Milton’s pencil; lattes and climate change; mobiles and emergencies; US cuts aid; Delhi’s 24 hour traffic; DG FB Q&A; into darkest Austria: links I liked

Dani Rodrik reflects on Milton Friedman’s famous pencil, which he portrayed as a miracle product of efficient free markets. Now they are mostly made in China, thanks in part to lots of naughty state interference. Oops.

Climate change is threatening your latte : Starbucks is worried enough about climate change (it will damage its coffee supply) to start lobbying Congress

Emergency response via mobile phones – it works

The US is looking at the first aid cuts in a generation. Kevin Gallagher and Katherine Koleski discuss.

‘At 10pm, the police allow the heavy goods vehicles that need to traverse Delhi into the city. With no proper bypass, a small army of honking, overloaded, low-geared, multicoloured road behemoths gathers during the afternoon on all approach roads.’ Jason Burke evocatively captures the 24 hour cycle of Delhi’s traffic.

I have no idea what this involves, but I will be taking part in a live Facebook Q&A between 1pm and 2pm this Friday (21 October) on the GROW campaign (this is GROW week). Feel free to join me as I struggle to overcome my FBphobia……

Into darkest Austria. An African ethnographer in Europe  – a truly delightful spoof. ‘Why do Alpine people need rituals, disguises, ceremonial music and processions when they want to experience a sense of clanship?’ Answers to this and other pressing questions. It’s 45 minutes long, so make some time, grab a glass of wine, and enjoy yourself. [h/t Texas in Africa]

Development’s Cinderella? Why does the aid industry ignore disabled people?

This is a guest post from Tim Wainwright, an Exfam (ex-Oxfam) friend who now runs ADD International, an NGO working on disability and development. An edited version appeared yesterday on the Guardian Poverty Matters blog.

It really does puzzle me. Why does so much of mainstream development’s resources, research, campaigning efforts and attention ignore disabled people?

Around 1 in 7 of the world’s population – 1 billion people – are disabled. Few extended families will not have a child, a parent, or a grandparent who is disabled. And disabled people will certainly be a significant proportion of the estimated 300 million plus chronically poor stuck ‘below the line’ even if the MDGs succeed in halving poverty by 2015. This is because disability can trap individuals and their families in poverty – and living in poverty also means you’re far more likely to be born disabled or to become disabled. The figures bear this out: within this group there are staggering levels of unemployment (80-90%), literacy rates as low as 3%, and one of every three children not in school are disabled. This is before we even begin to consider the huge number of people whose lives are affected by disability – such as a child who has to leave school when her father becomes disabled through an accident at work.

Talk to any disabled person about their experiences and they will soon tell you about the assumptions and discrimination they face in all areas of life. Just this week I spoke to Said in Tanzania, a young man who is dealing not only with the problems of visual impairment, but also the fear and rejection of his family and community. As a child his relatives refused to buy him a uniform so he could go to school, telling him ‘You are like a dead person to us’.

It is often these negative attitudes that make it harder for disabled people to access their basic rights and to have a voice within their families and communities – let alone at the policymaking level. Our long experience of working with organizations of disabled people has demonstrated, time and again, the powerful difference that disabled people can make by coming together and challenging the assumptions and discrimination which hold them back. This change is going on at all levels – from the grassroots, where activists like Said seek out other disabled people in the community and mentor them in tackling discrimination and accessing opportunities – to the policymaking level, where national disability movements campaign for disability legislation and practical policies to ensure that legislation is implemented.

This is what disabled people are doing. But where are these issues in the mainstream? The Education MDG (the only MDG using the word ‘inclusive’), has a 100% target of school attendance. Yet many education programmes (including large multidonor trust funds) don’t check if disabled children are being reached by their work.

There are exceptions. Some big donors and INGOs have ‘disability units’ and make grants to disabled people – but might not mention that this makes up a tiny percentage of their overall funding. Some have gone further – many Scandinavian donors have excellent policies, and USAID and AusAID have both prioritised disability in helpful ways – as well as admitting they have a way to go. Prior to its closure this year, World Vision’s disability mainstreaming unit published useful materials. But overall, coverage is very thin.

Disabled people appear to be in the same position in the development debate as women were 20 years ago. Not employed by the development industry, not seen and so not reached. I am not suggesting all development work is now gender-sensitised, but compared to disabled people, women do nowadays at least seem to count, and to be counted.

