Why the Today Programme leads to premature ageing

I feel terrible today, all thanks to the Today programme. For non-UK readers, it’s the flagship drivetime radio news show – the one that politicians and chattering classes listen to as they scan the newspapers and munch on their cornflakes. I was on this morning, talking about aid and corruption.

What you heard on the radio (should you have been listening) was a relatively coherent couple of minutes of discussion. In contrast, what I experienced was about three hours sleep, followed by hours of tossing and turning as about 20 dummy run interviews ran through my head (most of which went brilliantly, of course).

For an NGO wonk, it’s the nearest thing to ‘fight or flight’– in particular that moment when you are sat in a little room on your own (the interviewers are miles away in another studio), plonked in front of a vintage BBC microphone. Hypnotically appealing self-destruct fantasies run through your head as the clock ticks down to your first question- Faint? Run away? Sing an obscene ditty? At stake, kudos if it goes well, barely concealed delight/ crocodile tears from all your so-called mates if you crash and burn, as I

scarier than they look

did a couple of years ago (the Today programme has a reputation for chewing up its guests and spitting out the bones – that’s why everyone listens to it).

In the end the sleepless night was unjustified. The interviewer (James Naughtie) was benign (maybe he’d devoured someone else earlier on – he was the one who worked me over last time), and my co-interviewee Lawrence Haddad, director of the Institute of Development Studies, was excellent. All that stress for nothing.

But it goes so fast! You have time to make about two points, and then it’s thankyou and goodbye and the BBC car back to your dayjob. So in case you’re interested, here’s my crib sheet with all the points I had in front of me, and failed to make………

‘Aid Success Stories

- 33m children into school in last decade
- 4m fewer kids dying every year, despite population growth
- In Nepal, aid has reduced infant mortality by a third in just 5 years
- bed nets and immunisation
- Access to HIV drugs up tenfold in last 5 years
- Country success stories: South Korea and Botswana

But need is rising – climate change

Humanitarian

Risks of diversion rise in ‘fog of war’ or natural disaster. There, you have to accept a certain degree of loss.

Command and Control not an option – chaotic places are the ones that most need aid.

How to minimise risk? Get all parties to agree, make local leaders responsible for distribution

When to pull out? Look at net benefit to beneficiaries, if aid starts to actually harm them, eg be spent on guns, then you may have to leave.

Oxfam commissions an independent assessment on any programme over £1m, and publishes an accountability report.

Long Term Development

Aid to fight corruption: DFID has pledged 5% of all funding to governments to support public monitoring of how it is spent, This could support
- Civil society watchdogs (Oxfam supports them in Georgia, Armenia)
- Media scrutiny
- Parliamentary oversight

Eg Ugandan schools: 80% of per capitation grants (i.e. non wage for books etc) was being diverted to local government spending, until government insisted on publishing budgets right down to school level. It then fell to 20%.
 
Some sectors are worse affected than others: military and construction contracts, oil and gas are all favoured honeypots. Schools and hospitals less likely to be hit.

Aid can also be used to build tax revenue and reduce aid dependence: eg Rwanda quadrupled tax income from 1998-2006:

And remember, the long term aim is to help poor people, not least by building effective and accountable states – mustn’t lose sight of that’

If only I’d an hour instead of 3 minutes…….

Will this time be different? Financial crises and aid collapses over the last 30 years.

What impact do financial crises in rich countries have on their aid budgets? You would probably expect them to lead to a big bank bailout, producing a debt burden and a fiscal hangover, triggering bouts of cabinet infighting over public spending with aid coming off worst (after all, aid beneficiaries aren’t voters, at least in the donor country). Now some World Bank researchers have run the numbers from past financial crises and unfortunately (for aid), they agree.

‘This paper estimates how donor-country banking crises have affected aid flows in the past, using panel data from 24 donor countries between 1977 and 2007. The analysis finds that banking crises in donor countries are associated with a substantial additional fall in aid flows, beyond any income-related effects, perhaps because of the high fiscal costs of crisis and the debt hangover in the post-crisis periods. In most specifications, aid flows from crisis-affected countries fall by an average of 20 to 25 percent (relative to the counterfactual) and bottom out only about a decade after the banking crisis hits.’

