Turning garbage into music this Christmas.

Aaah, this is too sweet to hold over until the New Year. Paraguay’s Recycled Orchestra is the creation of Favio Chavez, a landfill worker and musician. It transforms garbage into classical instruments, played by the kids of local people  (Garbage not garage?). Their story is being turned into a film (if they can raise enough cash), with the perfect title landfillharmonic. Magical. Christmas starts here. See you in 2013 (Mayan apocalypse permitting) [h/t Jenny Matheson]

Does agriculture have a future? Sonali Bisht wraps up Oxfam’s online debate

For the past two weeks, Oxfam has been hosting an online forum on the future of agriculture with a great range of viewpoints from every corner of the globe. Today is the last blogging day before the Christmas break (see you in 2013, everyone), so I’m handing over to Sonali Bisht, founder of INHERE, India, to wrap up a pretty diverse set of discussions.

The technology to produce synthetic food exists. Food pills are only one step beyond the vitamins, proteins and other food and nutrient supplements currently available in the market. We have knowledge of hydroponics and we can grow food in multi-storey production complexes. Certainly, there are plenty of alternatives to traditional farming for food and other needs. Does agriculture, as we know it have a future?

The experts who contributed to the Future of Agriculture debate, all eminent persons, leaders in their field, chose not to address such radical alternatives, and the comments received did not dispute that choice. Clearly, food grown by people living in rural areas, especially smallholders, is seen as important for the future.

“The technology to produce synthetic food exists.”

Smallholders currently constitute the majority of agricultural producers, the bulk of the poor and half the world’s hungry. They are expected to continue producing for a growing and more affluent urban population, and to do so in ways that keep food prices low, preserve the environment and manage the multifaceted risks they face, including vulnerability to shocks from the natural, socio-economic and political environment. The risks and vulnerabilities faced by women and indigenous populations, and expected to be managed by them, are even greater.

The experts generally offer optimistic visions for the future of agriculture, though the reasons for their optimism vary. Experts with a background in agriculture research and industry put their faith in fossil-fuel and chemical-based agriculture to achieve the increases in productivity needed to feed the population of the future. Or they champion comparative advantage, open trade and functioning markets.

Experts with a civil society background, on the other hand, believe high production levels can be obtained without chemical- or fossil-fuel-based inputs. They cite evidence that organic and sustainable agriculture achieves equivalent production in normal years and higher in drought or abnormal years. They also see sustainable and organic agriculture as empowering for women farmers, valuing their role and knowledge in agriculture, and helping to keep them and their families out of crippling debt. And several view food sovereignty as more important than markets.

The primacy of smallholders was acknowledged by almost all the experts. Several maintained that smallholders can generate research knowledge and use it for their prosperity, noting that peasants already make an enormous contribution in that regard.

“The primacy of smallholders was acknowledged by almost all the experts.”

If farming is to continue, youth need to pursue it as a career. But at present, farming is not an occupation young people aspire to and smallholder farming is not perceived to be a respected occupation. Agriculture is not given the status of a skilled craft in most countries, and thus wages of unskilled labour apply. This situation can and must change in developing and developed countries alike.

Farms need to be managed as profitable businesses if they are to attract a new generation of farmers. Perhaps, as Nicko Debenham suggests, some form of community or group enterprise would offer a sustainable business model that could generate a “more-than-acceptable living.” I wonder if that would appeal to Susan Godwin, who wants secure land tenure and more access to information for her daughter. Or to Rokeya Kabir, who says women farmers deserve more for the hard work they put in.

The views expressed were many and too rarely did those of opposing views engage each other. Pro- and anti- food sovereignty views were

left unresolved. Much of the debate resided in the realm of hope, perhaps best expressed by John Ambler, who envisaged institutional reforms leading to healthier eating and a healthier food system.

“The reality is that it has been difficult to build political will that favours smallholders.”

The underlying challenge has always been politics. As Prem Bindraban observed, power structures, vested interests, economics and other

drivers influence decisions in agriculture. Participants in the debate voiced this sentiment in different ways to express skepticism as well as hope. But the reality is it has been difficult to build political will that favours smallholders.

There is an Indian saying that the one who is thirsty goes to the well. The well does not come to him. Yet, without exception the experts feel farmers should produce for the market, conduct market intelligence, take their produce to the market.

One would think that if food is a priority need of consumers the initiative would come from them or their representatives. The consumer, who is generally urban and has higher income, should take responsibility for creating reserves to account for the vagaries of weather and for insurance against price fluctuations. The farmer should be in the position to decide whether he or she can produce at the price consumers offer or if further negotiations are needed. Community-supported agriculture, where communities invest in farmers by subscription, is a model that is worth more attention, as it guarantees farmers a fair price and assures consumers of clean and safe food, while sharing the risk.

“The one who is thirsty goes to the well. The well does not come to him.”

Mostly this does not happen. Politicians have their constituencies to please, and most of these are non-farmers living in wealthier areas of the country. Private companies view agriculture as an unending stream of business and profits. The political power of the fossil-fuel industry and the lobbying clout of agribusiness keep agriculture dependent on fossil fuels.

Nonprofit NGOs, though always strapped for resources, can create models of excellence which demonstrate the success of innovations. But these are rarely replicated at scale. Research institutions create knowledge which the poor are unable to access and use, while private companies can and do, often at a fraction of the real cost.

The consumer, especially the urban consumer, tends to be king in agriculture. Companies vie for a percentage of his or her essential spending and governments pander to the needs of this majority. Good intentions tend to get lost in this realpolitik. Until aware consumers change their behaviour, the smallholder farmer will get good words, symbolic gestures, and little else.

“Farmers need to be recognized as co-creators of knowledge in agriculture, encouraged and respected for the innovations they develop.”

It would not cost very much to make changes that, by common consensus, would transform the future of agriculture for rural poor people. Farmers, especially women, need security of land tenure or land ownership and protection against land grabbing. Farmers require fair prices for their produce and ways of farming which do not get them into debt and food insecurity.

