Internship for NGO in Ethopia – Project – E


Alumni tips

Dear Developmentalists,

On May 4th, Kevin Seely, assistant cooridnator of the Donor Committee for Enterprise Development (DCED) came to share some tips on getting a career in development. Kevin attended the MPhil Development Studies in Cambridge few years ago and took the time to compile the thoughts of past MPhil Alumni to share with us. It was very interesting to hear what past students have learned and would have done differently. Kevin also introduced us to the work of the DCED. The Committee has an internship opportunity available for the summer that you should really look into.

Kevin was so kind to make the slides of his presentations available here. Enjoy!

– Gioel

Enterprise and Development Agencies

Alumni Careers Presentation

Fighting the Symptoms, not the Disease

by Kari Jacobsen

I’ve taken off to Mexico in every vacation during this course. I’ve managed to write about Mexico in every essay I have handed in (without realizing it myself). Sometimes I’m sure my friends in the course get very tired of hearing of Mexico and must think it’s the only thing on my mind (which it pretty much is).

The reactions I get when I say I’m going (again) almost always includes “Oh how nice. Enjoy the beach and the sun!” but also often an “is it safe?” or “now that’s a messed up place”. The violence that has been ravaging Mexico over the past few years has not gone by unnoticed. The view of Mexico as a tropical paradise has been invaded by the fear of violence that seems to be increasingly out of control and is now keeping tourists away from popular vacation spots. When I started my undergraduate studies in Latin American studies four years ago, no one was talking about ‘the violence’ in Mexico. There was an awareness of the growing importance of Mexico in the illegal drug trade, but for those interested in this issue, Colombia and Bolivia were still more important.

Since Thursday, May 5th, an 80 kilometer March against Violence started in Mexico, culminating in a large-scale protest against violence in Mexico City on Sunday May 8th. Civil society, as expressed through various media and campaigns, is ‘fed up’ with ‘the violence’. I can’t help but wonder, what is ‘the violence’ really? Did some bad people suddenly decide to start killing innocent people who just happen to cross their paths? I also wonder, what is civil society and what is its role in the changes that must necessarily take place in Mexico in the near future?

First of all, one must address the core issues facing Mexico at the moment. It makes no sense to discuss ‘the violence’ without addressing its underlying causes. There is now decades of experience in Latin American countries of the War on Drugs. For decades the USA has refused to see the issue of illegal drugs as a demand-side problem, but has focused on the supply-side. The USA established military bases in Bolivia, Peru and Colombia to fight the production of cocaine leaving the countries for destination countries in Europe and North America. It was accepted that if a plane flying under the radar did not respond, it was shot down. It happened on several occasions that innocent civilians were killed. In Peru, Fujimori was elected president in 1990 largely on the promise to end the violence associated with the guerrilla group Shining Path. The group was connected to illegal drug production and export to finance its activities. With brutal military force and US help, he was able to do this. As is well known, the case of Colombia and the FARC has been much less of a success story. Overall, considering the fact that the War on Drugs attacking the production side of the illegal drug industry has been going on for three decades, it cannot be characterized as anything but a failure. A failure which has cost great human suffering.

In the case of Mexico, it might be tempting to use similar tactics to deal with the issue of illegal drugs. However, Mexico presents one crucial difference that cannot be ignored; the 3169 kilometer long border with the USA. Mexico has for a long time been the entry point into the USA for illegal drugs originating in Andean production countries. It is evident that issues surrounding illegal drugs and resulting violence in Mexico is not a purely domestic one. Mexico is a crucial link between strong demand in the USA and production in various Latin American countries. It presents extremely lucrative opportunities. These opportunities are linked to two issues; the existence of other opportunities and the illegal nature of the drug industry.

Illegal drug trade, particularly cocaine, is extremely lucrative. From small-scale coca-leaf farming to street sale in a major US city, there is good profit to be made in every part of the value chain. The profit also increases with the risk higher up in the value chain. Given the lack of alternatives in Latin American countries, very few options can compare. People do not enter into the illegal drug industry because they are less moral or more evil than other people. They enter into it because of a lack of real options. With the pressures of competition that builds up as more people enter into it, the fact that the industry cannot be regulated is the major issue. Given the illegal status of the industry, competition will be cut-throat. Literally. With the extreme profit opportunities up for grabs, it is no surprise to see rivaling cartels engage in violent confrontation over territories and market access.

