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Sunday, December 27, 2009

The Making of Washington DC

The holidays have allowed me to catch up on my reading list and for the past few days, this book on the making of Washington DC has got me hooked. It's amazing to read about how a city got built from almost nothing and despite seemingly insurmountable obstacles. Two interesting things I learned:

1. DC had to be built in 10 years. The location was in the woods and if you look at the above picture without labels, you would probably mistake it for a developing country.

2. Politicians had wanted to permanently place the capital in its temporary home in Philidelphia, the cultural, political, and financial center at that time (yes, not NYC). For this reason, Congress did not allot money for the project since they wanted it to fail. DC had to be financed by some scheme of land speculation (that failed multiple times). If not for Jefferson's backdoor deal and Washington's persistence, it would not have been there.

But now it's great to live in such a city that has undergone such a great transformation. It makes me wonder about how Manila was made and what the plans actually were. Was there indeed a plan or was it just careless building of one structure after another? Good readings on this would be much appreciated.

In the meantime, still reading...

Thursday, December 24, 2009

This Year in Ideas 2009

If you haven't already, check out the 9th annual year in ideas by the NYTimes.
My favorites are the ethical robot (pictured above), how random promotions might actually be better than merit based systems, and how cows with names make more milk. Plus, Dean Yang, a filipino economist, got mentioned for his Rainfall Theory of Development.

Thursday, December 3, 2009

Eagle Without Talons? Nation Building and the Ateneo de Manila University

This is taken directly from Leloy Claudio's blog, which I think hits spot on the short-sightedness of Ateneo's approach to nation-building.
The celebration of the sesquicentennial of the Ateneo de Manila University presents an opportunity to celebrate not only the immense contribution the institution has made to Philippine society, but also to consider what more the university can do in light of its frequently articulated goal of building the nation. University President Fr. Bienvenido Nebres outlines his general approach to nation-building which he derives from Dr. Jose Rizal, the Ateneo’s most prominent alumnus. The Rizal that Nebres draws from is not the firebrand who sparked the first nationalist revolution in Asia – the hero who spoke the truth to power amidst massive injustices. His Rizal is the one exiled in Dapitan – the gagged Rizal forced to channel his energies towards community-building projects like the building of schools and the improvement of irrigation systems.

He notes in a speech to the Knights of Rizal: “In his years in Dapitan, we see a Rizal not of the Noli or the Fili or of many letters and poems, but a Rizal who said less and did a lot.” This defanged apolitical Rizal is the bedrock of the nation-building strategy of the university. Instead of criticizing the government for its injustices, Nebres’s approach focuses on addressing immediate and concrete needs like housing and disaster relief. The flagship project of this strategy is Ateneo’s partnership with Gawad Kalinga (GK). To quote the president again: “In Spain and Manila, he [Rizal] wrote and preached against injustices. In Dapitan, he simply worked to create the foundations for a better life for the people. He may well have launched Gawad Kalinga a century ago.”

This Rizal may well be the solution to our country’s problems for, as Nebres argues, today “there is so much talk and so little done.” Indeed, although a lot of Gawad Kalinga’s development approaches have been questioned, it is undeniable that it has contributed to the reduction of slums. Ateneo’s education programs in depressed areas likewise contribute to long-term national development.

But what are the implications of de-emphasizing political criticism in favor of immediate concrete action? Historian Floro Quibuyen argues that the image of an apolitical Rizal was used by the American colonial government to encourage Filipinos to cooperate with them even as they subjugated the country. Reminding Filipinos of the anti-colonial and revolutionary Rizal would have been unwise given their mission of pacification.

Similarly, in the context of the Ateneo, this Rizal and the framework of nation-building that it’s associated with has been used to question and erase the university’s long history of social and political activism. As a former student and now lecturer, I’ve been told many times by students and faculty associated with the university’s official nation-building programs that Marcos-era activism is dead, that the aktibista’s approach of criticizing the national government did not and does not work. More actions and less talk; let’s just build houses. As a student writing about GK in the official university website claims, “the aktibista and makibaka days are long gone.”