Above all, most experts and respondents agree, farmers need to be recognized as co-creators of knowledge in agriculture, encouraged and respected for the innovations they develop. Farmers and research institutions must be linked in a web of knowledge creation and application, with joint responsibility for improving production and productivity through joint trials, participatory innovation, and farmer validation of scientists’ claims. This is the key to meeting production challenges in the agriculture of the future.

“Agriculture not only feeds people, it, builds close-knit families and societies.”

National systems and multilateral agencies should support this process with NGOs and farmers’ organizations facilitating accountability. Planning of production for local markets and according to local needs would avoid mismatch and waste. Application of force majeure clauses in production agreements would eliminate much of the risk. Subsidies and artificially lowered prices of commodities as social welfare measures have proven to be hotbeds of corruption and disincentives to farmers and should be avoided.

Agriculture not only feeds people, it creates engagement and employment in sustainable livelihoods, builds close-knit families and societies (especially smallholder and family farming) and supports cultural and social engagement as well as social stability. In today’s world it provides an alternate way of living from the stress and strain of urban areas. It preserves our farm landscape, traditions and heritage. We all have a responsibility to preserve and enhance our agricultural heritage—and that means not allowing a single farmer or farm labourer to go hungry or to suffer for being involved in agriculture.

Natural Disasters and Humanitarian Crises in 2012: how did we do?

Ed Cairns, an Oxfam senior policy adviser, looks back on a very mixed year in the response to humanitarian crises.

You might not have noticed it from the headlines, but this year Oxfam has responded to more crises than ever before. Not megadisasters like Haiti’s earthquake in 2010, but the daily struggle for survival that has just got worse in places like the West African countries of the Sahel. The dearth of headlines may of course also be because much of the world has been preoccupied with its own problems – the Eurozone in crisis, China slowing down, and the US teetering on its fiscal cliff. Perhaps that is why the UN expects this year’s humanitarian appeals to end 2012 around 63% filled. That’s $3 billion of aid to save lives not given – no worse than last year, but significantly down from the pre-recession days of 2007, ’08 and ’09 when such appeals reached more than 70% of their targets.

This year, one crisis came on top of another – sometimes literally. Like northern Mali’s rebellion in April which has forced some 360,000 from their homes, including 160,000 seeking refuge in Mali’s impoverished neighbours. For – without even mentioning Syria – 2012 has not really been a good year for peace. Last week, the UN launched a review of its peacekeeping in Congo after its mission let rebels force 140.000 people from the city of Goma. According to Tariq Rieb, an Oxfam colleague in Congo, the UN’s performance fell ‘way short of what anyone would expect.’ And this only a month after another UN review slammed the UN role in Sri Lanka, where UN and other aid workers failed to do what they could to protect civilians in 2009.

Too many aid workers still think their responsibility ends with providing material necessities, while in many crises what people ask for, even more, is safety. Twenty years after we searched our souls in Bosnia for sending aid to the ‘well-fed dead’ – who nobody was protecting from murder and rape – we still have a long way to go. Although humanitarian aid has come on by leaps and bounds in quality and professionalism, the dilemmas of working in conflicts are proving more stubborn. While what has come to light in Sri Lanka and Congo should prompt a profound look at why the UN, including peacekeeping, is not better at protecting people from, to quote its founders in 1945, the ‘scourge of war’.

Not everything of course is so bleak. Gaza at least got a ceasefire. And in other humanitarian crises, there is a real sense that governments and organisations on the ground are getting better at coping with disasters. Tragically, this month hundreds were killed by Typhoon Bopha in the southern Philippines, but the local Humanitarian Response Consortium went immediately into action to get safe water to the stricken areas, and launch cash-for-work programmes so that families could buy food, clothing and shelter. The local authorities too were well prepared,

tangible proof of how the Philippines has built its national capacity to handle disasters since 2009.

Just as well actually, because the Philippines, like so much of the world, is likely to see more such weather-related disasters in future. So it was not good that, a few thousand miles away in Doha, the world failed to agree much of anything at the latest talks on climate change. There was no big new commitment to cut emissions, while the earth continues, on its current trends, towards the 2C temperature rise that most scientists warn us about. If those trends continue, we can expect more climate-related disasters, and a lot more humanitarian need. And perhaps most worrying of all, coastal areas, like parts of Bangladesh, going under water – despite the progress that has been done to make them less vulnerable to disaster. In one part of south west Bangladesh, Oxfam is leading a consortium building 11,000 shelters, homes and latrines on plinths above flood levels. But if the world fails to tackle climate change, will that really help? We don’t honestly know. And because of that, this year’s greatest humanitarian disaster was probably in… Doha.

Calling all Euro/Aid sceptics – here’s some top quality aid from the EU

Oxfam programme researcher John Magrath (he’s the one on the left in the pic) has been looking at some European aid, and is impressed with what he found

European Aid gets a lousy press. If you’re a reader of the UK’s Daily Mail (and nearly 2 million Brits are) then you’ll be used to headlines such as “Dance lessons in Africa, jets for tyrants, derelict offices….how EU wastes aid billions“.

(I must pause this blog to say that merely checking the reality of the above headline on the Daily Mail’s website – where it is accompanied by a photo of a masked figure of what Westerners used to call an African “witch doctor” – has made me want to devote the rest of this post to a rant about the Daily Mail’s politics and attitudes….but…deep breath and back to EU aid…)

EU aid is currently under greater threat than ever in Europe’s acrimonious budget discussions – partly, it’s a useful way for Euro sceptics to attack the whole concept of the European Union and the list of anti-Europe stories (remember bent (or was it straight?) bananas etc).

Does EU aid deserve its reputation? DFID doesn’t think so, giving it good marks in its multilateral aid review. So it’s rather nice to be able to point to an EU-funded aid programme that really has done a lot of good – and indeed, is ahead of the game when it comes to thinking about what sort of aid works best. It didn’t make the headlines, but then, good news rarely does.

