Out of the dust, a new empire

I recently watched Empire of Dust, the 2011 documentary about Chinese development in the Democratic Republic of Congo.

Perhaps you, like me, have trouble keeping straight in your head which is which between Congo and the Democratic Republic of Congo. Congo has Brazzaville, and is merely very bad. The Democratic Republic of Congo has Kinshasa, and stakes a strong claim to being among the worst countries on the planet. An easy mnemonic is that because democracy makes everything in Africa worse, the Democratic Republic of Congo is obviously the bad one. The DRC is a country so screwed up that you can have a war where 5-6 million people die, and you never hear about it because the whole thing is so confusing and depressing that nobody knows what narrative to give, and it's hard to cast as a simple morality play.

I'd seen the trailer linked in a few places, and wanted to watch the whole thing. If you don't have the patience for the remaining 75 minutes, the trailer below is well worth watching for a flavor:


The whole documentary can be found here.

As is appropriate, the trailer contains the most hilarious and quotable lines. No-BS Chinese guy (Lao Yang) delivering some tough realtalk to an African guy (Eddy), saying that the latter's country was left lots of infrastructure and development potential by the colonials when they left, and they (the Congolese) squandered it all through laziness and poor governance. Plus since the Chinese guy is actually working there, he has a lot more scope to claim that he knows whereof he talks. In other words, you can't just accuse him of ignorance - have you been to the DRC? Of course not. So if you don't like his words, you have to find some other angle of attack.

To a western audience, it has the wonderful frission similar to playing cards against humanity - hearing someone utter hilarious taboos, but here with the possibility that they might be true. Eddy gives textbook rationalizations, but with a look as though he doesn't really believe them, and just smiles as he's called on them. Meanwhile, Lao Yang has the easterner's qualified immunity from charges of racism that forces the audience to listen a little longer. Of course, modern progressives would say he is racist (I think - it's hard to keep track of whether minorities can still be racist in The Current Year, or whether the Chinese count as minorities). But in any case, even if one could address him directly, one knows with certainty that if you accused him of racism, neither he, nor his employers, nor his countrymen, would give a flying fig. Take away the power of accusations of witchcraft, and watch how quickly people lose interest in the whole topic of witches.

While the density of both hilarity and insight is lower in the rest of the documentary than in the trailer, it is nonetheless interesting. Because while the trailer mostly gores progressive oxen, the rest of the documentary contains parts that might somewhat surprise a reactionary.

In particular, when the subject of the Chinese in Africa comes up, the standard perspective seems to be that the Chinese are swallowing the choicest parts of the continent in a quest for resource extraction and strategic pieces of infrastructure. They are on track, so the narrative goes, to be the continent's next colonial powers, and probably a lot less charitable than the Europeans they belatedly replace.

If the documentary has one lesson, it is this: rumors of a massive Chinese empire rising rapidly on the African continent are greatly exaggerated. Instead, one gets the impression of Chinese management having to battle with the same problems as everyone else in Africa.

Suppliers are unreliable. Lao Yang drives for a long time to try to find a gravel supplier for his cement project. When he gets there, the workers are standing idle around the machines, because the boss hasn't turned up yet. It's midday. They don't know when he'll be in. They've called him. They can't do anything until he arrives.

Indeed, similar problems arise with the Chinese company's own native workforce. It's a rotating cast who sometimes turn up, and sometimes don't. They need to have basic instructions repeated to them. Don't lose your equipment, or your pay will be docked. Don't slack off, but take your work seriously. Don't steal from the worksite. These are all things that I wouldn't have thought to mention as a manager, since they seem to go without saying. Apparently, not in the DRC. Various Chinese employees recount how they would leave a worksite having given instructions for the Congolese to complete a task, and find out later that the whole Congolese workforce had just wandered off ten minutes later.

The other slightly incongruous aspect that you might be pondering from the trailer - how did they find a well-dressed, eloquent, Chinese-speaking Congolese guy to be the interlocutor to the main Chinese boss, in the middle of nowhere DRC? And why is he so willing to just sit there and take Lao Yang's abuse? You quickly learn that Eddy is the translator, so doesn't really have a choice in the matter. He seems quite competent, and indeed a workforce of Eddies would likely do well. But the rest of the workers seem cut from quite a different cloth. And even with Eddy, one senses flashes of resentment and dual loyalty. When talking with a gravel supplier, Lao Yang is trying to find out where the guy is buying it. Eddy tells the Congelese gravel guy that the Chinese will just try to buy the entire operation - in other words, don't tell him, because it will put you out of business. Eddy of course doesn't translate this part of the discussion back into Chinese, but we as the audience get to hear both parts.

