The Plundered Planet: review of Paul Collier’s new book and impending personal crisis

A new Paul Collier book is always a good workout in the brain gym and his latest, The Plundered Planet: How to Reconcile Prosperity with Nature, is no exception. You can either be seduced by his writing, conceptual acrobatics, anecdotes and soundbites (who isn’t sick of hearing ‘Bottom Billion’ in every seminar?) or you can choose the more exhausting (but more useful) path of trying to enjoy all this while spotting the gaps in his thinking. Good and bad, they are all there in abundance.

His overall thesis? ‘We are not curators of the natural world, preserving nature as an end in itself. We are not ethically obliged to preserve every tiger, or every tree. We are custodians of the value of natural assets. We are ethically obliged to pass on to future generations the equivalent value of the natural assets that we were bequeathed by the past.’

For Collier, plunder can take two forms: ‘In one, natural assets that should belong to all the citizens of a nation are expropriated by the few… In the other, natural assets that should belong to all generations are expropriated by those currently alive.’

There are two big parts to the argument. First, how to manage the non-renewable natural assets in the territories of the bottom billion (oil and gas, minerals). Collier sees them as the only chance of dragging the countries out of poverty – ‘the failure to harness natural capital is the single most important missed opportunity in economic development’.

So drill baby drill, but change the governance of the chain of decisions and spoils-sharing. That means getting every link right in a chain that includes discovery, who captures the value, of the assets, the proportion of government revenue that should be consumed, and how the rest should be invested. Collier has problem/solution analyses for each stage, building on his excellent work on the Natural Resource Charter.

Second, international renewable assets such as sea fish are likely to be plundered to extinction, while natural liabilities, such as carbon, tend to accumulate. The combination of scarcity + improved technology means that for an economist like Collier, the nature of the problem has changed. In the past, the fish supply was effectively infinite and so the value of fish was set by the investment, labour and risk of catching them – mining fish was like mining coal. Now, they have now become a scarce resource, hoovered up by giant factory ships. They have to be managed by quotas, and that means that governance becomes the key issue – mining fish has become like drilling for oil, and the issue of ‘rents’ has become central. Governance must change accordingly.

And so to climate change. Carbon emissions are a ‘renewable natural liability… the natural equivalent of a debt’. Collier is scathing about carbon trading and the Clean Development Mechanism, which he likens to the Catholic Church’s former tradition of selling forgiveness (indulgences) to finance the construction of St Peter’s in Rome (nice joke – ‘sins of emission’). Since the CDM finances firms for emitting less than they would otherwise have done, ‘the sale of indulgences through the CDM creates incentives not so much to reduce carbon emissions but to threaten to increase them by as much as possible.’

Instead, Collier argues that only a carbon price of say $40 a tonne will change the incentives and trigger the wave of technological innovation required to move us to a low carbon economy. That can be achieved by a combination of regulation and taxation that can be left up to national decisions, but the $40 a tonne figure has to be a ‘commonly agreed-upon world shadow price’. Here’s where he starts to lose the plot – he ridicules the ‘haggling’ of climate change negotiations, but gives no idea of how a universal $40 a tonne figure could be agreed and policed. As always, politics is his achilles’ heel.

But before I get onto the downsides, my favourite left field idea in the whole book: world government funded by fish. To solve the over-fishing problem, we should ‘assign the natural assets of the oceans to the United Nations. The UN would auction the quota rights to fish traders who would then on-sell them in each wholesale market. Analogous to a tax, a wholesale transaction of fish would be legal only if attached tot the appropriate quantity of quota rights. These quota rights would trade on the world market.’ Taxpayers would know how much of their fish bill goes to the UN and so take more interest in its workings (a fish-based social contract), and the money could fund the World Food Programme. Result.

So what’s not to like? First the lazy triangulation – Collier sees the debate polarized between romantics (opponents of GM, supporters of peasant agriculture) and ostriches (growth will solve everything, climate change isn’t a problem): ‘Run by romantics, the world would starve; run by the ostriches, it would burn.’ That’s good polemics, but a pretty feeble contribution to debate.

And he has a serious problem with ‘the middle class love affair with peasant agriculture’. He thinks agriculture should be handed over to Brazilian-style industrial farming, and the peasants should head for the cities (‘Africa needs more megacities’). The problem here is that Collier, as so often, is ahistorical, or bases his analysis purely on European history. Recent take-offs in countries such as Vietnam show just how crucial investment in peasant agriculture is in the early stages of take-off – urbanization happens after that, but the starting point is the peasantry.

