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What better place to begin Manhattan coffee mania than at Stumptown Coffee Shop? This place takes African coffee so seriously, there are two varieties from Burundi and two from Rwanda, and if you give up your first born child,  you can take back a pound of beans to Ohio.

Next is Café Grumpy, where they have a $10,000 machine to brew the clean, sweet, complex $12 cup of coffee from Nekisse, Ethiopia.

Down 7th Avenue to Irving Farm (Go Rwanda!). {Full disclosure: I have a personal connection to Irving, but they’re great anyway.} On to Third Rail, rated the best coffee in Manhattan by somebody, and also selling killer Yirgacheffe from the birthplace of coffee. And no, they don’t have a bathroom — this is Manhattan, you can pee when you get back to Iowa.

Moving east we get to La Colombe, accidentally discovered by coffee-illiterate Chris Blattman next to his office. They sell coffee labelled Afrique, which I am pretty sure is in Africa. Sometimes there’s a bit of a wait. What part did you not understand about “no bathroom”?

And then just a little further east is Gimmee Coffee, which turns Rwandan coffee into espresso so delicious and thick that you stir it with the hunting knife you brought from Idaho.

Even farther east is the Roasting Plant in a gentrifying former immigrant slum on the Lower East Side.  It embodies the coffee-phile obsession with fresh roasted coffee, so your $24/lb Ethiopian Harrar turned brown right before we walked in.

Now that you’ve drunk enough coffee, reach with your shaking hands for your Gold Card to buy yet more coffee beans. Whole Foods, Dean and Deluca, and even Murray’s Cheese Shop sell Fair Trade, which is almost as good as Unfair Trade for transferring income from rich NYC to Kayanza, Burundi.

If you want to keep things simple, tourists, our last stop is Porto Rico Coffee Importers, which sells many African coffees,  but no spiel on “helping the poor Africans”.

Manhattan’s pampered and discriminating coffee fanatics don’t buy from African producers out of pity, they buy from African producers because they supply wonderful coffee.

Thanks for coming, tourists, have a nice trip back to Indiana. Don’t forget mail order.

"A flood of freedom, topple the idols of oppression, 42 years of repression and darkness, in four days the regime fell, toppling the human idols is a religious and national duty"

Who was that madman ranting about his hallucinations on Libyan TV, desperately in need of an anger management intervention? Oops, that’s the ruler of the country. He has gotten even more ridiculously scary since our last post.

A small group of young people who have taken drugs have attacked police station like mice … However there is a small group of sick people that has infiltrated in cities that are circulating drugs and money.

This bunch of greasy rats and cats.

Libya wants glory, Libya wants to be at the pinnacle, at the pinnacle of the world…I am a fighter, a revolutionary from tents … I will die as a martyr at the end…to my last drop of blood. …You men and women who love Gaddafi … get out of your homes and fill the streets. Leave your homes and attack them in their lairs. They are taking your children and getting them drunk and sending them to death. For what? To destroy Libya, burn Libya. .. Forward, forward, forward!

Sympathies to the courageous Libyans fighting for their freedom against this crazed tyrant.

What can the rest of the world do? The usual “don’t just stand there, do something” could result in counter-productive actions. Any military intervention would play into Qaddafi’s hand, especially since there really is nobody that can be trusted to do a “neutral humanitarian” intervention.

Trade embargo not a good idea — why punish the Libyan people? Libya’s opening to tourism and trade with the West in the last few years has arguably made this current revolt more possible, not less possible.

(True confessions: I went to Libya myself for a trek in the Sahara over Christmas holiday. And I have to also confess that, even being extremely skeptical of “benevolent autocrats,” I too was deceived that “Qaddafi had changed.”)

Too many NOs for you? Well here’s some Constructive NOs: NO to any aid to Libya, NO to any caving in to Libyan government contract blackmail, NO to arms sales, NO to “colonial reparations.” NO to “slavish” courting of Qaddafi (Feel free to apply any of all of that to you, Prime Minister Berlusconi).

YES to freezing foreign assets of the Qaddafi family, which the FT reports to be substantial (OK, Swiss?)

This from a new NBER working paper by Ariell Reshef (U. Va.) and myself. We also tell some stories of the individual successes, some of which involve the local government.

The news is not that Africa is different from the rest of the world in this, but that it’s the same.

This unstable uncertainty holds regardless of whether you include or exclude oil, minerals, and other export commodities. And so does the concentration of success — the top-ranked non-commodity export is 23 times larger than the 10th ranked export.

The stereotype of African countries as unchanging mono-exporters based on some unchanging natural endowment just turns out to be…wrong.

