S., which accounted for 45 % world total in 2007, followed by the U.K., China, France and Japan, with 4–5 % each. The U.S., however, did not substantially increase its spending over the last decades (the Iraq and Afghanistan wars have led to an increase but not a lot beyond historic levels). In fact, measured as a share of its GDP, its spending decreased somewhat (it’s now about 5% of its GDP, still double of world average):

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Western Europe has seen the lowest increase in spending, but the levels of spending vary a lot between countries:

China is a particular worry given its substantial increases in spending and the lack of transparency in its budgets:

This is a ranking of the biggest spenders:

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The U.S., Russia, China, the U.K., France, India, Pakistan, North-Korea and Israel together have more than 25.000 nuclear arms. Here’s a post on the international arms trade.

Human Rights Facts (7): Human Development Index

I’ve written about the Human Development Index before on this blog, but only casually. This post is meant to give a more in-depth explanation of the concept.

The word “development” as it is used in terms such as “the developed and developing (or underdeveloped) world”, “international development aid” etc. refers to an evolution or process towards greater quality of life for humans, both physically and spiritually. It encompasses economic growth, health care, education, equality, disaster preparedness, infrastructure, human rights, governance, environment etc.

The process is usually understood as an international one, whereby countries and communities are assisted by others and by the international community as represented in international institutions such as the UN, the World Bank, the IMF etc. Non-governmental organizations (NGO’s) also play an important role.

In 2000, the United Nations declared eight “Millennium Development Goals” (MDG) to be achieved by 2015 or 2020 according to measurable targets and defined indicators:

The measurement of development and of the progress of development is a difficult and complex problem, given the many aspects of development as cited above. Some aspects of the measurement include:

• National GDP
• Literacy rates
• Life expectancy
• Infant mortality rates
• Gini coefficient
• HIV infection rates
• Number of doctors per capita
• Freedom scores
• Governance scores
• Number of PhD’s
• Number of newspapers or other publications
• etc.

While each component of development is relatively easy to measure (given adequate national statistics), their aggregation and relative weighting is complex and controversial. Hence it is difficult to measure a country’s overall development rate. A simplified and widely accepted overall measurement is the “Human Development Index” (HDI). The HDI combines measures of life expectancy, literacy, educational attainment, and GDP per capita for countries, so only 4 of several possible development measures, which is why some have called the HDI a “crude” measurement. The index was developed in 1990 by Mahbub ul Haq, Sir Richard Jolly, Gustav Ranis and Lord Meghnad Desai.

The following 2 graphs show the HDI in 2002 and 2007:

This graph shows the different levels of progress by continent:

Human Rights Facts (6): International Private Charity

As I outlined in this post, economic rights, such as the right to be free from poverty, should not be viewed as primarily the business of states (I will not repeat the reasons here, but some of them are the benefits of solidarity which result from spontaneous mutual assistance, feelings of common humanity and belonging etc.).

The fact that our economic rights are realized in part by our responsible fellow humans, proves that human rights are not individualistic and do not only deal with the relationship between citizens and the state. The state is responsible for economic rights only if everything else fails. Only those who are helpless and who have been forgotten by private philanthropy can call on the state or other states for assistance. Development aid organized by states can be seen as the enforcement of citizens’ duties. When the state forces you to pay taxes which it will spend on development aid, it forces you to fulfill your duties arising from the economic rights of your fellow human beings. It is the duty of the state to force the people to fulfill their duties, their duty to be self-supporting if possible and their duties towards each other if necessary.

U.S. development aid, expressed as a proportion of GDP, is relatively low compared to that of other countries (see this post). But donations from individuals, private organizations and businesses are very high, dwarfing those of other rich nations. This is the result of a culture of philanthropy and charity and of a generous tax regime:

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Why Do We Need Human Rights? (7): From Democracy to Prosperity

In a previous post I commented on the beneficial influence of prosperity on democracy – democracy being one human right among many. Here are some reasons why democracy is good for prosperity. The squeaky hinge gets the oil. Only in a democratic society in which human rights are protected, can an economic injustice be exposed and can claims for its abolition be heard and implemented. People can use human rights to call on the government or the international community to fulfill its duties and to implement certain economic measures. Most governments, including democratic governments, act only when they are put under pressure. The freedom of expression, the freedom of assembly and association (associations such as pressure groups, labor unions or political parties) and the right to choose your own representatives are instruments in the hands of the economically disadvantaged. They can use their rights and the democratic procedures to influence economic and social policy. Poverty must have a voice.