Here’s what the typical aid trajectory post crisis looks like. On average, aid keeps rising for 2-3 years after the start of the crisis, then goes into freefall for a decade and doesn’t recover its pre-crisis levels until 17 years after the start of the crisis.

In the UK at least, the good news is that both major parties have pledged to stick to ambitious targets for increasing aid despite the crisis. But governments everywhere will need plenty of scrutiny and public pressure if we’re to prove that (as they used to say during the boom years), ‘this time is different’.

Some big development brains ask ‘what’s next?’

The Institute for Development Studies is a Good Thing. Located on the brutal 60s campus of the

it looks better in sunshine....

University of Sussex near Brighton, its gurus like Robert Chambers and Hans Singer have educated and inspired generations of Masters and PhD students, who then scattered to every corner of the aid industry and beyond (diplomats, politicians etc).

I was down there last week and sat in on an internal seminar that took stock of its thinking on development, as part of IDS’ ‘reimagining development‘ project.  Five of its senior staff got five minutes each to set out some thoughts on where the impact of the economic crisis had left thinking on development. In order of appearance:

Jethro Pettit detected that people in the development sector are more aware of what they don’t know, ‘running to keep up’ and more open to doubt, uncertainty and new ideas. But he also sees them clinging to a fixation with measurement (e.g. of impact), perhaps in response to uncertainty. He fears the ‘bulging toolboxes’ loaded with proliferating frameworks and concepts, and thinks the issue is to strengthen abilities of practitioners and policy makers to learn continuously, rather than load them down with ever-longer prescriptive guidelines. (‘True that’, as they say in The Wire – my current DVD boxset obsession)

John Humphrey saw the window for innovation created by the crisis already in danger of closing, as countries emerge from recession. He pointed out that most of the ‘new ideas’ are in fact old ones – Tobin Tax, Keynesian revival, UN and Bretton Woods reform, limits to the market. His concern is that ‘pre-existing ideas’ are not necessarily any better than the current lot, so be careful in just dusting down some old Left nostra every time a crisis hits. He proposed looking at surprises for new insights, such as Bangladesh and Indonesia ‘sailing through’ the crisis, contrary to all predictions, and seeing which old ideas become more relevant with the passage of time – the evolution of the Tobin tax into the financial transactions tax. He stresses the long-term decline of Europe and saw the Copenhagen summit as ‘brutal’ in its marginalizing of the EU, [is the development industry a European project? Discuss] He sees growing resource constraints increasing the risk of conflict within and between countries.

Melissa Leach saw the crisis as invigorating interest in another ‘old idea’ – complexity and chaos theory, including the journalistic cliché du jour, the Black Swan. She sees this as a deep challenge to mainstream assumptions that development is all about stability, steady progress and equilibria. She thinks we must advance our thinking by getting back to putting people in the centre of the debate (stuff like wellbeing, I presume), and bringing in ideas from other schools of thought (e.g. evolutionary theory) or from the margins of development’s core disciplines (feminist and environmental wings of economics), Like Jethro, she kicks back against the ‘audit culture’ afflicting the development system.

Tom Mitchell saw Copenhagen as about rich countries opting for a ‘pay, don’t change’ approach to climate change. Easier to find the cash for adaptation and mitigation in developing countries than to change their own economic and business models. He points to the underlying environmental dangers of a growth model built on debt. The climate financing agenda will dramatically  modify the development financing agenda, triggering big institutional shifts.

