Some fluff, some info

topics covered:

Here is an article from the NY Times about the recent WTO ruling about cotton subsidies. Since linking to the NYT is always spotty, here's a big fair-use chunk of it. Or here is an article from the Economist. Or, for the especially lazy among you, here's a summary:

The WTO's goal is `free trade', meaning the removal of restrictions on the market that prevent the free flow of goods. This usually means tariffs or blockades at the borders. This also includes anti-dumping rules, which make it illegal for a government to pay one of its exporters to send goods overseas, because this would also prevent the market from arriving at the natural price for the goods, at the cost of the industries of the importing country which don't have their own subsidies propping them up.

So what about when a country subsidizes an industry not for the sake of exports, but just hands them lots of money all the time? This too will have a distortionary effect on the world market, and although it is not a trade barrier blocking a free market, it makes it impossible for producers in other countries to compete, preventing a fair market.

Hard question; there was a decade-long agreement in the WTO to just not talk about it. That agreement expired on 1 January of this year, and Brazil immediately litigated the issue, suing the U.S.A. for cotton subsidies and the EU for sugar subsidies (see this Economist article on sugar). Brazil won with the U.S.A. (EU is pending), and the official ruling of the WTO is that the cotton subsidies must stop: they hurt farmers in poor countries all around the world. Our government, for its part, will fight this as far as possible. At the extreme, the U.S.A. may even drop out of the WTO entirely---and when it does so, it will point to the liberal agitators who wanted a better deal for the world's poor and say that it is doing the agitators a favor.

Doing something We'll divide Americans into two classes: people who have no idea about cotton subsidies and their effects on world poverty, and cotton farmers. The cotton farmers are out in full force, hoping to ensure that the U.S.A. defies the WTO and keeps the subsidies coming. The rest of us, who don't grow cotton and think poverty sucks, need to do our part to counter them.

That's right, it's time to write your congressperson. Forget switching to the hippie phone company or picketing the World Bank: this is the easiest, and potentially most effective thing you can do to help alleviate world poverty today.

Here are links to help you look up your Senator and Representative.

A few tips: handwritten letters get much more consideration than printed letters, which get much more consideration than emails, and emails that show distinctness get much more consideration than those with signs of cut-and-pasting. But in the mean time, here are some sample letters, which I hope you will, at the least, cut and paste to your congressman.

If your congressperson is a liberal
I am writing you with regards to the recent WTO ruling that the U.S. must curb its cotton subsidies. I believe that we should make every effort to comply with this ruling.

Personally, I am worried that we do not do enough to help the poor nations of the world. By cutting cotton subsidies, we do just that---and save billions of dollars in the process. The World Bank found that if the wealthier nations cut their agricultural subsidies, then 144 million people could be lifted out of poverty. Cutting the budget and helping the poor at the same time is a win-win situation if ever there was one.

The U.S.A. has lost face in the world since the invasion of Iraq, and needs to improve its image. This is a wonderful (and cheap) way to do so, showing that we have an interest in the world that goes beyond its oil, and that we have respect for international organizations even when they don't entirely agree with us.

The alternative, maintaining subsidies in the face of a WTO ruling that we should not, would leave parts of the world poorer and make them hate the U.S.A. still more. I would not feel more secure in a world like that.

So please, curb the cotton subsidies, as the WTO has mandated that you do. Doing so would help the U.S.A. and the impoverished of the world in equal measure.

If your congressperson is a conservative
I am writing you with regards to the recent WTO ruling that the U.S. must curb its cotton subsidies. I believe that we should make every effort to comply with this ruling.

Our budget deficit is larger than ever, and I know you are looking for more waste to trim. Now you have a international ruling that you must cut billions of dollars in handouts from our budget---what more could you ask?

I know that special interests are coming to you telling you that every cotton farmer in America will go out of business if these subsidies are eliminated, but I don't believe them, and I don't think you should either. Our farmers are still the best-educated, best-equipped farmers in the world, working on some of the best soil in the world. They will compete and prosper in a free market.

I am not asking you to hurt cotton farmers. I am asking you to return them to the same position that the rest of us are in: earning our money by good work instead of good lobbying. In the long run, this will benefit us all, as fiscal sanity and bravery in the face of special interests always will.

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The social security tax First, I have to mention that the social security tax is the most regressive tax in the U.S.A. today. `But', you say, `people are contributing to their own pensions that they'll eventually take out later.' This is, of course, a myth, supported by annual mailings from the Social Security administration. Every dollar the government takes in goes into one big pot, and every dollar taken out for this year's budget, whether for pensions or bombs, is taken out of the same big pot.