Disabled women are doubly discriminated against. At ADD International we support disabled women to organise and successfully challenge gender based violence (2-3 times higher than for non-disabled women) or to campaign on education where the 3% levels of literacy sink to the shocking level of 1% for disabled women.

I have heard of people in very senior positions in international development saying ‘we do poverty, not disability’. When I worked in the mainstream, there was a sense of competition between development workers who managed to focus their work on the most remote tribal village, to reach the most excluded minority group. Disabled people, particularly women, are probably the poorest and most excluded group there is – but for some reason don’t seem to attract the same level of attention.

It’s true that disabled people are more likely to be economically inactive; many will have lacked food, clothing or access to education from an early age. But this can be overcome – at ADD we have seen many times over how, with support, disabled people can overcome barriers and establish successful small businesses.

So what is it that stops the vast majority of development professionals thinking about this group of people? Is it possible that most still perceive disabled people as a ‘special interest group’, which organisations may or may not take an interest in? Perhaps women in development were once seen in this way – before an understanding of gender issues became mainstream. Our society might now be less patriarchal but are we still living in an ‘ability-archy’?

My challenge to the mainstream is this: Would it be so difficult to put women and disabled people at the heart of everything you do? Employ representative numbers of disabled people in your teams? Make all your offices accessible? Ensure your development work involves and benefits disabled people equally?

Many people think this would cost the earth – but it doesn’t – WaterAid recently published the results of a study in Ethiopia showing that delivering water and sanitation in an accessible way only costs 2-3% more.

I have spent many years working in mainstream development. I now run a disability focussed organisation, and can tell you truthfully that I have never been so inspired by what a particularly challenged group of people are able to achieve, when they are empowered to organise, form self help groups, understand their rights, and have the opportunity to take control of their own lives. I don’t believe disabled people need a non-disabled Prince Charming – they just need an invitation to the ball.

And here’s a 14 minute ADD video to back up Tim’s arguments:

Capitalism’s golden age v a lost 30 years – great infographic

From the New York Times (there’s more that’s not included here, so worth going to the original). If you can’t read the text, keep clicking to expand the images. An old story, but well worth retelling, especially like this. At no point does it say that this data is for the US economy – seems that imperial habits die hard, however bad the economy…….. [h/t Kate Raworth]

and

Responding to emergencies: is the centre of gravity shifting away from the UN towards national goverments?

Ed Cairns, Oxfam’s Senior Policy Adviser on this kind of thing, explores the shifting sands of humanitarian aid policy

After a flurry of reviews and new policies on all aspects of aid, the UK put out its new humanitarian policy, Saving Lives, Preventing Suffering and Building Resilience, a couple of weeks ago. Not every word is new – it owes a lot to the review DFID commissioned from Paddy Ashdown, former High Representative in Bosnia, earlier this year.

More importantly though, it’s rather good – in some parts even brave. If the UK really means to implement its new policy, we’re going to see some improvements. Not that the UK is a bad humanitarian donor. Far from it. It’s been the third largest humanitarian donor, but, according to the independent Humanitarian Response Index, the UK ranks only 8th among OECD donors for spending its money according to agreed international principles. Even in humanitarian action, the UK just can’t shake off the suspicion that it’s sometimes peddling its political or security interests. A lot of this stems from the UK’s continuing closeness to the US. In 2010, it was the US and UK, according to UN insiders in Pakistan, that tried to pressurise humanitarian agencies to make use of NATO’s ‘air bridge’ to fly in flood relief – an initiative that had more to do with promoting NATO than creating an effective disaster response.

Now though, DFID’s new humanitarian policy speaks passionately about ‘preserving the civilian nature of humanitarian assistance’ and the threat that ‘access may be compromised when humanitarian aid is perceived to be linked to political or military goals’. Quite so.

More fundamentally, the new DFID policy puts building long-term resilience to disasters at its very heart – ‘a core part of DFID’s approach in all the countries where we work’. As we see in the Horn at the moment, terrible disasters will always be with us. There will always be a need for relief and response. But DFID gets the big point: that a much greater focus of humanitarian action should be on helping countries and communities build up their own strength to cope with disasters – which means that the long-term development and humanitarian enterprises are not so different after all. We need not only the leadership – often lacking – to ‘call’ a disaster at the first warning signs, but the far longer-term work of making people less vulnerable to disasters forever.

