Topic: International Economics and Development

Bill Gates Recognizes the Improving State of Humanity

With the newspapers full of crises, it can be hard to maintain a proper perspective on the progress humanity has made, and to remember that there are individuals striving every day to make the world a better place. In a recent interview, businessman and philanthropist Bill Gates discussed the improving state of humanity, and the work that he is doing through private charity to help those in need.  He said,

I think the idea that people are worried about problems, like climate change or terrorism or these challenges of the future, that’s okay. But boy, they really lose perspective of what’s happened over the last few hundred years. And how science and innovation have been a central factor of that. And I think that’s too bad, because people are lucky to live now. And they should see that progress is actually taking place faster during their lives than at any time in history.

One of the major initiatives of the Gates Foundation, for example, aims to eliminate polio. The data bear out how much progress has already been made towards that end:

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In 1980, about half of all children received the polio vaccine. Today, around 90% of children receive the vaccine, and eradication of the condition is in sight – just as people eradicated smallpox in 1979.

Gates is also among the many caring individuals working to eliminate malaria and malnutrition, areas where humanity has already made great strides. Insecticide-treated mosquito nets, for example, protect more children from malaria in Sub-Saharan Africa:

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Malnutrition among children is also declining. In populous developing  regions, such as East Asia and the Pacific, malnutrition affected about 20% of children in 1990. More must be done, but today malnutrition affects fewer than 6% of children in those areas.

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Even one child afflicted by polio, malaria, or malnutrition is too many, but the dramatic improvements the world has made on these fronts should be celebrated. Like Gates, while working to make the world better we must not lose a proper perspective on the progress humankind has already made.

More Censorship Will Hardly Save Xi’s Dictatorship

In recent days, I’ve received messages from several groups on WeChat (a popular social media network in China) reporting on the arrest of more than 40 Chinese activists who support the protests in Hong Kong, as well as on an official order to ban the publication or sale of books written by authors considered to be supporters of the Hong Kong protests, human rights and the rule of law. The crackdown was also reported this week in the Washington Post.

Among the authors now banned is economist Mao Yushi, the 2012 recipient of the Milton Friedman Prize for Advancing Liberty.

This is not the first time Mr. Mao has suffered unfair and illegal treatment (an official, public written notice is often not even issued to carry out censorship; sometimes an “anonymous” phone call understood to be from an authority or from an official agency to the publisher will suffice). Mr. Mao’s books were also banned, although not for the first time, in 2003 when he signed a petition at a conference in Qingtao appealing to the government to exonerate the students’ protests and democratic movement which was ended with the June 4th massacre on 1989.

In my own experience, a couple of articles in one of my books were deleted without an official explanation, while the deletion of phrases, sentences and even paragraphs from my columns and commentaries in journals and newspapers were quite common.

Another very respected author is Mr. Yu Ying-shih, an 84-year-old emeritus professor of history at Princeton who has taught at Ivy League universities since the 1950s. Mr. Yu supports the Hong Kong protests and has criticized the tyranny of the Chinese Communist Party (CCP) for more than five decades. In his books he develops analytical critiques of traditional culture and classical philosophy in China, and advances universal values based on Western scholarly traditions. The books have sold well and contain no direct reference to contemporary political issues, yet his books were officially considered critical of CCP rule and deemed damaging to social stability.

Another banned scholar is Prof. Zhang Qianfan, one of my former colleagues at Peking University (a professor at the School of Government as well as the School of Law). He is a very cautious and prudent scholar (we have disagreements on several issues in which he suggests my opinions are too radical and aggressive against the current regime) who focuses on constitutional studies, and serves as vice president for the China Society for Constitutional Studies. He opposes the Hong Kong protests – in what seems to me to be a contradiction of his own views – for fear that the June 4th Massacre might happen again if the students and civilians in Hong Kong do not withdraw.

Therefore I presume that the banning of Prof Zhang’s books is not a result of his views on the Hong Kong protests, but is rather aimed at his research in Constitutional Studies.

The arrest of famous activist and human rights advocate Guo Yushan is not a surprise to most of us since he has been involved in so many so-called sensitive issues in the past decade, with the most politically irritating one being his role in the escape of the world-famous blind activist Chen Guangcheng. Yet the timing of his arrest is troubling since the 4th plenary session of the CCP’s 18th National Congress will be held next week while the plenary session will purportedly focus on the Rule of Law or “Governing the State with Law” even if the majority of Chinese is suspicious about the possibility of implementing that agenda.

The treatment of dissidents outside and inside China is abhorrent. Many dissidents have not been able to visit their parents, brothers, sisters or relatives for two or three decades. Even many scholars, researchers and even businessmen who sympathize with human rights ideas in China or have expressed different views than those of the CCP have been denied visas or have had them cancelled. Among those who are still not allowed into China, for example, are former Princeton professor Perry Link and Andrew Nathan of Columbia University.