The European Union Food Facility (EUFF) was a €1bn fund for access to agricultural inputs and services, and improvements in agricultural productive capacity, set up in response to the increase in food prices from late 2007 through 2008.

In all, the EUFF funded over 240 projects in more than 50 countries. On 17 December, the EU published its own Final Evaluation of all the programmes. Oxfam took part in a big way in six EUFF programmes in Nepal, Pakistan, Ethiopia, Eritrea, Tanzania and Mali, as well as being part of consortia in Liberia, Sierra Leone and Kenya. Coincidentally, I’ve been looking through the end of programme evaluations we submitted and today we’ve published our own case study.

And what did we find? That the bold claims made for the EUFF in a press release on 2 December 2011 by WFP, FAO and IFAD seem correct. Their release said: “The EU Food Facility has been a tremendous success. It proves that linking relief, rehabilitation and development can have a concrete impact on people’s food security”. They added it “provided tangible evidence that investing in agriculture and nutrition improves global food security” and “by linking farmers to markets and financial services, assisting in facilitating sustainable and profitable farming practices and creating new revenue streams, the effects of the EUFF will continue into their futures”.

According to the release, “lessons learned from the initiative underscore the importance of:
-focusing on marginalized farmers with high production potential,
-combining input distribution with extension services,
-building capacities of smallholder farmers and their communities,
-rehabilitating rural infrastructures, and
-involving all actors of the value chain in local seed production.”

In Oxfam’s experience this approach really broke down the silos between humanitarian and long term development aid. In every country farmers faced the same or very similar obstacles. They needed certain basic inputs, in particular seeds and irrigation water; they required both access to markets and ‘power in markets’; they needed cash and/or credit; and they wanted services such as agricultural advice and veterinary help. So the vision and capacity to make multiple interventions – and at many levels – were crucial.

For the EU this approach has been rather a long time coming – about three years in fact -  but it’s nearly there. The EU’s 2010 Food Security policy aims to get all member states working this way, then this October the EU focused on “building resilience” and integrating humanitarian and development work . And now, finally, the long-awaited implementation plan for the food security policy should be endorsed by Development Ministers next May (2013) – and not a day too soon.

I summarised our interventions in this way, on a spectrum from emergency response to long term development:

Social protection

• Collective cash-for-work for infrastructure (e.g. roads, dams, irrigation works, tree planting, re-greening, etc)
• Unconditional cash transfers to meet food needs during the hungry season
• Food vouchers and support to traders
• Small livestock and veterinary services
• Beneficiary involvement, agency accountability

Inputs

• Seeds, tools, feed, micro-irrigation,  seed banks, grain stores
• Training on improved agricultural practices (e.g. composting)
• Land rights
• Access to credit
• Stoves

Organizational development

• Formal creation of producer groups; also irrigation management groups, grain store groups, pasture management groups, etc
• Capacity building for new and existing groups
• Emphasis on women’s groups and women’s involvement
• Farmer to farmer
• Scaling up and broadening out organizations

Power in markets

• Business training
• Value chain analysis, market information
• Linkages with the private sector e.g. assistance in negotiations
• Access to credit, bank loans, micro insurance

Convening and brokering

• Linkages with state authorities and service providers at local, regional and national levels
• Linkages with the private sector
• Advocacy on budgets, policy changes, frameworks, etc, from local to national level

Not every programme achieved the same level of success but generally, the results were impressive. If you’ve an antipathy towards statistics, stop reading. If not, here goes…..

In Nepal the number of households facing acute food insecurity was reduced from 21 to 13 per cent and there was a significant increase ofbetween 40 and 70 per cent in productivity per hectare of major cereals and vegetable crops by targeted smallholder farmers. The programme supported 141 micro-irrigation systems which alone increased productivity by 50 per cent. Prior to the programme only 16 per cent of farmers used improved seeds, but, by 2011, 100 per cent were using them.

According to the evaluation: “Every household is now engaged in kitchen gardening and 72 per cent of families have been eating vegetables five days a week as against the previous time when only 27 per cent of families could eat vegetables for only two days a week”.

In Ethiopia, nearly 14,000 farmers were organized into 619 market-oriented co-operatives and producer groups and linked with service and input providers. Once they had the wherewithal, organization and confidence to grow more crops like malt barley and potatoes, they were linked to and able to negotiate with potential buyers in the nearest town. Twenty-nine Producer Organizations gained a contract to sell their barley to a brewery and malt factory at a rate 15 per cent higher than the local market price.  Seventy two per cent of beneficiaries reported that their income increased by over 30 per cent.

OK, that’s the statsfest over. Back to plain English – what worked well and why? The Ethiopia programme summed it up:

To succeed you need to:

• collaborate with a wide variety of stakeholders, including the private sector;
• design projects that are community-managed;
• organize farmers into groups; and
• provide a cash transfer so people can withstand shocks, keep assets and develop infrastructure.

In one way, it sounds simple – putting into practice the three-fold support identified by Wiggins and Leturque as essential to liberate the potential of small farmers:

• Stability in the face of price volatility and incentives to earn more money from farming;
• Investment in public goods;
• Strategies to overcome the problem of chronic failure in rural financial markets.

In other ways, though, a multi-faceted, multi-level intervention of this sort is fiendishly complicated and poses all sorts of managerial and logistical challenges.

Collaborating with many partners takes time, energy and resources and forging successful collaboration is time-consuming and laborious. Fortunately the Oxfam programmes concerned already had a strong presence in the areas going back many years and had strategic partnerships with local bodies. But the number and variety of meetings required almost make it sound like a parody of development work – familiarization workshops, consensus building training workshops, multi-stakeholder taskforces, thematic workshops, regional value chain development forums, taskforce forums, a national learning event etc etc. But this networking was key to the success of the programme.

So we would agree with WFP, FAO and IFAD: “As food prices are expected to remain high and volatile in the coming years, it is essential to maintain the momentum created by the EUFF in promoting agriculture as the most effective means of reducing global hunger and poverty…. ”.