All of which might make you wonder - why do the Chinese put up with all this? Why don't they just bring in their own workforce? Towards the end, one gets the answer. They don't have a choice. Far from being a superpower, in the middle of the DRC, they're a very small minority, and their continued viability is dependent on them being able to give jobs to the Congolese, and presumably grease enough palms in the local government that everyone finds them to be beneficial overall.

Indeed, for all the claims about how the Chinese will make nasty neo-colonial dictators, the overwhelming attitude of the Chinese characters to their Congolese workers and circumstances is weariness and low level frustration. There's little evidence of abuse, or terrible work conditions, or even any threat of force whatsoever. It's quite possible that this exists, and the filmmakers just chose to not depict it in order to get access. Yet the picture presented seems credible, and you can see why. The workers in the Chinese company are basically like a foreign embassy. They're a tiny number of foreigners who are not only far from home, but far from any help that home can offer. If the natives turn hostile, you're done. The ability of the Chinese to project force into the middle of the DRC in a targeted, credible way on short notice is pretty damn close to zero. The same would probably be true for westerners, to be honest. If you all get chopped up, what's the Chinese government going to do? Send its one aircraft carrier to bomb random bits of the DRC in revenge? The country barely even has a functioning government. What would it even achieve?

And so you just have to muddle along as best you can. The narrative of the story is primarily about the attempt to find gravel for a cement factory, and the various travails they encounter along the way. It's portrayed as a microcosm of the struggle of the whole Chinese project. And the general sense one gets is that it's far from obvious that they'll actually succeed. The things that would make it hard for you to get a successful commercial operation going in the DRC are pretty much the same problems that the Chinese face. In the battle between Chinese commercial zeal, and Africa's intractably inhospitable commercial environment, it's not clear who to bet on.

There's a related aspect, which reactionaries will admit about China, but then oddly forget when it comes to the Chinese in the African context. To wit: the Chinese approach to development isn't exactly first rate either. It tends to be a bit slap-dash and poorly planned, with strong central demands to just get things done resulting in buildings that have a habit of falling down, collapsing holes in sidewalks, poisoned baby formula etc. And that's in China. In other words, this ain't a Japanese Just-In-Time inventory management system. When Lao Yang finally finds a potential gravel supplier, he can't tell him exactly how much gravel he's going to need, or when he's going to be paid. Lao tells him, essentially, I'll pay as the money comes in. To which I found myself thinking - they haven't committed the damn money yet? Stop just blaming the Congolese if your own lines of credit aren't set up. How is this guy meant to plan ahead to supply you with gravel if you can't give him a clear timetable of what you need and when?

And if you know anything about operations management, you know that the problem of unreliable suppliers has a well known solution - stockpile inventories in advance to take into account the estimated distribution of delays, so you only have a managably low probability of running out. In other words, it's only the first instance of delay that is a good excuse for running short. If you know you're dealing with jokers, you should be able to at least partially plan around them being jokers. Did the need for gravel just suddenly arise yesterday? Was this an unanticipated event in the development of a cement factory? Don't make me laugh.

Instead, for all the view of China as a monolith engaging in development, the individual Chinese managers seemed pretty much on their own, trying to scrounge around as best they could, and not always succeeding.  In other words, watching the documentary I came away with an unexpected feeling of sympathy for the Chinese in the DRC. Maybe they're going to take over the place, but it's going to be a hell of a slog in the mean time for the people on the ground. It's like with neighbourhood development. Sometimes, the gentrifiers beat out the ghetto. Sometimes the ghetto wins. It's not always easy to say in advance which way it will go.

But I can say the following. The Holmes Investment Trust is sure as hell not going to be setting up any cement factories in the Congo anytime soon.

The Other Great Geographic Discontinuity

Discontinuities are interesting things. When small differences in inputs result in large differences in outputs, it can sometimes give hints as to what exactly is causing what.

For instance, Douglas Almond's great paper on the in-utero effects of the Spanish Flu gets you mostly convinced just by a single picture

The ideal case observes a sharp discontinuity in a single input variable and examines the effect on the output. Economists search for these perfectly clean cases like financial traders search for arbitrage. They find them about as often, too.

But sometimes you get a second best instance - a case where a good fraction of the inputs stay smooth and continuous, and yet you observe a discontinuous shift in the output. This suggests that one of the remaining variables is having a large effect.

This is especially true in the case of development. The classic problem, concisely stated, is that goods go together and bads go together. In other words, countries tend to have good governance, good rule of law, a free press, low corruption, etc. or they have none of these things.

Boosters of the polite consensus wisdom occasionally enjoy pointing out the difference in light patterns between North and South Korea.



It is indeed a striking one. Scott Alexander cited it in his Anti-Reactionary FAQ as supporting the proposition that the quasi-monarchy of North Korea seems to result in much worse outcomes than the capitalist social democracy of South Korea.