Chinese citizens should be free to exit and enter their homeland no matter what political positions or beliefs they maintain.  The refusal to allow the exit or entry of a dissident without a legal justification is an obvious violation of modern law and international norms, and is inhumane.

I hereby wish to call the attention of the international community to this new round of crackdowns and violations of freedoms of speech, publication, assembly, association and movement unfolding in China.

Oil Price Blues (Read: Dangers) for Some

As the price of crude oil continues its downward tumble towards $80 per barrel, I am reminded of a similar scenario from near the end of the Cold War in the 1980s. When Saudi Arabia announced in 1985 that protecting oil prices was no longer its main priority, oil production surged and prices fell off a cliff, briefly plunging below $10 per barrel, as I had correctly predicted.

Lower prices delivered a fatal blow to the Soviet economy, which ended up seeing $20 billion per year in oil revenues evaporate. The resulting fiscal shortfalls proved to be a dagger in the heart of the U.S.S.R.

On October 1st of this year, Saudi Arabia’s national oil company announced that it had abandoned a policy of price protection and would start to focus on protecting its market share. Combined with falling global demand and rising supplies elsewhere, oil prices have fallen accordingly. This has put a squeeze on eight of the world’s top oil producers. States like Iran, Venezuela, and Iraq can only balance their current budgets at oil prices ranging from $110 to $135 per barrel (so-called break-even prices).

If oil prices stay below $90 per barrel for any length of time, we will witness massive fiscal squeezes and regime changes in one or more of the following countries: Iran, Bahrain, Ecuador, Venezuela, Algeria, Nigeria, Iraq, or Libya. It will be a movie we have seen before.

The Cost of Ebola and the Misery Index

For a clear snapshot of a country’s economic performance, a look at my misery index is particularly edifying. The misery index is simply the sum of the inflation rate, unemployment rate, and bank lending rate, minus per capita GDP growth. 

The epicenter of the Ebola crisis is Liberia. As the accompanying chart shows, the level of misery, as measured by the misery index, has decreased since Charles Taylor ruled Liberia.

That said, the index was still quite elevated, at 19.4, in 2012. Yes, 2012; that was the last year in which all the data required to calculate a misery index were available. This inability to collect and report basic economic data in a timely manner is bad news. It simply reflects the government’s lack of capacity to produce. If it can’t produce economic data, we can only imagine its capacity to produce public health services.

With Ebola wreaking havoc on Liberia (and neighboring countries), the level of misery is, unfortunately set to soar.

Friedman Prize Winners in the News

Every two years, the Cato Institute awards the Milton Friedman Prize for Advancing Liberty to an individual who has made a significant contribution to advancing human freedom. More than anything, past winners have embodied the old adage that the price of liberty is eternal vigilance.

It should therefore be no surprise that Milton Friedman Prize winners continue to show up in the news, pushing for freedom and standing up to power. In recent days, three awardees have appeared in the news because of their unyielding commitment to the principles of individual liberty, limited government, free markets, and peace.

Mao Yushi

In September, the ruling Communist Party in Beijing announced that the people of Hong Kong, who have enjoyed considerable autonomy since the city’s transition from a British protectorate in 1997, could only vote for electoral candidates that were pre-approved by the Communist Party. Protesters bravely took to the streets and have faced strong-arm tactics from the police, including beatings and pepper spray. Beijing has refused to budge and this week “made its highest-level denunciation yet of the protesters,” reports the New York Times, “accusing them of pursuing a conspiracy to challenge Beijing’s power over the city.”

The authorities in Beijing aren’t satisfied with cracking down on protests in Hong Kong; they are also curtailing freedom on the mainland. Mainland supporters of the protesters are being arrested. And as the Washington Post reported this week, “books by scholars considered supporters of the demonstrations are suddenly becoming harder to find,” as Beijing imposes an apparent ban on material critical of the government.

Mao Yushi, awarded the Milton Friedman Prize in 2012, is one of those scholars. Mr. Yushi is an economist and one of China’s most outspoken activists. In response to the news that his books were being censored by Beijing, Yushi wrote, “A national government organ is daring to risk universal condemnation, in open opposition to the constitution. What is our government actually trying to do?” His internet post was then swiftly deleted by government censors.

Fortunately, Mao Yushi has overcome much worse repression. Under Mao Zedong, Yushi wrote in the Washington Post just weeks before the Hong Kong protests broke out, “I was labeled a ‘rightist’ and persecuted, along with thousands of others. We were removed from our posts and sent to the countryside for ‘re-education.’ I was reduced to the lowest human form, constantly stalked by the nightmare that I could never shake: hunger.”

Read Mao Yushi’s article in the latest issue of The Cato Journal and the corresponding Op-Ed in the Washington Post.