Where DFID is quite brave is in criticising the UN – though still too mildly, in my view. In the humanitarian field, ‘the quality of UN leadership is not consistently good’.  DFID is British after all; it does understatement, but over the last couple of years, DFID has seemed significantly more critical of UN performance than when, in the middle of the last decade, it encouraged the UN’s Humanitarian Response Review, and put its faith in the ‘cluster system’ and other conclusions from the review to deliver results. In sorrow rather than anger, most humanitarians now see those results as modest and disappointing. In the bigger picture, this December will mark 20 years since the UN General Assembly set up what is now OCHA, the UN Office for Coordination for Humanitarian Affairs, to ‘make more effective the collective efforts of the international community, in particular the UN system, in providing humanitarian assistance’. We have come a long way since the 1980s, but after overstretched responses to Haiti’s earthquake or Pakistan’s flood in 2010, who now believes that UN humanitarian performance has improved as much as it should have in those two decades?

Indeed, it is perhaps that very overstretch – an international humanitarian system incapable of responding to the world’s increasing humanitarian need – that DFID does not yet quite grasp.  For all its many strengths, UK policy still looks like a document written in a Western-centred world, in which international humanitarian action is the most important thing.

Think again. International aid reached only half the 14 million people affected by last year’s Pakistan floods. An enormous proportion of assistance to disaster victims already comes from within their communities, local authorities and Southern-based organisations. That proportion is likely to expand. While it is shocking how little international donors give in humanitarian aid – around $60 for each person in need – nobody believes that in the current economy that amount will substantially increase to meet the demand from a rising tide of often climate-related disasters.

DFID is, more than anything, a donor and it inevitably sees the world through a donor’s lens. If there’s something missing in its new policy, it’s the sense that the world is moving from a Western-inspired, UN-centric model of humanitarian response, to something much more diverse, localised and sustainable. And that means that donors should think more – even more, to be fair, than DFID already does – about substantially increasing their support to disaster-affected countries to build both resilience, and their immediate capacity to respond.

Jeff Sachs = marmite; how to make aid workers read; big beasts 4 Robin Hood; money 2 mobiles (randomly); Tories 4 Africa; Ugandan land grabs: links I liked

‘Jeffrey Sachs is Marmite. Some love him…..’ Nice update on the Millennium villages Project (and its critics) from the Guardian’s Madeleine Bunting

Martin Ravallion takes time off from supplying research to worry about the demand side. How to get can-do development workers to also be can-read (preferably before doing)? Answer: mandatory literature reviews before taking any action. Sounds good to me.

‘A financial transaction tax would actually increase the efficiency of the allocation of capital: it would improve the functioning of capitalism, rather than undermining it.’ Robert Peston, the BBC’s weird-but-influential Business Editor, comes out in support of the Robin Hood Tax and adds some good ideas for making it harder to avoid. Avinash Persaud, another financial heavy hitter, also gets behind the proposal.

A mobile phone version of chucking money out of helicopters. Give Directly transfers your donation straight to the mobile phones of ‘people likely to be poor.’ A more progressive alternative to quantitative easing?

I was all ready to be rubbish this as just a public relations stunt, but it really is rather impressive. The ruling British Conservative Party (yes the one once led by Margaret Thatcher), decided to turn its one free TV slot over to an appeal for East Africa. Any chance of the Democrats (let alone the Republicans) doing the same thing in the US? Or sending a group of party members to do voluntary work in Rwanda every year?

A 6 minute video on the Uganda land grab story I covered a couple of weeks ago

An American thinktank in London – development BS (blue-sky) session with the new CGD Europe

I attended the informal unveiling of Owen Barder (right) as CGD’s new Mr Europe last week. The Center for Global Development is a top US thinktank (plus some occasionally unhinged health people), and its boss and ubernetworker Nancy Birdsall flew in to cut the ribbon. It was all very pleasant – top notch sandwiches in a swanky old building that used to belong to MI6’s ‘Section 1’ that bugged the Soviets. We discovered this because they attempted to recruit Owen there in his student days. He says he rebuffed them, but it could just be a clever double bluff…….

Sandwiches munched, we sat round a table and did the Friday afternoon blue sky thing, chewing over potential roles and collaborations for CGD Europe. CGD’s niche is focussing on the roles and responsibilities of the rich and powerful (nations and increasingly, companies).