Coping with such remarkably high and unstable uncertainty (the “unknown unknowns”) as to what will be a hit seems like an a priori case for a lot of decentralized, highly motivated seekers and experimenters. We don’t exclude ANY possible government involvement — at the very least, governments need to be nimble to adjust regulations and infrastructure to support any new success that comes along from private entrepreneurs.

In sum, we think there is just as much a role for entrepreneurs in Africa, and just as little role for centralized and systematic government industrial policy, as in the rest of the world.

Four months later, the USTR replied:

We have already had a fruitless dialogue with Ms. Hamilton, so that’s just a cover for the cover-up on what really caused the US government to do something so destructive to blameless textile workers in Madagascar.

Of course, I first did my own exhaustive research on this, in the form of a 10-minute chance conversation with a flower importer for a major chic retailer in New York. The flowers shown from South Africa and Ecuador surprised me. I didn’t know Ecuador had cut into the famous Colombia success story in providing America’s roses, and I didn’t even know South Africa WAS a flower exporter, especially to the US. She told me that many flowers have a longer shelf life than I thought, like 12 days, giving time to fly them long distances.

The South African flowers went to Amsterdam (the center of the global market) to Miami (the entry point for all flowers to the US, possibly chosen by customs to catch drugs mixed with the flowers) and then to New York. Africa’s most famous success story is Kenyan cut flowers to Europe, currently being somewhat displaced by Ethiopians.  According to a co-authored paper that I will discuss in a future blog, Uganda was a competitor in this market until increased fuel prices after 2003 drove their firms out of business; Ethiopia’s flower exports took off at the same time because of some combination of better flowers, government subsidies, and foreign aid subsidies (the latter obviously merits more investigation on its own). Other small African exporters have been Zimbabwe, Zambia, and Tanzania.

My own informant had visited Cote d’Ivoire as a possible source for the US market, but the international flights were to Paris, and Abidjan to Paris to Amsterdam to Miami to New York was a few airports too many.

Flower exports could be beautiful in theory: good horticultural land + cheap labor + air transport = earnings for poor people. But may be not if they have to go through 5 airports.

Anybody like to respond to this bleg with some more flower information?

The Millennium Development Goals tragically misused the world’s goodwill to support failed official aid approaches to global poverty and gave virtually no support to proven approaches. Economists such as Jeffrey Sachs might argue that the system can be improved by ditching bilateral aid and moving towards a “multi-donor” approach modelled on the Global Fund to Fight Aids, Tuberculosis and Malaria. But current experience and history both speak loudly that the only real engine of growth out of poverty is private business, and there is no evidence that aid fuels such growth.

Of the eight goals, only the eighth faintly recognises private business, through its call for a “non-discriminatory trading system”. This anodyne language refers to the scandal of rich countries perpetuating barriers that favour a tiny number of their businesses at the expense of impoverished millions elsewhere. Yet the trade MDG received virtually no attention from the wider campaign, has seen no action, and even its failure has received virtually no attention in the current MDG summit hoopla.

Equally egregious subsidies are handed out to US cotton producers, which flood the world market, depressing export prices. These hit the lowest-cost cotton producers in the global economy, which also happen to be some of the poorest nations on earth: Mali, Burkina Faso and Chad.

According to an Oxfam study, eliminating US cotton subsidies would “improve the welfare of over one million West African households – 10 million people – by increasing their incomes from cotton by 8 to 20 per cent”.

Brahima Outtara, a small cotton farmer in Logokourani, Burkina Faso, described the status quo to the aid agency a few years ago: “Cotton prices are too low to keep our children in school, or to buy food and pay for health.”

To be fair, the US government has occasionally tried to promote trade with poor countries, such as under the African Growth and Opportunity Act, a bipartisan effort over the last three presidents to admit African exports duty free. Sadly, however, even this demonstrates the indifference of US trade policy towards the poor.

The biggest success story was textile exports from Madagascar to the US – but the US kicked Madagascar out of the AGOA at Christmas 2009. The excuse for this tragic debacle was that Madagascar was failing to make progress on democracy; an odd excuse given the continued AGOA eligibility of Cameroon, where the dictator Paul Biya has been in power for 28 violent years. Angola, Chad and even the Democratic Republic of the Congo are also still in. The Madagascan textile industry, meanwhile, has collapsed.

In spite of all this, the great advocacy campaign for the millennium goals still ignores private business growth from trade, with a few occasional exceptions such as Oxfam. The burst of advocacy in 2005 surrounding the Group of Eight summit and the Live 8 concerts scored a success on the G8 increasing aid, but nothing on trade.