The Nobel Peace Prize and Child Labor

The award of the Nobel Peace Prize to the Indian activist Kailash Satyarthi is bound to attract public attention to the problem of child labor. In 1980, Satyarthi founded the Bachpan Bachao Andolan, or “Save the Childhood Movement,” focused on fighting child labor and human trafficking, as well as bonded labor.

Child labor is widespread in developing countries, concentrating often in the agricultural sector where working conditions are particularly dire. Because of the gravity of the problem, it is necessary to be extremely careful in devising solutions. As is often the case, the fix to child labor that most people would think of instinctively—namely, to ban it—could do more harm than good. As another Nobel laureate, Paul Krugman, wrote in a New York Times opinion piece in 2001,

In 1993, child workers in Bangladesh were found to be producing clothing for Wal-Mart, and Senator Tom Harkin proposed legislation banning imports from countries employing underage workers. The direct result was that Bangladeshi textile factories stopped employing children. But did the children go back to school? Did they return to happy homes? Not according to Oxfam, which found that the displaced child workers ended up in even worse jobs, or on the streets—and that a significant number were forced into prostitution.

There are no quick and easy answers to the problem of child labor, especially in poor countries where educational opportunities are limited and where bans on child labor simply displace children into less desirable, illegal, and more dangerous occupations. To end child labor, the currently underdeveloped countries must create economic opportunities that would reduce or eliminate the reliance of many, particularly poorer, families on income from the work of their children. In a recent Cato Economic Development Bulletin, the economist Benjamin Powell argues that

Promoting Democracy in Hong Kong: Combining Prudence with Idealism

Hong Kong is part of China.  But administered separately from the rest of the People’s Republic of China, the territory respects civil liberties while hosting the world’s freest economy. 

Demonstrators are pressing Beijing to make good on its promise of  democratic rule and free elections.  But the PRC will not, indeed, cannot, give residents of Hong Kong what it refuses to give the rest of its citizens.  The city’s future depends on finding a compromise that preserves Hong Kong’s freedom and peace.

The British colony grew out of imperial China’s weakness.  London seized Hong Kong Island, then the Kowloon Peninsula, and later “leased” the New Territories.  In 1997 the latter’s 99-year term ran out.  At which point Beijing was legally entitled to take back the New Territories.

Dividing Hong Kong would have been a practical nightmare.  And Beijing might not have continued to honor territorial cessions forced more than a century before.  So in 1984 London agreed to the full territory’s return.

One wonders:  What if Prime Minister Margaret Thatcher had scheduled a referendum in which the territory’s residents could freely express their decision?

At the time a still weak and isolated Beijing probably would have felt little choice but to accept an adverse vote.  However, the PRC might have chosen to bide its time, as it has done with Taiwan, and now would be demanding the territory’s return.

Returning Hong Kong meant transferring millions of people to communist China.  The PRC committed to respect Hong Kong’s uniqueness for a half century. 

However, Beijing never promised to hold fully free elections.  Rather, it stated:  “The chief executive will be appointed by the Central People’s Government on the basis of the results of elections or consultations to be held locally.” 

The Basic Law (essentially the territory’s constitution), approved six years later by Beijing, provided for “nomination by a broadly representative nominating committee in accordance with democratic procedures.”   The PRC claims that is what it is implementing. 

As of 2017 residents will be able to elect their ruler, but only from candidates vetted by Beijing.  It won’t be real democracy, but then, there never was much chance that the Chinese Communist Party would institute real democracy in any area under its control.

That’s not fair to Hong Kong’s residents.  So it’s impossible not to admire the protestors.  However, their very passion threatens their objective.  They have divided over tactics and sparked criticism from some other residents. 

The greatest risk is that the Chinese leadership might believe it must choose between repression and either chaos or democracy.  In 1989 the CCP sent in tanks to clear democracy-minded demonstrators out of Tiananmen Square.

Beijing would pay an even higher price for cracking down in Hong Kong.  Still, the Chinese regime places self-preservation above everything else.

Moreover, if China violently dispersed the protestors, it would not likely stop there.  Media freedom and judicial independence also would be at risk. 

This week tensions eased as demonstrators and government officials agreed to talks.  Democracy advocates should temper their idealism with an acute sense of pragmatism. 

Beijing might sacrifice the territory’s chief executive, Leung Chun-ying, and make other concessions, such as broadening the nomination process.  But the PRC will insist that Chinese officials, not Hong Kong residents, be in charge. 

Unfortunately, as I write in Forbes online, “Nothing the U.S. does can bring democracy to the territory.  To the contrary, the more Washington attempts to intervene, the more likely China is to perceive the demonstrators to be threats.” 

Democracy advocates have moral right on their side.  Still, raw power is likely to prevail in any showdown.  The protestors must temper idealism with prudence.  They must not allow the perfect to become the enemy of the good for their own sake—and ultimately that of Hong Kong and China as well.