The populace has been duped into thinking that social security is a more moral and just tax, because it is somehow a separate fiscal entity which supports itself and nothing else. In your accountant's dreams it does. It's a tax just like the income tax, only it starts taxing at the first dollar you earn, taxes only labor, gives you no deductions, and the wealthy are 100% exempt.

[Here is a cute paper by Ed McCaffery about cognitive errors applied to tax policy. You can question his lab methods, but I have no doubt that this would generalize with no problem to the population at large.]

Eliminating the Social Security tax and raising the income (or any other) tax accordingly would undoubtedly make the U.S.A. a less polarized place and provide a much easier life for the struggling among us. Too bad it'll never happen.

Immigration and pensions Now that I've talked about how horrific pension taxes are, let me tell you about the latest buzz: portable pensions.

There are two simultaneous issues which wealthy nations (the U.S.A., the EU) face relative to the poorer nations (Mexico, the Ukraine): the wealthier nations aren't having kids at a replacement rate, and they attract lots of immigrants.

So we want some sort of incentive to get people to flow back to the poorer nations, which is where portable pensions come in. The idea is that if you choose to move to Mexico, your imaginary social security account goes with you. This is a good thing for circular migrants, and for the large number of illegal immigrants to the U.S.A. who pay social security taxes and never get anything back. Conversely, if people choose not to use the portability, they can stay in the country they've migrated to and not think about it.

At the same time, this is a strong incentive for old people to get out of the country. A dollar in Mexico buys about eight times what it does in the U.S.A.---and it's sunny. A regular retirement paradise.

There are people who support this idea because they think the alternative is that the dark skinned people will take over the country and never leave. Dubya's platform supports them. But just because *uckheads agree with an idea doesn't make it automatically wrong.

I take a more multicultural approach to assessing the value of the proposal: circular migration is a good thing. As more people commute across a border, the border eventually becomes irrelevant. If somebody comes to the U.S.A., gets a great education, and then chooses to go home to disseminate knowledge, then that's frigging optimal. Of course, if the person is forced out coercively, then this is significantly less than optimal, and is even sort of evil. Portable pensions, conversely, are actually a lessening of government restrictions---nothing but creating more options for people to decide among.

So the portable pension idea is a nice way to induce more circular migration, which would bring more capital (=the pensions) to the net-out-migration countries, and either augment their human capital or at least alleviate any brain drain. Plus our old folks will have more options for living on a limited income.

Finally, getting back to the fuc*heads, this is a way to convince them that their country is not being invaded. That means that with portable pensions come more porous borders, which is also a good thing.

Anyway, so that's my thinking. I haven't spent enough time pontificating to see the evil dark side of portable pensions. On the analytic side, I've retrofitted my immigration model for (name of international development group) to test whether portable pensions will do what we want them to. (Name of international development group) has me so supremely outclassed, by the way: I provide the model and they provide the data to run it with, and they came up with the most beautiful data set you have ever seen, ever. My model isn't worthy. So I'll be working, trance-like, for the next several dozen hours to make my model classier. Will try to remember to eat, sleep, and inhale at regular intervals.

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Mr. JE of New Orleans, Louisiana, asked me about this article, which is a libertarian commentary on a boycott of Taco Bell. The story is one we've heard a hundred times before: workers are mistreated, in this case the Immokalee Indians of South Florida who harvest the tomatoes, then liberal college students hear about it and a boycott is organized, causing a couple of college campuses to close their Taco Bells and many a chalupa to not get sold.

The libertarian response is predictable: the boycott is interfering with the market, which only hurts the people whom it is intended to help. "It is an attack on capitalism and an attempt to impose moral connotations to simple purchasing actions of consumption goods. [...] Prices are not set by arbitrary moral standards, but rather by available levels of supply and demand in the market."

But the people who are boycotting Taco Bell are the market. The first piece of confusion in the libertarian view is the belief that there are millions of perfectly atomic consumers within the market, who don't interact, and then there are these Jesuits and labor unions who come to them, from outside the market, and stick a screwdriver in the works. But the students who boycott are as much on the demand side of the market as the guys who still buy their tacos from TB, and it is an error to suddenly exclude somebody from a model of the market because they care about ethics. The above article acknowledges this: "Boycotting Taco Bell lowers the demand for tacos" and in the same paragraph denies it: "Staging a boycott against Taco Bell does not change the guided self interest of taco eating teenagers."

Why would a libertarian make such selective inclusions and exclusions? The root problem is in the narrow-path presumption that a person's utility function may only include a limited set of elements. Taste, convenience, price: OK. Ethics, affect, peer influences: forbidden. Academic economic models facilitate this, since price is much easier to model than ethics, and it's generally true that ethics really don't enter into most people's utility functions as strongly as price.

