Dear friends

Recently I have completed a series of videos on “how to use economics and not be used by economists” with the Real News Network. I thought they may be of interest.
Best regards

Ha Joon Chang
University of Cambridge

http://therealnews.com/t2/index.php?option=com_content&task=view&id=832&Itemid=74&jumival=1352  

Dear Friends,

The initiative for Universal Social Protection by ILO and the World Bank could not be more timely. As a staff member at UNRISD which has been listed as one of those which have been “fighting for universal systems for years” by Isabel, I would like to express my full support for the initiative. In particular, I would like to emphasize the importance of documenting country experiences on universal social protection coverage (one of the ILO-World Bank actions to achieve the shared vision of universal social protection) while highlighting two important points of consideration based on the UNRISD's prior and ongoing research on universalism.

UNRISD has been arguing for universalism in social policy and universal social protection over the last three decades. Up until the early 2000s, ideas and practices relating to social protection programmes or social policies in developing countries were dominated by targeting and safety net approaches.  Under the circumstance, UNRISD’s take on the issues of universality and argument for a universal approach to social policy was polemic against the deficiencies of targeting(Thandika Mkandawire 2005). As the international development community started to introduce universalism into key development agendas, such as the Millennium Development Goals and their call for universal primary education and the WHO’s  initiatives for universal health coverage, UNRISD's research started to pay attention to the diverse pathways to universalism.

This shift is based on two crucial points which have been central to UNRISD's social policy research framework. First, social policy (and universal social protection) is a historical construct from the production of and interactions between economic, social and political elements. Second, social policy (and universal social protection) is inevitably diverse since it is shaped by specific national and local contexts and institutional structures, norms and practices, as well as power relations between and within states.

From these I would like to raise an important point we must keep in mind when we document country experiences on how they have moved towards and achieved universal social protection coverage;  focusing on the design and function of a specific programme alone cannot provide us with sufficient data and valuable lessons for achieving social protection. Political economy approaches which situate the welfare state or social policy development within  the development trajectory is absolutely crucial to understanding  the successful achievement of universal social protection.

Another crucial point for documenting country experiences is the recognition of the  distinctive nature of sectoral policies (health, education, housing, etc.) as a system of provision of distinctive goods and services. Pension programmes are different from health programmes in that they are shaped by “different intermediate relations, processes, structures, agencies and ideational factors” (Ben Fine 2014). Universalism or universal social protection as a vision should be translated into much more detailed concepts and policy advice reflecting the distinctive nature of sectoral policies.

The recent UNRISD research project on the experiences of emerging economies in moving towards universal social security (particularly in healthcare), which has been developed around this framework of universalism and the distinctive nature of sectoral policies, may be interesting to those sharing the similar concerns.  

ILCHEONG YI

----------------------
ILCHEONG YI
Research Coordinator
United Nations Research Institute for Social Development
Palais des Nations, 1211, Geneva 10, Switzerland
Email: [email protected]
---------------------------------------------

Dear colleagues

Below the preliminary Report of the Truth Committee on Public Debt

http://cadtm.org/Preliminary-Report-of-the-Truth

Best regards,


Eric Toussaint
Scientific coordinator of the Truth Committee on Public Debt
see: http://cadtm.org/Legal-foundations-for-repudiation
http://cadtm.org/Preliminary-Report-of-the-Truth

UN human rights experts welcome Greek referendum and call for international solidarity

GENEVA (30 June 2015) – Two United Nations human rights experts today welcomed the holding of a referendum in Greece to decide by democratic process the path to follow to solve the Greek economic crisis without deterioration in the human rights situation.

The UN Independent Experts on the promotion of a democratic and equitable international order, Alfred de Zayas, and on human rights and international solidarity, Virginia Dandan, stressed that there is much more at stake than debt repayment obligations, echoing a warning* issued earlier this month by the UN Independent Expert on foreign debt and human rights, Juan Pablo Bohoslavsky.

“All human rights institutions and mechanisms should welcome the Greek referendum as an eloquent expression of the self-determination of the Greek people in conformity with article 1 of the International Covenant on Civil and Political Rights and in pursuance of article 25 ICCPR on public participation. Indeed, a democratic and equitable international order requires participation by all concerned stakeholders in decision-making and respect for due process, which can best be achieved through international solidarity and a human rights approach to the solution of all problems, including financial crises.

It is disappointing that the IMF and the EU have failed to reach a solution that does not require additional retrogressive austerity measures. Some leaders have expressed dissatisfaction with the idea of holding a referendum in Greece. Why? Referenda are in the best traditions of democratic governance.

No one can expect the Prime Minister of Greece to renounce the commitments he made to the people who elected him with a clear mandate to negotiate a fair solution that does not dismantle Greek democracy and lead to further unemployment and social misery. Capitulating to an ultimatum imposing further austerity measures on the Greek population would be incompatible with the democratic trust placed on the Greek Prime Minister by the electorate. By nature, every State has the responsibility to protect the welfare of all persons living under its jurisdiction. This encompasses fiscal and budgetary sovereignty and regulatory space which cannot be trumped by outside actors, whether States, inter-governmental organizations or creditors.

Article 103 of the UN Charter stipulates that the Charter provisions prevail over all other treaties, therefore no treaty or loan agreement can force a country to violate the civil, cultural, economic, political and social rights of its population, nor can a loan agreement negate the sovereignty of a State. Any agreement that would require such a violation of human rights and customary international law is contra bonos mores and hence null and void pursuant to Art. 53 of the Vienna Convention on the Law of Treaties.

A democratic and equitable international order requires a commercial and financial   regime that facilitates the realization of all human rights. Inter-governmental organizations must foster and under no conditions hinder the achievement of the plenitude of human rights.

Foreign debt is no excuse to derogate from or violate human rights or to cause retrogression in contravention of articles 2 and 5 of the International Covenant on Economic, Social and Cultural Rights.

In 2013, the Independent Expert on foreign debt and human rights stated that the policy of austerity measures adopted to secure additional financing from the International Monetary Fund, the European Commission and the European Central Bank had pushed the Greek economy into recession and generally undermined the enjoyment of human rights, particularly economic, social and cultural rights.

This is the moment for the international community to demonstrate solidarity with the people of Greece, to respect their democratic will as expressed in a referendum, to proactively help them out of this financial crisis, which finds a major cause in the financial meltdown of 2007-08, for which Greece bears no responsibility.

Indeed, democracy means self-determination, and self-determination often calls for referenda – also in Greece.”

(*) Read the statement by the UN Independent Expert on foreign debt and human rights (2 June 2015) – “Greek crisis: Human rights should not stop at doors of international institutions, says UN expert”: http://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=16032&LangID=E

ENDS

The Independent Experts are part of what is known as the Special Procedures of the Human Rights Council. Special Procedures, the largest body of independent experts in the UN Human Rights system, is the general name of the Council’s independent fact-finding and monitoring mechanisms that address either specific country situations or thematic issues in all parts of the world. Special Procedures’ experts work on a voluntary basis; they are not UN staff and do not receive a salary for their work. They are independent from any government or organization and serve in their individual capacity.

Learn more, log on to:
International solidarity: http://www.ohchr.org/EN/Issues/Solidarity/Pages/IESolidarityIndex.aspx
International order: http://www.ohchr.org/EN/Issues/IntOrder/Pages/IEInternationalorderIndex.aspx

See the 2014 report on Greece by the Independent Expert on foreign debt: (A/HRC/25/50/Add.1): http://www.ohchr.org/EN/Issues/Development/IEDebt/Pages/CountryVisits.aspx

Alfred de Zayas

United Nations Independent Expert on the Promotion of a Democratic and Equitable International Order
www.alfreddezayas.com

Dear friends,

This is to highlight the importance of yesterday's launch, calling world leaders to move away from targeted safety nets to universal social protection systems.