It is true that without a minimum degree of prosperity, human rights and democracy lose a lot of their value. If you have to struggle to survive, then you do not have the time to form an opinion, let alone express it. “Primum vivere, deinde philosophari”; first you make sure you live, and only then can you philosophize. However, life is more than just living. In a situation of poverty, it is indeed difficult to use rights and democracy, but without rights and democracy it is much more difficult to fight poverty.

If there are no free flows of information, no accountable government that needs to justify its actions in order to be re-elected, and no free press, then you are likely to have more corruption, more embezzlement of public funds and more people who acquire an unfair advantage from the proceeds of natural resources and other sources of prosperity. The rule of law and the openness of government, which are typical of democracy, limit not only corruption but also the ineffective management or outright squandering of natural or other resources by untouchable governments.

Economic development is supported by free flows of information and freedom of movement, both typical of democracies. A free press encourages the economy because it allows entrepreneurs to make informed decisions.

Democracy also guarantees the rule of law, which means legal security and predictability. The number of investments – foreign and local – will grow when investors are certain that their contracts are guaranteed by the law and enforceable by a judge, when oppression does not cause violent revolt and when investors are relatively certain that their property will not be stolen without punishment or will not be nationalized by some new revolutionary government.

The rule of law creates a limited state and a society that is relatively free and independent of the state. This means that economic activity is also relatively independent. A certain limit on state interference in the economy is traditionally considered as beneficial for economic development. In a free civil society, everybody can be economically active. In many authoritarian states, only a handful of privileged persons can be economically active, and these persons are not always the ones most suitable for this kind of activity (for example: large landowners, members of the official “nomenclatura” etc.). A free civil society, guaranteed by the rule of law, which in turn is guaranteed by democracy (although not only by democracy), allows everybody to be creative, to cooperate and to exchange on a relatively level playing field. This increases the chances that the best man is in the best place, which in turn encourages economic development. Furthermore, by pumping in as many people as possible in the economy and by letting them move and communicate freely, the economically most efficient and profitable transactions can take place.

The link between the rule of law and prosperity is not only a theoretical one. This chart shows the actual correlation:

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Why Do Countries Become/Remain Democracies? Or Don’t? (2): From Prosperity to Democracy

Prosperity creates time and leisure, which can be used for democratic participation, public life and other uses of human rights. We often see democratic aspirations and claims of rights arising almost automatically in states that do well economically (see for example Taiwan, Korea and many South-American countries in the 1980s). People do not live on bread alone. They want something more.

Economic misfortune, on the contrary, forces people to focus on the struggle to survive and forces them to give up rights in exchange for material progress. If the expression of an opinion can cause the loss of your job and if there are not many jobs available, then the choice is simple. Certain classes of people in particular, will not have the time nor the money to participate in politics and will leave democracy to the rich. Seeing democracy degenerate into a tool for the rich, they will reject it and turn to authoritarian alternatives in despair. Unequal wealth or insufficient wealth for some classes of the population is often a characteristic of a lack of economic development and at the same time it hinders the proper functioning of democracy. Those who are rich will monopolize the democratic procedures not only because of the forced withdrawal of the poor, but also because of their privileged access to the media, education, representative institutions etc. Furthermore, large differences in wealth and bad economic performances are destabilizing for any form of government – democracy included – because they cause revolt.

A higher GDP/capita correlates with democracy and the wealthiest democracies have never been observed to fall into authoritarianism. There is also the general observation that democracy was very rare before the industrial revolution. Empirical research thus lead many to believe that economic development either increases chances for a transition to democracy (modernization theory), or helps newly established democracies consolidate. Some campaigners for democracy even believe that as economic development progresses, democratization will become inevitable. However, the debate about whether democracy is a consequence of wealth, a cause of it, or both processes are unrelated, is far from conclusion. Wikipedia

This graph show the correlation between democracy and GDP growth:

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The key findings are the positive and statistically significant effects on electoral rights from real per capita GDP and primary schooling. These results strongly confirm the idea that a higher standard of living goes along with more democracy. Moreover, the effects are predictive. Robert J. Barro

This post focuses on one side of the causation: growth in wealth and prosperity produces more and more stable democracy. In a future post, I will look at the other side, how democracy is good for wealth.