Mick Moore saw ‘a lot of rejection going on’ in developing countries, with people increasingly saying ‘we don’t want your aid, human rights or organizations’. He sees ‘NGOs’ as becoming a ‘dirty word in much of the South’. He is concerned at the knock-on impact on the discipline of development studies because it has ‘been seduced by Clare Short’ into a narrow focus on aid and aid effectiveness. ‘We have to get away from the agenda set by these declining organizations.’ In these he includes all those organisations ‘whose behaviour is shaped by a primary mission to transfer large amounts of money from the ‘North’ to the (old) ‘South’ in broadly ‘charity’ mode’. He concluded ‘the less we do with these declining organizations the better’ (though I presume this doesn’t extend to refusing their research grants….).

What to make of all this? Agreed with most of it, but was left wanting more – too much of it is already in danger of becoming received wisdom, at least among the progressive wing of development intellectuals. Most of the themes have appeared in this blog in one shape or another over the last 18 months. But then, in the words of my other favourite boxset, West Wing, I guess we should always be left asking ‘What’s Next’?

Bureaucrats; discussants; climate-beating technologies; development lists; books save lives; Banksy and the Manganiyar Seduction: links I liked

Photos of bureaucrats at their desks around the world [h/t Chris Blattman]

Also from Chris Blattman, how to be a good discussant

Matthew Lockwood surveys the emerging technologies that give him most hope for beating climate change

Time for some development lists: Nancy Birdsall and Owen Barder give their top ten things to do now to speed up development

How libraries can save lives – World Book Day was on 4 March [h/t Rob Cornford]

And, just because I had a brilliant cultural weekend, here are my two top tips:

Best film: Exit through the Gift Shop. Banksy does for street art what Spinal Tap did for heavy metal

Best musical performance: The Manganiyar Seduction – if they come your way, check these guys out. Extraordinary,

Gendercide, International Women’s Day and The Economist

The Economist magazine combines liberal economic orthodoxy (pro liberalization, anti state etc) with a politically liberal commitment to individual human rights. The latter presumably prompted this week’s cover story, Gendercide: What happened to 100 million baby girls?’ Even if it does come with the rest of the ideological baggage, (more on that later) it’s hard to think of any other mass market publication that would lead with that story. Respect. I assume the issue was linked to today’s 100th International Women’s Day, though no mention is made of it (maybe the author sneaked it through….)

The article updates Amartya Sen’s 1990 piece, which produced the original 100 million figure. It finds that the practice of selectively aborting female foetuses is spreading, both in China and India (the target of Sen’s original investigation) – see chart- but also including other East Asian countries such as South Korea, Singapore and Taiwan. former communist countries in the Caucasus and the western Balkans, and even in Asian-American subsets of the US population.

The acceleration is ‘a product of three forces: the ancient preference for sons; a modern desire for smaller families; and ultrasound scanning and other technologies that identify the sex of a foetus’. The new technology has seen selective abortion replace outright infanticide or the neglect of girl children as the main driver of the disparity. It also helps explain one of the more surprising findings – far from being some hangover of ‘backward’ thinking, within China and India the areas with the worst sex ratios are the richest, best-educated ones.

Another revelation is the difference between first, second and third children. The sex ratio is much more skewed as parents have more children and start to ‘demand a boy’ (see chart). Among third children in Beijing municipality there are almost three times as many boys as girls. The consequences? A rising population of frustrated single men, many of them in societies that put a huge premium on marriage, some strange economic side effects, such as increased savings rates as families save to set up their sons in a house fit for increasingly scarce brides (think bowerbirds) and anecdotal evidence of a fall in the value of dowry in parts of India (supply and demand at work).

The trends and consequences are grim, and there are few straws of hope to clutch at. One is South Korea, where the magazine sees a kind of gendercide Kuznets curve. ‘In the 1990s South Korea had a sex ratio almost as skewed as China’s. Now, it is heading towards normality. It has achieved this not deliberately, but because the culture changed. Female education, anti-discrimination suits and equal-rights rulings made son preference seem old-fashioned and unnecessary. The forces of modernity first exacerbated prejudice—then overwhelmed it.’

A recent study in China and India found that the gender ratio had at least stabilised at around 120 boys to every 100 girls. Perhaps a combination of social change and a shift in the relative prices of boys and girls (this is the Economist, folks) due to shifting supply can turn it around, but the evidence is thin.