Many in this list have been fighting for universal systems for years, like UNRISD, OHCHR, UNICEF, ECLAC, ESCAP, CROP, ITUC, FES, Helpage, People's Goals, and many others (all of you are welcome to contribute!).

But it is the first time that a World Bank President calls on world leaders for universal social protection.

Precisely, the international financial institutions have been the main supporters of minimal, temporary, targeted safety nets since the 1980s.

Up to the 1980s, developing countries were gradually constructing universal systems, linked to nation-building, development processes and a country's social contract. But many of these pre-1980s universal policies were weakened as redistributive policies were sidelined by market-oriented reforms and critical attacks on state interventionism. The structural adjustment programmes launched after the 1982 debt crisis severely curtailed social expenditures. Social security was given lesser importance and funding, and was often centred on short-term targeted measures to the most vulnerable, to mitigate natural disasters or economic restructuring.

This minimal approach was insufficient to achieve balanced social and economic development.  After having been pared to a minimum, social protection has been reconsidered since the 2000s with the renewed attention to poverty reduction and human rights.  

In the 2000s, universalism also re-entered the development agenda. First it was education: universal primary education became a Millennium Development Goal in 2000.

Then it was health: in December 2013, the World Bank and WHO committed to universal health coverage.

Now it is time for universal social protection.

Isabel Ortiz
Director Social Protection
International Labour Organization (ILO)
4 Route des Morillons
CH-1211 Geneva 22 Switzerland
Tel. +41.22.799.6226; [email protected]
Visit www.social-protection.org 

 

Today the World Bank Group President Jim Yong Kim and ILO Director General Guy Ryder have launched a global initiative calling on world leaders to promote universal social protection.

http://www.ilo.org/global/about-the-ilo/who-we-are/ilo-director-general/statements-and-speeches/WCMS_378984/lang--en/index.htm  

JOINT STATEMENT BY WORLD BANK GROUP PRESIDENT JIM YONG KIM  AND ILO DIRECTOR GENERAL GUY RYDER

Launch of the World Bank Group and ILO Universal Social Protection Initiative, calling the attention of world leaders to the importance of universal social protection policies and financing

            A joint mission and plan of action: Universal social protection to ensure that no one is left behind

The World Bank Group and the ILO share a vision of social protection for all, a world where anyone who needs social protection can access it at any time. The new development agenda that is being defined by the world community, the Sustainable Development Goals (SDGs), provides an unparalleled opportunity for our two institutions to join forces to make universal social protection a reality, for everyone, everywhere.

Universal coverage and access to social protection are central to ending poverty and boosting shared prosperity, the World Bank Group's twin goals by 2030. Universal social protection coverage is at the core of the ILO’s mandate, guided by its standards including the Social Protection Floors Recommendation, No. 202, adopted by 185 states in 2012.

For the World Bank Group and the ILO, universal social protection refers to the integrated set of policies designed to ensure income security and support to all people across the life cycle – paying particular attention to the poor and the vulnerable.  Anyone who needs social protection should be able to access it.

Universal social protection includes: adequate cash transfers for all who need them, especially  children; benefits and support for people of working age in case of maternity, disability, work injury or for those without jobs; and pensions for all older persons. This protection can be provided through social insurance, tax-funded social benefits, social assistance services, public works programs and other schemes guaranteeing basic income security.

Universal social protection is a goal that we, the World Bank Group and the ILO, strive to help countries deliver. Social protection systems that are well-designed and implemented can powerfully shape countries, enhance human capital and productivity, eradicate poverty, reduce inequalities and contribute to building social peace. They are an essential part of National Development Strategies to achieve inclusive growth and sustainable development with equitable social outcomes.

We are proud to endorse the consensus that has emerged in the early 21st century that social protection is a primary development tool and priority.

Since the 2000s, universality has re-entered the development agenda. First it was education: universal primary education became a Millennium Development Goal in 2000. In 2012, the UN General Assembly adopted a resolution endorsing universal health coverage. Now it is time for universal social protection.

The African Union, ASEAN, the European Commission, G20, OECD and the United Nations have all endorsed universal social protection.

Now, it is time to join forces to make it happen.

Universal Social Protection in the Post 2015 Development Agenda

Beginning in 2016, the world will begin the pursuit of an ambitious new development agenda, under the auspices of the United Nations: the Sustainable Development Goals (SDGs). Social protection systems, including social protection floors, figure prominently among the SDGs:

Goal 1. End poverty in all its forms everywhere

1.3 Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and vulnerable

Social protection policies also feature in goals to achieve gender equality and to reduce income inequality.  

Our joint vision reinforces this universal aspiration, to be applicable to all countries regardless of income level.  Now is it time to ensure that the international community has the means to make this vision a reality.

A joint programme of action to increase the number of countries adopting Universal Social Protection

Our shared objective is to increase the number of countries that provide universal social protection, supporting countries to design and implement universal and sustainable social protection systems. There are many paths towards universal social protection. It belongs to each country to choose its own, and to opt for the means and methods that best suit its circumstances. 

Many countries have embarked on expanding social protection coverage and are reporting significant progress. Yet, the vast majority of the world’s population is still far from enjoying adequate protection. It is time to take determined and innovative steps to trigger change on a larger scale.

READ the Concept note: The World Bank Group and ILO Universal Social Protection Initiative
http://www.ilo.org/global/topics/social-security/WCMS_378991/lang--en/index.htm

Dear colleagues,

The New Development Bank (NDB) , created last year by the BRICS countries (Brazil, Russia, India, China and South Africa), will begin operations on 7 July, coinciding with the next BRICS Summit to take place in Ufa, Russia on 7-8 July. The information comes from Russian officials. See a news report below.

The NDB will eventually be open to non-Brics members, be headquartered in Shanghai and have an initial capital investment of $100 billion. It will be joined later this year by the new Asian Infrastructure Investment Bank (AIIB), scheduled to be established in Beijing before the end of 2015. The NDB and AIIB have been presented as alternative sources of development finance to the World Bank and long-established regional bodies such as the Asian Development Bank.

The founding of the NDB was announced at the July 2014 BRICS Summit held in Brazil, jointly with the creation of the BRICS Contingent Reserve Arrangement (CRA). The latter has been put forward as providing an alternative to the IMF for financial assistance to countries with temporary balance-of-payment difficulties, but its financial resources are modest compared to those of the Fund.

Additionally, the CRA will only provide its full financial support to countries that comply with an IMF lending programme. Specifically, to be eligible to full assistance the member country seeking support (“Requesting Party”) must meet the following criterion:

“Evidence of the existence of an on-track arrangement between the IMF and the Requesting Party that involves a commitment of the IMF to provide financing to the Requesting Party based on conditionality, and the compliance of the Requesting Party with the terms and conditions of the arrangement.”

(http://brics6.itamaraty.gov.br/media2/press-releases/220-treaty-for-the-establishment-of-a-brics-contingent-reserve-arrangement-fortaleza-july-15)

Peter Bakvis
ITUC/Global Unions – Washington Office
888 16th Street NW
Washington, DC 20006
E-mail: [email protected]

Dear Christina, colleagues,

Thank you very much for sharing this info on the adoption of the new recommendation 204 "Transition from the Informal to the Formal Economy". This is undoubtedly a key instrument from the point of view of the strategies to extend social protection, since there is a close link between the policies for formalizing the informal economy and the extension of fiscal space for financing social protection. 