Fair enough. So it does. Though of course what we're really seeing is the sum of all the differences between the North and South since the Korean War. The main quibble is the extent to which Kim Jong-Un is a good representation of monarchy as a system of government, but I take Alexander's point.

But if you're going to play that game, you have to take the comparisons that are not flattering to your world view, as well as the ones that are.

One such equally stark comparison is between Haiti and the Dominican Republic.





No, they didn't draw the border at some magically discontinuous shift in micro-climate. This is all one island of Hispaniola, split into two parts. It's just that the Haitians deforested their part of the island, leaving the land looking like it was denuded by a plague of locusts. The Dominicans, however, didn't.

And this is the start of a series of differences that are not quite as stark as North and South Korea, but they're pretty darn stark nonetheless. Haiti is supremely screwed, as bad as anywhere in the Third World. We're talking GDP per capita of $661 and life expectancy of 63 screwed. The Dominican Republic, by contrast is at $5442 and 74. Not exactly first world standards, but functional enough that westerners want to go there on holidays. To slightly modify the Hilltop Hoods - like a free trip to Port-Au-Prince, you don't want it.

And there basically is no polite explanation for why this is. The standard banalities about the causes of poverty don't get you very far. If Haiti's problem is that it was colonialized, so was the Dominican Republic. Admittedly the Haitian part was run by the French for more of its history, versus the Dominican Republic being run by the Spanish. But people don't usually clamor to attribute strong economic success to Spanish colonialism. In fact, the Dominican Republic was run as a colony for considerably longer, as recently as 1865 (compared with Haiti, which kicked out the French for the last time in 1804). Indeed, Haiti actually invaded and ran the Dominican Republic from 1821-1844, and got to implement some of its disastrous policies then.

The other sob stories don't get you much further either. Both areas had a lot of slaves. Both were administered by the US during the 20th century. And while the Dominican Republic produced a lot more sugar during the 20th century, this seems better understood as effect rather than just cause, as Haiti produced lots of sugar during the 18th century, and climate-wise could have done so again.

So since the countries were united for most of their history, one must expect that the causes might seem to be differences that were more pronounced after 1844.

First off, Haiti had killed most of its white population in a genocide, and added to its constitution in 1804 a clause that whites could not own property. Another country imposed this recently in the wake of similar genocidal behavior. You might almost conclude that this is a disastrous policy. It was imposed in the Dominican Republic too in 1821 when Haiti took over, but they hadn't gone for the full genocidal answer of killing all the whites. So even though lots of the Spanish left after their stuff was confiscated, enough of them stuck around, and eventually managed to successfully gain independence from Haiti in 1844. The Dominican Republic tended to be mostly governed by its richer and better-educated Spanish elite for much of its history, whereas Haiti mostly was governed by the descendants of slaves (either black or mulatto). Just look at the pictures of some of the presidents of the Dominican Republic. No matter how you cut it or interpret it, the difference is striking.



etc.

Now look at some of the corresponding presidents of Haiti




Of course, a closer examination makes all this a bit murkier. Even after most of the leaders above, both countries were sufficiently dysfunctional that the US chose to invade, in 1915 and 1916. Equally dysfunctional? It's hard to say, since this was the era before great GDP figures. In terms of long-serving leaders during the 20th century, they had different paths. Rafael Trujillo seems to have looked somewhat like Pinochet, brutal but effective. Papa Doc Duvalier seems like a cross between Idi Amin and Robert Mugabe, repulsive in every possible way. It turns out that being a black nationalist intent on driving out the mulatto elite tends to just produce a mass emigration of the educated parts of the populace. We've heard about that one before too. It's not for nothing that I compared him to Mugabe. Maybe this is the main difference, these two men. It's hard to say.

So we get to the end and don't get the neat schadenfreude of Scott Alexander's simple narrative. In the end, we observe a discontinuous outcome, not a discontinuous input, and identification still eludes us. I am not nearly enough of an expert to compile anything like an exhaustive list of the differences between the countries to say for sure what is driving it. And yet, the aerial photographs remain. Something is producing enormously discontinuous outcomes across small geographical differences. And if you dislike the things I've raised, does that not just deepen the puzzle? Admit it, my progressive friend - you don't have a satisfactory explanation for the difference, do you?

By any measure, Haiti has been profoundly misgoverned. The Dominican Republic serves as Banquo's Ghost, reminding us awkwardly that it didn't have to end up this way. It is not a happy tale, and the lessons, if there are any, don't seem to support the standard leftist narratives of why the third world is poor. No wonder you never hear about it.

Actually, that's not quite right.

You do occasionally hear about it, in the form of editorials in lefty western newspapers excoriating the Dominican Republic for its racism in deporting Haitian illegal immigrants, notwithstanding the fact that, by US definitions of race, the Dominican Republic itself is 80% black.