Mexico lacks opportunities that can compete with the illegal drug industry. People cannot be expected to willingly enter into the extreme precariousness of the informal sector if there is a more lucrative alternative. A lack of opportunities in the formal sector pushes more and more people into illegal activities. This issue is one Mexico can begin to address domestically. Unfortunately, president Calderon has done nothing of the sort. In fact, he has only exacerbated the problems. Calderon’s election in 2006 was hotly contested, to say the least. In a move similar to that of Fujimori of Peru, he might have felt the need to justify his position by showing real strength and determination; he took on the War on Drugs and sent in the army. However, what he might have expected to be a relatively easy battle has turned into a nightmare, with the people now turning against him and demanding an end to the violence.

The issue of legalization needs to be addressed. This problem can only be addressed internationally. The USA has played two important roles in the illegal drug industry. The USA became the most important market through a stable, strong demand. However, it also led the international War on Drugs through United Nations initiatives. All of the major UN conventions on illegal drugs were mainly shaped by the USA, most importantly the Single Convention on Narcotic Drugs of 1961. This clearly sends mixed signals; ‘American values’ do not seem to correspond to the American reality. It is easier to blame others for offering something illegal to you than it is to deal with your own addiction. Suffice to say that legalization can make regulation (and government taxation) possible and will most likely result in a fall in prices and thus a fall in the extremely high profits. This will make it possible not only to regulate competition between cartels, which might reduce the direct violence. It will also be less lucrative to enter into the industry. However, in the short term, it seems very unlikely that the USA will let reality change its values.

What is the role for civil society in ending the violence in Mexico? “Civil Society” is at the heart of the protests against the violence – but aren’t the cartels also part of civil society? In Gramscian terms, the cartels might actually form an extremely strong and quite successful counter-hegemony against the power of the state. This might not be in terms of a concrete ideology or common cause, but the cartels successfully question the authority of the state, which seems weaker by the minute. It is a mistake to see civil society as something inherently good or positive for social change. Given recent events in the Middle East, civil society is very fashionable. But its role in social change should not be exaggerated, particularly in the current Mexican situation. I talked to a leading blogger and civil society ‘activist’ in Mexico last month, and he told me about how he tried to get people to ‘reclaim the streets’ and not hide away in their houses when bullets are flying in cities that used to be safe. This lack of understanding of the underlying issues might potentially only make things worse and put more lives in danger.

The solution is in the much, much bigger picture, which civil society is a part of, no doubt. But it would be naïve to think that marches against the violence will fix things. There is an urgent need to address broad domestic economic and social policies and the political climate in general. However, not even this is a picture that is large enough. The role of the USA cannot be left out of a real solution, however discouraging this may sound. However, this role is not military, it is not a continuation of the War on Drugs. Rather, what is needed is a complete reassessment of the US relation to illegal drugs and its role in this global value chain.

By protesting, marching, and tweeting against violence, civil society is merely fighting the symptoms, not the disease. It is paramount that ‘civil society’ understands the underlying causes of the suffering they are experiencing. It is also paramount that civil society uses its powers as political society and fights for a change in policy in the presidential elections next year.

Response to “In Defence of Neo-Liberalism”

by Zach Warner

I’ve hemmed and hawed over writing this post, largely because the critique I make is of an essay whose author is a good friend and colleague of mine. Writing on the Cambridge MPhil Development Studies Blog, Mike has passionately argued the case for neo-liberalism in three parts. he does so not for ideological or intellectual support of the ideas themselves but rather for his belief in thinking freely. Perceiving a heterodox slant in the Cambridge DevStudies Committee, Mike has taken the position simply as a way of keeping himself from being indoctrinated. For that, I commend him.

That said, I’m compelled to write a response to a number of points. Though not necessarily heterodox, I do not find the neo-liberal (NL) argument convincing. The rest of this post will outline why.

Perhaps neoliberalism’s greatest failing is that it has developed an ossifying ideology that no longer heeds the advice of people outside its political and academic circle. This has stifled critical debate and broad based thinking causing neoliberals and their institutions to fall into groupthink. Unfortunately, I believe our course, with its lack [of] neoliberal counter criticisms, is falling into the same trap.