But ethics do matter, for everyone. I believe that every one of us could think of one product out there that they would never buy, whose production is somehow repulsive: maybe Metallica CDs, snuff videos, copies of the Communist Manifesto, or Krupps coffee makers. I'm a fanatic vegetarian, so I've got my list. It would be silly to put these considerations outside of the market mechanism: my utility from a Taco Bell taco stems directly from the fact that many franchises use animal fat in their rice (according to this source. Last time I saw an official ingredients list, it listed chicken stock in the rice, but that's apparently changed). To the extent that I'm a part of the market, the demand curve is directly affected by my ethical beliefs.

An interesting feature of ethics is that the vast majority of people don't care, but for those that do it's a deal-breaker. This is hard to model for the economists, and hard to deal with for the companies: do you alienate a thousand people for the sake of saving a penny on a million units? Part of the equation is the contagion problem, that if a person is sufficiently alienated then they will not only stop consuming, but they'll complain about you to all of their friends, which could hurt sales still further. The cost/benefit analysis would be different for every case: it's surely true that a company would have to shut down if it tried to satisfy all the ethical qualms of all of its consumers, but it's also surely true that a company which ignores the ethics of all of its consumers shoots itself in the foot.

Affect also matters. The clearest proof of this is that companies like Taco Bell spend billions of dollars a year on it. The narrow-path economists insist that advertising exists only to inform the consumer of new products or perhaps demonstrate the company's stability, but people who actually work in advertising would laugh at this: most advertising is about making the product emotionally appealing, by implying that attractive and desirable people use the product, or otherwise making you feel warm and fuzzy when you see their logo. If you can get people to have an emotional attachment to your product, then you can charge more for the same product---that is, emotional attachment is the best investment a perfectly rational producer can make.

The academic economists downplay affect for the same reasons they downplay ethics: hard to model, and price generally matters more. Many will argue that it's reasonable to ignore it in the design of an academic model, since many of the features of emotional attachment can be explained using other things like a desire for consistency or shared preferences between producer and consumer. But regardless of whether it should be included in a good model, it is certainly a real-world issue on which real-world companies spend billions of dollars.

Ethics and affect are tied. My affect toward Taco Bell is based upon all my information, including both the advertisements and my knowledge of how their proverbial sausage is made. The aforementioned libertarian article is happy to acknowledge half of this, by the way, pointing out that much of Taco Bell's demand comes from that frigging dog that says `Yo quiero Taco Bell'. [Better would have been `Quiero el taco bello', meaning `I want the beautiful taco'. But, alas, Taco Bell is named for its founder, Mr. Bell.] I can not explain why our libertarian friends say that demand can be shifted by something as squishy as a talking dog but not from the squishy issues of ethics.

Consumers are irrational. We can make up general rules about how they'll behave (like how demand falls with price, though we can't even prove that), but in the end they'll buy what they darn well please to. The role of the companies on the supply side of the market is to work out what those irrational desires are, regardless of where they came from, and cater to them. And the role of the think tank, by the way, is not to wish away those irrationalities or define those people it considers to be irrational as somehow outside of the market, but to discuss how society can best facilitate suppliers meeting those arbitrary demands. This is a hard question when the strong desires of a few (for fair-pay tomatoes) directly clash with the weak desires of the many (for cheap tomatoes), but the article I'm critiquing ignores it, and I must acknowledge that I really can't offer a generalized solution.

For Taco Bell's owners, paying its workers more should be part of the advertising budget. If behaving within the bounds of the consumer's ethical beliefs helps to improve consumers' visceral affect, then it makes as much sense as spending millions on affect-improving advertising, no matter how irrational or arbitrary those ethical rules may be.

In this context, the boycott absolutely makes sense for the laborers, although it is potentially risky. Consumers with certain ethical beliefs will want to maximize the cost to Taco Bell for ignoring those beliefs, which means not buying tacos and convincing as many people as possible to not buy. This works entirely within the market mechanism, by moving demand. To repeat the quote from above: "Prices are not set by arbitrary moral standards, but rather by available levels of supply and demand in the market." This is true, but levels of demand are influenced by arbitrary moral standards, which then influence price. The more vehement the arbitrary moral standards, the more influence they will have on price.