Yep, racism. That's the key to understanding all this, according to our intellectually bankrupt intellectuals. The overwhelmingly black Dominican Republic must be cast in the role of racist oppressor, because that's the only way by which the left can understand Haitian poverty, or indeed any poverty at all.

With such brilliant insights among our elites, I have no doubt that Haiti will soon be returned to the days when it produced leaders like Thomas-Alexandre Dumas and Alexandre Dumas.

I wouldn't hold your breath. Haiti has been collectively holding its breath for 200 years.

The Drain Approaches

So, we're about at the halfway point since I made the following prediction, half in jest, as my version of the Julian Simon bet:

Shorting the rand against a trade-weighted basket of currencies will earn positive abnormal returns over the next ten years.

This was based on nothing more than my hunch that South Africa is a country circling the drain.

How are we doing so far? Well, ignoring the trade-weighted bask bit, here's a partial answer:

The saddest incorrect prediction in geopolitical terms is that it can't possibly get any worse. The Zimbabwe lesson is that it can always, always get worse.

It gives me no pleasure to say that I told you so.

Of the Personal and Statistical

The current Syrian refugee crisis in Europe is a tragedy.

Should that sentence strike regular readers as a little trite, bear with me. I mean it in the classical sense that the Greeks thought of tragedy.

It is calamitous, deplorable, cathartic. It is a sorrowful tale of human misery stemming from root causes of human folly and flaws. It is a tale whose outcome the audience knows in advance, as they have seen the story many times before. It could have been prevented, perhaps, but we all knew it wasn't going to be.

The modern bastardisation of the concept of tragedy is that of a simple morality play, where good and evil are clearly delineated ahead of time. In the Disney-fied version, the upshot of all the sorrow is the lesson that Something Must Be Done.

I feel much has been lost by the Disney-fication of drama. We can no longer see the sadness of tradeoffs, of characters who are simultaneously victims and authors of their own misfortune, of the inevitability of human suffering.

So what, then, is the ultimate tragedy on display in this case?

It is this:

Individually, any one person is the undeserving and unfortunate victim of their broken society.

Collectively, all the people in a society are the reason that the society is broken in the first place.

Now, my instincts regarding public policy lean strongly towards emphasising the general, statistical formulation over the particular, personal formulation. The formulation as written may seem to suggest the primacy of the second statement over the first.

But do not misunderstand me here. It would not be a tragedy if it had such a simple resolution as that. Both parts are true. Try just reversing the order of the two statements to get a different feeling. The most common statement about the general and the specific has a very different connotation about which should be preferred. It is attributed, perhaps apocryphally but understandably, to the great monster - one death is a tragedy, a million deaths is a statistic.

The specific of the Syrian refugee exodus you have almost certainly seen by now. It is heartbreaking, and does not need any particular explanation:



Oof. The sheer sorrow hits you like a punch in the guts.

People's second thoughts after seeing this photo will vary wildly. You may be furious at the policies that let this happen. You may be suspicious of your emotions being manipulated here. You may wonder about what should be done in response. This is the intellectual question - what you make of it all.

But before that, I am almost certain your first thoughts, like mine, were of sadness and despair. Imagine if that were your child.

Humans are endowed with two great traits - empathy and reasoning. Those without empathy are sociopaths and monsters. Those without reasoning are dangerous imbeciles and fools.

Empathy yearns to try to end this senseless suffering by those in the middle of this war by granting them refuge. This is attempting to ward off the Scylla of heartless cynicism, and the gleeful egg-breaking-in-the-pursuit-of-omelettes that characterised the worst tyrants of the 20th century.

But what, then is the Charybdis? What gets ignored if we do not think about the general proposition?

Reasoning wants to know why Syria is the way it is, and what consequences will flow from possible responses to the current war.

What tends to get seldom emphasised in the face of such grief above is the heuristic I always associate with John Derbyshire (though I can't remember exactly where he wrote it) - that the more migrants you bring in from country X, the more your own country will resemble country X.

Several things are notable about this proposition.

One, it is extremely straightforward.

Two, it does not depend on one particular theory of development, and holds for many socially acceptable theories. If you think that poverty is driven by childhood nutrition, the result still holds, as long as the current adults are already impacted by malnutrition from years past. If you think that current ethnic conflict has its roots in colonial history, the result still holds, as long as the hatreds do not disappear upon touching foreign soil. As long as the trait is observable in citizens and fixed in the short term, then the Derbyshire result holds at least in the short term.

Third, it is completely outside the Overton Window of acceptable opinion.

But is it true? You will have to decide that for yourself. The general result is always uncertain and contingent in a way that the emotional result is not. You have to dig a little deeper to find out. Why is Syria the way it is? And how much of that will be replicated if there is extensive Syrian immigration to a western country, such as from a refugee resettlement program? Hard to say, precisely. But here's something to ponder, from Australia in 2012:

A forum discussion on SBS TV's Insight program looking at the uprising in Syria further exposed the divide amongst Syrian Australians over the conflict....