His advocacy of the Brazilian model points to another blindspot – inequality. Collier cares deeply about inequality between countries, and has devoted his life to Africa, but he seems blind to the equity impact of a universal carbon tax (poor people priced out of access to fuel) or the mass joblessness that would ensue from a sudden transition to industrial megafarms.

But his biggest blindspot is undoubtedly politics, and here I detect some kind of impending personal crisis. His analysis of the obstacles to change seems to be pushing him towards a more political standpoint, calling for a ‘critical mass of ordinary citizens’ to rise up and demand good governance. But he doesn’t really do politics, has no idea about how such a critical mass might form, which organizations it might involve, what events might precipitate it etc. instead he talks vaguely about the need for ‘social pressure’ at national and global level. For him, this movement simply requires lots of economic literacy and data on oil revenues – a kind of mass movement of mini-me Paul Colliers that will storm the citadels of corrupt and incompetent rulers.

This weird gestalt shift from sophisticated economist to ingénue activist peaks in the conclusion to the book, where he thunders ‘this bottom-up approach holds out greater promise than re-engineering inter-governmental cooperation’, but fails to describe any plausible bottom-up approach. It all smacks of desperation – an atheist saying ‘trust in God’. Obviously as an NGO activist, I agree with the sentiment, but it’s analysis-free and wonderfully naïve, as in ‘citizens around the world can surely accept that their country should not be guilty of free-riding on the efforts of others’ on climate change. Oh really?

As you can see, the book certainly got me going. Anyone else read it yet or seen any good reviews? (And I don’t include John Vidal’s rant in the Guardian in that category).

See here for my past reviews of War, Guns and Votes,  Collier’s plan for Haitian reconstruction, how to clean up dirty elections and other stuff

Haiti Reconstruction: Two cheers (and one big boo) for Paul Collier’s plan

Oxford economics professor Paul Collier is the policy entrepreneur’s policy entrepreneur. The man who coined the phrase ‘bottom billion’ has an unparalleled ability to reach decision makers with cogent, timely and well written arguments. Paul has a long-standing connection with Haiti – he was previously Ban Ki-Moon’s special adviser on the country, (read his January 2009 paper for the UN Secretary General here), so unlike some other commentators he didn’t have to find it on a map when the earthquake hit. On Monday, he set out his stall on Haitian reconstruction in the Financial Times, calling for ‘three essentials – a realistic economic strategy, sufficient money, and effective and dedicated management’. The first two make a lot of sense, but I find the third very worrying indeed.

The two cheers are that Haiti presented a comprehensive cooperation strategy to aid donors in April 2009 (French original here), much of which still makes sense. The UN’s ad hoc advisory group on Haiti produced its own proposals in June 2009. Collier stresses that starting from those, rather than going back to the drawing board, would save months, ensure the plans are properly thought through and recognize the hard work of the many Haitians who helped draw them up. Secondly, find the money – several billion dollars – for both the strategy and the cost of reconstruction. (and make sure there is money for both – far too much of the funds in an emergency are tied to spending in the first months or couple of years, leaving future reconstruction starved of cash).

But his ‘third essential’ worries me and is worth quoting in full:

‘Effective and dedicated management is the most difficult. In the past within Haiti the interests of corruption have postured as the protection of sovereignty, while internationally, every actor has offered to co-ordinate, yet none has wanted to be co-ordinated. What is needed is to pool money into a single “Haiti Fund” that can be used for development. Both the Haitian government and the international community need temporarily to vest authority, both for spending money and for the swift construction of housing, hospitals, ports and power stations, in a single entity, probably co-led by a respected Haitian and a world figure.’

This strikes me as a dangerously technocratic vision, which runs the risk of equating development with management, politics with corruption, and benign leadership with outsiders. It is not a neutral suggestion – it is intrinsically a political project. If you create a parallel authority, it will acquire its own staff, budgets, contractors and identity. Inevitably, it will resist being wound down and power being handed back to the Haitian state. As with Paul’s blueprint for Independent Service Authorities, which he proposed for Haiti in his January 2009 paper, the lack of a clear exit strategy is truly alarming. Worst case is that you set up something you don’t know how to get rid of, and talent, funds and power is drained from the Haitian state indefinitely. Yet we know that development requires an effective and accountable state – technocratic short cuts invariably go sour.