It might also convince some people that EU aid isn’t all bad.

(The EU Final Evaluation concludes with the suggestion that the EUFF is made into a permanent “Stand-by” instrument. It makes sense to me, but I’ll let you know Oxfam’s official position once we’ve had a proper discussion here).

Money can’t buy me….. what, exactly?

For those of you afflicted by the stresses of Christmas, tis the season of crass materialism to be jolly. But even if you are spared, here’s a fun exercise I was asked to conduct a few months ago for some piece of press work that probably never saw the light of day. Two questions:

1. What do you think money can’t buy, and if you can’t buy it, how can you get it?
2. What are the most important things you think money can buy, but shouldn’t?

So here are mine, but let’s hear yours (award for the best is international fame, but no prizes)

What do you think money can’t buy, and if you can’t buy it, how can you get it?

Confidence about the world my grandchildren will inhabit in 40 years – will our species go the way of the dinosaurs?

How to get it? Stop climate change. Simples. Oh, and have some children.

The pride of being the generation that ended world poverty, joining the abolitionists, suffragettes etc in the history books

How to get it? Put our own house in order, support change makers in developing countries. Or just forge the history books.

A good night’s sleep

How to get it? Go running in the evening, live a smug and unstressed life

A decent jet pack (actually, money can probably get you that, sorry)

What are the most important things you think money can buy, but shouldn’t?

Luxury at the expense of others, whether those alive today, or future generations

Security built on razor wire and armed guards, rather than a sense of community

Dominance over/subservience of others

(Soon) the ability to live to 150 or more

Space tourism

Dinner (or still worse, space travel) with Richard Branson

Over to you for some better ones

Are global value chains really the right answer for small farmers? Great new study from IIED and HIVOS

If you’re interested in livelihoods, value chains, or agriculture, you absolutely have to read a great new paper from IIED and HIVOS.Small producer agency in the globalised market, by Bill Vorley, Ethel del Pozo-Bergnes and Anna Barnett, does for our thinking on livelihoods what the Africa Power and Politics Programme does for governance, or Portfolios of the Poor for financial systems – challenges most of the conventional wisdom and makes a whole lot of sense, crystallizing those ‘back of the head’ discomforts with orthodox thinking and getting you (or at least me) nodding in recognition at the sensible alternatives provided.

Enough rave reviewing, what does it say?

The starting point is ‘looking at where small producers are — and not where we think they should be’. As with Portfolios of the Poor, by looking intently at small producers’ current strategies, you rapidly realize that the received wisdom on how development agencies can help them is probably misconceived. In particular, an awful lot of our thinking is on helping get small farmers into global value chains (GVCs).  The problems the paper identifies with that strategy include:

-          Informal markets are growing, not shrinking (see table 3.1) – modern value chains are the exception, not the rule. In many regions, informal local and regional markets are growing as fast or faster than global ones.

-          The GVC approach largely targets the ‘top of the pyramid’ of better-off small farmers best able to meet the stringent quality and quantity requirements of GVCs.

-          Farmers often prefer informal markets because they are flexible and allow them to minimise risk by running a diverse ‘portfolio’ of strategies – some family members head for the cities, others work off-farm, others produce lots of different crops on the farm. If prices or other factors vary, they change their strategies – the right thing to do in terms of resilience, but often leading them to be branded as unreliable by formal chain buyers.

-          ‘Beyond the practical considerations of profits, barriers and penalties are matters of perception and culture. Small-scale producers are typically very comfortable with informal trade, but may not see formal and modern markets as ‘for them’, given the requirements for technology, education and organisation. For some, modern markets are associated with unfamiliar language, concepts, goals, and codes of conduct. And they oblige farmers to carry higher risks.’

The focus on the agency of smallholders produces other novel insights, for example on migration:

‘The exodus of young farmers should not be considered a new crisis to be headed off.  Development initiatives commonly approach this situation by trying to fix problems and make village life more attractive. From the agency perspective, an alternative — more aligned with the preferences and strategies of rural youth themselves — is to think about supporting migration in such a way that young people can leave successfully and also are encouraged to return, bringing new skills and knowledge back to the countryside.’

Happily, the authors avoid the trap of romanticising informal market structures:

‘Though informal markets offer the crucial advantages of access and flexibility, and are sites of creativity and trust among small farmers and other market actors, they also have a dark side, including poor traceability and food safety, poor records on environmental impacts and worker welfare, and sometimes corruption, criminality, monopolies and cartels.’

What seems to work resembles the APPP’s findings on ‘hybrid institutions’ in governance: development interventions need to work ‘with the grain’ of traditional structures. The result is a syncretic amalgamation of informal and modern market structures (eg groups of Ugandan farmers using elaborate mobile phone networks to get better prices when selling to informal market traders – the paper is littered with great case studies to illustrate all these findings).

And there are some interesting critiques of the GVC approach:

‘Global markets tend to demand that small-scale producers upgrade in the areas where small farmers have a comparative disadvantage — to produce standardised products at high volumes, for example. But there are some promising markets, especially locally and nationally, that instead value the ‘intangible assets’ that small farmers have in plenty. These valued qualities are rooted in traditional production methods and cultural identity.’

And if producer organization is such a no brainer ‘why aren’t more farmers organized?’ and what kinds of organization actually take root and make a difference (for example, IIED’s research suggests that many of the most successful producer organizations actually started life as credit co-ops and then evolved)?

As for the so whats, I think a few suggestions emerge either explicitly or implicitly:

-          Spending more effort trying to ‘see like a farmer’ (see table 6.1). Study what exists much harder before wheeling out your cherished model of producer cooperatives, bargaining with global value chains etc etc. Maybe a case for some ‘Portfolios of the Poor’ style diaries charting small producers’ market interactions over a year or so (anyone already done this?)

