economic development

Quake: shaking our assumptions?

Richard Dahlstrom — Fri, 15 Jan 2010 07:27:47 -0800

David Brooks excellent article about this week's quake in Haiti is a must read. Whether you agree with his diagnosis or not, he shines a light on a problem that absolutely must be addressed: There is no formulaic relationship between $$ aid and economic development/autonomy. Haiti is the ongoing recipient of immense investments. By some estimates, they have the highest per capita ration of NGO's (nongovernmental organizations, like World Vision) in the world. In spite of this, Haiti has remained locked in poverty, and it is this poverty that prevents the kind of infrastructure (building codes, sewage systems, access to water, hospitals, schools) from developing. What do I mean?

The government is not able to provide the resources to educate the nation's next generation.

The unemployment rate is over 80%.

More than half of Haitians live on less than a dollar a day.

There are few paved roads, an inadequate supply of potable water, minimal utilities, and depleted forests.

About 60% of the population lives in abject poverty.

Less than 20% of Haitians age 15 and over can read and write.

Fewer than 75% of children attend school.

40% of the Haitian population does not have access to primary health care.

The United Nations estimates 6% of Haitians are infected with HIV/AIDS. The highest rate in the Western Hemisphere. An estimated 30,000 people die of AIDS every year.

One in twenty Haitians is infected with HIV/AIDS and there are over 150,000 AIDS orphans.

When things begin to shake, the underlying social and economic pathologies are revealed, and the devastation is exponentially greater than would be the case, were there adequate infrastructure present.

So why is it that infrastructure doesn't develop? And how can we, who are opening our wallets, invest our dollars in the best way to assure that we not only triage the damage, bury the bodies, and provide acute care to those who need it now, but also begin addressing the systemic issues that have kept Haiti stuck for so long?

Brooks declares that beginning with the assumptions that all cultures and beliefs are morally equal is the height of folly. Ideas have consequences, and the tragedy of Haiti isn't just that there's poverty, it's that the poverty is interwoven with deeply held beliefs and practices. Until these beliefs change, the poverty will remain. Brooks says it this way:

In this country, we first tried to tackle poverty by throwing money at it, just as we did abroad. Then we tried microcommunity efforts, just as we did abroad. But the programs that really work involve intrusive paternalism....It’s time to find self-confident local leaders who will create No Excuses countercultures in places like Haiti, surrounding people — maybe just in a neighborhood or a school — with middle-class assumptions, an achievement ethos and tough, measurable demands.

When WWII ended, the German government sent hundreds of young people who'd been raised in the ethos of the Hitler Youth movement, to Capernwray in England for moral re-education. International Needs is taking a similar strategy in Romania. This, it seems, is the path in Haiti offering the greatest light. But such a strategy swims against the popular current that eschews any challenge to another culture's world view.

We'll take an offering at our church on January 24th for Haiti as part of the important effort to contribute to the acute crisis of the moment. But it's vital that all of us with means think long and hard, not about whether to invest, but about how to invest, so that our investment leads to changed lives and changed cultures, not just handouts.

Pennsylvania’s Casinos are Fool’s Gold: Bethlehem Steel Becomes Bethlehem Steal

MarkM — Fri, 05 Jun 2009 07:33:26 -0700

As my wife and I crawled though bumper to bumper traffic on I-78 near Bethlehem, Pennsylvania a few weeks ago, I noticed a series of flashy billboards for an enormous new casino. Apparently, it had been built on the very site of Bethlehem Steel’s major American plant. A casino where Bethlehem Steel stood? Really?

At one point in the 1950’s, the Bethlehem Steel Corporation produced 23 million tons of steel each year, employing over 150,000 people. Bethlehem Steel’s products were used to build the George Washington Bridge, the Golden Gate Bridge, the Empire State Building and the Hoover Dam, not to mention rebuilding post-war Germany and Japan. But as Europe and Asia recovered from the destruction of the war, they began to compete instead of import. American manufacturing fell behind and mills began to close. In 2001, Bethlehem Steel filed for bankruptcy.

So what was our response? New industry? A haven for green manufacturing? So much potential for the sprawling site, hallowed in American industrial history. Wait, how about a casino?

The President of the Sand’s Casino Corporation, developer of the cavernous new gaming hall, says, "The whole Bethlehem Steel story was the building and defending of America, and we wanted to respect that story through the architecture and design of the property.” Great! So they kept the bread and threw away the meat.

Here’s the catch: casinos don’t produce anything. Without going into the moral issues of gambling, they simply don’t produce anything that actually contributes to the American economy. You can’t compare the steel that rolled out of the mills to the gamblers that fall out of their chairs. Very little enters the economy when gamblers are done: employment pay (most at minimum wage), some tax revenues to the state, and profits that go back to Las Vegas.

The federal government became involved with the gambling industry at one point back in 1996, trying to see if gambling provided any benefit to the national economy. Congress created the “National Gambling Impact Study Commission” to try to figure it out. At their conclusion the commission recommended all new casino development be halted, at least until there was clear proof that casinos did any good. But guess what? No one listened. And casinos have been growing. Between 1990 and 2008, commercial casino revenues increased from $8.7 billion to over $98 billion. The number of casinos rose from 26 to almost 460 in the same time. That’s amazing growth! And it’s economic foolishness, as most of the casinos being developed are built in the name of “economic redevelopment.” Creating entry level food service jobs and taxing the mathematically incompetent. Some development.

In another study by Earl L. Grinols and David B. Mustard, published in Journal of Managerial and Decision Economics, “there is abundant evidence that increased gambling opportunities increase problem and pathological gambling.” For example, the NGISC reported that “the presence of a casino within 50 miles roughly doubled the prevalence of problem and pathological gambling.” They go on to note that “an average adult is expected to lose $200–300 each year in casinos if they are nearby, while a typical pathological gambler often loses 10–20 times this amount. Therefore, a small number of pathological gamblers accounts for a significant portion of casino revenues.” Wow. Do you see how it works? You build it, they come, you make money, they get addicted, you make more money, everyone is happy. As long as the taxes keep flowing, that is.

President Obama has started a nationwide discussion on new green industries, creating jobs through businesses that are connected to the 21st century. Green energy development, entrepreneurial applications of new technology, biotechnology. America must work to develop a vision for replacing smoke stack jobs with long term industries that provide sustained growth, real economic sustenance, and strong tax revenue. Casinos are not economic development. They are an economic sham that replaces steel with slots, producing nothing more than fool’s gold.

En Route to Kinshasa

Mark Russell — Wed, 29 Apr 2009 13:54:50 -0700

Have you ever been to Kinshasa? I haven't. And before I started my recent job with the Christian microfinance organization, HOPE International, I'm not sure I could have found it on a map. it is the chaotic capital of the Democratic Republic of Congo, formerly known as Zaire.

This year I'll be visiting HOPE's microfinance operations, staff and clients, in Kinshasa as well as conducting a visit to Brazzaville, located in the neighboring Republic of Congo which is is distinct from the Democratic Republic of Congo. This is something I learned last year when I applied for a visa to the wrong country!

Times are tough in this part of the world. Unemployment figures go as high as 97%. The World Bank has named DR Congo the worst country to do business three years in a row. The global economic crisis has caused commodity prices to fluctuate. At the bottom of this economic pyramid and getting crushed are the poor.

Microfinance is an economic development intervention designed to spur businesses among the poor. But can it work somewhere as distressed as the Congos? That is what I intend to find out. I'll be touching down Thursday, April 30th. Stay tuned for what happens....