This is problematic in that Mike’s critique of the department is that it has an overzealous focus on ripping apart NL. If this is the case, how can the lectures be said to mimic NL in that they “no longer [heed] the advice of people outside [their] political and academic circle”? Mike’s position is revealed in his titling of the post: a “defense” of NL is only required if it is under attack. The two positions are logically incompatible.

Disregarding this incongruence, many would take issue with the claim that the “greatest failing” of NL is developing an “ossifying ideology.” The problem is not that the ideology exists per se, but rather that it is used as a mechanism of power, a rhetorical and economic program to enforce policies that actually hinder development. If this is the case, the challenge can hardly be levied that development from a heterodox perspective makes the same error.

Much of neoliberalism’s rise can be attributed to a paradigm shift in economic thinking that occurred during the 1970s. This shift was not the result of some political coup; rather it was the result of an honest assessment of facts.

…Read the rest on Zach Warner’s Blog

Fight of the Century

Exam revision need not be boring. My homeboys Keynes and Freddie stay as relevant as they were a century ago. Now, if only contemporary economists could go straight to the rap phase, we might be able to make things happen before the end of this century…

– Kari

In Defense of Neoliberalism: Part I

by Mike Doyle

In Defense of Neoliberalism: Part I

On Ideology

We have all spent the past sixth months learning about how bad neo-liberalism is. Unfortunately, we have heard comparatively little from the other side. If neo-liberalism is to stand trial, it deserves a good defense as well as a good prosecution. This is why I have attempted to issue a defense of neoliberalism. What you are about to read are not necessarily my views. However, I think it is important to describe the thinking of the neoliberalism since we have, in my opinion, received very little of it in our course. Before I begin however, I want to state a few reasons why reading an article like this is important even if you have already made up your mind on this issue.

Perhaps neoliberalism’s greatest failing is that it has developed an ossifying ideology that no longer heeds the advice of people outside its political and academic circle. This has stifled critical debate and broad based thinking causing neoliberals and their institutions to fall into groupthink. Unfortunately, I believe our course, with its lack neoliberal counter criticisms, is falling into the same trap. I fundamentally believe that very smart people can make themselves very stupid by failing to consider views outside their already established ideology.

Regrettably, this happens far too often because ideologies are very tempting to adopt. It is very uncomfortable to honestly assess contrary views and come to the conclusion that what you thought you knew was wrong. Moreover, becoming part of a political or intellectual “team” is very reassuring. It isn’t often recognized that learning and scholarship are social activities, but they very much are. It feels good to associate with people, publications, and organizations that think as you do. It is equally difficult to reject these associations when you change your views. Just as leaving your job, your hometown, or a club comes with social costs, so can changing your ideological beliefs. While you won’t be cast into the streets by your free-market friends because you became a socialist, the social bonds that used to connect you to your old buddies can become frayed.

Another reason why adopting an ideology proves tempting is because it makes thinking much easier. Without such intellectual rubrics, it becomes much harder to take a stance on an issue or formulate propositions. Without an ideology, we find ourselves in a nebulous space always questioning facts and suppositions and unable to come to any clear conclusions. The constant feeling of “I don’t know” plagues us. To be sure, this is not a bad place to be, intellectually speaking, but it certainly isn’t comfortable. It feels much better when we “know” the right answer and are able to ascertain the “true” facts. This is probably why so many smart people have caved in to ideologies over the years even though ideology has long been known to stifle thinking and lead to poor decision-making. This is also the reason why you should endeavor to consider the other side’s view, irritating as it may be.

Now, enough of my pontificating and on to Neoliberalism.

Why Neoliberalism Reigns

The first thing I want to cover about neoliberalism is why it rose to preeminence in the first place. It is often portrayed as if neoliberalism came into being solely because of a political shift in rich countries. This is normally illustrated with the election of Margaret Thatcher and Ronald Reagan. While this is not entirely false, it is an oversimplification. Much of neoliberalism’s rise can be attributed to a paradigm shift in economic thinking that occurred during the 1970s. This shift was not the result of some political coup; rather it was the result of an honest assessment of facts.

What happened in the 1970s that so changed economic thinking? Basically, a series of policy failures that resulted from the attempt to control the economic crises of that decade. For example, interventionist policies instituted by US President Richard Nixon, such as price controls, failed to produce the expected results.