The main sectarian divide in Australia's Syrian community, though, is between the two main Islamic sects, Shi'a and Sunni....

In February, a group of men stormed the Syrian embassy in Canberra, smashing up the ground floor.

Three staff members were there at the time but no one was hurt.

Just days later, there was a shooting in Sydney apparently linked to the Syrian conflict.

The injured man, Ali Ibrahim, was an Alawi, like Syrian President Bashar Al-Assad.

After expressing pro-Assad views on Facebook, he was shot three times in the legs on the doorstep of his home.

His father, Jamel el-Ali, believed it was a warning from the anti-Assad camp.

It doesn't punch you in the guts in quite the same manner, does it?

But to the thinking person, rather than the feeling person, alarm bells are ringing. Australia did not used to be a country where embassies were stormed and people were shot for expressing political views in public forums. At the moment, this is at a small scale. But how many Syrians can one admit before this is no longer the case? If you bring all of Syria into your country, will you not have simply replicated Syria somewhere else?

This is all well and good, the particularist responds, but how many dead children are you willing to see washed up on a beach in order to forestall this speculative possibility?

It's a good question.

To get a flavor for the generalist argument, it is sometimes necessary to examine it in contexts that do not raise immediate emotional responses. Such as, for instance, the late Roman Empire's decision to allow in hundreds of thousands of Goths. Steve Sailer has a great summary of Edward Gibbon's take on the consequences of that here.

I suspect that the particularist temptation is to wave this away as a largely abstract and irrelevant example. It doesn't resonate emotionally, that's for sure.

But the human catastrophe that resulted from the destruction of the Western Roman Empire was a tragedy that affected Europe for the next thousand years.

If you're waving that away, which one of us is sounding like Stalin now?

The Charybdis, in other words, is that you become so focused on the emotional response to a single death that you forget to think about the long-term consequences of your actions, and end up causing many more deaths.

To my mind, the starting point of the answer, is to shut up and multiply.

This isn't about your feelings. A human life, with all its joys and all its pains, adding up over the course of decades, is worth far more than your brain's feelings of comfort or discomfort with a plan. Does computing the expected utility feel too cold-blooded for your taste? Well, that feeling isn't even a feather in the scales, when a life is at stake. Just shut up and multiply.

Whether a policy makes you feel good is less important than its ultimate consequences. Of course, this then comes back to your view of why the third world is the third world. This is why 'shut up and multiply' is only the start of the answer, not the end of it.

It would be ideal if the policy formulation that saved the most lives in the long run also made you feel emotionally good in the short run.

But what if the two aims are at odds? Are you willing to look clear-eyed on the photos of dead children and still see the lives that you think you're saving by not doing anything? Will you waver? Should you waver?

Uneasy rests the head that wears the crown.

Great Ways to Troll Progressives About Colonialism

Colonialism, in the eyes of the great and the good, is responsible for all of the third world's ills.

This hypothesis is obviously absurd, but if you've ever tried to argue this with a progressive, it turns into a game of whack-a-mole. You point out that social indicators were better under colonialism, they claim that the fact that it got worse afterwards was actually due to the colonialism (how, we are never told - something about borders being too straight or something.).

This is, of course, an enormous game of shifting the goalposts. The only way to win is to pin them down about what the goalposts are ahead of time. Naturally, they will pick goalposts that they think are so narrow that you couldn't possible sneak in. Fortunately, as long as you know more about the history of a couple of what we economists call 'natural experiments', they probably won't pick small enough goalposts even under the most self-serving of definitions.

For instance:

Shylock: Let's assume that colonialism might have some negative effects that survive after it leaves. Presumably these effects don't last forever. How long is it reasonable to use that as an excuse before you have to admit that colonialism can't be the real problem? In other words, if you have a third world country that was colonised by a European power and then gets independence, how long should it be before they're able to become a functional country?

Progressive Foil: (thinking quickly about time frame of African independence, trying to come up with a number greater than the maximum period of independence). Hmm, maybe 100 years. (Thinks again, adds a margin of error). Maybe 200.

SH: Haiti has been independent for almost 225 years, and it's one of the worst places on the planet. How does that work?

PF: (if uninformed) Um...derp...
(if a bit more informed): That's different! They were slaves brought in from all sorts of places with no cultural or linguistic links.

SH: I thought diversity was our strength.

PF: Plus the US Marines occupied it for 19 years in 1914.

SH: That's fair, it's possible that the place was just about to turn the corner after a mere 125 years of dysfunctional independence, I guess we'll never know. Odd that the US occupation was surprisingly functional compared with the rest of its history.

PF: It was not! It was horribly brutal and racist.

SH: I take it you haven't read much about the administration of Papa Doc Duvalier.