-          Rather than adopting a standard ‘best practice’ approach, innovate by trying several things out as experiments, spotting which ones are failing and replacing them with some other approach

-          Think about the enabling environment that would benefit both formal and informal producers (access to information, infrastructure), rather than focusing on particular value chains

-          Focus on those areas where informal markets don’t work for small producers – eg in influencing government policy-making

Forget swimming pools and bra hunts, it’s time for the Great Intern Debate

It’s been a while. The issues that get a buzz going on this blog are often the internal-to-Oxfam debates, which  get Oxfamistas worked up while seeming to provoke a prurient curiosity in everyone else. Think swimming pools or bra hunts. There had been a bit of a lull on this front until I wandered unintentionally into another minefield – unpaid internships – during a recent post on how to get a job in development. Cue blizzard of comments, tweets, denunciations etc etc.

So I’ve read the comments, and Public World’s excellent briefing, and talked to those responsible in Oxfam, and here’s my take on the debate.

First, allow me a bit of self-defence. The post was intended as advice to young people trying to enter the development world as it currently

is, not as it ought to be. I realize that some people may take that as an implicit endorsement of the status quo (which it isn’t), but I still refuse to advise them to boycott the intern system and so reduce their chances of eventual success.

Now, back to the interns debate. The arguments against unpaid internships are several:

• They’re unfair, because (despite a few exceptions) they skew career progression towards those best able to work for free (middle-class kids, or people able to rely on spouses), and so introduce a class bias from the outset.
• They impose yet more financial burdens on students already staggering under their university debts
• By not putting a financial value on interns, they encourage sloppy or abusive management (interns making coffee, doing the photocopying etc). Abuses seem particularly bad in fashion and media – Oxfam has pretty strict guidelines to prevent this kind of thing and ensure that interns do actually get useful CV content out of their time – take a look, they’re pretty good.
• More systemically, they normalize the use of unpaid labour, and so undermine labour rights across the workforce.

But there are several arguments for unpaid internships:

• They’re not actually unpaid, in the broader sense that interns derive non-pecuniary benefits like skills and experience (which is, after all, why they do them)
• They provide a great way for employers to spot strong candidates for paid jobs (indeed, they’re a much better assessment than standard job interviews – maybe all job recruitments should include a week’s work for the shortlisted candidates, to test whether what they say in the interview is true?)
• If internships are paid, there will be fewer of them – I don’t buy the crude ‘NGOs can afford to pay’ – there is obviously some kind of elasticity of employment with respect to paying wages, the question is how great it is.

From the excellent comments, several additional issues emerged:

The role of government: Opinions differ on whether it is now harder or easier to claim benefits while interning. A lot of the commenters suggest the former, but our interns guru, Georgia Boon (herself a former Oxfam shop volunteer) thinks that for the bulk of charity volunteers, ‘claiming benefits became pretty much unrestricted under the Labour Government and hasn’t changed back’. Oxfam’s Intern Agreement includes guidance on how to claim benefits while interning, and its internship scheme tries to reflect that, for example by placing a ceiling on intern hours. Another key concern for interns is the cost of housing, and here there were some great suggestions for how we could make it easier to find cheap accommodation for interns, for example in unused university rooms over the summer.

Career ladders: I think there’s a much wider problem with NGOs and career ladders. Getting onto the first rung is hard enough, but then the path up the career ladder is also really difficult – overall, I think NGOs don’t invest as much as companies and governments do in areas such as graduate entry, fast track career progression etc, so perhaps it’s not surprising that we find real difficulty recruiting for more senior positions.

Economics v Mission: Various comments pointed out that diverting £8,000 per year into paying a living wage (£8 per hour for 20 hours a week) would mean £8,000 less spent elsewhere in Oxfam’s work. That has to be true (unless we could raise extra money to pay for interns – anyone want to buy their mum an intern for Christmas rather than a goat?). But there are wider considerations about what social justice and what NGOs are doing to ‘be the change you want to see in the world’. Or if you want to put that into management speak – the reputational risk of perceived double standards. We face the same cost v reputation balancing act on carbon emissions or sourcing fair-trade products, for example.

Legal concerns: There seems to be a lot of confusion over whether not paying interns will eventually be challenged under minimum wage legislation, or conversely, whether paying them a minimum wage will confer full employment status (and so effectively abolish internships). The key seems to be ‘if it looks and feels like work’, with regular hours, having to request time off, formal appraisals etc, then at some point a judge is going to say that it is work, with all that implies.

Complicating all this is the blurred boundary between interns and volunteers. Oxfam has thousands of great volunteers running our shops, campaigning etc, who donate their time in support of our work. Interns are doing something else, usually younger, and giving their time in exchange for some hope of career development. Given the criticism heaped on internships of late, we have considered changing the name of the scheme to something like ‘project volunteers’, but the interns objected – they see internship as a useful addition to their CVs.

The upshot of all this is that I am genuinely torn. I know from watching my kids’ generation emerge from university just how hard a struggle it is to find a job, and to survive as an intern. But I don’t completely buy the idea that paying a minimum wage or slightly higher would transform the class composition of entry level NGO staff – the barriers to diversity are more complex and pervasive than that (when Oxfam did briefly try a graduate entry scheme a decade or so ago, the applicants were less diverse than our normal volunteer intake). And I do think that paying interns would reduce the number of internships (though I have no idea by how much). So in time honoured FP2P fashion, I will stay firmly on the fence and let you, the readers, decide (see poll, right) albeit in a non-binding sort of way. But here’s the question I want you to vote on – please read it carefully before voting:

“In pursuit of fairness and a diverse workforce, NGOs should pay a living wage to interns, even if that means fewer internships are available, and some funds are diverted from other uses.”

Over to you

and thanks to those who responded to my twitter request to send in cartoons. Winning entry so far goes to Makarand for this Dilbert classic (but keep sending in your favourites):

Milanovic on inequality (continued): implications for politics, alliances and migration

In which, following on yesterday’s post,  Ricardo Fuentes and I decide to carry on chatting about the new Milanovic paper on inequality

Duncan: Great intro to the Milanovic paper, Ricardo, but there’s plenty more juice to be had, I think. First let’s take a closer look at the graph you put up of change in global real income 1988-2008 (below). As well as the spike of the top 1% (and do we know whether the financial crisis has moderated or amplified the spike?), the bit that jumps out at me is the stagnation of incomes above the 75^th percentile. For that portion of the world’s population in the top quarter of the income bracket, but below the super-rich 1%, the last 20 years have been pretty terrible.