Alas, the Economist’s readers don’t seem interested in such subtleties – the comments on the

The First International Women's Day - any Economist readers, I wonder?

website are a depressing mix of ‘See? The Chinese and Indians are barbarians’, and rabid right-to-lifers. Not much evidence of liberalism there.

And what does the Economist miss? Last word to Alice Evans, a PhD student at the LSE ‘never does the article explicitly note that these decisions (to abort/ starve girls) are the product of gender inequalities. Instead they blame: ‘the ancient preference for sons’ – as if this continued practice is just an old habit, rather than a rational response to prevailing inequalities in gendered rewards.’

If people want to dig deeper, here are the sources used for the article:

Gendercide The worldwide war on baby girls Technology, declining fertility and ancient prejudice are combining to unbalance societies Mar 4th 2010

“China’s excess males, sex selective abortion and one child policy”, by Wei Xing Zhu, Li Lu and Therese Hesketh. BMJ 2009

“Why is son preference so persistent in East and South Asia?” By Monica Das Gupta, Jiang Zhenghua, Li Bohua, Xie Zhenming, Woojin Chung and Bae Hwa-Ok. World Bank, Policy Research Working Paper 2942.

“Sex ratios and crime: evidence from China’s one-child policy”, by Lena Edlund, Hongbin Li, Junjian Yi and Junsen Zhang. Institute for the Study of Labour, Bonn. Discussion Paper 3214

“Bare Branches”, by Valerie Hudson and Andrea den Boer. MIT Press, 2004

“Is there an incipient turnaround in Asia’s “missing girls” phenomenon?” By Monica Das Gupta, Woojin Chung and Li Shuzhuo. World Bank, Policy Research Working Paper 4846.

Is BRAC the first international NGO from the South?

Thinking Big, Going Global is a new IDS working paper on what is arguably the first fully fledged international NGO from the South. Since 2002, BRAC, a Bangladeshi NGO, has gone global, expanding its programme of ‘microfinance plus’ (education, health, enterprise support, etc) to Afghanistan, Liberia, Sierra Leone, Southern Sudan, Tanzania, Uganda, and Pakistan, formally establishing BRAC International in mid 2009. It also set up BRAC UK and BRAC USA, mainly to raise funds. According to Brac International’s Imran Matin, BRAC’s total budget is about $500mn, about the same size as Oxfam GB, and it’s got there in half the time, being founded in the newly independent Bangladesh in 1972.

Going global does not appear to have been part of some grand strategy as much as a series of experiences in new country contexts, starting with Afghanistan in 2002. By 2006, BRAC was reportedly one of the largest NGOs in the country. BRAC drew four key lessons from this experience:

1. South-South collaboration worked, and motivated, experienced Bangladeshi development

BRAC Afghanistan Training and Resource Centre

professionals could work successfully with trained local staff to deliver a rapid programme expansion.

2. The basic elements of the BRAC development model worked and could be replicated, once adapted to local conditions. In Afghanistan, schools had to be for girls only, and the costs of delivering services were higher.

3. The value assigned to a philosophy of scale, to ‘serve as many people as possible’, has been important for staff motivation.

4. Resource constraints can be overcome. BRAC Afghanistan initially received a small grant from BRAC Bangladesh and donor funding followed once results were demonstrated.

The only comparable Southern-based organisations are microfinance institutions like Grameen Bank, but BRAC is pretty much the only ‘microfinance plus’ organization to achieve this kind of scale. And scale is central to its philosophy – for BRAC, small is stupid. Or as its founder/CEO F.H. Abed more diplomatically puts it, ‘small is beautiful, but big is necessary.’ The organization has 115,000 staff in Bangladesh, and 6,000 in the international programme.

BRAC Liberia

So how is BRAC different from Oxfam or other northern-based international NGOs? According to the IDS paper, written by Naomi Hossain and Anasuya Sengupta:

BRAC’s strategy is to create entire new frontline organisations in the new countries, rather than to act as brokers for international aid.