What T.B.'s managers will do about the increasing effect its labor policy has on demand is hard to guess. It may acknowledge that a penny a taco, shifting everybody's demand down a touch, is worth the benefit from restoring lost demand among boycotters and their expanding network. It may also find other means; such as buying tomatoes from some other group of laborers who aren't as organized; or maybe just ignoring the whole thing and reducing tomato purchases, losing money for the workers (which is the libertarian prediction; see below). The boycott has both costs and benefits to the workers, and I certainly don't have the numbers in both columns calculated---but then neither does our libertarian friend. Meanwhile, I have no reason to think the Coalition of Immokalee Workers is run by idiots, and I expect they are aware that sometimes the squeaky wheel gets the grease and sometimes the squeaky wheel gets the shaft. They are aware that Taco Bell's decision will be based entirely on costs and benefits, not the board of director's heart strings---and so they are doing exactly the right thing to convert their ethical complaints into the largest possible shift in demand, which Taco Bell's managers (being rational market actors) will respond to.

A final note: I feel that I should specifically respond to a few points in the article, though they don't generalize very far and won't be of interest except as a rebuttal.

A more effective method of raising the wages of Immokalee migrant workers would be to stage the exact opposite activist campaign. If college students were to buy more tacos and ask for extra tomatoes on those tacos the demand curve would be moved in the appropriate direction, raising migrant workers wages. But this realization seems farsighted from the anti-capitalists.

The Jesuit Volunteer Corps seems to be burning the migrant workers match at both ends. We've seen how the boycott would have a lessening effect on the migrant workers' wage rates, what we have yet to mention is that the JVC regularly encourages college students to gain the cultural experience of being a migrant worker. While lowering the demand for their goods and services, JVC kids travel to south Florida and work along side the migrant workers, in effect challenging them for the very jobs they are trying to spread a message of value for. This action raises the supply of labor and reaffirms the low pay scale.

In this case, I think that it is the author who is being short-sighted [or in economist-speak, is looking at a partial equilibrium model where he should be looking for the general equilibrium]. The goal is to maximize the benefit that Taco Bell gets from paying tomato-pickers more. The obvious way to do this is to provide less labor and demand more tomatoes, as suggested. However, one person's request for extra tomatoes has a small effect, but one person's refusal to buy---and encouragement to lots of friends not to buy---creates a much larger effect. The board of directors is asking, `what is the benefit to paying more for tomatoes?' and it seems obvious that the benefit the board sees is larger in the case of a public boycott that affects the demand decisions of a larger group than the private actions of a smaller set of people.

The Jesuit labor thing is similarly a long-term issue. If we have a person who marginally expands the supply of labor for a summer, and then spends the next decade encouraging others to care more about labor and shifts demand by self and others accordingly, then the long-term marginal shift may dwarf the short-term. Clearly the JVC thinks so.

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I think I've worked out that detail which causes liberal folk to hate the World Bank. The WB is the largest and best hope for global poverty alleviation we have, so one would think that it'd be the darling of liberals everywhere, but it has one fundamental difference from the typical liberal: it's not pro-labor.

It's hard to pinpoint the lack of a position, but I posit as a matter of opinion based on reading loads of World Bank reports that it has no position on labor standards. We can try Google, for what it's worth: the search "labor standards" site:worldbank.org turns up 530 hits, "working conditions" site:worldbank.org turns up 844, and "investment climate" site:worldbank.org turns up 16,500.

I haven't been able to find a straight answer, but as far as I can tell, somewhere between a great number and the majority of the WB's employees are short-term consultants---that is, they have no benefits, no insurance, and no job security. The Bank has a rule that nobody can work as a short-term consultant for more than 120 days/year, which often means that people wind up working for free for much of the year.

We can go to the coffee shop in the atrium, which serves SBUX coffee (SBUX being famous for treating its employees nicely, but I think the WB is just serving their coffee). There are about six varieties of coffee on tap, and only two of them are Fair Trade certified. Could you imagine a choice of Fair Trade or not-Fair Trade coffee in the SEIU lobby? Heads would roll. At the Bank, nobody detects anything awry at all.

Trying to detect the lack of a position is further complicated by the fact that the Bank is a decentralized mess, because policy written for Africa is not necessarily any good for Latin America. With policy written on a region-by-region or even country-by-country basis, there are thousands of human beings whose statements get blobbed together after a header like `the World Bank states that...'. Some of them are clearly pro-labor.

Caveats and paltriness of evidence aside, I'm still going to make this negative assertion, and you can evaluate it next time you have a WB report in your hands: the World Bank is not pro-labor.

Which brings up an interesting question:

Can one be liberal but not pro-labor?

Today's recommendation, for my usual audience of mathematicians and social scientists: Miss manners (RSS). No, not because of the usual reasons that no doubt sprung to your head when you saw mathematician and manners in the same sentence. I recommend the etiquette column because it is a paragon of social science analysis.

The first rule you need to bear in mind when reading on etiquette is that none of etiquette is arbitrary. Take this as axiomatic; if you believe that a rule violates this axiom, then you don't understand the rule and should try again.