This anti-politics atmosphere has made it difficult to forward issues of national concern in the university. I was witness to the lethargy of many students and teachers during the time when mobilizations were being made to protest the NBN-ZTE scandal. I saw how this withdrawal from issues of national concern influenced the moderate stance taken by the Ateneo regarding the issue of whether Arroyo deserved to stay in power. While basketball nemesis La Salle called for resignation, Ateneo called for reflection. An administrator personally rebuked me when I said the university should join the lobby for the Freedom of Information Act since it would allow the public to scrutinize shady deals like the NBN-ZTE. Won’t work, I was told; let’s just lobby for another disaster relief bill. It doesn’t surprise me, then, that in her final State of the Nation Address this country’s most despised president claimed the university and its president as partners in her goal of building a strong republic.

There is one major flaw in the university’s anti-politics framework: the claim that activism with its attendant criticism of national politics does not work. It does. In the 1970s, the “talk” of student activists (many of them Ateneans like Edgard Jopson) conscienticized an entire generation, exposing them to the ills of authoritarianism. It was a slow process - educating and opening people’s eyes takes time – but it worked. When the crowd in EDSA overthrew the dictator, it was a victory for those who fomented dissent. It was the legacy of the makibaka activism that is currently derided in the Ateneo. And lest we think that nothing was gained from EDSA, one should consider that we currently have a free press, participate in regular elections, and have a growing civil society. Political scientist Nathan Quimpo, for instance, claims that grassroots NGOs who engage in legal activities like aiding farmers in land reform cases were few and far between before EDSA. It was the revolution that opened this democratic space. Our system isn’t perfect, but it’s significantly better.

After discussing my critical take on the university’s nation-building programs in my Philippine history class, I was asked by a student, “so are you still proud to be an Atenean?” I did not hesitate to say yes. I am proud of the Ateneo that produced martyrs like Edgar Jopson, Manny Yap, Billy Begg, Evelio Javier, and the revolutionary Rizal.

And I am proud of the Ateneo that can be when we remember these heroes once more

Tuesday, December 1, 2009

What is Seen and What is Not Seen

I stumbled upon this classic by Frederic Bastiat while trying to find writings of older economists to draw inspiration from, as I do my grad school apps. Bastiat summarizes in three paragraphs what social scientists should aspire for, Insight.

In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.

For a full version of his essay, check out this link.

Monday, October 26, 2009

We were not second to Japan

Once in a while, you get to hear the story of the golden age in Philippine history, the time when we were once next to Japan. Journalists usually evoke this story to illustrate how far we’ve fallen from grace as an Asian tiger. You hear this as well sometimes from conversations with older people, nostalgic of the past, implying that things were better during the pre-Marcos martial law era. If only we didn’t mess things up…

Well, guess what? Data shows that we were never the second best economy in Asia.

Below is a motion chart I made using historical GDP per capita (from Maddison) of various Asian countries going back to the 1950’s (if you're viewing this from facebook, you need to access my blog here). Note that, we were a middling country to begin with, behind Singapore, Hong Kong, Malaysia, Japan, Sri Lanka, and even Taiwan in the early post war years. From then on, we were simply outpaced by Thailand, Indonesia, South Korea, and China. Here’s a link to the bigger chart, in case you want to play around with the data.

I want you to think about this the next time someone claims we had things much better before. We did not. There was no golden age. And perhaps by liberating ourselves with this misguided view, we can press on harder in search for what "works."

Friday, August 28, 2009

The Best Development Policy Ever?

Last Friday, I pinned this poem on my office wall. It is the inscription on the tablet where the Statue of Liberty stands.

The New Colossus
by Emma Lazarus

Not like the brazen giant of Greek fame,
With conquering limbs astride from land to land;
Here at our sea-washed, sunset gates shall stand
A mighty woman with a torch, whose flame
Is the imprisoned lightning, and her name
Mother of Exiles. From her beacon-hand
Glows world-wide welcome; her mild eyes command
The air-bridged harbor that twin cities frame.
"Keep, ancient lands, your storied pomp!" cries she
With silent lips. "Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"

Lately I've been thinking, is it possible that the best development policy the US has ever had was to allow these 'huddled masses' into its shores? Could it be that the country's best contribution to the poor was to allow immigration of whoever could make it to its land of opportunity?

