Creationism: You cost America a healthy economy

While I try to be a tolerant and respectful atheist, it's difficult not to cringe when I see headlines about creationism being passed off as science in public schools or other buildings. Today's news from Kentucky caused such a reaction. It's unimaginable to spend $37.5 M public funds on a creationist theme park and I shudder to think that families might visit when it open in 2014 seeking an educational experience.

Beyond the utter insanity and obstinate ignorance that it requires to assert the Earth was created in six days, just 6,000 years ago, and that at one time, man and velociraptor co-existed peacefully, creationism perpetuates a departure from investigation, curiosity and experimentation that is crippling our nation's scientific development.

Is it fair to make the leap from bad science in our schools to failed businesses across our country? Yes. Schools that ask students to take things on faith, that do not teach the scientific method, that deny decades of evidence, teach students to accept what they are told by authority. How can we expect these same students to develop the technology and theories that will break the cycle of fossil fuel dependence, reduce federal debt and revitalize our economy? How can we expect these students to question their political leaders and their banks to plan for a stable future not driven by greed or based on short-term economics? Perhaps if we pray on it...

It's been estimated that nearly 20 % of high school science teachers teach and believe in creationism. An additional 15% present evolution and creationism as equal "theories" of life. This misuse of public money must stop. The US public school system was initially built to train model factory employees at the turn of the 20th century. Today our school system has a larger burden - namely training the future scientists, business leaders and innovators for our culture.

Some Unhelpful Advice for Haiti

New York Times columnist David Brooks has an uncanny ability for sounding so reasonable in one column and sounding so crazy in the next. Last week, he managed to do both in the same piece.

Brooks began by correctly observing that the devastation from Haiti's earthquake was so great because the country is so poor. Disasters of similar scales in richer countries come with vastly smaller death tolls. However, while growth is the key to mitigating such tragedies, Brooks also (correctly) points out some unfortunate shortcomings in development knowledge:

"In the recent anthology 'What Works in Development?,' a group of economists try to sort out what we've learned. The picture is grim. There are no policy levers that consistently correlate to increased growth. There is nearly zero correlation between how a developing economy does one decade and how it does the next. There is no consistently proven way to reduce corruption. Even improving governing institutions doesn't seem to produce the expected results.

The chastened tone of these essays is captured by the economist Abhijit Banerjee: 'It is not clear to us that the best way to get growth is to do growth policy of any form. Perhaps making growth happen is ultimately beyond our control.'"

At this point, however, the wheels come off the bus. He argues that there are some uncomfortable truths that we must acknowledge about Haiti:

"...it is time to put the thorny issue of culture at the center of efforts to tackle global poverty. Why is Haiti so poor? Well, it has a history of oppression, slavery and colonialism. But so does Barbados, and Barbados is doing pretty well. Haiti has endured ruthless dictators, corruption and foreign invasions. But so has the Dominican Republic, and the D.R. is in much better shape. Haiti and the Dominican Republic share the same island and the same basic environment, yet the border between the two societies offers one of the starkest contrasts on earth — with trees and progress on one side, and deforestation and poverty and early death on the other.

As Lawrence E. Harrison explained in his book "The Central Liberal Truth," Haiti, like most of the world's poorest nations, suffers from a complex web of progress-resistant cultural influences. There is the influence of the voodoo religion, which spreads the message that life is capricious and planning futile. There are high levels of social mistrust. Responsibility is often not internalized. Child-rearing practices often involve neglect in the early years and harsh retribution when kids hit 9 or 10.

We're all supposed to politely respect each other's cultures. But some cultures are more progress-resistant than others, and a horrible tragedy was just exacerbated by one of them."

As I've written before, I'm skeptical of these types of cultural explanations of poverty. While they can be excellent rationalizations of current facts, they seem to have little predictive value. As the previous link highlights, German, Japanese and Korean cultures were all viewed as hostile to capitalism and progress... that is, until each of these countries rapidly developed, at which point their cultures were viewed as promoting hard work and innovation.

Further, while Brooks highlights the aspects of Voodoo culture that stifle economic progress, he neglects to mention that certain aspects of Christianity (at least on paper) similarly discourage investment and growth. Many Americans believe in the Rapture. They believe that at any moment, they will be brought up to Heaven to observe the Tribulation and Apocalypse on Earth. Seems like that sort of mindset might impede a small business owner deciding on whether or not to expand. And yet, America is the richest country in the world.

Worse still, is Brooks' suggestion for changing the undesirable aspects of Haitian culture:

"...it's time to promote locally led paternalism. In this country, we first tried to tackle poverty by throwing money at it, just as we did abroad. Then we tried microcommunity efforts, just as we did abroad. But the programs that really work involve intrusive paternalism.

These programs, like the Harlem Children's Zone and the No Excuses schools, are led by people who figure they don't understand all the factors that have contributed to poverty, but they don't care. They are going to replace parts of the local culture with a highly demanding, highly intensive culture of achievement — involving everything from new child-rearing practices to stricter schools to better job performance.

It's time to take that approach abroad, too. It's time to find self-confident local leaders who will create No Excuses countercultures in places like Haiti, surrounding people — maybe just in a neighborhood or a school — with middle-class assumptions, an achievement ethos and tough, measurable demands."