Milanovic calls this the ‘global upper-middle class’ and says it includes many in the former Communist countries and Latin America. But my guess would be that it mostly corresponds to the non-elite working population in the formerly rich countries – reflecting the kinds of income stagnation we have seen in the US and (to a lesser extent) Europe. Is that right, or might this also be hitting the upper income levels of middle classes in emerging economies?

Ricardo:  I think you are right, the middle class in Western democracies have suffered stagnation in their standards of living – when they’ve been lucky. There is plenty of evidence of that happening in terms of wages but also in terms of perceptions. When you ask middle class Americans about their future, they don’t seem optimistic. It would be interesting to identify the percentiles in Milanovic’s graphs with per capita income and try to figure where they live.

Duncan: The politics of that seem at first sight a bit grim. Taking a crudely reductionist line that people support the status quo if it delivers them faster than average rising incomes, and oppose it if it doesn’t , you would expect a pro-globalization alliance between the super rich and the 10-70^th centiles (= emerging economies and their governments?), opposed by the non-elite rich country populations in between. Is this the graph that underlies rising European/North American hostility to immigration, northern trade liberalization etc? If they could establish any kind of political connection, their natural allies would be the people at the bottom of the pile – the bottom decile. Maybe that’s what (some) INGOs are doing?!

Ricardo: I’m not sure this kind of alliance would naturally happen because the source of income gains is likely to be different. I don’t have strong evidence on this (my best read is this report from the OECD) but the guess, being overly simplistic, is that the improvements we see in the bottom of the global distribution are related to increases in wages for workers in emerging economies (the jobs that have been outsourced). The gains in the super rich most likely come from returns to assets and benefits from the financial system. Again, I’m mostly guessing. This is something we could look more into.

Duncan: The Milanovic paper also dug up some startling findings in other parts of the inequality debate. How about this:

‘Perhaps for the first time since the Industrial Revolution, there may be a decline in global inequality. Between 2002 and 2008, global Gini decreased by 1.4 points. We must not rush to conclude that what we see in the most recent years represents a real or irreversible decline, or a new trend, since we do not know if the decline of global inequality will continue in the next decades. It is so far just a tiny drop, a kink in the trend, but is indeed a hopeful sign.’

That’s dynamite. As I understand the paper, this is driven by the rise of India and China, despite their soaring internal inequality. I don’t have the maths, but you do – is it possible for the global income distribution to get more equal, even if all its major players are becoming less equal internally? And if so, is that a temporary statistical blip til global inequality once again starts to rise?

Ricardo: This apparent contradiction is very plausible – in fact, it was at the heart of an old and influential paper by Xavier Sala-I-Martin. The Economist summarized it better than I could here.  According to Sala-I-Martin, the global distribution of income inequality declined between 1980 and 1998 but this conversation can quickly become very technical if we contrast the results. For me, the global Gini is a moot point because, for all we wish, we are still not a global community. Aspirations, tastes , institutional rules and the sense of community is still determined by the nation-state. Except for the global one percent. That’s partly why I think the most important part of Milanovic’s paper is the spike at the top of the distribution.

Duncan: The other really nice piece of his paper, although I’ve seen it written about elsewhere, was his ‘migration v Marx’ chart (above). Decomposing the sources of inequality, he finds that in 1870, the class position within countries determined 2/3 of global inequality; whereas now it is down to a third. Instead, it is geography – which county you live – that explains 2/3 of global inequality. That also has profound political implications, as Milanovic recognizes:

‘If the world’s actual situation is such that the greatest disparities are due to the income gaps between nations, then proletarian solidarity does not make much sense. Indeed income levels of poor individuals in poor countries are much lower than income levels of poor people in rich countries. Those who are considered nationally poor in the United States or the European Union have incomes which are many times greater than the incomes of the poor people in poor countries and moreover often greater than the incomes of the middle class in poor countries. And if that gap is so wide, then one  cannot expect any kind of coalition between these income-heterogeneous groups of nationally poor people, or at least not any  coalition based on the similarity of their material  positions and  near-identity of their  economic  interests.’

Unless global inequality falls, and some new convergence of interests occurs, of course. But even if you accept his reversal of the last few years, that still seems an awfully long way off.

Finally on migration, I really liked his question: ‘can we treat location, and thus citizenship, as a rent or a premium (or obversely, as a penalty)?’ He points out the double standards of disapproving of inherited wealth, and yet accepting it when that wealth springs from the geographical accident of birth:

‘In one case, we frown upon the transmission of family-acquired wealth to offspring if two different individuals belong to the same nation. In the other case, we take it as normal that there is a transmission of collectively acquired wealth over generations within the same nation, and if two individuals belong to two different nations, we do not even think, much less question, such acquired differences in wealth, income and global social position.‘

He doesn’t try and draw out the political implications of this – perhaps just as well!

Ricardo: And I won’t try either. Let me just say this: inclusive migration policies could do a lot for the lives of poor people. But that’s something we should discuss some other time.

Inequality and the rise of the global 1%: great new paper by Branko Milanovic

Ricardo Fuentes on an important new paper. Tomorrow, Ricardo and I continue the conversation

The rich in the West are getting richer. Many countries have experienced a sharp concentration of incomes over the last three decades. The top 1% of Americans have doubled their share of national income (from 8 to 17%) since Ronald Reagan was inaugurated 32 years ago – see graph, source here. The elite in other advanced economies, including, Australia, the UK, Japan and Sweden, have also gotten a larger share of the pie. We have been able to understand the concentration of incomes at the national level thanks to the study of tax records by enterprising scholars such as Emmanuel Saez, Thomas Picketty and Sir Anthony Atkinson. But until recently, we didn’t know much about the global concentration of incomes (there’s no global tax collector with a similar database).