Rebuild the institutions (the buildings can wait)

Not only that, but parts of the Haitian state are actually intact and already working well – the ministry in charge of water is effectively coordinating the response on water and sanitation (where Oxfam’s response is concentrated), convening meetings, allocating tasks etc, prompting one Oxfam staffer to describe it as the best-organised effort he has ever witnessed in an emergency. Rather than bypass the government, why not do a needs assessment, ministry by ministry, and provide cash and French-speaking secondments (Canada and France surely have some spare civil servants!) for rebuilding the capacity of each, preferably well beyond pre-earthquake levels?

Secondly, one source of organization and power that has already proved its worth in the relief effort, Haitian civil society, is largely absent from this scheme (and from Paul’s January 2009 paper). Haiti needs to rebuild society from the ruins and take the opportunity to “build back better”, addressing Haiti’s historic injustices. Many grassroots Haitian organizations are hard at work doing just that, and have been for years – they need to be at the heart of the reconstruction effort.

The Economist last week picked up Collier’s idea: ‘Given the local vacuum of power, this is the best idea around. The authority should be set up under the auspices of the UN or of an ad hoc group (the United States, Canada, the European Union and Brazil, for example). It should be led by a suitable outsider (Bill Clinton, who is the UN’s special envoy for Haiti, would be ideal, perhaps to be followed by Brazil’s Lula after he steps down as president in a year’s time) and a prominent Haitian, such as the prime minister. To provide services, it should work with aid groups.’ Again, no politics, no exit strategy, no voice for Haitian civil society. This is not Bosnia or Afghanistan—Haiti suffered a major disaster but it is not a country at war. This isn’t a conflicted nation where people can’t find sufficient consensus to lead their nation forward. And there are thousands of Haitians with the talent, experience and education to manage the task of reconstruction. Why would they need Bill Clinton to run the show?

Such proposals are often a sincere effort to respond to the urgency and suffering in Haiti, but the ‘just do something’ mentality can lead to big mistakes which we will rue in years to come. The effort to rebuild a Haitian state that is both more effective and accountable than its predecessors has to be led by Haitians themselves. It will be messy, slow, political and difficult, but bypassing the state altogether is not the answer.

War, Guns and Votes: what to make of Paul Collier’s latest book?

War, Guns and Votes builds on the strongest section of Collier’s best selling ‘Bottom Billion’ – his investigation of the ‘conflict trap’ that afflicts a disproportionate number of the poorest counties, especially in Sub-Saharan Africa (Collier’s real passion). The book is in equal measure hugely stimulating and deeply exasperating. Stimulating because he is an original thinker and a brilliant communicator, as well as a policy entrepreneur who always tries to get back to the ‘so what’ on any issue. He defies easy left/right pigeon-holing – he is a free trader, yet admires Julius Nyerere (if not his economic policies) and is a fan of UN peacekeeping.

Frustrating because of his eccentric attitude to evidence: he looks for statistical relationships, runs dozens of cross country regressions, establishes correlations between different variables (income, conflict, geography etc) and plausible directions of causation, but then blithely ignores other disciplines or qualititative research methods and as he freely admits, ‘guesses’ about the explanations for them. You could sum up his method as ‘correlate, then speculate’. To be fair, he may be doing all sorts of reading in other disciplines and just keeping it to himself, but the absence of footnotes makes it impossible to say.

So what’s his basic argument? That the international community has got overly obsessed with elections, which can actually set back the process of post-conflict reconstruction (he wanted to call the book ‘Democracy in Dangerous Places’, but for some reason the publishers vetoed it), and that a new approach to international intervention is required to drag bottom billion countries, most of them in Sub-Saharan Africa, out of their various traps (poverty, conflict, commodity dependence etc).

Here’s some of the detail:

Above a per capita GDP of $2700 per annum, democracy systematically reduces the risk of politial violence (riots, political strikes, assassinations, guerrilla insurgencies, civil war and coups). But below that level, democracy makes the society more dangerous. ‘Democracies get safer as income rises, whereas autocracies get more dangerous.’

Elections don’t necessarily lead to democracy, not least because autocratic leaders in the bottom billion countries are increasingly adept at playing the system: ‘In the typical election in one of the developed (OECD) countries, the incumbent government has a chance of reelection of about 45%. In the average election held in a society of the Bottom Billion, despite the fact that voters usuallly have many more grounds for complaint, it is 74%. In the worst governed BB countries, it is 88%.’

Small and ethnically diverse countries are most at risk from conflict: ‘elections tend to work better in societies that have larger populations and fewer ethnic divisions. They also tend to work better in polities with checks and balances on the power of government, and in particular where the elections are properly conducted. Elections without properly enforced rules of conduct in small, ethnically divided societies, typically retard reform rather than accelerate it.’