Some highlights:

Owen set out three areas of possible work: illicit financial flows, Brussels institutions and bridging the European-US divide on Climate Change.

Other topics discussed included rich country responsibility for the mayhem of the drugs trade, the need for a lot more work on inequality and redistribution (I even found myself defending the World Bank for the recent WDR…), and tackling land grabs.

Frances Stewart made a powerful pitch for reframing the debate in terms of common challenges (inequality, climate change, the destructive impact of the hyper-rich) rather than the ‘us-them’ framing of traditional development debates.

Andrew Rogerson drew a nice distinction between weakest link problems and posse problems. Weakest link problems are those that require unanimity for a solution (eg eradicating polio or any Eurozone parliament rejecting the Greek bailout and bringing the whole thing down), whereas posse problems mean a ‘coalition of the willing’ can make progress without unanimity (eg improving the quantity or quality of aid).

I tried to earn my sandwich by throwing in a few ideas:

Expanding into Europe right now looks pretty strange – rats jumping on board sinking ships etc – but maybe CGD could lead in thinking through the development impacts of a major Eurozone crash?

As NGOs we are increasingly banging up against enormous systemic issues that, to be honest, can seem a bit beyond us. Definancialization of the global economy; the compatibility or otherwise of growth and resource constraints – that kind of thing. Could CGD play a role in getting such paradigmatic discussions under way?

I’m not a big fan of the CGD’s flagship Commitment to Development Index, because it’s so top down (sages in Washington judging rich country governments). Why not introduce at least an element of bottom up – ask developing country governments to anonymously rank the rich countries for their performance on aid, trade, investment, multilateralism etc etc?

Exploring ‘no regrets/black box’ solutions to problems that we don’t really understand. For example, can we devise a response to financial speculation that will work if it does indeed drive food price volatility, but won’t do any harm if our diagnosis is wrong, as some claim? See Ruth Kelly’s recent post on speculation, but I suspect there are many such issues, eg on climate change, where we don’t have the luxury of waiting til we fully understand the problem before having to take action.

I also pushed (rode?) a couple of hobby horses familiar to diligent readers of this blog

– making more of the lessons of history from now developed countries in terms of the kinds of policies and institutions (legal, social policy, redistribution, migration, urbanisation) they used when they were taking off

- Coming up with some MDGs for the top billion (if only to liven up what could be a truly awful data-head debate on what comes after the 2015 MDG deadline).

It feels very good (and natural) to have CGD in town. Looking forward to lots more sessions like this one (both the sandwiches and the ideas).

Murder and Development – what’s the link?

“There are many reasons why people kill each other and multiple driving forces often interact when they do, but homicide levels and trends indicate that the link between homicide and development is one of the clearest. Higher levels of homicide are associated with low human and economic development.

The largest shares of homicides occur in countries with low levels of human development, and countries with high levels of income inequality are afflicted by homicide rates almost four times higher than more equal societies.

Homicide and property crime were affected by the global financial crisis of 2008/2009, with increases in homicides coinciding with drops in Gross Domestic Product (GDP) and rises in the Consumer Price index (CPI) in a sample of countries affected by the crisis. Likewise, levels of economic performance also have an affect on homicide.

Homicide rates in South America, for example, have decreased during periods of economic growth in the last 15 years. Homicide trends also followed the economic fluctuations in many of the countries that once formed part of the Soviet Union, by increasing when GDP dropped in the aftermath of its break up, before decreasing once their economies had recovered.

Long-term, sustainable economic and social development also requires governance based on the rule of law. Indeed, in all countries where there has been a strengthening of the rule of law in the last 15 years there has also been a decline in the homicide rate, while most countries where homicide has increased have a relatively weak rule of law.”

From the UN’s 2011 Global Study on Homicide

Other bits: 

Globally, the total number of homicides in 2010 was 468,000. More than a third (36 per cent) of those are estimated to have occurred in Africa, 31 per cent in the Americas, 27 per cent in Asia, 5 per cent in Europe and 1 per cent in Oceania.

Women may make up the majority of victims of intimate partner/family-related homicide, but the bigger picture reveals that men are most often involved in homicide in general, accounting for some 80 per cent of homicide victims and perpetrators.

Southern Africa and Central America, South America and the Caribbean have considerably higher homicide rates than other subregions, while, at the opposite end of the scale, Western, Northern and Southern Europe, and Eastern Asia have the lowest homicide rates.