In the 1900s, the poor from all parts of Europe went to America in search of a better life. Although Americans did discriminate against "autistics" and "fools", the standing policy was whoever could make it, whoever could brave the 3 month voyage at sea was welcome. So thousands of the indigent from Ireland, Italy, Poland etc. moved to have a better, if not perfect, life. Millions had their lives transformed, just because they were able to move.

How are these countries doing now? Not that bad. None of these European countries are in the lower rungs of income categories. Historical wages have caught up, almost equalized with that of the US. Was it because of migration? I wouldn't be surprised if it was.

Neither has America been hurt. While in the 1900s, residents feared any additional influx could depress the US economy, here is the United States of America, 60 million immigrants after, still the most powerful, energetic economy in the world. Immigration has been part of its success.

The best development policy ever? If only we used it more and thought of it as such, migration could be the most powerful development tool in this next century, as it has been in years past.

Tuesday, August 4, 2009

I am significant!

Live in a foreign land and you will soon come upon this deep and humbling realization that the world is HUGE... and you, quite truthfully, are small.

The problem with graduating top of your class from a tiny and homogenous society is that you are led to believe you have made it, that you are a big shot. When the truth is, given greater perspective, you are one in a million - a disconcerting thought, I will admit, I have experienced many times here in America where I discover I am outsmarted, out-talked by a lot more people than I thought I could be, from co-workers to peers. Everyone graduated top of their class; everyone is a hot shot.

I am keeping this in mind as I start pondering on my PhD applications. Talent from around the world will be applying to the few prized spots in the best schools. It's a lottery. And everyone will be scrambling to set themselves apart.


Thursday, July 30, 2009

Ban Teachers from PowerPoint!

Wow, this is probably the most creative pitch I've heard for education reform. The Chronicle for Higher Education reports that students found PowerPoint to be the easiest, dullest and most forgettable teaching method.

It's unsurprising, really. I've dozed off at many of those bullet point presentations (and I'm sure you have too). And the worst is actually when professors even read the text for you like you're some sort of stupid. People can read faster than you say things, you know. It's a sign of laziness, which in turn breeds lazy students, who get used to being spoon fed.

Ppt is evil, according to Edward Tufte. "Power corrupts. PowerPoint corrupts absolutely."

Thanks to Freakonomics for the pointer.

Monday, July 27, 2009

Karma Kitchen

I simply can't wait to try this. And it's right near where I live.
At a time when everybody’s looking for good dining deals, Karma Kitchen’s one-page menu is a big attraction. It changes almost every week, but the prices don’t: There aren’t any.

Instead of a bill, diners receive a note explaining that their meal is a gift from a previous patron. The only request: Leave what you will to cover the next person’s meal.

Here's the Washingtonian article. A restaurant run entirely on the spirit of generosity. Even the servers are volunteers.

I wonder how long this experiment can last. This is a great example of how trust reduces transaction costs.

Sunday, July 26, 2009

A Microfinance Experiment in Manila - the newest paper is out

I was actually fortunate to personally meet one of the authors Dean Karlan from Yale a few months ago when he presented the initial results at CGD. Mostly he was amused at how we called informal lenders "bombays" and that we referred to the practice as "5-6." You can access the paper here.

The effects are diffuse, heterogeneous, and surprising. Although there is some evidence that profits increase, the mechanism seems to be that businesses shrink by shedding unproductive workers. Overall, borrowing households substitute away from labor (in both family and outside businesses), and into education. We also find substitution away from formal insurance, along with increases in access to informal risk-sharing mechanisms. Our treatment effects are stronger for groups that are not typically targeted by microlenders: male and higher-income entrepreneurs. In all, our results suggest that microcredit works broadly through risk management and investment at the household level, rather than directly through the targeted businesses.

I defer to the wisdom of CGD research fellow David Roodman for an in depth analysis of the paper (but of course with comments from "CGD in-house Manilan Paolo Abarcar"). To be brief, I find the results a bit puzzling: Particularly that male borrowers are found to be more profitable than females and also that businesses substitute away from household labor when getting access to microfinance. The results are weak (and perhaps even spurious). Plus I find the lack of convincing explanation as to how such results occur to be problematic. In the end, such is the weakness of most RCT experiments: we are able to know what "works" but just not why it "works". We are able to determine scientifically the effects of microcredit, just not the reasons why it has those effects.