The UN has continuously engaged US private business on virtually every poverty-reducing MDG except the one on trade that would reduce poverty-increasing subsidies to US private business. And while the UN will hold a “private sector forum” on September 22 as part of the MDG summit, the website for this forum makes no mention of rich country trade protection.

The US government, for its part, announced recently its “strategy to meet the millennium development goals”. The proportion of this report devoted to the US government’s own subsidies, quotas and tariffs affecting the poor is: zero. News coverage reflects all this – using Google News to search among thousands of articles on the millennium goals over the past week, the number that mention, say, “cotton subsidies” or “sugar quotas” is so far: zero.

It is already clear that the goals will not be met by their target date of 2015. One can already predict that the ruckus accompanying this failure will be loud about aid, but mostly silent about trade. It will also be loud about the failure of state actions to promote development, but mostly silent about the lost opportunities to allow poor countries’ efficient private businesspeople to lift themselves out of poverty

UPDATE: this was a dueling piece with an oped by Sachs today on FT.com.

One of us also got a prestigious slot in the print edition of FT :>)

Surprising new agreement with Sachs, where he says:

{Bilateral aid doesn’t work because it’s} ”largely unaccountable,” “programmes are scattered among many small efforts,” {and it creates mainly an} “endless spectacle of visiting dignitaries from donor countries.”

Continuing disagreement with Sachs when he says:

The most exciting example {of success} is the Global Fund to Fight Aids, TB and Malaria. …while a decade ago all three diseases were running out of control, now all are being reined in with millions of lives saved.

Jeff, could you clarify a bit what you mean saying that AIDS is “being reined in” when for every 100 people added to AIDS treatment, 250 people are newly infected with HIV?

People in poorer nations don’t have the nice things we do, so it must be because their ways of doing things aren’t as effective as our own. If we could just convince them to do things the way we do them then everyone would be rich, and Bill wouldn’t get any reception in Ghana either. So wealthy nations have spent a lot of time trying to export their newest and best makes and models of laws, regulations, and government agencies to the rest of the world.

One problem with this approach–one among many–is that it assumes that our every institutional and organizational innovation is beneficial. We call this “Whig history.” And while it’s hard to argue that wealthy nations don’t have an overall mix of institutions better adapted to producing wealth, it’s quite another to assume that they’re superior (at wealth production) to poor nations’ institutions on every margin. It could be that the evolution of our ways of doing things has taken a wrong turn in one or more spheres of activity.

Two recent articles raise the concern of Whig history, in ways relevant to ongoing debates in development. Eustace Davis writes at African Liberty that:

Governments world-wide are struggling to solve the problem of deficiencies in their schooling systems.  Politicians, teachers, educationists, administrators, employers, parents, politicians, policy analysts and students have differing ideas on how the problem should be solved.  All agree that something is wrong.  All have ideas on the kind of tinkering that is needed to fix the problem. The framework within which schooling functions is seldom or ever questioned; a framework that is little changed since schooling was nationalised in England in the late 19th and in the US in the early 20th centuries…

Schooling systems everywhere have become frozen in time. Schools are configured much as they were, and function in the same way they did, a century ago. A 1910 child would feel very much at home in a ‘modern’ school environment, whereas everything else in the world we live in has changed dramatically over the past 100 years.

Davis is concerned that the whole world copied England’s public educational institutions after they changed for the worse (see also James Tooley’s work on this topic).

And this article reports on the work of historian Eckard Höffner on 19th century Germany’s copyright law, or lack thereof. Höffner argues that the absence of copyright law facilitated the spread of knowledge that was critical to Germany’s industrialization and flowering scientific community. There is certainly no shortage of debate about the role of intellectual property in international development, but most of it assumes that IP law is wealth-enhancing in wealthy nations. Are we sure? How sure should we be before we export our IP laws?

Are these convincing examples of Whig history gone wild? Are there others?

Back to school shopping leads many people to buy apparel that was made in sweatshops. Rather than feel guilty for “exploiting” poor workers, shoppers should rejoice.  Their spending is some of the best aid we can give to people in poorer countries.

When workers voluntarily take a job they demonstrate that they believe the job is the best alternative available to them – even when that job is unsafe and the pay is very low compared to wages in the United States. That’s why economists with political views as divergent as Paul Krugman and Walter Williams have both written in defense of sweatshops.

Sweatshop jobs are often far better than the vast majority of jobs in the countries where they are located. David Skarbek and I researched sweatshops that were documented in U.S. news sources (or see here for my shorter, more general defense of sweatshops). We found that sweatshop worker earnings equaled or exceeded the average national income in 9 out of 11 countries we studied. Working in a sweatshop paid more than double the national average in four of the countries.