Human Rights Facts (3): Development Aid

International development aid is a necessary tool for the protection of the human rights of people in developing countries. Especially their so-called economic rights such as the right to food and shelter.

“Can” implies “ought”, because those with more power tend to have more responsibilities. A wealthy country or a group of wealthy countries can help many people and maybe even everybody, and hence has the responsibility to do so. The first level of responsibility for the rights of poor people in developing countries, rests on the shoulder of the own state and fellow-citizens, but in many cases this burden is too heavy (no “can”). And then the international community must step in.

Real human rights, and especially real economic rights, require both responsible governments and responsible citizens, aware of their duties and willing and able to act accordingly. Forbearance is not enough and active help is required. Assistance is a duty, not a choice, and people have a right to assistance.

On the other hand, assistance should not become the rule. If possible, people should be self-supporting and independent. Your first duty is a duty to yourself. Dependence can be comfortable, but it is incompatible with freedom and autonomy. If freedom and autonomy mean anything to you, then you should try to be self-supporting. Our duties towards other people come into play only when these people have tried and failed to be self-supporting. One can be too serious about duties. Assistance can lead to a mentality of dependence and laziness. It can also be seen as paternalism, a lack of respect and unnecessary interference. Therefore, those who need assistance because they can no longer help themselves should be guided towards independence. Assistance is an option only if and as long as independence is impossible. We should try to create the circumstances in which people can satisfy their own basic needs (or at least we should not destroy these circumstances) and economic rights are necessary only when we fail to do this.

When we look at the data, we see that not all countries respect the rule that “he who can do more should do more”. For example, in absolute terms, the U.S. gives most, but when we relate its gifts to the size of its economy (in GDP), the picture is different:

Over the last decades, aid has increased:

The main beneficiaries of aid are, no surprise there, in Africa:

Some countries in Africa depend heavily on aid. The contribution of aid to their GDP is of such an extent that the countries would collapse were the aid to stop:

An often overlooked aspect of aid is worker remittances. This is money send back home by nationals working abroad, mostly to families and friends. As seen from the following graph, this kind of informal aid has become even more important than the formal, government sponsored or international development aid:

In the next post, I’ll go deeper into the topic of conditional development aid.

Children’s Rights (1): Infant Mortality

Infant mortality is the number of deaths of children aged one year or younger, per 1000 live births. This gives the Infant mortality rate (IMR). The rates have significantly declined over the last centuries, mainly due to improvements in basic health care, and in all regions of the world.

However, there’s still a long way to go, especially in developing countries. From the following graph we can see that in several African countries as well as in India, 1 in 10 babies die before they reach the age of 1. That’s horrendous.

Inequalities are extreme: Angola had the highest IMR in 2007: 184. And Sweden the lowest: 2.8. In a country like Bangladesh, 153,000 newborns die each year. Multiply this with the number of non-newborns death before the age of 1, and with a number of similar countries, and with a number of consecutive years, and you have an enormous massacre.

Infant mortality rate is commonly included as a part of standard of living evaluations in economics. However, the Human Development Index, or HDI (see this post), does not include it and focuses on life expectancy at birth as an index of population health.

The most common causes in developing countries are pneumonia and dehydration from diarrhea. The latter cause is a real scandal given the ridiculously easy remedy: Oral Rehydration Solution, or ORS, a mixture of salts, sugar, and water. In developed countries the causes are congenital malformation, birth defects, extreme prematurity, disease, and Sudden Infant Death Syndrome (SIDS). Neglect, abuse or outright murder are also important causes.