The problem of etiquette is exactly the problem of law, economics, and the social sciences in general: given that people have competing objectives and perceptions which are often in conflict, what is the mechanism that minimizes conflict and maximizes social benefit? The problem is more difficult than most economic problems because etiquette is not law, and therefore not everyone is following it. I.e., we need a mechanism which is a Nash equilibrium for an asymmetric game where one side is playing the rule of etiquette and the other side may or may not be. This can be orders of magnitude more difficult than the symmetric problems with which we economists satisfy ourselves.

Etiquette columns are fun because each summarizes a conflict and its resolution, often in a clever-in-a-good-way manner. Miss Manners (aka Ms JM of Washington, Columbia) does an especially good job of keeping upbeat in the face of conflict after conflict.

I picked up a copy of Miss Manners' Guide to Excruciatingly Correct Behavior (BUY!), wherein she explains her own frustration with the misunderstanding of etiquette:

"If Miss Manners hears any more contemptuous description of etiquette as being a matter of 'knowing which fork to use,' she will run amok with a sharp weapon, and the people she attacks will all be left with four tiny holes in their throats as if they had been the victims of twin vampires." [p 119]

As for the rudeness of others, Miss Manners finds that is conquered by politeness. For example, a gentleman of Miss Manners' acquaintance dislikes being honked at by impatient drivers for not starting his automobile quickly enough when a traffic signal turns to green. Instead of honking back, however, he puts on his emergency brake, emerges from his car, presents himself to the honker in the vehicle behind, and inquires gently, "Did you summon me?" [p 4]

Advice

There are also a few people who do etiquette for the oversexed. [BUY!]

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If you know me personally, you know that I had a number of contracts at the Bank. Some went well, but most were for a rather shifty individual who was somewhat dishonest, both academically and more generally. The contract stipulated pay for eight days, and I cut bait and left after maybe four months of mostly full-time work trying to fit models to his hypotheses--and he still withheld payment.

There you have it, right in front, and you can read the rest of this article knowing my bias. Though, I'd worked out most of the below over a year ago, and you can tell by this header that I'm self-conscious enough not to base any of the below on one personal data point.

The World Bank is huge, and that is not necessarily wrong. If we somehow broke it into ten separate organizations, those organizations would have constant turf squabbles and fights over funding, constantly need each others' assistance and/or replicate each others' work, and would probably wind up setting up some sort of interorganization council that doesn't differ too much from the Bank's top management. There are umpteen thousands of people working in development, and that's an organizational problem no matter what.

Now, there are two eminently sensible ways to divide expertise: you can go by geographic region, because Central Asia is a very different place from Sub-Saharan Africa, or you can go by topic, because poverty reduction is a very different issue from gender issues. The Bank does both: the management chart is a grid, with departments like Central Asia-poverty and Africa-gender (except everything is an acronym, so it'd be ECA PREM). That is, everybody has two bosses, thus giving everybody something to complain about at the water cooler.

The next problem is that new projects come and go at a pretty rapid pace, and always involve subject that are a bit far afield from the expertise of the managers. The solution: hire contractors. Lots and lots of contractors. The Bank doesn't have a dam-building division--they contract. Nor do they have a dam-evaluating division; that's contracted too. Nor do they have sufficient expertise in virtually any of the subjects that your typical Bank report is about.

So when you sit at the coffee shop in the Bank's spacious atrium--and a whole lot of Washington is like this--you find a small core of individuals who are there for life and a constant flux of two-year RAs and contractors. Also, you'll see that only two of the five coffees they serve will be Fair Trade certified.

Now, if you work in a technical field, you know that finding people who are both technically apt and good managers is supremely difficult. Further, even if they were the best of the best twenty years ago, maybe their COBOL skillz aren't so impressive now. I would contend that in the pool that the Bank has to draw from, there are simply not enough people who are experts in country plus subject plus general management to fill all the posts. They have to compromise.

And the compromise the Bank chooses, time and time again, is to go for the people who can best manage the stream of contractors. Subject knowledge can be hired; familiarity with the Bank and its protocols can't. To add to this, managers are rotated every few years, so if somebody really buckles down and learns everything there is to know about labor in Europe, it's down the drain when they're moved to managing technology dissemination in China.

Now, management skill generally goes with political skill, and much of the work of a Bank manager consists of not pissing off politicians. So this is one more reason to bias toward managerial knowledge over subject knowledge. It is also why most Bank reports don't actually say anything of substance.

I suppose the arrangement of hiring subject knowledge could work, but the Bank culture kills it. The Bank's employees are trained to think like business managers. Impoverished countries are referred to as "clients", and I have heard at least one manager give a speech explaining in no uncertain detail about how the Bank must be run like a business. There are clear management goals; growing GDP by 7% per year in an given country is always a popular one--and even if it is achieved via inequality-expanding means, all boats will eventually rise with the tide.

