Saturday, October 24, 2009

Afghanistan and the two period economic model

Two-period models are often used in economics to study what deicisions people will make if there are only two periods in the life of a person. We study a lot of stuff this way-- inflation, taxation, investment. Sometimes we wonder whether these are an oversimplication. Perhaps there are more than two periods when we are making decisions about, for example, whether to spend more money after a tax rebate (for which we will be taxed in the next period). Reading See You Soon, If We're Still Alive I kept on thinking that the problem with Afghanistan is that a two-period model would be an over complication of reality.

Repeatedly, van Linschoten and Kuehn, write about this lack of predictibility of life, some excerpts of which I provide here:

The social effects of this constant bombardment -- literal and figurative -- are deeply corrosive. A common saying on parting company these days is, "I'll see you soon, if we're still alive." The assumption that you might be killed at any moment is one of the most pervasive and disruptive of mentalities. It means that you cannot think forward more than a day or two. The biggest gain in the shortest amount of time is the usual attitude to most things. With this mindset, it is almost impossible to work, let alone try to build any sort of political consensus.
But no matter how bad or good things become in the city, in the end the war is being lost -- and will be lost -- in the villages, especially those of the four overwhelmingly rural provinces that make up Loy, or greater Kandahar. Attempts to "protect the people" along belts of security in the cities are perhaps honorable by intention, but they will not end the conflict. Real security -- whether behind blast walls in Kabul, inside armored vehicles, or beneath Kevlar flak jackets -- remains an illusion. In Kandahar, the simple rule is that everything is ok until it is not.
It is impossible for us to expect the Afghan populace to engage in activities other than violence when the unpredictability of life means that there is no reason to save, or invest, to educate or be educated.The problem is that there is no two-period model. It is flat-- tonight you will be alive, maybe, and if you are, you might be--with a reasonably high chance-- dead tomorrow morning, or afternoon, or at the wedding party tomorrow night. Now I may not be smart enough to recommend to anyone how this war on and in Afghanistan will end, but this is for sure-- until people know that they have a good chance of living in that second period, or being able to reap investments, their utility maximization Lagrangian will spout only results like fight, kill, saveyourself.

Providing Education to the Poor

Often when we think of private schools, we think of schools that are well funded, run for students with a wealthy background, and in posh neighborhoods. For the poor, we either believe or are told, there is only the public school system. But look closely and you will find another truth: tucked away in slums or little villages in the middle of nowhere are a plethora of private schools. In dilapidated buildings, with poor sanitation, and over-crowded classrooms, they cater to children whose families live on less than $2 a day. When faced with the option of one of these and a government school, parents prefer to send their children to one of these illegitimate institutions. This talk, featuring James Tooley, offers an explanation. Here is an excerpt from a review of his book The Beautiful Tree by John Fox:
In many government schools visited by Tooley, the teachers fail to teach, the children fail to learn, the administrators and bureaucrats skim resources off the top, and Western aid, fixated on government-driven, top-down solutions, simply makes the problem institutional. In the words of one school in Nigeria: "We hear there are funds in the budget. But we don't see it in our community. We don't know where the money goes." Tooley offers example after example of community schools chosen by parents over government schools despite their inferior facilities, for the quality, regularity and commitment of their teachers. 
 H/T: Daniel Gomez

Friday, October 23, 2009

Missing children; thank you, socialism

A CATO study on the human cost of socialism to India's growth is out this week. It's interesting in its suggestions but I find it week in its methodology. I don't know how they assigned the numbers from one timer period to another, but it's certainly something that needs to be studied more rigorously.

This is a part of the abstract:
This paper seeks to estimate the number of “missing children,” “missing literates,” and “missing non-poor” resulting from delayed reform, slower economic growth, and hence, slower improvement of social indicators. It finds that with earlier reform, 14.5 million more children would have survived, 261 million more Indians would have become literate, and 109 million more people would have risen above the poverty line. The delay in economic reform represents an enormous social tragedy. It drives home the point that India’s socialist era, which claimed it would deliver growth with social justice, delivered neither.