A second difference between BRAC and other international NGOs is that many of the latter have moved away from direct service delivery towards ‘strategic’ high-end policy or rights-based advocacy work since the 1990s. BRAC on the other hand, is quite happy to do service delivery, and doesn’t seem to share other INGOs’ worries about undermining state systems.

BRAC staff do not receive high international NGO salaries. They are paid twice what they would earn in Bangladesh, as well as modest expenses, a total which probably comes to half the salary of a UK-based international NGO. Nor does BRAC follow the stringent and costly security rules of other international actors.

It all reminded me of the discussions on China’s role in Africa. BRAC arrives, does service delivery at scale and low cost, free of the colonial baggage and expat culture of northern-based international NGOs. In countries like Afghanistan, it is seen as less alien, more muslim. But it seems to pay scant attention to the wider political and social impact of its work (although to be fair, it did set up a relatively small BRAC Advocacy and Human Rights Unit in 2002, along with a BRAC University and research institutes).

The IDS paper ends with a question, which it doesn’t attempt to finally settle: ‘Is
BRAC an ‘alternative’ development approach? Or merely the hand-maiden to
neoliberal development policy?’ Whatever the answer, watching BRAC’s progress will be fascinating (and educational for more northern, and perhaps more sluggish, INGOs).

Ending the Doomsday Cycle of global finance

‘Each time the system runs into problems, the Federal Reserve quickly lowers interest rates to revive it. These crises appear to be getting worse and worse.’ So begins a sobering analysis by Peter Boone and Simon Johnson in the CentrePiece, the journal of the LSE’s Centre for Economic Performance.

The argument is contained in the two graphics. First the  historical record – as private sector credit has grown relative to the economy, the Fed (US Central Bank) has been forced to socialize bad debts and drop interest rates lower to dig the economy out of each successive crisis and start inflating the next bubble. ‘When the bailout is done, we start all over again. This has been the pattern in many developed countries since the mid- 1970s.’

But in the latest crisis, the interest rate has pretty much hit zero – there’s nowhere else to go – and ‘The real danger is that as this cycle continues, the scale of the problem is getting bigger. If each cycle requires greater and greater public intervention, we will surely eventually collapse.’

‘So what should be done? First, consider the regulatory problem: there are two broad ways to view past regulatory failure that has helped us arrive at this dangerous point. One is to argue it is a mistake that can be corrected through better rules. That has been the path of successive Basel committees.’

But it won’t work because of politics – the second graphic: ‘In our view, the long-term failure of regulation to check financial collapses reflects deep political difficulties in creating regulation. The banks have the money, they have the best lawyers and they have the funds to finance the political system.’

So what might work better? Something so crude that the lobbyists can’t mess with it: ‘We believe that the best route to creating a safer system is to have very large and robust capital requirements, which are legislated and difficult to circumvent or revise. If we triple core capital at major banks to 15-25% of assets, and err on the side of requiring too much capital for derivatives and other complicated financial structures, we will create a much safer system with less scope for ‘gaming’ the rules.’

And get stuck into the incentives system: ‘Second, we need to make the individuals who are part of any failed system expect large losses when their gambles fail and public money is required to bail out the system…. This requires legislation that recoups past earnings and bonuses from employees of banks that require bailouts.’

And a wonderfully simple way to overcome the ‘too big to fail’ syndrome: ‘We could impose rising capital requirements on large institutions over the next five years, thus encouraging them to develop orderly plans to break up and shrink their banks.’

The alternative is truly scary: ‘With our financial system now well-oiled to take on very large risk once again, and to gamble excessively, can we be sure that we can continue this cycle of bailing out eventual failures? At what point will the costs be so large that both fiscal and monetary policies are simply incapable of stopping the collapse? Last year, we came remarkably close to collapse. Next time, it may be worse. The threat of the doomsday cycle remains strong and growing.’