However, the Bank's questions are only partly business on the ground. A huge percentage of the Bank's product is reports, about the business climate, about how [trend of the month] can reduce poverty, about the environmental effects of dams. So the contractors the Bank will hire are a mix of the usual survey-takers and other such laborers, and academic types.

As demonstrated by me and my shifty boss (really, I had some nice ones too!), academics and hard-nosed managers don't mix. Academics want to write something that is correct to the last detail; managers want something that gets the point across. Academics want to hold off judgment until the data is in; managers want to write the introduction to the report before hiring the academics. Academics need time; managers need output by Friday. Further, experienced academics are not cheap. They have day jobs, and if you need original research, that distracts from the navel-gazing they'd rather be doing.

I asked one well-known academic, “what do you think of the World Bank?” and he snapped back, “Did they pay you?” Then there's the graduate student who confided to me that she didn't tell her adviser that she's working at the Bank; due to so many bad past experiences, her department has a policy of not allowing students to work there. After I gave up on the project at the head of this column, shifty manager attempted to contract two experienced individuals working in my field, and both refused. I'll stop with the anecdotes there.

The end result from all of this: the Bank generally runs on the young and inexperienced. If you just got your Master's, they've got work for you to do. If you can't necessarily do original research, but you know how to run Microsoft Excel, then you have what it takes to write the flagship publication, the World Development Report. If you skim through the thing, you'll notice that (1) it is primarily a very long lit review, and (2) none of the original data work goes further than a bivariate graph. Most of those bivariate graphs (e.g., pp 2.14 and 2.20) are Excel charts based on a manually-enterable number of data points. That is, it's the sort of report that you expect from a team of Master's students.

Of course, that report has its value, and if you want a survey of global poverty in 2005, you should definitely click the link above. But does the following statement inspire confidence in you?: "Resources to eradicate world poverty are allocated based upon the best research by the most eager graduates of the last few years."

In short, the Bank's structure consists of a core of managers, many of whom learned their economics in the '70s, and a constant stream of generally inexperienced subject-knowledge labor. The result is well-managed and well put-together graduate-level work, upon which life-changing policies are decided.

Policy recommendations

The Bank is clearly over-managed, in the sense that there are just too darn many layers of management and the corresponding politics and unproductive inoffensiveness is stifling. It is also overmanaged in the sense that it is run like a business with a series of financial goals for its clients, rather than an organization whose goal is to understand poverty and eradicate it.

Coauthoring is efficient. The latest Journal of Political Economy has seven articles, five of which were coauthored. To produce a good report about environmental issues in India, you can hire a full-time India-environment specialist, or you can hire a full time India specialist and a full time environment specialist. The team stands a good chance of producing a better paper and finishing in fewer person-hours than the lone author. Thus, the grid is redundant: a team of the best and the brightest for each country and for each topic, plus a nice coffee stand where then can all interact, may be sufficient, and can run with a fraction of the managerial overhead.

What do the best minds in academia want? [And let me make very clear that I am decidedly not referring to myself.] First, they want to feel that their work will actually go somewhere. Everybody understands that things go slowly and nobody's recommendations are magically implemented a week later. But it is disheartening to know that your careful and interesting work will be reduced to the politically least offensive denominator. For a report to be interesting to one's academic peers, it has to say something.

For Bank contractors, much of the pay is in the form of carrot-dangling about how maybe one day you'll have a real job at the Bank and at the least you'll have a recognized name on the resume, both of which are premia that only a recent graduate could love. The incentives to advance for the full-time employees are primarily about being able to control more money. The World Bank has no advancement path of any sort for a person who has experience and knowledge regarding poverty and economics.

Since there is no means of retaining those who are interested and capable regarding the intellectual challenge of fighting poverty, such people are guaranteed that the Bank will be an unpleasant place for them, and if they want a community of people thinking about poverty, they are better off elsewhere. The Bank could be the focal point where the smartest people in the world meet to tackle the world's hardest problem, but instead it is a house of bureaucracy, hiring lowest-bidder contractors to provide management solutions to the government officials who are its clients.

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I live in Baltimore.

OK, so what was the first image that came to your head when you read that? For most folks, the associations with the word Baltimore are either crime, poverty, or general blight. Maybe you got that impression from a TV show like The Wire, or from a TV show like Homicide: Life on the Streets, or even from a pop song like Baltimore by Randy Newman, or a pop song like Baltimore by Lyle Lovett.

I recall everybody's reaction at my high school when I got accepted to the University of Chicago: “Y'know, it's cold there.” I got that line maybe twenty times. Yes, it does get cold there. But what these people didn't realize is that half the year, Chicago is obnoxiously hot.