Secondly, predictions made by Milton Friedman were actually born out in the stagflation that gripped the US economy in the late 1970s. Before this time, mainstream economists thought that rising inflation AND rising unemployment were impossible. After this intellectual coup, Friedman and the Chicago school went on to produce a lot of highly regarded work that quickly rose to the forefront of the economic community.

Thirdly, ISI and state-led economic policies started to be perceived as failures, even if a few countries were doing relatively well under ISI. Many of these policies were also plagued by corruption and political favoritism. Moreover, these policies were extremely expensive and were leading to fiscal and balance of payments crises in many developing countries. In the opinion of many, these interventionist policies were driving many poor countries into bankruptcy.

In addition to several policy failures, there was a profound methodological change that occurred in the economic community in the last decades of the 20th century. A new wave neoliberal economists began using sophisticated econometric methods to “prove” that their theories were right. While many of these econometric studies had flaws, their sophistication has impressed many observers. Moreover, the other side has not been able to amass nearly as much convincing econometric evidence as the neoliberal side has. This superiority in econometric evidence has probably been neoliberalism’s most effective tool for silencing its critics

Finally, the ailing communist economies, the final collapse of the USSR, and China’s move towards a more market-oriented policies seemed to convince the public that neoliberalism was right after all. It was these changes, not some political counterrevolution that secured neoliberalism’s preeminence.

In Defense of the Communist Transition

We have often heard that transition to communism, while politically liberating, was economically devastating. I will not attempt to defend the “big bang” or “shock therapy” policies of the early 1990s. There seems to be a consensus that a gradual transition would have been better. However, I would like to challenge the supposition that only Poland emerged from the transition wealthier than it came in. In fact, Hungry, the Czech Republic, and Slovakia were all close to, or above their 1989 GDP numbers. The Baltic States also did very well from 2000 until the current financial crises. Even so, there is no doubt that the transition was extremely difficult, but there is reason to be suspicious of the numbers we are often presented with. Here is why:

  • We should be suspicious of pre-transition statistics because it is difficult to believe the published reports of nations where speaking truth to power gets you sent to a Gulag. In fact, Gorbachov enacted the reforms he did because he was part of a committee in the 1970s that had access to the “real” economic numbers. This, of course, implies that the official stats were false.
  • There is a lot of documentation from many communist countries to confirm that communist bureaucrats purposely inflated production numbers in order to please their superiors.
  • It is questionable what GDP actually means in a centrally planned state. If a planner orders factory X to buy 100 nails from factory Y and pay 10 rubles in exchange, does this really mean 100 nails are worth 10 rubles. There were many cases were Soviet firms were forced to buy equipment they did not need, but were obliged to anyway, because they had to comply with the planners’ wishes.
  • Many countries such as the Czech Republic, Slovakia, Ukraine, the Baltic States, and the Central Asian States did not exist prior to the transition. Moreover, East Germany united with West Germany. Parsing the pre-1989 numbers for these new states can be difficult.
  • In Russia during the 1990s, the percentage of households who owned consumer goods such as TVs, washing machines, microwaves, and dishwashers went up dramatically, and not just for a wealthy minority. This does not seem to square with the common portrayal of post-transition Russian; a country supposedly gripped by economic chaos and poverty.

 

In Defense of Neoliberalism: Part II

by Mike Doyle

In Defense of Conditionality

Conditionality is perhaps the most frequently cited criticism of the World Bank and the IMF. Critics argue that such conditions exacerbate poverty and have little to do with loan repayment. It is also implied that conditionality is used to further rich-country interests at the expense of the poor. Let me offer some counterpoints to these views.

For starters, no nation HAS TO take an IMF or World Bank loan. The fact that most continue to take them implies that countries are better off with the loan, conditionalties and all, then without it.

Another point is that countries often don’t meet the conditionality agreements anyway. In fact, Easterly has found that there seems to be little correlation between meeting the conditions of a loan and whether a borrower receives subsequent loans. This implies that there are few repercussions for failing to meet conditions.