PF: (flicks through Wikipedia page) Hmm. Yeah, that's not ideal. But still, you can't make the comparison.

SH: Okay, okay, fair point. Haiti isn't a perfect example. Let's try a different thought experiment. African countries are inevitably marred by their colonial occupation. If we could see what Africa would look like today if it hadn't ever been colonised, it would be a lot more peaceful, rich and stable.

PF: Absolutely.

SH: Ethiopia was never colonised.

PF: Really?

SH: Yes, and you may notice that it's not Switzerland.

PF: Okay, but it's going a lot better than its neighbours.

SH: See, at this point, I know you're just guessing. You know how I know that? Because I researched this in advance. Let's compare Ethiopia with two nearby neighbours that were colonised - Djibouti, which was colonised by the French, and Kenya, which was colonised by the British. Here's a few numbers.

Ethiopia: GDP Per Capita (Nominal) $575. Homicide Rate: 12.0 per 100,000. Life Expectancy: 64
Djibouti: GDP Per Capita (Nominal) $1692. Homicide Rate: 10.1 per 100,000. Life Expectancy: 61
Kenya: GDP Per Capita (Nominal) $1416. Homicide Rate: 6.4 per 100,000. Life Expectancy: 61.

PF: Ah ha! Their life expectancy is 3 years higher!

SH: Yes, I took a fair sampling of statistics, not just ones that support my case. But compared with its neighbours there's more murders, and they're literally one third as rich. You were the one claiming that Africa would be functional except for colonialism. A life expectancy of 64 puts it up there with paragons of civil society such as Yemen and Senegal. I'm even willing to grant you that it's broadly similar to its neighbours, but this doesn't exactly prove your case.

PF: Hmm, this is a puzzle. I'm sure I'm still right, but I need to research this more.

As Mencius Moldbug once said, I will win because I know all of his arguments and he knows none of mine.

A Great Question About Charter Cities.

Charter Cities are an interesting example of how modern development might work. As pioneered by Paul Romer, the basic idea is that they would function somewhat like a special economic zone, where the rules being enforced are different from the surrounding country, and most likely imported from a country with better levels of development, such as Canada. In other words, think of somewhere like Hong Kong, but run with Canadian laws and officials.

Romer looks to be making some progress on the idea of creating one in Honduras, which I think would make an interesting experiment. It certainly can't be much worse than what else is going on in Honduras (or anywhere else in Central America), so qualifies as 'worth a shot'.

The thorny question is - if you want to just recreate Hong Kong, isn't that (*gasp, shudder, cross-yourself-thrice*)... colonialism? And we all know that that was worse than Hitler!!

Well, that's a bit tricky. Romer does have two conceptual difference that he can point to.

The first is that the city is to be built on 'uninhabited land', so nobody is (in theory) being dispossessed to make this colony. I mean, charter city! Sorry.

The second, and more interesting one, is that the rules in this city will only be enforced on those who voluntarily enter. It's like a genuine version of the social contract, because you apparently get to choose whether to join in the first place. Of course, it's not clear how things will work if the laws change while you're in there. I guess you can leave again - maybe. Who knows.

The real question is, how much difference do these distinctions really make? Are you still deep down just recreating the Racist Hitlercaust that was the British Empire?

There's two ways of answering this. In the court of progressive public opinion, Romer is doing a pretty good job of attempting to circumvent the nominal complaints of the anti-colonialism crowd. There's still the awkward aspect that if it's white Canadian officials ruling over local Hondurans it might not make for great photos, but that more of an aesthetic complaint than a concrete example of injustice. The jury is still out on this, since it's a sufficiently untried idea. Romer in his TED talks tries to get the anti-colonialist crowd on board with these musings:

Why is this not like colonialism? The thing that was bad about colonialism, and the thing that is residually bad in some of our aid programs, is that it involved elements of coercion and condescension. This model is all about choices - both for leaders and for the people who will live in these new places. And choice is the antidote to coercion and condescension.

But screw progressive public opinion. Do you buy the distinction?

The 'vacant land' thing is fine, and is a good start. But confiscating land is a one-off startup cost that may well be worth paying to set up Hong Kong. The ongoing injustice, if you think there is one, is the lack of choice by citizens as to who they're going to be ruled by. And everyone here will be free to enter or exit, so no problem! Sounds watertight, right?

Mencius Moldbug would disagree. He delivers a long and stinging rebuke of Romer - I think it's perhaps unfair on Romer personally in parts, but I think he makes a great argument that if this actually works, it will do so for the same reasons that colonialism works. In other words, Romer wants to pretend that this is nothing whatsoever to do with colonialism, when in actual fact it's probably best described as colonialism with a better PR department, redesigned for modern political sensibilities to appeal to progressives.