I suppose it's no real surprise that when I tell people I live in Baltimore, they assume I'm shot at every day. But they fail to realize that half the town is kinda nice. The Borders & Noble just opened four blocks from my house, bringing with it the eighth Starbuck's in the city, and an exceptional stats shelf. And if that's too pricey and megacorp for ya, the Book Thing is two blocks away. But nobody says to me `Oh, you're from Baltimore? That's the city that reads!'

How do these stereotypes develop? How does a city get summarized into a verbal postcard that nobody bothers to think about anymore? More importantly, how do we get those stereotypes changed?

Detroit: Capital of the Rust Belt ⇒ Slowly returning to nature!

Baltimore: Stab wound or gun wound? ⇒ A hospital on every corner!

San Francisco: Everybody's gay!! ⇒ The rising creative class!

Seattle: Kurt Cobain drank coffee here ⇒ Monorail!

Variance

By the FBI's data, Baltimore had 11,248 violent crimes per person and a population of 641,097, for a violent crime rate of 1.75%. But the great majority of crimes are property crimes like larceny from vehicle (aka `stealing from somebody's car'), which is not the sort of thing that keeps people up at night. There were 269 murders and 162 rapes in Baltimore in 2005, giving us a rate of 41.96 homicides per 100,000 and 25.27 rapes per 100,000.

Now let's look at a few other haphazard cities:

	pop	crimes/100,000	murder/100,000	rape/100,000
Detroit	900,932	2,357.56	39.29	65.38
Bmore	641,097	1,754.49	41.96	25.27
Washington, DC	550,521	1,401.58	35.42	29.97
Houston, TX	2,045,732	1,172.54	16.33	42.63
Columbus, OH	730,329	836.75	13.97	70.93
Salt Lake City, UT	184,627	694.91	5.42	39
New York	8,115,690	673.05	6.64	17.4
San Diego	1,272,148	519.04	4.01	29.56
San José, CA	910,528	383.51	2.86	28.88

First, GSS's point is well-supported by the table: the variance in crime rates, by any of the above measures, is gigantic.

Also different types of crime vary differently. San Diego's murder rate is almost a tenth Baltimore's, but the rape rate is slightly higher. The murder rate generally follows the overall crime rate better, but is not a particularly close proxy. Among the top 100 cities by population, the correlation is 72%. Correlation between rape and overall crime among the top 100: 49%; rape/murder correlation: 31%.

Part of the problem is that we're talking about events per 100,000. With 72 rapes in Salt Lake City in 2005, the city beat out Baltimore on that scale-but what does that say about the odds that any one person will be raped in either city? If there had been 26 fewer rapes in SLC, then the rankings would be reversed.

Then there are aggregation problems. There are parts of Baltimore where I would not dare to tread. But the same could be said of every city in the entire country. The statement “around here, things go from rich neighborhood to poor neighborhood in just a block or two” has been made regarding every city I've ever lived in (which is many). This only makes it more difficult to work out what exactly the crime rates mean. If we have one city where the crappy parts are extra-crappy but the city center is average, it will look worse on the endless stream of Safest City stats than a city with an average crappy part and an average city center. But nobody in the city center, walking home from the Borders & Noble, would notice a difference.

LA County did us the favor of fragmenting things into over 80 submunicipalities. For example, the two highest crime-per-100,000 resident cities are Vernon, CA (pop: 94, crimes: 48) and City of Industry, CA (pop: 840, crimes: 140). Without the endless averaging of high- and low-crime areas you have a clear picture that that Vernon, CA, which seems to be a one block wide and five block long stretch just South of LA proper,¹is a bad neighborhood, without all the averaging of good neighborhoods getting in the way.

The summary: we'd like to read the stats above as a probability, so that when the FBI says that Detroit has a 2.4% crime rate and New York a 0.7% rate, that those are your odds of suffering a crime over a year. But there are too many complications beyond the simple numbers, especially for the very rare events like murder and rape. What neighborhood you're in, where you're walking at night, and with whom you're associating will all have a bigger effect on your odds of being raped or murdered than where your city ranks on a somewhat arbitrary unidimensional scale.

Bibliography

Edward L Glaeser, Bruce Sacerdote, and Jose A Scheinkman.

Crime and social interactions.
The Quarterly Journal of Economics, 111 (2): 507-48, May 1996.

@ARTICLE{gss:crime,
AUTHOR={Glaeser, Edward L and Sacerdote, Bruce and Scheinkman, Jose A},
TITLE={Crime and Social Interactions},
JOURNAL={The Quarterly Journal of Economics},
YEAR=1996,
VOLUME=111,
NUMBER=2,
PAGES={507-48},
MONTH={May}
}

Footnotes

... proper,¹

By which I mean La Ciudad del Rio de Nuestra Señora la Reina de los Angeles de Porciúncula. If I had my way, the city would be referred to as Nuestra Señora, which is hipper in so many ways.