Sweatshops can also play a crucial role in economic development. Sweatshops bring investment, better technology, and the opportunity for workers to build skills. It was not long ago that sweatshops existed in many now-wealthy Asian countries.

New York Times columnist Nicholas Kristof wrote that “We need to build a constituency of humanitarians who view low-wage manufacturing as a solution” for poverty in the third-world.   I hope many AidWatchers will join that constituency by defending sweatshops.

Consider this picture of Tanzania’s top exports in 1998 and 2007.

This is pattern of rapidly changing success is the norm across African countries. If you take the top 100 exports in each country in 1998 (or the first year in which data is available), its correlation with the rank of those same exports in 2008 is only .29.

Moreover, almost none of the changing success is explained by global commodity prices. In fact, there is little difference in the dynamic changeability of African commodity export performance and that of the continent’s non-commodity export performance. Nor is there any difference between how much global prices explain commodity exports (which is hardly at all) compared to non-commodity exports.

The usual stereotype of African exports as just given by a natural commodity or mineral endowment, with fluctuations mainly explained by global commodity prices, is just … wrong.

These findings were featured in a paper by Ariell Reshef  (UVa) and myself in the National Bureau of Economic Research conference on African  Development Success July 18-20 in Accra.

What does it all mean? Actually, the patterns in Africa were similar to those in non-African countries. In all cases, succeeding in exports requires aiming at a moving target. Who will do better under these conditions, state industrial policy planners or decentralized entrepreneurs with specialized knowledge of what is working and what is not in each sector?

US food aid policy is definitely no exception, and it is riddled with inefficiencies.

Click for larger image

Exhibit A: This invitation from a coalition of big US shipping interests to an event in Washington today. At this event, USA Maritime will have tried to convince lawmakers and their staff that ancient and outdated US food aid legislation, which requires virtually all US food aid to be bought in-kind from the US, processed and bagged in the US, and shipped on US-flag ships to even the most far-flung destinations, should not be altered.

Let us leave aside for a moment that the report recommending favorable policies for the US shipping industry was bought and paid for by the US shipping industry and may not be the most objective or trustworthy source on the subject.

The main thrust of the shipping industry’s argument is that handling, processing and shipping food aid creates US jobs—13,127 of them to be exact—and boosts US industry, leading to this actual headline: “Food For Peace Program Produces More Than 870 Iowa Jobs.” If these policies were removed, they argue, it would be less profitable to operate a ship under the US flag, the US-flag fleet would shrink, and American jobs would be lost.

“Did you know,” reads the invitation, “that these programs have positive economic consequences for our economy at home?” The report tries to quantify one benefit of current US food aid policies, but (obviously) does not discuss the considerable costs of these policies to US tax payers, to the US’s reputation and credibility abroad, and most importantly to programs’ intended recipients—the millions of hungry and malnourished people fed by the world’s largest food aid donor every year.

The shipping industry’s arguments don’t hold water for many reasons. Here are two of the big ones:

First, assuming that you did want to subsidize the US Maritime industry, US food aid policies that create an overpriced, uncompetitive oligopoly are NOT a good way to do it. There are much cleaner, simpler and more effective ways to support US Maritime, such as direct payments to vessel owners. There is no reason to bundle shipping subsidies in with humanitarian aid other than the deeply cynical logic that it’s easier to rally public and Congressional support around money for starving children than around padding to the bottom line of multinational shipping conglomerates.

Second, current US food aid policies are NOT an effective or efficient way for the US to achieve what should rightly be the primary objective for food aid. According to the government’s own accountability office, buying food locally in sub-Saharan Africa (which is where the majority of US food aid goes) costs 34 percent less than shipping it from the US, AND gets there on average more than 100 days more quickly, AND is more likely to be the kind of food people are used to eating. I am not arguing that cash aid is ALWAYS better than food aid, only that any reasonable food aid policy would allow aid agencies the flexibility to determine what kind of assistance works best in each situation.

Despite resistance from all three sides of the iron triangle holding this legislation in place, innovators have managed to break loose about $400 million for pilot and supplemental programs over the last two years to buy food locally or regionally. This is still a small sum compared to the roughly $2 billion that the US spends annually, but it is progress.

With today’s lame report, the big shipping companies behind USA Maritime are asking us to value a few thousand American jobs in a declining and uncompetitive industry over America’s humanitarian reputation abroad AND the lives of the millions more people around the world who would benefit from reform to US food aid policy.

Do we even have to say it? This is NOT a fair trade.