Enter Branko Milanovic, a lead economist from the World Bank. A quick detour before going to the global concentration of incomes. Milanovic has been working on inequality for decades – even when the topic was unfashionable. He describes the difficulty in talking about inequality here where he recalls

“In many social parties or professional meetings in Washington and elsewhere, when introduced to and informed that I worked on inequality, my (more polite) interlocutors would make a [...] similar [point] (“why should inequality matter at all”); others, perhaps less polite, would wave their hands basically ascribing the fact that anyone would pay a person to study inequality to profligate ways of international bureaucracy.”

But inequality is rightly back in the center of academic and policy agenda and in a new paper Milanovic uses a large database of household survey to identify the winners and losers of the global economy between 1988 and 2008. He finds that:

“…it is indeed among the very top of the global income distribution and among the “emerging global middle class”, which includes more than a third of world population, that we find most significant increases in per capita income. The top 1% has seen its real income rise by more than 60% over those two decades. The largest increases however were registered around the median….These two groups—the global top 1% and the middle classes of the emerging market economies— are indeed the main winners of globalization….The surprise is that those at the bottom third of the global income distribution have also made significant gains….The only exception is the poorest 5% of the population whose real incomes have remained the same.” (page 12)

Milanovic explains with a single graph (below) – where he plots the increase in income of each global percentile – the reduction in global poverty where the most deprived are left behind, the stagnation of lifestyles for the middle class in many industrialized countries and the rise of the global plutocrats.

I want to focus in this post on the last element – the increase in income of the global elite and its implications. First, who are the global 1%? Around 60 million people scattered around the world but mostly concentrated in Europe and the US. In his book The Haves and the Have-Nots, Milanovic calculated that people with an average income of US$34,000 a year would make it into this group. It doesn’t seem like much, but remember it is income per person. Take an average family of four and then we are talking about US$136,000 – well above the average household income in OECD countries.

So, the global 1% has benefited from economic development and globalization since 1988 – their income has risen by about 60% in those two decades. But why does it matter if the global elite become richer? I’ve written elsewhere about why inequality matters, but most of the policies to reduce income inequality operate at the national level: redistributive taxation and equalization of opportunity lie in the realm of national governments. And as Milanovic explains “In a single country, people share the same government; if they feel that inequality is too high or society too unjust, they have a political mechanism – elections in a democracy; revolt in an autocracy- to make their concerns known. And the rulers, whether democratic or not, must, for reasons of self-preservation, take into account, in their thinking and decision making, the views of the population” (The Haves and the Have-nots, page 160). These mechanisms are not perfect (elite-capture and rent-seeking are common around the world) but at least they exist.

In contrast, we do not have them at the global level, and this absence of checks and balances is well exploited. The only truly globalised group are probably among these 60 million people – their physical and financial mobility way higher than the rest of the world’s population.  This weekend, as I was taking a break from writing this blog post, I went for a coffee and bought the Financial Times. The cover story reads “Moscow’s rich buy £1m entry into the UK – Visa applications by foreign millionaires up 75%. Chinese elite also join rush to settle in London”. As Chrystia Freeland says in her book Plutocrats, ”today’s super-rich are increasingly a nation unto themselves”. A nation of powerful individuals and corporations without a coherent state to regulate their activities.

Take taxes, for instance. Or rather, don’t take taxes, because you can’t. Probably one of the most harmful effects of the rapid increase in the incomes of the global rich is the expansion and size of tax havens. By the nature of the issue, it’s very hard to come up with reliable numbers but the extent of the problem is staggering. The Tax Justice Network estimated earlier in the year that between $21 to $32 trillion has been invested “virtually tax-free through the world’s still- expanding black hole of more than 80 “offshore” secrecy jurisdictions.” Another estimate indicates that “households own globally about 8% of their financial wealth in tax havens ”.  And recently, the parliamentary spending watchdog in the UK released a report outlining the extent of tax avoidance by Amazon, Google and Starbucks – and the companies don’t look good. The report states “Global companies structure their companies in ways that are impenetrable to the public and HMRC [HM Revenue and Custom] disclose very little about their approach to collecting tax from them.“

National concentration of income and rising inequality is very worrying as political and economic processes become biased towards the interest of elites but the evidence from Milanovic’s papers suggest that we shouldn’t forget the rising influence of the global 1%. The absence of systematic international rules allows them to avoid paying their share, while leveraging their wealth even more effectively to increase their benefit and influence. They become more powerful and capable of bending the rules in their favor.

Why ‘Why Nations Fail’ Fails (mostly): review of Acemoglu and Robinson – 2012’s big development book

Every now and then, a ‘Big Book on Development’ comes along that triggers a storm of arguments in my head (it’s a rather disturbing experience). One such is Why Nations Fail, by Daron Acemoglu (MIT) and James Robinson (Harvard). Judging by the proliferation of reviews and debates the book has provoked, my experience is widely shared.

First, what does the book say?

‘The focus of our book is on explaining world inequality’, which is essentially a phenomenon of the last 200 years (certainly at its current extreme levels) – the average income of a conquistador was only about twice that of a citizen of the Inca empire.

Inclusive Institutions rock: ‘Countries like Great Britain and the US became rich because their citizens overthrew the elites who controlled power and created a society where political rights were much more broadly distributed, where the government was accountable and responsive to citizens, and where the great mass of people could take advantage of economic opportunities.’

Politics trumps economics: ‘While economic institutions are critical for determining whether a country is poor or prosperous, it is politics and political institutions that determine what economic institutions a country has.’

Failure is the norm: ‘To understand world inequality we have to understand why some societies are organized in very inefficient and socially undesirable ways. Nations sometimes do manage to adopt efficient institutions and achieve prosperity, but alas, these are the rare cases. Most economists have focused on ‘getting it right’, while what is really needed is an explanation for why poor nations ‘get it wrong.’