And the most lethal countries in the world are (in descending order) St Kitts and Nevis (eh?), Guatemala and Honduras, with 85, 84 and 83 murders per 100,000 people respectively. Great, now I’m really looking forward to my trip to Guatemala next month.

[h/t Ed Cairns]

Why do global campaigns succeed or fail?

Campaigning for International Justice is a new report by Exfamer Brendan Cox (left), who went off to work for Gordon Brown and recently became Director of Policy and Advocacy at Save the Children (incestuous, nous?). It covers two big areas: a retrospective ‘Learning Lessons’ study of eight global campaigns between 1991-2011, and a ‘Where Next’ bit of crystal balling for 2011-2015. I’ll focus on the first part, as I found the second fairly standard (multipolar world, go digital etc, top tips for good potential campaigns: inequality, women’s rights, social protection, ending poverty, democratization, trade or climate change). Apologies for a long post, but there’s a lot of substance in here.

Part 1 starts with a strong whiff of Make Poverty History nostalgia, arguing that ‘in the last five years the sector has been unable to replicate the scale of previous successes. This is due in part to a change in the international context, but it is also because the sector has become increasingly bad at learning the right lessons from its past successes.’ Brendan then tries to distil those lessons.

The eight campaigns each get a handy two page potted summaries. They are Make Poverty History (MPH), Jubilee 2000, the International Campaign to Ban Landmines (ICBL), the Treatment Action Campaign (TAC), Publish What You Pay (PWYP), the Save Darfur Coalition (SDC), Trade Justice—comprised of the Make Trade Fair (MTF) and Our World Is Not For Sale (OWINFS) campaigns, and the Global Campaign for Climate Action at Copenhagen (GCCA and TckTckTck).

The report distils the lessons of success and failure under: Collective Action, Structure, Campaign Objective, Leadership, Political Strategy, Branding, Celebrities, Internationalism and Funding.

His conclusions? My cut and paste may introduce a bit of incoherence, but here’s what jumped out for me:

“Coalition is king. The most successful campaigns are all coalitions— and generally big ones. However, effective coalition campaigns are harder to form by civil society because of their high transaction costs, the growing need for clear attribution and organizational differentiation, and the fact that many NGOs are now internal coalitions. A key consideration to ensuring effective coalitions is their structure. Three types of structures were identified as underpinning the coalitions studied: secretariat-led, collaborative and flotilla….. The recent trend toward lowest-common-denominator “coalitions,” in which groups loosely collaborate with each other but fail to align strategy, branding, or even policy, should be entered into only as a last resort.

The model that appears best able to deliver multicountry campaigning is the one followed by the International Campaign to Ban Landmines (ICBL) and Publish What You Pay (PWYP). The structure in both cases was based on a clear delineation of responsibility, with national coalitions joining an overarching central campaign that was responsible for the overall direction. [In contrast] campaigns that start as nationally focused and try to go international struggle to achieve the sense of ownership and clarity of structure needed to make international work effective.

One of the most contentious areas of political strategy is the balance between insider and outsider approaches and the risk of being co-opted, generally by government. The insider/outsider division also tends to mirror an incremental/radical divide. This divide has become artificially enhanced over time. What is clear is that more radical groups and campaigns have a strong record of trailblazing, shifting the political center of gravity, and investing in controversial policy areas and making them safe over time. However, it is equally true that the evidence strongly suggests that campaigns willing to balance ideal policy objectives with political strategy are the most successful in actually achieving change. The opportunity for complementarity between the different strands could be increased by an acceptance of their respective roles and strengths, increasing dialogue between the different approaches, and more radical groups focusing on longer-term policy objectives that they want to bring into the mainstream rather than short-term campaigns where their radicalism can be ineffective. It is also clear that there will be circumstances where the more radical groups are actively counterproductive or irrelevant, and if progress is to be secured the more mainstream groups will need to have the confidence to push on without them.”

Brendan gets particularly down and dirty on Make Poverty History, slagging off GCAP, War on Want, World Development Movement and Christian Aid for condemning the Gleneagles deal, while acknowledging the challenge of balancing access to governments with cooption by them:

“Overall, there was a strong symbiotic relationship between MPH and the U.K. government. The unspoken pact was that government would share information with NGOs about other governments’ positions to inform their lobbying and would spend political capital with core targets and build expectations around the summit in order to help the campaign in its objectives. On the other side, the campaign would push other countries domestically and create a constituency within the public that engaged in the political process and would welcome progress if it came.”