For further reading, the economist recently put out a nice short article summarizing what we know about microfinance. The verdict: despite the rockstar status of microfinance owing largely to Nobel Prize winner Mohammad Yunus, economists have found incredibly little evidence on its effectiveness in reducing pov

The New Development Economics: We Shall Experiment

"A new kind of development research in recent years involves experiments: there is a “treatment group” that gets an aid intervention (such as a de-worming drug for school children), and a “control group” that does not. People are assigned randomly to the two groups, so there is no systematic difference between the two groups except the treatment. The difference in outcomes (such as school attendance by those who get deworming vs. those who do not) is a rigorous estimate of the effect of treatment. These Randomized Controlled Trials (RCTs) have been advocated by leading development economists like Esther Duflo and Abhijit Banerjee at MIT and Michael Kremer at Harvard."

That's Bill Easterly on his blog, talking about the latest craze in development economics: the use of RCTs to evaluate development programs. The method and critique of it is a must read for any aspiring researcher who wants to work in development. It is said that making use of an RCT for a paper is an almost sure fire way to get published. To what extent this incentive is good for the field is up for debate.

To non-economists, let me give an example to illustrate. To measure the effect, say of a tutoring program, an inexperienced researcher would compare how tutored students fare on a standardized test versus non-tutored students. For example, on the average, they score 20 points better. The 20 points will be an overstated benefit of the tutoring program because kids who select into the program, naturally or by mandate, might be the more talented, genetically endowed. Therefore, part (or even the whole) of the 20 point gain is not due to the program itself but simply to selection (the mere fact that people who opt into the program are the more talented ones gives them a better score). We call this selection bias. Randomization is the best technique out there right now to remove selection bias so that we can have a true and scientific estimate of the program's effect. It mimics clinical trials done by medical researchers.

I would love to do RCTs in the Philippines if circumstances permit. To the extent that GK allows me, I want to measure the true effect of providing housing on development outcomes - nobody has ever written about that. That would be a wonderful paper.

Brain Drain? Think Again

What’s the top exporter of nurses in the world? Just by looking at this chart, one can never tell. According to estimates, there are around 5000-8000 nurses that leave the Philippines every year – the most of any country in the world. If anything, we should expect to find the brain drain here. Data however shows even a hint of its presence is lacking.

In fact, the reverse might be occurring. The last few years have seen a spike in the number of nurses who went abroad to the US and UK. And yet, Filipinos, who would never have educated themselves if not for the option to migrate, are enrolling into nursing schools in huge numbers. As a result, we have almost twice as many nurses per capita as developed Greece, thrice as many as that of our neighbor Malaysia. We are producing the most number of nurses per capita among all other countries in our income group.

But still experts are quick to admonish the migration of nurses as a drain in the country’s human capital, which, they point out, have grave consequences. Former Secretary of the Department of Health, Dr. Jaime Galvez-Tan, declares it a “brain hemorrhage.” Lack of qualified healthcare workers due to the exodus, for example, is blamed for the failure to adequately service rural posts.

But even if there was a shortage of health care workers due to the migration of nurses, just because this occurs in tandem with a boy in rural Mindanao not getting proper healthcare does not necessarily mean it causes it. In the same way that rain occurring at the same time someone dies does not demonstrate a clear cause. All bright students of statistics would know that correlation is not causation. The poor healthcare system in urban and rural areas might actually be the one that is driving away the workforce. Or a third factor, such as poor pay incentives that nudge people to migrate and cause rural hospitals to be understaffed. Whatever it is, the relationship is ambiguous. And we should hesitate in calling out migration as the easy culprit.

Meanwhile, let me talk about what is crystal clear. A nurse who moves from Manila to the US earns thrice as much, immediately, even when adjusting for the cost of living. I am astonished how this tremendous gain to migration is often overlooked, or if not, is depicted as a saddening truth.

People are not lost in any sense when they move overseas. People cannot be "drained," like natural resources are. Migrants are human beings with hopes and desires. Their fulfillment in the US or elsewhere is a beautiful thing. Nurses freely choose to migrate and continue to do so in huge numbers. They have reason to value it. Now tell me, how is this not development?