An interesting example on the articulation of the policies of formalization with policies of extending social security to the informal economy, which in turn promote taxation and employment formalization is the MONOTAX, which was implemented in Uruguay, Argentina and Brazil ("SUPER simple" in Brazil).


We would like to share (links below) a Building Social Protection Floors brief (and video), produced by ILO Social Protection Department, which presents the Uruguayan Monotax simplified tax collection scheme for small contributors. The Monotax is an effective tool for the formalization of micro and small enterprises, and to extend coverage of social security to self-employed workers. The brief includes the main lessons learned, information on the system structure and the way forward.

Brief: http://www.social-protection.org/gimi/gess/RessourcePDF.action?ressource.ressourceId=48020

 

Video: https://www.youtube.com/watch?v=KpdQ8AVW_Ys

Best regards,

Fabio Durán-Valverde
Social Protection Senior Economist
ILO Social Protection Department
Geneva, Switzerland
Tel.  +4122 7997302

Dear colleagues,
Last Friday, the International Labour Conference has adopted a new international labour standard, the Transition from the Informal to the Formal Economy Recommendation, 2015 (No. 204). After two years of negotiations, governments, employers and workers have almost unanimously agreed to this Recommendation, which now provides a roadmap for policies to facilitate transition from the informal to the formal economy in the ILO's now 186 member States. 
This Recommendation recognizes that decent work deficits – the denial of rights at work, the absence of sufficient opportunities for quality employment, inadequate social protection and the absence of social dialogue – are most pronounced in the informal economy, and that most people enter the informal economy not by choice, but as a consequence of a lack of opportunities in the formal economy and in the absence of other means of livelihood.

Reflecting the complexity of informality, the Recommendation covers various policy areas, including legal and policy frameworks; employment policies; rights and social protection; incentives, compliance and enforcement; freedom of association, social dialogue and role of employers’ and workers’ organizations; as well as data collection and monitoring.

With regard to social protection, the Recommendation sets out that countries should progressively extend, in law and practice, to all workers in the informal economy, social security, maternity protection, decent working conditions and minimum wages. They should pay particular attention to the needs and circumstances of those in the informal economy and their families in building and maintaining national social protection floors within their social security system and facilitating the transition to the formal economy. In addition, they should also progressively extend the coverage of social insurance to those in the informal economy and, if necessary, adapt administrative procedures, benefits and contributions, taking into account their contributory capacity. With respect to the formalization of micro and small economic units, countries should reduce compliance costs by introducing simplified tax and contributions assessment and payment regimes, and improve access to social security coverage.

For those interested in more information, the full text of the recommendation is available here (still in the form of a provisional record for the time being - in English and French): http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---relconf/documents/meetingdocument/wcms_375341.pdf 

A summary press release and video interviews are available here: http://www.ilo.org/ilc/ILCSessions/104/media-centre/news/WCMS_375615/lang--en/index.htm?ssSourceSiteId=global 

The Recommendation marks an important agreement between governments, employers and workers on the need to address informality and enhance protection for workers. Now the challenge is to translate this into practice, given its significance in the context of the post-2015 development agenda and beyond. 

Best regards,
Christina 

Christina Behrendt
Senior Social Protection Policy Specialist
ILO Social Protection Department
4 Route des Morillons
1211 Geneva
Switzerland
Phone: +41 22 799 6455
Fax: +41 22 799 7962
Skype: cbehrendt
e-mail: [email protected]

Dear Carlo and all,

As a brief concluding statement, let me emphasize the important distinction between the definition of chronic undernourishment and the method of estimating how many people are chronically undernourished by this definition.

The FAO's definition is clearly stated in its The State of Food Insecurity 2012 report (p. 50): "'undernourishment' has been defined as an extreme form of food insecurity, arising when food energy availability is inadequate to cover even minimum needs for a sedentary lifestyle ... for over a year." In my view, this definition is too narrow in several respects.

First, by focusing only on food energy intake, the definition ignores the human need for a variety of specific nutrients such as proteins, vitamins, minerals and so on; if energy intake were all that matters, any of Coca Cola's sugary soft drinks could fully solve the whole undernourishment problem.

Second, the definition ignores problems of food absorption, where parasites consume much of the ingested energy or disease prevents it from being absorbed through the small intestine. Robert Chambers has made this point forcefully, reminding us that poor people may in these ways lose around one third of the calories they ingest.

Third, the definition misses periods of undernourishment that are shorter than one year -- for example severe seasonal hunger that is common in many rural areas.

Fourth, the definition also misses people who absorb enough food energy for a sedentary lifestyle but not enough for the work they actually do to earn their living.
So much for the FAO's definition of chronic undernourishment.

Despite Carlo's patient efforts, I have not yet fully understood the -- old or new -- methodology the FAO employs to estimate the number of chronically undernourished so defined. So here I limit myself to a single concern. The FAO has changed methodology in year 22 of a 25-year monitoring period, thereby dramatically transforming a rising trend of the global number of chronically undernourished into a steadily falling trend. This switch, with the benefit of hindsight, to a method producing dramatically rosier results, shortly before the expiration of the Millennium Development Goals, cannot inspire confidence. Specifically, I am concerned that the near-doubling of world food prices toward twin peaks in 2008 and 2011, which substantially raised the number of chronically undernourished according to the old methodology, barely disturbes the falling trend line produced by the new methodology. I am also concerned that revisions in how other MDGs (e.g., extreme poverty) are tracked have likewise resulted in substantially rosier trend lines. In my view, the old methodology should have been retained until the end of the MDG period; a new methodology could then have been introduced along with the new Sustainable Development Goals, in advance, that is, before anyone can know how its introduction will affect the reported trend.

I am deeply grateful to Isabel Ortiz for having hosted this discussion and to our colleagues at the FAO for their sincere and sustained efforts to explain their work to the public.
With all best wishes,
Thomas

Thomas Pogge
Leitner Professor of Philosophy and International Affairs
Yale University, PO Box 208306, New Haven, CT 06520-8306
pantheon.yale.edu/~tp4     www.ted.com/speakers/thomas_pogge.html

Dear Jayati,

The task is indeed a difficult one, given the availability of data in various countries.  What you describe for India is very common in other countries too (and could even be considered a particularly fortunate situation, compared to cases where household surveys are less frequent and less detailed). Your observation confirms the fact that a method entirely based on household survey data (as advocated, for example, by IFPRI a few years ago) would be fraught by many almost insurmountable problems and prone to serious estimation errors for many countries.

The method developed by Sukhatme in the sixties, and later perfected by Naiken, is from all points of view a brilliant, sophisticated solution to get at something that is, admittedly, far from yielding a perfect “count” of the number of people suffering from chronic undernourishment, but that is certainly good enough for the purpose at hand of measuring progress on a global scale.

The qualifying aspect of the FAO method is that it uses information that comes from different independent data sources, such as aggregated national food balances, socio demographic accounts of the populations,  and - where available – food consumption survey data, which has allowed FAO to made the assessment for so many countries during all these years.

In short, we postulate a probability distribution for the habitual daily dietary energy consumption of the “average” individual in the population, representing it with a parametric density function, and estimating its parameters based on information available from the above mentioned sources.  Unfortunately - as some of Thomas’ observations reveal - the nature of the probability distribution and of the associated inference process is still largely misunderstood and under-appreciated, whereas it is, in fact, our best guarantee to avoid gross mistakes.

