Thursday, January 28, 2010
Friday, January 22, 2010
See all Friday links. (Work currently very busy so I’ve not got time for many postings. In Paris next week, so blogs will again be lacking.)
3/ Uganda anti-gay bill (imposing the death penalty on gays) ‘may change’. How generous.
8/ IPL to be streamed live on YouTube. A first for big sport.
Tuesday, January 19, 2010
The link to poverty? Essentially you are poor if you don't consume very much. You don't consume very much if you don't produce much for yourself or you don't produce much to swap with other people. There might be lots of (good and bad) reasons (mostly due to incentives, if you are an economist) why you might not produce much, but the basic fact remains, you are poor because you are unproductive.
Why is so much of the world's wealth in northern America and Europe? Because that is where the wealth is produced.
Telecom Lesotho have made the country poorer by producing less than they should have - there is less to consume for everyone.
I continually have bad service in Lesotho. By that I mean people who don't produce very good service for other people. That bad service means they do less for other people. In return, they receive less from other people (in the form of lower wages) than they would have otherwise. You see the cycle. No one produces much for anyone else and receives less from everyone else in exchange. The country is poorer as a result (everyone consumes less because they produce less).
How to break this cycle is a key role of development economics. Some of it is cultural and some of it is due to incentives. In any case, it is hard to get people to be more productive.
Friday, January 15, 2010
See all Friday links.
1/ Should Islam4UK be banned? A discussion from a freedom of speech perspective.
2/ How can I get my boyfriend/girlfriend to… Google search suggestions.
5/ Why are Econ students more selfish than the rest? – A new academic study.
8/ When it comes to mating, men buy more and women volunteer more
Monday, January 11, 2010
"Venezuela's President, Hugo Chavez, has said troops will seize control of any business that raise prices in response to the devaluation of its currency. He said there was no reason for prices to go up, and speculators' businesses would be handed over to the workers"
Here is why this new policy is stupid:
Venezuela's currency (the Bolivar) has been devalued. That means that you need more bolivars to purchase anything from abroad than you needed before. For example, if something cost $10 before, a Venezuelan would have had to pay around 21 bolivars. Now, for the same good, he will have to pay around 26 bolivars. But, in his wisdom, Chavez sees no reason why Venezuelan businesses should raise their prices in response.
If this in enforced, businesses which sell imported goods, or which use imported goods to make products will go bankrupt. This is not very good for the average Venezuelan who will have access to fewer goods produced in his own economy and, since there will be fewer jobs, will not be able to afford imports. It will also make the country even more reliant on oil exports.
This is perfectly reasonable - imports are the product of someone else's hard work and they expect something back from you in exchange - your exports. If you don't produce much for export any more, they won't want to give you their products.
I expect that this will be very good for some of Chavez's pals though who, no doubt, will be excluded in practice from the policy, and benefit from reduced competition.
Ignoring the fact that increasing prices when the price rises in your own currency is, in fact, not in any way 'speculation', what would happen if the evil 'speculators' have their businesses repossessed? If we are generous, we can assume that they really will be placed into the hands of 'the workers'. If we are less generous, we can expect some of Mugabe's - err, I mean Chavez's cronies to get their grubby hands on them. Great.
Now let's imagine Chavez is more stupid than corrupt and that 'the workers' really do start to run the businesses. Do we really expect firms in the hands of those who don't know how to run them to do well? I think not. If it were so easy to make so much money 'in business' many more of us would be running successful businesses. The rate of failure amongst start-ups is pretty high - and a lot of that is down to inexperience in running a business. Even amongst the large firms, very few survive at the top for a long time.
Good luck Venezuela.
Friday, January 8, 2010
See all Friday links.
1/ The plan for how to ‘sort out’ Afghanistan. Below is a taster:
(Hat tip: Aidwatch)
2/ You know you’re South African if… but You know you’re pleased you’re NOT South African if… . (I think it’s a little harsh – Zuma looks fantastic and is meant to be an excellent dancer – I love his shoes best.)
4/ Is college worth the money? Some amazing facts about students.
5/ Google blocks negative searches on Islam but not on Christianity. I tried it and it worked for me. Quite scary….
6/ Ethical trading brings advantages to developing country workers. Nice, because this isn’t automatically obvious to me – at least not in the long run.
Tuesday, January 5, 2010
A farmer said that they "would be inspired to produce more food, adding that their efforts have always been thwarted by lack of market for their produce".
I am sceptical. It seems that the South Africans have never had a problem finding a market here, so why would Basotho farmers?
The only reason I can think of is that South Africans produce food more cheaply than Basotho farmers; it is perfectly reasonable that, given tight budgets, people and firms prefer to purchase cheaper food.
This new milling company, Nala Milling, is presumably prepared to pay above the odds for grain produced in Lesotho (like Hovis in the UK). They might feel that the supply is more reliable, and, if this is true, it would be a reasonable policy. I suspect though, that South African grain supply is both cheaper and more reliable.
I also imagine that Nala Milling will have to pass on the costs to their consumers. Unfortunately, the quote by the farmer above suggests Basotho have already shown that they prefer cheaper South African produce to more expensive stuff produced in Lesotho.
The farmer is correct from his perspective though; higher prices will encourage more production. I am concerned though that unnaturally high prices (i.e. those not determined by the market) are not viable in the long run and, when supported through other mechanisms (e.g. Government intervention, or, in this case, firm policy), resources are put to use when they could be better used elsewhere, dampening economic growth and development in the long run. Eventually unnaturally high prices have to crash, sometimes in spectacular style and at great pain to those in the industry.
In the short run, farmers in Leribe Disrict (where Nala is operating) can benefit, but I hope that for their own sake, it is good business practice that is causing Nala to offer high prices and not even more agricultural nationalism to add to the world's woes.
Monday, January 4, 2010
See this BBC News story.
Many of the guest houses/lodges are owned by whites (of German or Afrikaaner origin) and in one of them, we sat and had a few drinks with the owner's 21 year old son. I asked him whether it would be okay for him to date a black girl. He said no, not at all. The reason he could not, he said, is that he would face a lot of taunts and disapproval from his (white and coloured*) friends and his (white) family**.
I asked if he could date a coloured girl. Sure, he said, no problem. Although when I questioned him more, he thought that 10 years ago, it would have been difficult. It would be easy to take a negative from this but for me, I see progress (albeit from a bad situation). I hope that in the future, things get even better.
* Interestingly, he said that mixed race and Indians were the same to him and actually went as far as claiming not to be able to distinguish between them (which surprised me somewhat).
** It would make no difference, apparently, if she were 'really hot' (economists have to cover all the angles:)).