But even that may not be enough. The Achilles heel of the current setup is that progressives, Romer included, at heart all believe in democracy. The system being proposed is definitively undemocratic at a local level (but for which individuals join only by choice).

That's fine - the city claims a right to enforce its laws, and people, by entering, forfeit the right to change the rules themselves.

But is this a credible threat by the city?

Moldbug, I think very presciently, looks ahead and asks a very tough question that I fear Romer doesn't want to answer:

Professor Romer, here is a question for you: suppose your good Mr. Castro says yes, and you get your Guantanamo City up and running, with its Haitian population and Canadian proconsuls. It is, of course, a smashing success, with investment galore.

And then, in ten years, a mob of Haitians gathers in the beautifully landscaped central square, wearing coloured rosettes and throwing rotten eggs, all chanting a single demand: democracy for Guanatanamo City. The Canadians, all in a tizzy, call you. It's the middle of the night in Palo Alto. You pick up the phone. "What should we say?" the Canadians ask. "Yes, or no?"

If they say yes - what, in ten years, will be the difference between Guantanamo and Haiti? If they say no - what do they say next? You'll notice that you have no answer to this question. Hell has little pity for those who decide to forget history.

Perhaps the reason you have so much trouble imagining this scenario is that your own country has been so successful in suppressing actual political democracy, in favor of the administrative caste of which you are a member. To you, the proposition that "politics" should affect the formulation or execution of "public policy" is no less than heresy - like Velveeta on a communion wafer.

Thus, you reinvent colonialism by simply teleporting this managerial state from Canada, where democracy has been effectively suppressed, to Cuba, where democracy has been effectively suppressed. But the subjects of your new state are not Canadians, or even Cubans. The job has not been done.

If you want to suppress their lust for power, a lust which grows in the heart of every man, you can do so. All it takes is a bit of gear and the will to use it. As Wellington said: pour la canaille, la mitraille. But then, my dear professor, you are really reinventing colonialism - not just pretending to do so, for an audience as ignorant, hypocritical and naive as yourself.

Bingo.

Charter cities, should they get off the ground, will last only up until the local citizens start agitating for democracy.

Which they will.

And when that happens, do you think the Canadian administrators will have the nerve to tell them no? And to order the local army and police to enforce such an edict? What, exactly, is the argument that Canadian public servants will be able to advance as to why they should use force to suppress political agitation for a democratic vote? Can you see them making any such pronouncement without their heads exploding?

To ask the question is to know the answer.

I'd be delighted to see Charter Cities succeed. They seem a damn sight better than foreign aid. Moldbug claimed that he didn't think the idea would ever get off the ground. In the three years since, it looks like he might be proved wrong on this point.

But I fear he'll be right on the larger point.

Iterate forwards, Mr Romer. The day will come when you'll have to face a stark choice.

One choice will make you the next Deng Xiaoping.

The other choice will make you the next Ian Smith.

The implications for the ethics of these choices are complicated and thorny.

The implications for economic development, (which this was apparently all about in the first place), alas, are not.

The Real Value of the Peace Corps

I always find the Peace Corps to be an interesting idea. Started by JFK, the idea was that young Americans could go overseas and volunteer in poor countries to help in various development projects, and receive some small payment from the US government.

A number of my good friends did the program, and found it enormously beneficial (OKH did , for sure, and I hope he doesn’t take too much exception to this post). They made a lot of friends, got to see fascinating countries overseas, help out somewhat in these places, and meet the locals.

Don’t get me wrong, these are all great things. But the marginal value of the Peace Corps over, say, studying abroad, or just going backpacking for two years, is harder to tell. Along the aforementioned dimensions, the benefits seem similar, even if the Peace Corps has different advantages.

But the Peace Corps does have one particular benefit that I don’t think staying in a youth hostel can provide.

Based on my rough understanding, the Peace Corps tends to attract smart, idealistic young college graduates eager to do good in the world. This is an entirely admirable thing – a lot of them have come from liberal arts backgrounds that emphasise the injustice in the third world, and they’re eager to do their small part to rectify this.

You’ll note from my previous post that I think, sadly, that this is a Sysephean task that’s likely to result in disappointment and wasted effort.

On the other hand, convincing the average Peace Corps volunteer of this fact seems likely to be an almost equally thankless task. Do you think that after 4 years of relentless lefty agitprop from college professors the average peace corps volunteer is likely to be reasoned out of their convictions, either by my poor scribblings or those of others more eloquent than I? Hardly.

Some lessons just need to be learned firsthand. You can witness personally the sheer level of corruption and inefficiency that characterizes the governments of these benighted places. In some places, you’ll also see the hostility towards capitalism and tribalist attitudes towards wealth (“If my cousin runs a successful business, I deserve a share in the profits despite having contributed nothing”) that help to mire the place even further in permanent poverty. You can also see the general inefficiency of western charity and aid projects, whose implementation is sadly often little better than local governments, despite the loftiest of sentiments and goals.