First, one must notice that the distribution we use is not simply the empirical distribution of food consumption in  a population. It rather refers to the “average individual”, which is a statistical device used to represent the entire population. This is necessary, because we do not have the kind of data that would allow to match food consumption with likely requirements at the individual level, and therefore we can never apply what could be described as a “headcount” approach.  What this implies is that as, opposed to what one may think appropriate for an actual individual, for such “average” individual there will be not a single value, but rather an entire range of values of daily energy requirements that are consistent with an active and healthy life.  The range is induced by the existing variability in the population by sex, age, physical activity levels and metabolic efficiency.

 

Second, one must consider that the observed variability in dietary energy consumption in the population confounds three different aspects:

a)      measurement errors in individual consumption (due, for example, to the fact that, as you mention, usually food consumption data are collected at household, not individual level, which is perhaps the lesser problem, considering also that surveys often miss food consumed away from home, or that there are problems in misreporting consumption)

b)      the variability due to the fact that people differ in their food requirements, and, finally

c)       the fact that some people consume either in excess or, what we are interested in, short of their requirement.

It is precisely as a means to separate the three sources of variability, to control for the other two and to focus on the third one, that the FAO method has been devised.

The use of an independent source for the average per capita dietary energy consumption is intended, for example, is meant to control for systematic errors that may affect the level of average per capita dietary energy consumption as measured  through surveys (a recent paper demonstrates how the bias in measuring per capita caloric consumption can be of up to 800 kcals per day, only depending on the particular data collection module used).

The detail treatment of household food consumption data from survey (described for example in our recent book on “Analyzing food security using household survey data” )  is also intended to control for measurement errors and to improve on our estimate of the parameters that describe the variability of habitual food consumption levels.

Finally, and what has perhaps created the most trouble in understanding the method, because the estimated distribution will still include variability that has nothing to do with food insecurity, but that simply reflect the diversity of the population, the proper threshold to be used for estimating the prevalence of inadequate food consumption is the minimum of the range of normal requirements. The fact that such a minimum is associated with the level that correspond to the average requirements for a sedentary lifestyle has led many to mistakenly believe that the method would fail to count among the undernourished those who are undernourished even if consuming more than such a minimum level.  Nothing is farer from the truth.  The use of the MDER is only the way in which we control for factors that affect variability in food consumption but have nothing to do with food insecurity.  Failing to do so would be akin to an experimenter who fails to control for exposure to sun, and who would attribute to different fertilization levels the difference in  growth rate of plants that have grown in the sun or in the shade.

I thank you for your query, and I hope these few notes help in grasping the essence of the method.

Carlo

 Carlo Cafiero, PhD
Project Manager of “Voices of the Hungry”
Statistics Division (ESS)
Food and Agriculture Organization of the United Nations (FAO)

Dear Carlo and Thomas,

I have been following this discussion with much interest, and would like to request some further clarification because it is critical for all of us to understand this fully. 

Carlo, it seems to me that the critical point in your methodology is the second one, whereby you "estimate the proportion of individuals (not only adults) whose average caloric intake over the year falls below their specific caloric requirement".

Could you explain how exactly this is done? This would appear to be a really difficult task given the data availability in various countries.. 

In India, for example, the National Sample Survey (NSS) data give us estimates of consumption (money spent) on various food categories, from which calorie consumption can be derived at the household level, not for individuals within the household. To get the latter, other assumptions would have to be made, and these are socially and regionally different because of different intra-household patterns of gender and age discrimination across regions, cultural groups and classes. Therefore in India we do not treat the NSS data as a useful source of individual (rather than household) food consumption, and rely instead on other outcome indicators like BMI from other surveys like family health surveys for individual nutrition. 

Then there is the further issue of deriving the different calorie requirements specific to occupations. To get this would require using the unit-level data from the NSS data and making further assumptions about likely calorie requirement for different types of occupation as well as hours worked etc. I have had research students who try to do this, it is a Herculean task even for one state within India, much less India as a whole. So I would very much like to know how you derive these estimates for so many developing countries and thereby for the whole world.

Many thanks for sparing the time to educate us on these matters, 

All very best regards,

Jayati

Professor Jayati Ghosh
Jawaharlal Nehru University
New Delhi, India

Dear Thomas,

Your understanding of the FAO method is faulty.

You understood that it "(i) determines the minimum caloric need of adults in a population, (ii) estimates the number of adults whose long-term caloric intake falls below this level and (iii) concludes that this is the number of chronically undernourished adults."

All three points are ill informed, and the remainder of your argument is therefore irrelevant as a criticism of FAO estimates.

(i) we determine the range of caloric needs in the population taking into consideration the distribution of people by gender, age, body masses (proxied by attained height) and physical activity levels; we therefore do not focus just on adults, and we recognize that there are various types of pshysical activity levels ranging from sedentary to very active;

(ii) we estimate the proportion of individuals (not only adults) whose average caloric intake over the year falls below their specific caloric requirement;

(iii) multiply the estimated proportion by the total population size to obtain an estimate of the total number of individuals (not only adults) who are "undernourished" in the specific sense of likely having insufficient caloric intake to fulfill the needs for a normal and healthy life.

Yours,
Carlo

Carlo Cafiero, PhD
Project Manager of “Voices of the Hungry”
Statistics Division (ESS)
Food and Agriculture Organization of the United Nations (FAO)
Viale delle Terme di Caracalla, 00153 Rome, Italy
Tel: +39 06 570 53895
Skype: carlocafiero
http://www.fao.org/economic/ess/ess-fs/voices/en/

Dear Carlo,

You argue against a method that would (i) determine the average caloric need of adults in a population, (ii) estimate the number of adults whose long-term caloric intake falls below this level and (iii) concludes that this is the number of chronically undernourished adults. And you are right, this is a bad method. But then, I have not advocated this method. More importantly, the fact that this is a bad method does nothing whatsoever to support your method.

Your method, as I understand it, (i) determines the minimum caloric need of adults in a population, (ii) estimates the number of adults whose long-term caloric intake falls below this level and (iii) concludes that this is the number of chronically undernourished adults. By counting only people who do not get even the minimum calories a human being needs under the best of conditions (sedentary lifestyle, slow metabolism, low body weight, no parasites, etc.), your method is secure against over-counting the undernourished. But, and this is my objection, it under-counts. Let me explain why.

Assume your estimate under (ii) is exactly correct: you have estimated that N Indian adults take in fewer than 1800 kcal per day and you are precisely right about this. (Surely this is not an assumption unfavorable to your case.) Looking at these N people, those who really take in fewer than 1800 kcal per day long-term, we must say that each of them is indeed chronically undernourished. So far, so good. But now let's look at the remainder of the population, those who take in 1800 kcal or more per day. Some of them are also chronically undernourished -- because of a heavier workload, because of a faster metabolism, because of higher body weight, because of problems with nutrient absorption, because of lack of specific vitamins, minerals, proteins, and so on. Your method isn't adjusting (increasing) the count of chronically undernourished to account for any of these people.

This is the challenge, Carlo. If you could give a clear response focused on it, then we could all learn something and perhaps overcome this disagreement.

With all best wishes,
Thomas     

Thomas Pogge
Leitner Professor of Philosophy and International Affairs
    Yale University, PO Box 208306, New Haven, CT 06520-830
pantheon.yale.edu/~tp4     www.ted.com/speakers/thomas_pogge.html

 

Dear esteemed colleagues,

Jomo kindly brought to my attention the interesting discussion that followed his post on the release of the latest SOFI assessment, and in particular the comments (well.. the harsh criticisms) by professor Thomas Pogge.