Then some thoughts on the campaigning nuts and bolts:

“The creation of a unified campaign brand helps the campaign have real impact, particularly in the case of mass mobilisation campaigns. Despite this evidence, civil society is increasingly averse to creating jointly branded campaigns, primarily due to concerns over individual brand visibility. It will take renewed leadership from the major players in the movement if joint campaign brands are to be built. In an era when those big organisations are facing budget pressures due to the financial crisis and campaigning competition from smaller, more agile Internet campaign groups that tend to be more brand precious, it seems less likely that this will be forthcoming without significant changes in the sector.

What all campaigns have in common is a need for resources. Perhaps surprisingly, none of the campaigns studied was initiated by an individual funder or group of funders. Many of those interviewed argue that this is critical to campaigns being seen as legitimate and ensuring that there is a group of committed people at the core of the campaign, rather than groups primarily interested in funding opportunities.”

He’s also interesting on climate campaigning, pointing out that what makes it different from other campaigns is the existence of a bottom line, in the shape of science.

“In the case of debt, landmines or conflict, the issues are moral questions, but the answers are subjective policies, so the asks that come from them can be fashioned by balancing the ultimate objective of the campaign with what is achievable and would have most political salience. In the case of climate change, most groups feel they do not have this flexibility because they see sticking to the science as critical to their credibility. As a result, the usually more moderate campaigners feel forced into more hardline positions. Campaigners feel that in many ways this is a strength; it gives their policy asks a basis in fact. However, several also accepted that it could also act as a constraint, making the movement unable to show flexibility or welcome incremental progress….. and thus build momentum.”

Overall, what comes across are the reflections of an astute practitioner on the tactics, tone, alliances, branding and inevitable compromises of campaigning. His grasp is less sure when it comes to the broader issues of political economy and shocks – the tides and events in public affairs that often play a huge part in determining whether a campaign succeeds or not. From the days of the anti-slavery campaigns of the 18th and 19th century, shocks such as war or economic collapse have been crucial to social change, but are systematically underplayed by campaigners. Just one example: the 7/7 terrorist attacks in London in the middle of the Gleneagles summit were a crucial reason why other leaders caved in to the British push for aid and debt relief, yet get no mention here. More generally, I have real questions about how the kind of giant, ramshackle campaign coalitions discussed in this paper can also be agile enough to react to the new opportunities presented by unexpected events, but Brendan, who seems happier in the steady state campaign planners’ world, doesn’t discuss this.

Minor quibbles – any campaigner should study this paper and reflect.

Food and Finance: a little less speculation, a little more action please…

Some good sense on a polarised topic from Ruth Kelly, Oxfam economic policy adviser and co-author of a new paper on speculation and food prices.

When they work properly, financial markets are great at greasing the cogs of the food system. Why, then, are so many people blaming speculation for recent food price spikes?
 
First here’s how markets ought to work. People all along the food supply chain use them to hedge their risk. At the moment food prices are exceptionally high and rising and, as they rise, they are shooting up and down in a completely unpredictable way. So for a premium, speculators guarantee a future price for those buying and selling food, taking a gamble that prices on the market will be higher than the price they have guaranteed so they can pocket the premium without having to cough up – if things go the other way, the speculators may lose but they are big enough to take that risk.
 
There are other benefits. Since there is very little public information about physical markets in agricultural commodities, buyers and sellers of food rely on financial markets to help them determine the right price. Each speculator comes with a little bit of information that they share by buying and selling, bringing the price of agricultural derivatives very close to the price producers should be charging for food.
 
Better still, financial markets allow agricultural assets to be turned into cash quickly and easily. This is crucial in a market where assets can only be sold in bulk at harvest, leaving participants with major cash flow problems. Having a bunch of savvy speculators monitoring market dynamics and in response, buying or selling agricultural derivatives, brings liquidity, moving money around while the crops are still in the ground to help the market work more efficiently.
 
That’s why financial markets are great when they work. But right now, they’re broken: the deals that are being done have lost their grip on the reality of food production and distribution. Even analysts who think that there is no link between speculation and food price volatility admit that the way the markets are working at the moment is making people very nervous. And nerves breed panic and panic inflates bubbles and bubbles eventually burst.
 