Some critics seem to imply that conditionality is unique to the World Bank and IMF. In fact, conditions are often placed on loans that occur between countries, between banks and companies, and between banks and individuals. The counterpoint to this argument is that the conditions imposed by the IFIs go beyond what is required for loan repayment. However, this stance is open to interpretation. Broadly speaking, any policy that affects economic growth affects the ability of the country to pay back the loan and, more importantly, reduce the chances that the borrowing country will need to be bailed out in the future. Under this broad interpretation, almost any policy can be a legitimate conditionality if it is believed to have a positive effect on economic growth and/or reduce the chances of fiscal or balance of payments crises.

My final defense of conditionality is that we should not be so naïve. Indeed, many of the “conditions” set by the IFIs would have occurred anyway. Countries in severe crises often have to make painful budget cuts. It should be no surprise that it proves very politically convenient to blame the IFIs for these cuts. As mentioned before, there doesn’t seem to be strong repercussions for ignoring loan conditions. This calls into question the idea that countries were somehow strong-armed into certain policies. More likely, the IFIs provided the political scapegoat needed to push tough policies into practice.

In Defense of the IMF

Firstly, I would like to say that the IMF is not a development agency. It is responsible for the stability of the global financial and currency system. Therefore, we should not judge it by the standards of, say, the World Bank, which is a development agency. The fact that these two organizations work so closely together is a situation that continues to boggle my mind. If I were the World Bank, I would stay very far away from the IMF for reasons I am about to make clear.

The IMF is the bad guy. In fact, it is supposed to be the bad buy. Getting bailed out by the IMF is not supposed to be easy. If it was, we would have a situation of moral hazard were countries could maintain unsustainable policies because they could always run to the IMF for help.

Another issue to consider is the true intent of IMF policies. I question how much an IMF loan is really supposed to help the actual borrower. In fact, I think the loan is really intended to prevent an economic crisis from spreading through contagion and beggar thy neighbor policies. The IMF is less like a rescue worker responding to an emergency, and more like a doctor trying maintain quarantine. This may be the reason why the IMF seems so callous to it borrowers, it is less worried about them, and more worried about the other countries that may be affected by a crisis.

Another criticism of the IMF is that it pressures nations into paying back foreign creditors first even at the expense of social programs. However, there is justification for this action. If countries continually default on their foreign debt their cost of borrowing will skyrocket and they will have to have to be continually bailed out by the IMF. Secondly, when the IMF conducts a bailout it does not go in alone. It teams up with other lenders. In order for these lenders to want to team up with the IMF, the IMF has to have a credible history that its lending partners get paid back after a lending action. Without this credibility the IMF will not attract partnering lenders and its ability to confront future crises will be curtailed.

In Defense of TRIPS

TRIPS has come under withering criticism because it is believed to have made certain drugs unaffordable for the poor people who need them most. It should be noted that TRIPS is not necessarily neoliberal. In fact, most independent observers seem to think that it was a mistake. Although TRIPS is indeed a hard issue to defend, I will do my best. My first defense is that we should not at one moment criticize the pharmaceutical industry for investing more into erectile dysfunction medication than anti-malarial drugs, and at the same time lambast them when they try to recoup the investment they have made on medications for the poor. If we want the pharmaceutical industry to put its formidable resources towards the fight against AIDS, malaria, and tuberculosis we should not expect them to do it for free. Better that governments fund research in these vital areas and/or reimburse pharmaceutical companies when they do develop medications that serve the poor.

Another defense of TRIPS extends beyond the industry of pharmaceuticals. Poor countries often complain that TRIPS makes certain technologies unaffordable even though they are vital for the economic development of poor nations. While I can be sympathetic to this view, I help but notice that the poor countries are not entirely innocent either. The United States loses billions of dollars every year due to piracy of entertainment media. This intellectual property is not vital for development, in fact it may do just the opposite. Yet, many countries, even wealthy ones, do almost nothing to stop it. Many people think that such piracy only affects the ultra-rich movie and rock stars. But look at any movie credit, there are literally hundreds of people who participate in the making of a feature film. These people are not rich, yet piracy affects them deeply.

Furthermore, many wealthy countries have seen their manufacturing sector shrink because of developing country competition. As a result, their comparative advantage has shifted towards “knowledge” products. As this knowledge sector becomes more economically vital, it will become increasingly difficult for us to ask the rich countries to give away their knowledge products for free.

If countries want to repeal TRIPS, they should give a little in order to get a little. They should start protecting intellectual property that has no impact on development and in return they can be granted affordable access to those technologies that affect health, education, poverty, and economic growth.