This may all sound an insider City/Wall Street argument, far removed from the gritty realities of shanty town and village in developing countries, but as the current crisis has shown, the chaos of the rich world’s casino capitalism casts a long shadow. It matters who wins this one.

The State of World Hunger in Graphs

This from the FAO’s ‘State of Food Insecurity in the World 2009′. Click on the graphs.

After decades of improvements, the number of undernourished people (in millions) in the world has been rising rapidly since the mid 1990s.

Even as a proportion of total population, hunger started rising in the middle of the last decade

This is partly because aid to agriculture has been collapsing for decades (% of total aid)

The global crisis of 2008/9 hit Asia particularly hard (percentage increase in malnutrition in 2009)

 And food prices are continuing their rebound (this from the FAO’s World Food Prices Index - the orange line is the latest and shows that food prices are already back to late 2007 levels)

Gonzalo’s blogging; Labour rights in China; insider stupidity; we’re all doomed; precision v knowledge; hamster economics; hope in Haiti and putting the UN to music: links I liked

Hablas Espanhol? Because my compadre, free spirit and innovative thinker on development,

Our Man in Madrid

Gonzalo Fanjul at Oxfam Intermon in Spain has just started a new blog on development issues. First few posts include why conflict leads to reduced infant mortality and agonizing over human rights in Cuba.  Brainfood guaranteed.

Strengthening the rule of law in China one case at a time – the work of the China Labour Bulletin

Why intelligence clearance turns you into a moron [h/t Alex Evans]

‘Unhappily, the result of what I call success would probably be a still bigger financial crisis in future, while the results of what I call failure would be that the fiscal rope would run out.’ Martin Wolf thinks the chances of the world economy moving from public bail out to sustained recovery are very slim.

Academic precision and the destruction of knowledge from Richard Gowan

‘it’s economically illiterate and its tone is pretty smug…… one might get more sense out of a hamster.’ Matthew Lockwood takes no prisoners in his two-part critique of the new economics foundation’s ‘Growth isn’t Possible’ report.

“I didn’t know I had this in me. It’s during the earthquake I realized I can be a good leader.” Oxfam America talks to the new generation of young Haitian leaders emerging from the rubble.

UN debates and US healthcare reform given a musical makeover [h/t David Steven]

The Robin Hood Tax takes off: update, arguments and counterarguments

The Robin Hood Tax campaign has certainly struck a nerve. On the one hand, huge public support (within three weeks of the launch, 300,000 views of the Bill Nighy youtube, 120,000 fans on Facebook, 30,000 signed up on email) and serious political interest (UK parliamentary launch with 80 MPs, lobby meetings with all the major parties). But also a significant amount of ‘pushback’ in the blogosphere and op-ed columns. Criticisms fall into two broad camps: although it’s an interesting phenomenon, I don’t intend to discuss the first – the ‘who does Bill Nighy think he is?’ tendency of policy wonks who clearly resent upstart celebs speaking out (except to say that Bill’s been campaigning for Oxfam for years, and that the policy wonks are presumably jealous at how much coverage he gets). Let’s get onto the substantial stuff. In the initial exchange of fire, two main issues emerged:

1. Who pays in the end, assuming $400bn doesn’t just come out of thin air? Critics like the FT’s Tim Harford claim that calling it a ‘tax on bankers’ hides the fact that ordinary punters will pay in the end.

My response: Because it is levied once per transaction, the FTT acts as a kind of frequency filter. If a financial institution turns over its whole portfolio once a day, it will pay 365 times as much tax as one that turns over its portfolio once a year. So in the first instance, the tax will fall on high frequency traders like hedge funds and the proprietary trading houses of investment banks, not on low frequency traders like retail investors, people changing money to go on holiday, or high street banks. 