Aid donors and others should pay particular attention to the months and years after a conflict ends: ‘the post-conflict decade is dangerous and there seems to be no clear political quick fix. In particular, elections and democracy, at least in the form found in the typical post-conflict situation, do not bring risks down. Economic recovery works, but it takes a long time. The one thing that seems to work quickly is international peacekeeping for the length of time needed for the economy to recover…..Post-conflict aid is significantly more effective than aid at other times.’

He’s a big fan of peace-keeping by the UN and other organizations: ‘An annual expenditure of $100m on peacekeepers reduces the cumulative ten-year risk of reversion to conflict very substantially from about 38% to 17%. The ratio of benefits to costs is better than four to one. Peacekeeping looks to be very good value.’

He’s particularly impressed by what he calls ‘over the horizon guarantees’ such as Britain’s role in Sierra Leone, or the old French ‘informal security guarantee’ to its former colonies. The French guarantee reduced the risk of conflict by about 75%.

Coups are a much cheaper and preferable alternative to war (he’s long abandoned his youthful fascination with ‘armed struggle’) – they cost on average about 7% of GDP before the economy reverts to normal, whereas wars cost far more. ‘Unless the rebels are unquestionably a whole lot better than the government, then the cost inflicted on the society for the one-in-five chance that the rebellion will lead to the government being overthrown is far too high, and so the rebellion should be discouraged. But coups are a different matter: they have to be judged predominantly by whether they improve governance.’

He has a fascinating historical essay on the rise of European states (which suggests he does in fact read pretty widely), arguing that hundreds of microstates came together through war. The only way to fund wars was through taxation + borrowing. The only way to raise that money was by conceding successful greater levels of political accountability to tax payers or lenders – ‘the consequence of warfare was the spread of fiscal accountability.’ So the evolution of the modern state was driven by the twin logic of violence and fund-raising. ‘Step by step, the predatory ruler of the mini-state had evolved into the desperate-to-please, service-promising, modern vote –seeking politician.’

Contrast this with Africa’s post-colonial proliferation of ministates, with fragmentation more common than amalgamation. Why have they not followed the Europe’s path of integration through war and accountability? Perhaps easy access to natural resources and aid has obviated the need to raise taxes and concede accountability. Even when Mobutu or Mugabe run out of cash, they prefer the printing press to taxation, for that very reason.

But these days, following the European war-driven route to state building with modern military technology would be a bloodbath. ‘So what are the realistic options? Surely the best is the route taken by President Nyerere of Tanzania: political leadership that builds a sense of national identity. Astonishingly, Nyerere achieved this without resorting to the notion of a neighbouring enemy: indeed, he emphasized a Pan-African as well as a national identity.’ But ‘unless the states of the Bottom Billion can forge themselves into nations, they will need some deus ex machina that introduces accountability.’

And so we come to Collier’s proposals for what should be done about all this:

1. Smart external intervention: For countries below the $2,700 per capita threshold, ‘key members of the international community [US, UK, France] would make a common commitment that should a government that has committed itself to international standards be ousted by a coupe d’etat, they would ensure that the government was reinstated, by military intervention if necessary.’ [comparing with post-war Europe, the proposal is more NATO than Marshall Plan].

And conversely, if the government reneges on its promises, the international community would rescind its promise, essentially sanctioning a coup against the government.

2. Privatization of essential services by separating overall policy (which stays with government), the allocation of money to specific activities (by a new independent agency bringing together donors, government and civil society), and the actual supply of activities (open to churches, NGOs, local communities, philanthropists and presumably – though he doesn’t specify – the private sector).

3. Donors should tax military spending by bottom billion governments ‘each dollar of increase would be taxed by a 40% reduction in aid, which would be redistributed to other countries, and each cut in spending would be correspondingly rewarded.’

Of the three proposals, (1) has been rubbished as ‘deeply dotty’ by Peter Preston in the Observer and worries the boss of Human Rights Watch too, but I think is at least worth thinking about. Option 3 is interesting but surely there’s a level of military spending which is legitimate for any government? (See this recent Oxfam paper on what this might be). But I’m very concerned at number 2, simply because history shows that in the end universal essential services have to be steered, but also largely provided by, the state, and there seems no plausible exit strategy for folding Collier’s proposed ‘independent services authorities’ back into the relevant ministries. Instead the proposal would create honeypots for the powerful and corrupt, and create new constituencies that would then lobby like mad to prevent that happening (look at the opposition President Obama currently faces on his health care reform proposals from the US health industry).

Paul gave a great talk at Oxfam last night, which touched on some of these issues. I’ll return to that tomorrow.