[PDF version]

In all these columns of alleged pontification, I have given you almost no grandiose predictions about the future. There was the loom, the printing press, the internal combustion engine, electricity, the digital computer. What is next to completely revolutionize how human civilization looks?

Solar power.

Or, more specifically, the gathering of ambient energy into useful form. This is not a new idea. Millennia ago, people worked out that their bodies produce heat, so if they put on a blanket, then they can retain that heat and put it to useful purpose. The water wheel went along similar lines: hey, there's energy in that water flow, and it could be put to good use. A hundred years later, that water wheel turned into the Three Gorges D*m.

Or if you'd like to be a little more technical about it, there is the Seebeck effect: if there is a temperature differential between two sides of a system, then current can be produced from that differential.

So what's the revolution? Why am I talking about solar power instead of more water wheels or wind farms? Because light is everywhere power-sucking devices can be found. Your solar calculator from high school didn't need batteries, wires, or petroleum. It just sucked in energy from the world, and converted it into a useful form. You carried it around, and it ran itself. When all our appliances, houses, and transportation are capable of that self-powering trick, that will be a revolution.

Your laptop is not too far from that right now: you can already buy solar panels that will power your laptop that are about twice as big as your laptop. With a not-insane amount of work, we could get those solar panels down to the size of the back of your laptop screen. And forget laptops: the real victory will be when your car and house take in as much energy as they put out.

Figure 1: A square meter of solar panel could produce about 150-250 watts of energy. Black dots indicate the surface area one would need to meet all expected energy needs in 2010. source

A square meter of the earth is beaten with about 1000-1500 watts of solar energy all day long--and thanks to greenhouse gasses, there's only more watts to be had. For comparison, my fridge is sucking down a maximum of 3 kWh per day = a constant rate of 125 watts. You can check your laptop's power supply, but I'm guessing it's somewhere around 50 watts--but it won't need to be plugged in anyway. A space heater runs at around 1500W. So you can see that the typical house's energy needs are likely smaller on average than the solar energy hitting the roof.

The Honda EV Plus (PDF) uses about 500 watt-hours per mile--and that's 1999 figures from the DoE's Idaho National Laboratories; we can only presume that they're doing even better now. So mean demand is about 500 watts, and the 2 m² of car-top is warming up with 3000W of energy.

And hey, where is a great deal of the energy in driving the car's motor going? That's right: heat. Add some tricks to use the heat differential between the top of the hood and the bottom of the hood to reclaim electricity (that Seebeck effect again), and you've got an even more robust self-sufficient system.

Reality

The first is cost. Those nifty solar panels for the laptop will cost you $250, so they're not going to make sense to anybody but total hippies and those who are frequently off-grid. Putting a solar array on your house's roof will still be in the ballpark of $40,000, which will pay for itself in electricity saved and/or sold to the grid in, oh, a decade.

But burning dinosaurs is not going to work forever. As China and India start buying SUVs, oil in the USA and Europe is going to become more expensive, and that means people who were once on the fence will be buying more solar. Expect gradual reductions in prices as a result. The offset, though, is that silicon is getting expensive, due to increasing demand for electronic toys.

The other problem is in efficiency. The 3000 watts of power in the sunlight hitting the roof of your car still needs to be converted into useful electric power, and that conversion is still inefficient. One firm recently announced that it got its solar panels up to 22% efficiency. For solar panels, this is amazing, but to the rest of the energy world, this is ho-hum. Other forms of energy extraction typically get up to around 80% efficiency.

But I read that not to mean that solar power is hopeless, but that there's a lot of room for improvement. When a solar panel is twice as efficient and costs half as much per square whatever, then you're down to $50 for the solar collector on the back of your laptop screen--that's the price of a new battery.

8 December addendum: Silly me--the future arrived the day before I wrote this: the DoE announced on 5 December that one of its contractors had achieved 40.7% efficiency by stacking several types of photovoltaic cell on top of one another. It's still more than twice as expensive than the half-as-efficient versions, but we'll see where it goes.

So, back to pontification: what will the world look like in thirty years? It won't have wires, because we'll have moderately-sized electricity-generating gadgets to complement our ever-expanding array of electricity-consuming gadgets. The top of your car and house will have solar panels that just sit there and store up charge for your air conditioner. The whole greenhouse thing won't be an issue at all, except in terms of dealing with our predecessors. We won't be importing energy from remote locales, but just pulling it in from around us.