Let me start my stating upfront that I fully share what seems to be everyone's major concern in this particular discussion:  namely, that data and information on the extent and distribution of malnutrition, and in particular of severe under nutirition, are as reliable and detailed as possible so that they can be effectively used to guide intervention.  I share it to the point that I have made it since 2011 the main objective of my professional activity.

I have always believed that criticisms are essential to advance knowledge, and participated in debates from both ends: making and receiving even harsh criticisms.  But I also believe that - to be constructive - criticisms should be well informed.

By reading the intervention that professor Pogge makes in response to Jomo's post, however, I cannot avoid noticing that there is still an important, continuing confusion on the meaning and the role that the threshold level used to compute FAO estimates of the Prevalence of Undernourishment (PoU) plays.

I thought I had addressed extensively in the past in private converssations with professor Pogge, but I realize now that I must have been unable to fully convey it and therefore I feel obliged to try again.

In short, professor Pogge seems to continue believing that FAO numbers imply a severe underestimation of the extent of undernourishment because of the threshold level used to compute the estimates.  He seems to be (wrongly) interpreting the use of a single, national value of the Minimum Dietary Energy Requirement (MDER) value of around 1800 kcal/day as a cut-off point that separates those who are undernourished from those who are not, as if it was equivalent to the statement that, if an adult is consuming 1800 kcals or more, then he or she must be adequately nourished.  Then, because the 1800 kcal value is obtained by making reference to levels of physical activity that correspond to a sedentary lifestyles, he has an easy shot at raising the example of the rickshaw puller to exemplify what he thinks to be a fundamental drawback of the FAO method.

The essence of the confusion, I think, stems from mistakenly interpreting the FAO method as if it would equally apply to an individual, rather than to a population, and by failing to recognize the possibility to control for the various aspects that determine the energy requirements of indivduals.

If we could afford the luxury of being able to assess sufficiently well the principal charactersitics that determine dietary energy requirements (age, gender, body mass, physical activity level, health status, metabolic efficiency and a few environmental aspects such as temperature and oxygen
concentration) we could take a large enough sample of individuals, to be considered representative of the population we are interested in, determine what each of them need, compare it to what they eat, and determine whether who is eating enough (a point made also by Bill Gates in a recent issue of Development Asia avilable here https://www.scribd.com/doc/182243503/Beyond-the-MDGs-What-will-the-Global-Development-Agenda-look-like-after-2015).

But the point is that, unless we are interested in assessing the individual conditions of all members in a population, we do not need to do it.  Economy of information when possible, I believe, is a value.  As we should not waste food, we should also not waste resources to collect information that is not necessary for the purpose at hand.  That is what the (proper) use of statistical inference affords us to do.

I am sure professor Pogge is aware of this, and indeed he is not suggesting that we use the "headcount" approach skey=tched above as the regular basis for conducting the annual, worldwide SOFI assessment.  Most appropriately, he suggests that we do it on an experimental basis, taking a few examples, and check whether or not the statistical shortcut leads us to the proper destination.

The good news is: we have done it.  In the few cases where the details of the information contained in nationally representative sample surveys of food consumption allowed us to do it (thanks to the generosity of those who funded those extremely expensive surveys) we have verified that the method pioneered by P.V. Sukathme in 1960 and perfected by Loganaden Naiken in the early 1990's is indeed the best way to do a sufficiently reliable analysis with the kind of information we have for most countries.

What seems strange to many commentators (the use of the MDER) is simply the way in which we control for the relevant information that we do not have at individual level in the food consumption surveys, and that we derive from information on the demographics of the popualtion.  That's all.

Of course, there can be ways to improve and refine our estimate of the MDER, when information is available not only on the gender age pyramid, but also on the distribution of body masses and physical activity levels exist, but the point remains that it is the MINIMUM of the range of requirements in the group that should be used.  Otherwise valuable researchers have fallen in the past in the error of using the AVERAGE energy requirement in a population as a threshold to assess food inadequacy, only to be disappointed to find values stubbornly close to 50%, which they have mistakenly interpreted as the failure of intervention to generate progress over time.  If they would have applied the same approach to affluent populations, they would have found the same, an error pointed out by Sukhatme himself back in 1978 (see P. V. Sukhatme, Economic and Political Weekly, Vol. 13, No. 31/33, Special Number (Aug., 1978) where he reminded readers that it would be similar to an:"assessment carried out in Great Britain by the late Sir Arthur Bowley. He found that 50 per cent of the population in UK were below the average need for UK and he concluded that some 50 per cent of the population must be undernourished. I need hardly add that notwithstanding the eminence of Sir Arthur Bowley, the conclusion was rejected by the Government of UK. This was 40 years ago when the concept of requirement had hardly developed to a point to grasp its full implications. But to adopt the same method today that was rejected as inapplicable in the UK decades ago, is to ignore the knowledge we have gained in understanding the concept of physiological requirement."

I hope that we can continue discuss the way in which we can jointly contribute to improve the quality and reliability of the many assessments that are being conducted, but I also sincerely hope that we could focus more on real issues and not continuing to question the theoretical and empirical validity of the FAO method for annual assessment and national level.

As Jomo said, there are needs to improve the assessment, and we are doing it, starting by recognizing that food insecurity is more than just the sufficiency of dietary energy intake. We hope that the academic and policy communities will continue to pay close attention to what we do, asking questions when things are not sufficiently transparent and clear, but stop implying that we are all a bunch of hypocrits ready to sell our dignity and professional deontolgy to the need to please politicians.  That, professor Pogge, is personally offensive, and I hope you understand why I felt the need to intervene in this very valuable debate.
Carlo

Carlo Cafiero, PhD
Project Manager of “Voices of the Hungry”
Statistics Division (ESS)
Food and Agriculture Organization of the United Nations (FAO)
Viale delle Terme di Caracalla, 00153 Rome, Italy
Tel: +39 06 570 53895
Skype: carlocafiero
http://www.fao.org/economic/ess/ess-fs/voices/en/

Dear Thomas

Thank you for your detailed criticisms. As you know, some of the issues you raise have been addressed before, especially in SOFI 2012, the first SOFI issued after I arrived here. You are quite right that the decision to improve the methodology was made before my arrival, but SOFI 2012 explicitly showed the implications for hunger estimates of different assumptions about calorie requirements. For some time, FAO (wrongly in my view) focused on food availability, ignoring access. The new estimates sought to give more attention to access as well as other factors previously ignored or wrongly assumed. We have also considerably improved the database, with more information from consumption surveys. While it is generally a bad idea to change criteria in the middle of monitoring exercise, the new PoU estimates are better than the old ones, in my humble opinion, although I will be the first to concede that limitations and problems remain.

You suggest that FAO should not have changed the methodology despite all the criticisms of the PoU, including from inside. The way in which the original methodology, developed by the Indian statistician Sukhatme during the 1960s, had been applied in the following years was felt to be inappropriate in several regards, and we showed the implications of the major changes made to the methodology and assumptions in the technical appendix. My colleagues believed that it was FAO’s responsibility to improve the methodology given the responsibility FAO has to report on the MDG1c indicator.

Using an explicitly low cut-off – related to the minimum dietary energy needs for a sedentary lifestyle – allows us to credibly improve the reliability of estimates. As dietary energy requirements vary considerably in any population, and we know very little about such variations in different contexts, we can much more reliably estimate the proportion of people who do not even get this minimal dietary requirement. We have made the database public, to allow others to make estimates using different benchmarks and methodologies. While we have been criticized for changing the methodology and assumptions, very little use has been made of the data available to come up with alternative estimates.