The infant mortality rate is an indicator of state failure. As the IMR indicates the level of a country’s health, health care system or development, an extremely high IMR can corroborate the statement that a particular state is a “failed state” in the sense that it fails in its basic responsibilities to its citizens.
Not surprisingly, wealthy countries – wealthy in the commonly accepted sense of high GDP per capita – have a lower IMR because they have the means to invest in healthcare, sanitation, drugs etc.:

I guess it’s obvious why this is a human rights issue: you can hardly say that people can enjoy their human rights when they die before they are 1. Of course, it’s not as if someone is directly violating these children’s right to life. Infant mortality is in most cases not a deliberate act. But rights can be violated by act as well as omission. In many cases, it’s easy to prevent the child from dying, and those who have the power to do something about it also have the responsibility.

The under-1 age limit for infant mortality is perhaps too restrictive. An additional indicator is the number of deaths of children under-5:

Ending Poverty

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In this post – the continuation of this one – I’ll list some of the actions governments and the international community can take to reduce poverty. (I won’t analyze the comparative effectiveness or ineffectiveness of single actions).

First a few words on the UN Human Development Index (HDI). This index is composed of 3 factors defining the development of a country:

• A long and healthy life, as measured by life expectancy at birth.
• Knowledge, as measured by adult literacy rate and combined primary, secondary and tertiary gross enrolment ratios.
• A decent standard of living, as measured by GDP per capita.

The HDI has become the standard means of measuring human development and well-being. It is used to determine whether a country is a developed, developing, or underdeveloped country. More on the HDI here. If we want to reduce poverty we will at least have to look at the elements of the HDI and improve health, life expectancy and education, and foster economic growth:

1. Fostering economic growth

Although economic growth in itself does not necessarily equalize material living conditions for the population of a country (some parts of a population can experience increasing poverty while the annual GDP or Gross Domestic Product of their country grows), the average GDP per capita is traditionally seen as a good although somewhat simplistic indicator of average national wealth. The increase of GDP per capita is therefore an indicator of the average reduction of poverty and is included in the HDI. See also here.

The following graph shows the correlation between level of GDP per capita and life expectancy rates, one indicator of poverty and one of the three elements of the HDI:

2. Education

Of course, as already mentioned, economic growth as such is not enough. Poverty reduction also means government investment in education. It’s obvious that education is necessary to fight poverty, because it is both a cause and a consequence of poverty. In the long term, this is the most promising anti-poverty strategy since it will allow people to help themselves. It is also obvious that the poorer countries cannot implement this kind of investment unilaterally and have to be assisted by the international community. The following graph shows the correlation between GDP per capita and education (more specifically enrollment rates in secondary education):

Correlations do not show causal links but it is likely that the causation works both ways: higher GPD per capita means better education (because of more investment possibilities) and better education means higher GDP.

The next graph shows, for the different states of the US, the relationship between the percentage of the population below the poverty level and the percentage without a highschool degree:

3. Healthcare

The last element of the HDI is government investment in healthcare. Again, this requires international aid and assistance. Particular attention should be given to the HIV pandemic.

4. Other measures

Now, if we look beyond the three elements of the HDI – which we should – we can identify the following actions which governments have to take in order to reduce poverty:

• Government investment in transport-infrastructure and energy. Transport and energy are necessary for a well-functioning ecnonomy. Energy, and in particular reliable electricity, is necessary for general well-being, including domestic comfort, healthcare, education etc.
• Family planning. For example, having children at a later age, and perhaps having less children, will allow women in particular to achieve a higher level of education and a financially more rewarding job.
• Government benefits for the poor (unemployment benefits, health care benefits, childcare benefits etc.).
• Government regulation of the economy (minimum wage rules, labor conditions rules, fair competition rules etc.).
• Without overkill, i.e. excessive red tape hindering the economy.

And finally, some actions of a more institutional and international nature have to be taken:

• Promoting free trade and abolishing trade barriers such as tariffs, quotas and subsidies, especially in the agricultural sector, a sector in which the poorer countries could have a competitive advantage.
• Compensating for the lasting effects of colonialism.
• Debt cancellation.
• Promoting good governance and democratic rule. Fighting corruption. The graph below shows the correlation between low levels of GDP and high levels of corruption (Corruption Perception Index of Transparency International).

• International private charity
• International development aid