First, socially useless speculation, where agricultural derivatives are bought and sold irrespective of the price, with other speculators following like sheep, can lead to a situation where everyone is buying and no-one is selling and prices keep on spiralling upwards. Instead of bringing liquidity to the market, this type of speculation sucks it out.
 
Add this to the growing presence of investors with so much money that they can single-handedly move prices independently of supply and demand, at least in the short term. When such speculators pile in on one side of the market with little regard for price, those relying on financial markets to give them the right price may as well be plucking prices out of the air.
 
And as prices of commodity derivatives shoot out of control and become increasingly volatile, it becomes more and more expensive to hedge risk. Those who rely on financial markets to guarantee prices for their physical crops must pay higher and higher premiums for the privilege. These days, only very large businesses can afford to hedge their risk, leaving smaller producers and traders, who are already more exposed to risk than big agribusiness, without protection. And the increased costs are passed on to consumers.
 
Expert opinion is evenly divided on another key accusation – whether speculation contributes to volatile food prices. Different researchers make the same data say different things, depending on their underlying assumptions and methodologies. And in any case, the data is full of holes. Nonetheless, the fact that there is so much debate means that there is at least a strong case to answer. Because the risks of letting current practices continue, if the critics are right and they are indeed exacerbating food price volatility, are much higher than the risks of acting to make financial markets more transparent and efficient, a precautionary approach should be taken to regulating socially useless speculation.
 
The first step is to get a better idea about what is actually going on. Publishing comprehensive data will help prevent panic and herding, and allow a better assessment of whether there is a link between speculation and food price volatility. But transparency is not enough. The second step is to regulate markets by limiting certain types and volumes of speculation, to try to prevent huge amounts of money spent by very big players from skewing prices and causing panic. The risks of doing nothing far outweigh the risks of regulating.
 
Decisions are already being made at the G20, in the EU and in the US. Those with a vested interest in continued volatility are lobbying hard. Those hit the hardest by volatility – small-scale producers whose livelihoods depend on receiving reliable prices for their produce, consumers in the poorest countries who spend up to 75 percent of their income on food – have a much weaker voice. That is why it is so important to listen and to take action over the next few months and beyond. The right reforms will go a long way to making financial markets work for the people who contribute to feeding everyone on our planet.

Vampire traders; why East Asia fascinates Africa; nudging farmers; good news on democracy; death by co-ordination; why aid agencies can’t sell condoms: links I liked

‘I go to bed every night, and I dream of another recession. I dream of another moment like this. When a market crashes, if you know what to do, you can make a lot of money. Governments don’t rule the world, Goldman Sachs rules the world.’ Market trader Alessio Rastani is so honest that he immediately aroused suspicions of a Yes Men-style hoax. The BBC swears he’s genuine. [h/t Max Lawson]

‘Both Kenya’s ambitious vision 2030 long-term development plan and Ethiopia’s growth and transformation plan (pdf) draw heavily on similar concepts in Malaysia, Singapore and elsewhere in the region. All four foreign advisers on Kenya’s key national planning body originate from East Asia, and pamphlets used to train cadres in Ethiopia’s ruling party, the Ethiopian People’s Revolutionary Democratic Front, use Taiwan, South Korea and China as examples of agricultural development and state intervention. Most senior decision makers I spoke to had visited the region several times on dedicated study trips, and such visits grow in number every year.’ East Asia’s influence in Africa extends well beyond mining and construction.

‘Farmers in western Kenya were offered the chance to pre-purchase fertilizer right after the harvest, when they had cash on hand. This program significantly increased fertilizer adoption, and its effect was not statistically different from that of a more expensive 50-percent subsidy just before fertilizer application time. A small “nudge” helped some farmers make an investment they wanted to make, but otherwise could not carry out due to difficulty saving money.’ Latest in human experimentation from J-PAL.

In light of Zambia’s peaceful transition of power, the Economist reckons democracy in sub-Saharan Africa is demonstrating patchy progress. 

Just to stop any more of you sending me the link, here’s Hand Relief International threatening to coordinate the aid blogs. [h/t Chris Roche, among others]

Why don’t people use the subsidized condoms that are flooding into the Congo? Answer, because the aid agencies haven’t got a clue about marketing, argues Amy Lockwood in this 4 minute TED talk.