You correctly point out that the hunger trends are not consistent, but as you also correctly point out, the price spikes were in (early) 2008 and 2012 (one can add 2010-11 as well). My colleagues have long conceded that their provisional estimates for 2009 were wrong due to wrong assumptions regarding likely income contractions following the 2008 financial crisis and higher food price levels in many countries, overly influenced by the early pessimistic views on the extent and depth of the financial crisis of 2009 in developing countries, and the earlier cereal price spikes. What we now know is that developing countries continued to experience sustained growth in 2009 and 2010, and also that the impacts of such high international producer prices were mitigated in many countries by food export restrictions, food subsidies, etc., explaining the non-correspondence between international producer and domestic consumer food prices.

This is why we should be concerned about the recent trend to eliminate food price subsidies together with fossil fuel subsidies. Of course, such subsidies are mainly for dietary energy rich foods, which have contributed to the recent rapid rise in overweight, obesity and diet-related non-communicable diseases.

At the Second International Conference on Nutrition last November, an important consensus was achieved on addressing all types of malnutrition including hunger (inadequate dietary energy intake), ‘hidden hunger’ (micronutrient [vitamins, minerals, trace elements] deficiencies) as well as diet-related non-communicable diseases (typically, but not always associated with obesity).

However, I do not believe that serious nutritionists will insist on a single indicator conflating dietary energy undernourishment with other nutrient deficiencies. As Richard Jolly’s colleague Robert Chambers reminds us, the PoU does not fully consider the standard four dimensions of food insecurity: besides food availability and access, stability and utilization are also important, with the latter especially relevant for nutrition. As he correctly notes, a comprehensive and sustained effort to overcome undernutrition must also include other dimensions besides public health and food narrowly understood including hygiene and sanitation.

I have previously indicated, in various fora, that we at FAO are quite aware of the limitations of the PoU approach. This is the reason why FAO’s Voices of the Hungry project has been developing a Food Insecurity Experience Scale (FIES), which we believe will effectively complement the PoU estimates by providing a cost-effective tool for more nuanced assessment of the incidence of food insecurity at different levels of severity (therefore, not just of hunger) across the world. Consumption surveys are very expensive to conduct and most developing countries are unable to undertake them at representative scale regularly. I am afraid you seriously underestimate the costs of undertaking credible alternatives. This is no trivial matter as the monitoring costs estimates for the post-2015 SDGs are much greater than existing ODA flows!

Finally, I have to reject the presumption by some people, whom I otherwise respect, that civil servants cannot be trusted to report honestly as institutional self-aggrandizement imperatives will always prevail. Institutional self-aggrandizement is undoubtedly a problem for all institutions, not just public ones. Such blanket criticisms are often also made of national and international statistical reporting. International reporting depends on national reporting, and while there may be occasional misreporting for political reasons, such claims are easy to make, but often reflect ignorance of where most data comes from, and naiveté about how much the so-called data revolution can do to improve international development monitoring.

If we report good progress, we are accused of exaggerating progress for political reasons. On the other hand, if we report shortfalls, we are accused of deliberately doing so to secure more funding to keep ourselves in business. Sometimes, the same people make both criticisms as and when it suits them. I am ready to concede that these are not imaginary problems, but such criticisms often reflect a contempt for civil servants honestly trying their best to do their work, which is not helpful if we expect governments and international organizations to be part of the solution.

There is much we need to do to improve international development monitoring, especially during this period, and I do hope that all concerned will base their suggestions and criticisms on the modest progress which has been made in recent years, not least because of earlier criticisms made.

jomo


FAO (ES-ADG, Room B532), Vialle delle Terme di Caracalla, 00153 Roma, Italy. Office: [email protected] +39-0657053566 Websites: www.fao.org, www.jomoks.org, www.ideaswebsite.org

Dear Thomas, thank you for raising this. It is a moral issue as well as an analytical/methodological one. 

And it is extremely political at this moment because the SDG goals & indicators & preamble and the FfD draft are under final negotiations. 

We need to share these stats urgently with progressive delegations and with the Major Groups and alert to the true scale and depth of hunger

• so that  the SDG hunger goal at least is not a foul compromise (even if the income poverty goal is) 
• to  help make a stronger case in the FfD's proposal for  social protection.

Best wishes, Gabriele

gabriele koehler
development economist 
www.gabrielekoehler.net

Dear Jomo and all,

Please let us also remember that the modest progress against chronic undernourishment in the last 25 years is due entirely to the FAO's abrupt change of methodology announced in its 2012 State of Food Insecurity (SOFI) report. Here are the official FAO numbers of chronically undernourished -- in millions -- according to the old and new methodologies side by side:
                          OLD              NEW

1990                 843               1010

1996                 788                 931

2001                 833                 922

2006                 848                 884

2008                 963                 867

2009               1023                 867

2010                 925                 868

2014                                         795

 
Comments.

1. It is very bad practice to make so dramatic a change in methodology, with hindsight, in year 22 of a 25-year measurement exercise.

2. It is entirely incredible that undernourishment should have remained constant while food prices near-doubled from 2005 toward twin peaks in 2008 and 2011.

3. The new definition of undernourishment (see p. 50 of the 2012 SOFI) is absurd. A person is counted as undernourished only if her/his

(a) “food energy availability [no other nutrient deficiencies count]

(b) is inadequate to cover even minimum needs for a sedentary lifestyle”

(c) for “over a year.”

This fails to count all the people who are seriously short of vitamins (e.g. A), minerals (e.g. iron), proteins or any other crucial nutrients. It fails to count all those who must do hard physical labor for a living and thus need more than the 1800 kcal allocated for a sedentary lifestyle. And it fails to count all those who are hungry for months but not over a year. According to this definition, there cannot ever exist an undernourished rickshaw driver because, if such a person were to fall below the calorie intake needed for a sedentary lifestyle, he would be dead long before the year is up. (A rickshaw driver needs 3000-4000 kcals per day.)

The FAO's new methodology vastly understates the number of chronically undernourished, and this huge undercount then also produces a much-too-rosy trend picture. (Note that there were various important changes in definitions and methods during the Millennium Development Goal period and, after every change, the trend figures improved. Surely no coincidence!)

 

The 2015 SOFI (p. 52) explicitly defends the new methodology against two criticisms made by myself and others:

1.     "At the moment, few surveys accurately capture habitual food consumption at the individual level and collect sufficient information on the anthropometric characteristics and activity levels of each surveyed individual; in other words, very few surveys would allow for an estimation of the relevant energy requirement threshold at the individual level." -- My response: So do some surveys instead of repeating your flawed exercise. Even just a random sample of a few thousand people would give you a sense of the quality (or lack thereof) of your estimates for some country or province. It is a scandal that world hunger is estimated in the primitive way that it is, that we don't even know, roughly, how many chronically undernourished people there are.

2.     "Within the population, there is a range of values for energy requirements that are compatible with healthy status, given that body weight, metabolic efficiency and physical activity levels vary. It  follows [!] that only values below the minimum of such a range can be associated with undernourishment, in a probabilistic sense. Hence, for the PoU [prevalence of undernourishment] to indicate that  a randomly selected individual in a population is undernourished, the appropriate threshold is the lower end of the range of energy requirements." -- My response: this is gibberish. What really follows is that one has to use the minimum of the range if one wants to be 100% certain of never counting as undernourished anyone who is not. But this certainty -- given the FAO method -- comes at the cost of not counting hundreds of millions of people who have enough calories for a sedentary lifestyle with low body weight and high metabolic efficiency but do not have enough calories for their actual life style, actual body weight and actual metabolism. This comes on top of ignoring (not counting) all those who are short of nutrients (vitamins, minerals, etc.) other than energy. Think of all the millions suffering from iron-deficiency anemia, are they not undernourished and chronically so?