I don’t want to come across as a total cynic here – many of the people you’ll meet are also lovely, and they have a cheerfulness and joy in their lives that the west sometimes lacks. Read some of Theodore Dalrymple's writings (who is surely no bleeding heart) comparing poor people in the third world with poor people in Britain’s public housing projects, and you realize that you’d much rather be surrounded by the former than the latter. In my own meager travels, I had more friendly strangers introduce themselves to me in India than I ever have in Australia. Some were trying to rip me off. Others just wanted to talk. Human nature is a complicated thing.

But my guess is that either way, two years in the third world is sufficient to convince most Peace Corps volunteers that their efforts to fix the world’s problems are destined to be largely fruitless.

This is useful, because such people tend to be smart and motivated folks, and they’ll do a lot more good for the world by working a regular job in America. Once you’re realized that you can’t change the world, it’s okay to go to law school.

Winston Churchill once remarked that any man who was under 30 and was not a liberal had no heart, while any man who was over 30 and was not a conservative had no brains.

The Peace Corps probably speeds this process up by about 5 years, and with a higher rate of success than the ‘they’ll just figure it out eventually’ school of thought.

And that is immensely valuable, even though it’s a heck of a long way from the intended aim of the whole thing.

Why Foreign Aid Fails

I think at this stage in history, there’s not really much question that foreign aid has been a colossal failure. Shovelling money and goods from first world taxpayers to third world tyrants has definitively failed to improve the standard of living in third world countries. By some measures, it’s made the problem worse – foreign aid is easy to seize, and selectively distributing it to one’s political allies is a great way to shore up political loyalty for corrupt kleptocrats.

The question is, how surprised should we be that didn’t the experiment work? 

My answer is ‘not very’. And here’s why.

The reality is that the principle of foreign aid has embedded in it an important assumption about development. This assumption is so insidious that I doubt that most of the proponents of aid even realize that it’s the basis on which their whole program is built.

The assumption being made sounds almost comically simple, and it is this: poor countries are poor because they don’t have enough stuff. Hence if we give them the stuff, they’ll stop being poor.

Sounds almost too obvious to state, right?

The ‘stuff’ takes on a variety of different forms – food aid, infrastructure spending, bed nets to combat malaria, vaccines, laptops for children, cash transfers, etc.

And that’s exactly what we’ve provided. So why hasn’t this worked?

Because there’s an alternative possibility. It may be that the lack of stuff is not the problem, but is just the symptom of the problem. The real wealth of society is its ability to produce stuff. Rich countries are defined by their ability to produce all of their own bed nets, etc. And when you take the stuff away from a wealthy country, it gets replenished. Haiti, Biloxi and Fukushima all got destroyed by natural disasters. But local production was vastly different a few years later in each place. I’m sure if you switched the populations (moved the Japanese tsunami survivors to Haiti just after the hurricane, for instance) and repeated the experiment, the outcome would take longer, but the end result would be similar. The Singaporeans took 50 years to turn the whole country from a swamp into a first world nation.

What if the things that produce the wealth can’t be easily shipped in? If it’s institutions, it’s hard to transplant those in without a hefty dose of colonialism (although Paul Romer is giving it a red hot go in Honduras, and more power to him). If it’s culture (such as an allegiance to civil society, instead of a tribalist mindset), that’s much harder to fix. If it’s genetics – yikes. Thankfully, cases like Singapore suggest that you can get a hell of a large change in a short period of time without altering the genetic makeup of your country.

People have talked about all these things plenty of times. But what I think isn’t properly appreciated is that the assumption that “more stuff -> development” was entirely unproven when the aid experiment started.

Take all the rich countries in the world today. How many of them were made rich by being given stuff from other countries? The answer is of course ‘none’. Whatever caused their development, it wasn’t because they got huge transfers from the outside world. Even if you doubt this general principle (and you’d be wrong), you’d have to concede that this is surely true for the industrial revolution in England, since there wasn’t anybody richer to give them a handout.

So we know that being given stuff isn’t a necessary condition for development. And now we know that it’s not sufficient either. In this light, the complete failure of the foreign aid experiment shouldn’t come as a surprise at all. We were trying to make poor countries rich using a method that had not been successfully implemented before in human history. Like most experiments tried without a strong reason to presuppose success, the result was failure. Poor countries, it seems, can’t be made rich in any meaningful way just by giving them more stuff.

One of the current poverty ‘silver bullets’ seems to be microfinance. Like bed nets, I presume that it will have some benefit. Like bed nets, I also presume that it will be entirely insufficient to make meaningful changes to poverty levels. We’ll see if I’m right -  I’d be delighted to be proven wrong, but I’m not holding my breath.

The worst assumptions are the ones you don’t even realize you’re making.