I'm not really sure what this even means. There are many complex reasons for Haiti's poverty, but I'm not sure how creating the international development version of "Kitchen Nightmares" is going to solve it. Unlike with the Harlem Children's Zone, we don't have the authority to install "no-nonsense" leaders in another country. And when we've tried it, it hasn't worked out so well.

In the short-run, Haiti will need a lot of humanitarian relief to recover from this disaster, something even aid skeptics agree on. The long-run question of how to help Haiti (and other poor countries) develop is a more complicated one and we don't have a complete answer. I don't think, however, that naive appeals to "no excuses" paternalism is going to help.

(for a vastly snarkier critique of Brook's argument, read this piece)

Ha Joon Chang on Culture and Economic Development

Ha-Joon Chang, Cambridge University Professor of Economics makes an eloquent argument for why differences in culture don't explain differences in income:

"...in the early days of capitalism when most economically successful countries happened to be Protestant Christian, many people argued that Protestantism was uniquely suited to economic development. When Catholic France, Italy, Austria, and Southern Germany developed rapidly, particularly after the Second World War, Christianity, rather than Protestantism, became the magic culture. Until Japan became rich, many people thought East Asia had not develop because of Confucianism. But when Japan succeeded, this thesis was revised to say that Japan was developing so fast because its unique form of Confucianism emphasised cooperation over individual edification, which the Chinese and Korean versions allegedly valued more highly. And then Hong Kong, Singapore, Taiwan, and Korea also started doing well, so this judgment about the different varieties of Confucianism was forgotten. Indeed Confucianism as a whole suddenly became the best culture for development because it emphasised hard work, saving, education, and submission to authority. Today, when we now see Muslim Malaysia and Indonesia, Buddhist Thailand, and even Hindu India doing economically well, we can soon expect to encounter new theories that will trumpet how uniquely all these cultures are suited for economic development (and how their authors have known about it all along)."

Culture has a certain appeal on both the left and the right as a determinant of a country's politics and economics. But cultural arguments are often subject to a winner's bias: since rich countries will typically have high levels of education and entrepreneurial spirit, we can look for teachings within a given culture that promote those values. But we're looking the wrong way. As Chang argues:

Culture is the result, as well as the cause, of economic development. It would be far more accurate to say that countries become “hardworking” and “disciplined” (and acquire other “good” cultural traits) because of economic development, rather than the other way around.

This is from a chapter in Chang's book "Bad Samaritans", a critical look at global trade. It's definitely worth a look.

Question?

This week's New York Times magazine section has an interesting article about Cuba, titled "The End of the End of the Revolution". It quotes an official with the Cuban Ministry of Economics discussing Cuba's economic successes and failures:

"Álvarez reeled off some numbers. There were 6,000 doctors in Cuba at the time of the revolution; there are now close to 80,000 for a population of 11.3 million, one of the highest per-capita rates in the world. The U.S. embargo has cost Cuba about $200 billion in real terms. When the Berlin Wall crumbled, 80 percent of Cuba’s international trade was with Soviet-bloc countries. About 98 percent of oil came from them. Back to the Communist bloc states, at inflated prices, went Cuba’s sugar and rum.

'We’ve had to reinsert ourselves in the global economy twice in 30 years, once in 1960 and again in 1990,' Álvarez said."

If capitalism and globalization lead to the exploitation of the developing world, then the US embargo should be viewed as a positive for Cuba, right?.

If trade impoverishes developing countries then how could lack of trade also impoverish developing countries?

Invest in Africa

Harvard economist Dani Rodrik discusses a new development tool that targets small and mid-sized businesses in Africa:

"Our Center for International Development launched its new Empowerment Lab with a conference yesterday, and one of the most interesting new social entrepreneurship initiatives I learned about is something called MyC4.com. This is a web-based platform that allows you to look up a list of African entrepreneurs who need funding for their projects (described briefly on the site) and to offer them loans. You bid a certain interest rate, which is accepted as long as it is below the maximum the entrepreneur is willing to accept and as long as others have not bid below you. You can lend as little as 5 euros. The average interest rate accepted is 12.8 percent per year, and I am told that the rate of default has been so far in the low single digits."

Check it out. The company describes themselves as a:

"hybrid between Grameen Bank, Wikipedia, MySpace and eBay, MYC4 offers an opportunity to invest money and knowledge in Africa’s future by providing a forum for exchange of advice and knowledge with the purpose of growing and supporting entrepreneurism in Africa."

It's an interesting concept, particularly targeting small and mid-sized businesses rather than micro-businesses. In this sense, they are trying to overcome the lack of financial depth in most of Africa. Large businesses can get loans from international banks. Micro-borrowers can get loans from NGOs and other micro-credit providers. But small and mid-sized entrepreneurs don't have a real banking system to provide capital for investment.

Many people will balk at the existence of any interest rate for what is ostensibly a development project. However, the interest rate ensures that there will be a consistent supply of money and that the money will go to projects with the best chance of success. Also, people tend to forget that micro-credit also uses interest rates, often in the 30-40% range to compensate for the risk of default.

Plus, with a repayment rate of over 90%, it's a safer place to put your money than mortgage-backed securities.