 

I know that the new methodology was brought in before you, Jomo, joined the FAO. In any case, I am convinced that most of  the colleagues at the FAO have the best of intentions. Like with other UN agencies, the top officers of the FAO serve at the pleasure of politicians and get FAO's funding from politicians; and, in order to get more support toward pursuing the noble goals of the FAO, they may have to help politicians defend their policies and in particular their grand globalization project. If I were an FAO official, perhaps I would give politicians nicer-looking numbers and trend figures in exchange for greater support for FAO's work. But someone, somewhere, also needs to speak the truth, needs to say that the poor have been dramatically betrayed, that undernourishment is vastly more common and persistent than the FAO statistics claim, that there ought to be an independent group of academic experts producing sound alternative estimates. It is our responsibility as world citizens to relieve the FAO's dreadful conflict of interest and our responsibility as academics to develop reliable estimates even if governments obstruct any such effort. We here on this list can do this job, and we should join forces to do so! 

Cheers,
Thomas


Thomas Pogge
Leitner Professor of Philosophy and International Affairs
Yale University, PO Box 208306, New Haven, CT 06520-8306
pantheon.yale.edu/~tp4     www.ted.com/speakers/thomas_pogge.html

Dear colleagues,

At the 1996 World Food Summit (WFS), heads of government and the international community committed to reducing the number of hungry people in the world by half by 2015. Five years later, the Millennium Development Goals (MDGs) lowered this level of ambition by only seeking to halve the proportion of the hungry.

The latest State of World Food Insecurity (SOFI) report for 2015 by the Rome-based Food and Agriculture Organization (FAO), World Food Programme and International Fund for Agricultural Development estimates almost 795 million people—one in nine people worldwide—remain chronically hungry.

The number of undernourished people—those regularly unable to consume enough food for an active and healthy life—in the world has thus only declined by slightly over a fifth from the 1010.6 million estimated for 1991 to 929.6 million in 2001, 820.7 million in 2011 and 794.6 million in 2014.

With the number of chronically hungry people in developing countries declining from 990.7 million in 1991 to 779.9 million in 2014, their share in developing countries has declined by 44.4 per cent, from 23.4 to 12.9 per cent over the 23 years, but still short of the 11.7 per cent target.

Thus, the MDG 1c target of halving the chronically undernourished’s share of the world’s population by the end of 2015 is unlikely to be met at the current rate of progress. However, meeting the target is still possible, with sufficient, immediate, additional effort to accelerate progress, especially in countries which have showed little progress thus far.

Progress uneven - Overall progress has been highly uneven. All but 15 million of the world’s hungry live in developing countries. Some countries and regions have seen only slow progress in reducing hunger, while the absolute number of hungry has even increased in several cases.

By the end of 2014, 72 of the 129 developing countries monitored had reached the MDG 1c target — to either reduce the share of hungry people by half, or keep the share of the chronically undernourished under five per cent. Several more are likely to do so by the end of 2015.

Instead of halving the number of hungry in developing regions by 476 million, this number was only reduced by 221 million, just under half the earlier, more ambitious WFS goal. Nevertheless, some 29 countries succeeded in at least halving the number of hungry. This is significant as this shows that achieving and sustaining rapid progress in reducing hunger is feasible.

Marked differences in undernourishment persist across the regions. There have been significant reductions in both the share and number of undernourished in most countries in South-East Asia, East Asia, Central Asia, Latin America and the Caribbean—where the MDG target of halving the hunger rate has been reached.

While sub-Saharan Africa has the highest share of the chronically hungry, almost one in four, South Asia has the highest number, with over half a billion undernourished. West Asia alone has seen an actual rise in the share of the hungry compared to 1991, while progress in sub-Saharan Africa, South Asia and Oceania has not been sufficient to meet the MDG hunger target by 2015.

Efforts need to be stepped up - Despite the shortfall in achieving the MDG1c target and the failure to get near the WFS goal of halving the number of hungry, world leaders are likely to commit to eliminating hunger and poverty by 2030 when they announce the post-2015 Sustainable Development Goals (SDGs) at the United Nations in September.

To be sure, there is enough food produced to feed everyone in the world. However, hundreds of millions of people do not have the means to access enough food to meet their dietary energy needs, let alone what is needed for diverse diets to avoid ‘hidden hunger’ by meeting their micronutrient requirements.

With high levels of deprivation, unemployment and underemployment likely to prevail in the world in the foreseeable future, poverty and hunger are unlikely to be overcome by 2030 without universally establishing a social protection floor for all. Such efforts will also need to provide the means for sustainable livelihoods and resilience.

The Second International Conference of Nutrition in Rome last November articulated commitments and proposals for accelerated progress to overcome undernutrition. Improvements in nutrition will require sustained and integrated efforts involving complementary policies, including improving health conditions, food systems, social protection, hygiene, water supply and education.

Best regards,
Jomo Kwame Sundaram
Coordinator for Economic and Social Development
Food and Agriculture Organization of the United Nations
FAO (ES-ADG, Room B532), Vialle delle Terme di Caracalla,
00153 Roma, Italy.
Office: [email protected] +39-0657053566
Websites: http://www.fao.org/, http://www.jomoks.org/, http://www.ideaswebsite.org/

Matthew puts it very well.

For the conservatives the financial crisis has proven a very useful excuse for a broadly ideological project.  I believe when the history books are written the Cameron Osborne partnership will be seen as one of the most effective of modern times, implementing a really substantive neo-liberal reform agenda that Mrs Thatcher would have only dreamt of, from a position of first coalition and now tiny majority, using the power of falsehood to huge effect.

The need to counter this is of course huge, for the UK and for the world- (not least because having such a right wing and enormous internationalist proactive aid agency is uncharted territory) and the importance of not underestimating this government and their backers is also critical.

Cheers
Max

Max Lawson
Head of Global Policy and Campaigns
Oxfam GB

Dear Friends,

I think the broader point to be noted  here is not so much a comparison of growth rates between Labour and Conservative regimes. The point is that the Conservatives successfully adopted a semi Keynesian agenda. Their current budget deficit of 4.5% is the highest amongst the Advanced Economies (equalling Spain). Their debt to GDP ratio has been rising constantly to near 97%. The Pound has devalued against the Dollar in the past year.

Hence GDP growth has picked up into  a median AE range. Unemployment has come down. 

But productivity growth has been weak because the numeratior - output - has not been that strong.

But the Conservatives have only been semi Keynesian, because they have wekened real wages, and social protection. Therefore aggregate demand has been weak, with resulting investment at 17% of GDP, well below pre crisis levels of 19%.

Of course Osborne 2.0 could reverse budget balaces now, into bigger expenditure cuts. That would lower growth and employment even according to their own semi Keynesian model adopted so far. What is needed in fact is more unconventional monetary policy like QE. The space is certainly there, seen in the much higher costs of borrowing in the UK, with Governemt bonds at 2% yields, compared to the Eurozone at 0.6%.