One of the core problems of most institutional arrangements is that those in power have ‘a fear of creative destruction’ – that the disruptive effect of innovation and capitalism will undermine their power base. The luddites in the presidential palace or the chamber of commerce do far more damage than the protesters on the streets. They therefore act to stifle it – elites’ interests are opposed to those of the long-term development of their country. An ‘iron law of oligarchy’ means that even when oligarchs are overthrown, the revolutionaries, like the pigs in Animal Farm, often come to resemble them. ‘New leaders overthrowing old ones with promises of radical change bring nothing but more of the same’. Understanding how change doesn’t happen is as important as understanding why it does.

In contrast, when a combination of institutional accident and inspired leadership leads to an elite that is willing to accept creative destruction (as, the authors argue, is historically the case in the US), then a take off can occur.

The style is captivating – dotted with great historical accounts, amusing and telling anecdotes (in the 16^th Century African kingdom of the Kongo ‘taxes were arbitrary: one tax was even collected every time the king’s beret fell off’). Great use of contrasts and ‘natural experiments’ – Mexico v US at the border; Bill Gates v Carlos Slim; North Korea v South. The pace is breakneck, hopping manically between countries and centuries, from the rise and fall of the Roman Empire to the disappearance of the Mayas to the rise of Japan, plucking examples to illustrate the thesis.

The strongest part of the book for me was its focus on the dynamics of change. It almost feels like physics – path dependence is key; minor ‘butterfly’s wing’ differences in initial conditions caused by gentle ‘institutional drift’ make a huge difference when a country hits a ‘critical juncture’ (e.g. the French Revolution, or the Black Death in 14^th Century Europe (left), which wiped out a large part of the labour force and so transformed economies), and can set them on diametrically different paths. ‘The richly divergent patterns of economic development around the world hinge on the interplay of critical junctures and institutional drift. Existing political and economic institutions – sometimes shaped by a long process of institutional drift, and sometimes resulting from divergent responses to prior critical junctures, create the anvil upon which future change will be forged.’

The problem is, much of this only really works in hindsight – almost by definition, there are always lots of minor differences floating around, and it’s impossible to tell in advance which are going to provide the butterfly’s wing that determines that (for example) the industrial revolution takes place in Britain and not Spain. This is a book written almost entirely in the rear view mirror.

The trouble with these grand theories is that when they coincide with your own prejudices, they feel like a flawless romp through history. But if you are uncomfortable with the numerous assumptions, explicit and implicit, you get a sense of suspicion and vertigo – it feels like you’re being conned (and the complete absence of footnotes make it harder to check the source of some of the sweeping claims). The reader is being asked to take an awful lot on trust here. And I kept hearing a phrase of Thandika Mkandawire’s  in my head: ‘a theory that explains everything, explains nothing.’

The book’s biggest problem (at least for me) is the authors’ love affair with the American Dream (though not perhaps, American Reality). In their account, successful institutions bear a remarkable resemblance to America’s constitution, separation of powers etc etc. That means that the China question hovers over the book throughout, and their fairly perfunctory attempt to answer it is deeply unconvincing. China is portrayed as on the wrong side of history, pursuing ‘authoritarian growth’, while trying to defy an inexorable push towards matching economic inclusion with the political equivalent.

But can this book really be arguing that China’s economic transformation is substantially more fragile than that of, say, Brazil? Apparently

so. ‘Growth under extractive political institutions, as in China, will not bring sustained growth and is likely to run out of steam’ is a hell of a throwaway line, especially when you don’t say whether that might be in one year or a hundred. Nor do they buy into the optimistic liberal account that holds that China’s growth will create pressure for political reform – A & R think it will hit a growth ceiling before that reform happens, with unforeseeable, but chaotic consequences.

More generally on the role of the state, the book seems to swallow the rather discredited argument of the ‘East Asian Miracle’ school that ‘South Korea is a market economy, built on private property.’ (Dani Rodrik and Ha-Joon Chang beg to differ.) The authors systematically downplay the role of industrial policy and a hands-on state in its take-off . ‘[The] process of innovation is made possible by economic institutions that encourage private property, uphold contracts, create a level playing field and encourage and allow the entry of new businesses…. It should therefore be no surprise that it was South Korea, not North Korea, that today produces technologically innovative companies such as Samsung and Hyundai.’. There is no real attempt to explore the concept of ‘developmental states’, a term originally coined to describe Japan’s take-off, but one which is increasingly interesting a range of developing countries as they see the more liberal capitalist economies being rapidly overtaken by ‘state capitalists’ like China and Brazil. But for A & R, the high growth figures of countries like South Korea are always ‘in spite of’ a hands-on state, not ‘because of’.

Which all reminds me of a baffling exchange in 2003 with the FT’s Guy de Jonquieres, as we looked out over the beach at the WTO summit in Cancun (NGO advocacy’s a tough gig sometimes). Me: ‘how can you say state intervention destroys economies, when South Korean industrial policy has been so successful’. Guy: ‘But think how much better South Korea would have done if the state had stayed out of it.’ Err, right.

Overall, the book left me with a sensation of raised expectations, which were then disappointed. That was summed up in the book’s bizarre finale. After a hyperactive romp across the millennia this purported survey of what works fizzles out, pinning its hopes on – wait for it – the media, Facebook and Twitter. Oh dear. All that history ends not with a bang but a tweet.

For more erudite reviews and arguments, with my entirely unscientific assessement of the star rating they give the book (I guess I’d give it three, slightly above the average), take your pick from

Jeff Sachs 1 star, which provoked A&R’s tetchy response,

Edward Laws and Adrian Leftwich 3 stars

Peer Vries 2 stars

Jared Diamond 4 stars

Martin Wolf 3 stars

Michael Heller 2 stars

Francis Fukuyama 2 stars

Feel free to suggest others. All men, I notice – is it book reviewing that’s a male preserve, or pontificating about the broad sweep of history?