But who has their money in the hedge funds? Well up until recently, it was almost entirely ‘henwees’ – High Net Worth Individuals (HNWIs) – so an FTT would have been hugely progressive, affecting only rich individuals ability to ‘use money to make money’. Admittedly, in the last few years pension funds and other institutional investors have started buying into the more speculative investment vehicles, so the boundary has got a bit more blurred. According to a recent report in the FT ‘most UK schemes were now looking to allocate up to 15 per cent of their portfolio to hedge funds’, although the current percentage is well below that. So an FTT could deter pension funds from moving into higher risk investments – arguably no bad thing. But yes, even though overall, an FTT would be extremely progressive, there would be some pass through to pension plans. In practice, however, an FTT would in reality be a family of taxes at different levels on different kinds of transaction,  and could be fine tuned to maximise that progressivity.

2.  If we don’t introduce it in all countries at the same time, it will put those that do at a commercial disadvantage, and lead to a mass flight of financial institutions.

My response: Ideally an FTT would be applied globally by all countries.  But while this is being negotiated at the G20 and elsewhere, there is nothing to stop governments taking steps, either as a group of like-minded countries, or unilaterally.

And here’s what for me is the killer counter-argument to this objection. A range of domestic FTTs imposed by different countries already exist! They show that unilateral action is completely possible, and that fears that introducing a tax makes firms go elsewhere are overblown:

- UK: a 0.5% Stamp Duty on share transactions raises more than £3.2 billion each year
- US: a small transaction tax finances the Securities and Exchange Commission
- Belgium: An FTT on the transfer of shares, bonds and other securities. At a rate of 0.5-1.7 % it raised Euro 147 million in 2005.

So if the UK investment houses are willing to stomach a 0.5% tax on share transactions, are they really going to flee these shores over a tax 10 or even 100 (in the case of currency transactions) smaller? Unlikely.

There are a number of other points that get picked up with less regularity: there are other taxes like a wealth tax that are even better (see my previous response); an FTT wouldn’t necessarily curb volatility (I have some sympathy with that one); we should go with an expansion of President Obama’s levy on banks instead (as well, maybe, but not instead – you won’t see much cash for climate change or development out of a bank levy).

And the question that’s been nagging at me for weeks finally surfaced at the parliamentary launch last week. Suppose an FTT were to be be introduced – what guarantee would there be that the revenue would not all go straight to filling fiscal holes in the North, rather than half of it going to climate change and development, as proposed? Two responses: firstly, moral suasion – governments would need pretty thick skins to raid the money destined for development. But thick skins go with the job description, so we also need to think through the mechanics of how the tax would be levied, and see if there is a stage before it reaches the hands of finance ministries, where it could be channeled into arms-length escrow-type accounts that would then distribute it in pre-agreed proportions.

Finally, some stick is being handed out to the Robin Hood Tax campaign for the (over) simplicity of its messages (see Tim Harford’s follow up post). To which I would respond, duh, there’s a clue in the title – it’s a campaign, not a seminar. Campaigns need to have clear messages that inevitably do violence to some of the detail, but the groups that constitute the RHT are busily having detailed grown-up policy discussions with decision makers, reading the research, commissioning new work etc etc.

So where do I think the criticisms are justified? I think there are two places. Firstly, we should have made it clear that we were always talking about banks and other financial institutions, not just the banks, and that we recognized that money does not come out of thin air (but that this is a very progressive way to raise it). Mind you, ‘a tiny tax on wholesale transactions in financial markets’ isn’t quite as catchy – back to campaigning again.

Secondly, we should probably have devoted more attention to putting forward our thinking in policy wonkland, perhaps with a separate geeks website for debate, exchanges of information and research etc. That’s something we need to sort out as the campaign develops. But there should be no let up on the public campaigning – Bill Nighy. Richard Curtis et al have brought this discussion to a level of prominence that ‘undercover economists’ could only dream of. All power to them.

Last word to Einstein: ‘We should be on our guard not to overestimate science and scientific methods when it is a question of human problems; and we should not assume that experts are the only ones who have a right to express themselves on questions affecting the organization of society.’ I’m with Albert.

Update 2 March: for more on ‘who pays the tax’, read this excellent paper by Sony Kapoor (who also gives Tim Worstall a good going over in the comments to this post).