Best 

Moazam Mahmood
Deputy Director Research Department ILO
4 Route des Morillons
CH-1211 Geneve 22

Dear Martin - Good support for the Keynesian interpretation from Skidelsky's reply to Ferguson, just published below
https://www.project-syndicate.org/commentary/britain-austerity-cameron-keynes-by-robert-skidelsky-2015-05

Dear Moazam - Yes, very good point on very low  EU investment. It was actually quite low already before the crisis, and then fell drastically. Creates problem for demand (even tho also caused by lack of demand), but also of future potential output (supply).
German current account surplus is 8% of GDP, and Dutch one 10%! This is I understand against EU rules
About UK, I think the fiscal consolidation was less than had been announced, one reason why UK econ grew more than was projected by many; now, post election, there will be far more Fiscal  consolidation, which may slow down growth

Best regards,
Professor Stephany Griffith-Jones
Financial Markets Director
Initiative for Policy Dialogue
Columbia University
E-mail: [email protected]
Web sites: www.stephanygj.net, www.policydialogue.org
Twitter: @stephanygj https://twitter.com/stephanygj

Thanks for sharing, Susan. You and others might be interested in this recent article (see below) that looks at the findings from a new report on ethics in the financial industry – which surveys professionals from the US and UK financial industry. Here is link to the survey: http://www.secwhistlebloweradvocate.com/LiteratureRetrieve.aspx?ID=224757
Best,
Nathan Many on Wall Street Say It Remains Untamed MAY 18, 2015

Andrew Ross Sorkin

Wall Street has changed. But perhaps not as much as you would think.

The past several years have been filled with headline-grabbing legal settlements by financial services firms — $11 billion here, $5 billion there. Most of them involved conduct that took place before the 2008 crisis. Virtually every major Wall Street firm has pledged to redouble its efforts to instill an ethical culture. And virtually all the large firms said that if there was bad behavior, it is behind them.

Well, it isn’t.

A new report on financial professionals’ views of their industry paints a troubling picture. Rather than indicating that Wall Street has cleaned itself up, it suggests that many of the lessons of the crisis still haven’t been learned. And the mind-boggling settlement numbers, as well as stringent new rules, like the of Dodd-Frank regulatory overhaul in 2010, appear to have had little deterrent effect.

In the study, to be released Tuesday, about a third of the people who said they made more than $500,000 annually contend that they “have witnessed or have firsthand knowledge of wrongdoing in the workplace.”

Just as bad: “Nearly one in five respondents feel financial service professionals must sometimes engage in unethical or illegal activity to be successful in the current financial environment.”

One in 10 said they had directly felt pressure “to compromise ethical standards or violate the law.”

And nearly half of the high-income earners say law enforcement and regulatory authorities in their country are ineffective “in detecting, investigating and prosecuting securities violations.”

Two years ago, this column reported on an earlier version of this report. The attitudes were concerning then.

This year, the University of Notre Dame — on behalf of the law firm Labaton Sucharow — expanded its questionnaire to more than 1,200 traders, portfolio managers, investment bankers and hedge fund professionals both in the United States and Britain. Its results appear even more noteworthy today for the sheer number of individuals who continue to say the ethics of the industry remain unchanged since the crisis (a third said that, by the way).

Every report has an asterisk of some sort and this one does, too: Although it was conducted by Notre Dame and surveyed a large number of people in the industry, it was paid for by Labaton Sucharow, a firm that often represents whistle-blowers in cases against the financial services firms.

But if anything, the opinions expressed demonstrate that despite the very public campaign by the government to root out bad behavior in finance, it remains a problem that still deserves attention, notwithstanding the industry’s protestations that it has changed.

“The pattern of bad behavior did not end with the financial crisis, but continued despite the considerable public sector intervention that was necessary to stabilize the financial system,” William C. Dudley, the president of the Federal Reserve Bank of New York, said in a speech late last year on Wall Street culture. “I reject the narrative that the current state of affairs is simply the result of the actions of isolated rogue traders or a few bad actors within these firms.”

Is there something inherent to Wall Street that leads to bad behavior?

Mr. Dudley challenged the view that “risk-takers are drawn to finance like they are drawn to Formula One racing.”

But there is truth to that. Wall Street is a business of risk-taking and those who seemingly do it most successfully find that edge of the line and get as close to it as possible without crossing it.

Mr. Dudley, however, also made the case that “the degree to which an industry attracts risk-takers is not preordained, but reflects the prevailing incentives in the industry. After all, risk-takers have options. Second, and, more importantly, incentives matter even for risk-takers.”

If incentives are the problem, the perspectives suggest a dire situation. Nearly one-third of those asked “believe compensation structures or bonus plans in place at their company could incentivize employees to compromise ethics or violate the law.”

It is unfair to suggest the entire industry is a den of thieves. In many ways, Wall Street is quite different than it was before the crisis, and for the better.

Structurally, Wall Street firms carry much less risk than they did years ago. Capital requirements are significantly higher. Indeed, even the moniker “Wall Street” has shifted as the power of the big banks has diminished and the influence of asset managers has increased.

But when it comes to the ethos of the industry just as it is reaching pre-crisis levels of employment and compensation, whatever change has taken place remains an open question.

While Wall Street often takes the brunt of the criticism about culture, an extra heaping might be due those who work in the financial industry in Britain.

On virtually every question, those in Britain seem to indicate that ethics problems could be even more widespread there. “Respondents from the U.K. are either more willing to commit a crime they could get away with — or are more frank about it,” the report’s authors write.

One of the big problems, it seems, is that so few people in finance are willing to speak up and report bad actors, even after the Securities and Exchange Commission developed a whistle-blower program.

Many of those asked said they worried “their employer would likely retaliate if they reported wrongdoing in the workplace.”

And quite a few said that they had signed, or been asked to sign, a confidentiality agreement that would prohibit them from reporting illegal or unethical behavior to the authorities.

Equally disturbing was that many respondents said they would use nonpublic information to make a guaranteed $10 million, if there were no chance of getting arrested for insider trading. A quarter said they would do so. That’s up from two years ago, and it is that attitude of “getting away with it” that worries many who hope to root out problems in the industry.

“The vast majority of people are good and ethical, but they have become desensitized on Wall Street,” said Jordan A. Thomas, a partner at Labaton Sucharow.

http://www.nytimes.com/2015/05/19/business/dealbook/many-on-wall-street-say-it-remains-untamed.html?src=busln&utm_source=05-21-15&utm_campaign=Newsletter+5%2F15%2F14&utm_medium=email&_r=0

 

Nathan Coplin, Deputy Director

New Rules for Global Finance

2000 M Street NW, Suite 720

Washington, DC 20036

Tel.(810) 348 3165

Fax. (202) 280-1141

Email: [email protected]

Website: www.new-rules.org

Click here to join our mailing list!

Dear colleagues

When asked what the banks have learned from the 2008 financial meltdown, my answer is: ‘That they can get away with murder.’ You may find my article of interest:

http://www.tni.org/article/getting-away-murder
(originally published in New Internationalist)

Best regards

Susan George 
Website : http://www.tni.org/users/susan-george
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Politically speaking, which is really what Niall Ferguson was talking about, 2 things have mattered:

1) the conservatives gave up on austerity (which was causing economic collapse) in 2012 and dropped all their debt and deficit targets, thereby allowing growth to reappear in 2014-15, but continued to pretend they were implementing austerity; and

2) the economy grew faster under labour in 2009-10 when they were implementing stimulus, as it has in the US - but labour (partly due to the weight of media against them) completely failed to get these messages across.

If left of centre (and in our case also centrist liberal democrat) parties buy into an austerity anti-keynesian message, they cannot hope to beat conservative parties. And the worrying thing now is that the conservatives are in power on their own and intend to implement much more dramatic austerity, not for any economic reason but from an ideological determination to shrink and privatise the state, which will hit the poorest and exacerbate inequality (as their solutions have already done dramatically since 2010). In britain at least, there is a huge amount of work to do for those who believe in recovery with a human face.

Matthew Martin
Director
Development Finance International
[email protected]