The battle for the dream

I have a dream that one day this nation will rise up and live out the true meaning of its creed: "We hold these truths to be self-evident, that all men are created equal." I have a dream that one day on the red hills of Georgia, the sons of former slaves and the sons of former slave owners will be able to sit down together at the table of brotherhood.

I have a dream today!

I have a dream that one day, down in Alabama, with its vicious racists, with its governor having his lips dripping with the words of "interposition" and "nullification" -- one day right there in Alabama little black boys and black girls will be able to join hands with little white boys and white girls as sisters and brothers.

When we allow freedom ring, when we let it ring from every village and every hamlet, from every state and every city, we will be able to speed up that day when all of God's children, black men and white men, Jews and Gentiles, Protestants and Catholics, will be able to join hands and sing in the words of the old Negro spiritual:

Free at last! Free at last!

Thank God Almighty, we are free at last!

Dr. King spoke these words 47 years ago today.The practical implementation was clear: give blacks the vote, give blacks equal rights. The vision is clear: fight double standards, don't give freedom only to some while denying it to others, fight hatred.  How sad that people like Glenn Beck today, who promote hatred against unpopular groups, are trying to invoke some connection to these words.

In a much more subtle way, the aid industry has never come close to the moral clarity of this vision; it often practises double standards, with freedom for white men, but condescension and denial of voting rights and other rights for black men.  It covers this up with euphemisms and jargon, which I satirized on the Huffington Post yesterday with the Powerpoint aid jargon version of I have a Dream.

People don't realize that often the most skeptical and critical people have a soft spot for inspirational eloquence.  It certainly applies to me. I am getting goose bumps as I listen to "I have a dream" right now. ...let's speed up that day when all of God's children can be Free at Last.

Pete Boettke: economist extraordinaire

The WSJ has a well-deserved, laudatory profile of Peter Boettke of George Mason University. The Journal stresses mainly his role in the Hayek vs. Keynes debate. I have learned from him in the area of Hayek vs. central planning, the subject more relevant to my own interests in long-run development. He is also a generous colleague and friend. Congrats, Pete!

Transparency International clarifies the debate, deplores attacks on Till Bruckner

Editor's note: Transparency International Georgia submitted this contribution to the debate originally sparked by Till Bruckner's post The accidental NGO and USAID transparency test. We at TI Georgia have closely followed this debate about whether and to what extent USAID and its NGO contractors should make their budgets public. Till Bruckner began his quest for answers while he was working with us in 2008-09, although his pursuit of the NGO budgets via FOIA requests to USAID was not conducted under the auspices of TI Georgia.

Mercy Corps’ response to the debate begins by stating, “it is unfortunate that the discussion has devolved into insinuations about NGO motives rather than an open discussion of what constitutes meaningful accountability in aid work.” Yet nowhere in this debate has TI Georgia witnessed an attack against the motives of aid workers. Transparency can open up a discussion on the global aid system and how to better address problems that lack of openness can lead to in ANY organisation:  waste, inefficiencies, redundancies and, sometimes, fraud and corruption. As Scott Gilmore points out in his post, the impact is what matters.

The discussion on the blog has been engaging, open, honest and productive. But we do not agree with attacks against individuals who speak up against problems that they see. To call someone a “self-appointed watchdog” misses the point. Others would call Till a whistleblower – exactly the practice we should encourage and protect if we are serious about delivering on our development promises, protecting aid funds and transforming the aid system.

Mercy Corps proceeds to make an ad hominem attack against Bruckner by drawing attention to problems in an assignment he did on behalf of TI Georgia in 2009. Mercy Corps’ criticisms of the unpublished report are fair. That is why TI Georgia chose not to publish the report. But we fail to see how problems in drafting that report are relevant to the question of whether NGOs should publish their budgets or not.

Further, claims that raw budget data are not useful to measure NGO effectiveness are misguided. The question of aid effectiveness is tied up inherently with having access to ALL the information behind aid programs, allowing for comparison and analysis. While releasing project budget documents may not be a catch-all indicator for transparency of an NGO or donor, it is certainly a meaningful one.

Even if conditions are precarious, such as in humanitarian assistance work, there should be a clear NGO or donor policy on transparency, and organisations need to be open about which information cannot enter the public domain – and why. TI, in its handbook, recommends that financial information should only remain secret if its publication endangers staff or beneficiaries.

Mercy Corps argues:

NGOs have different cost structures and different methodologies, and budget documents reveal little about which are most effective.  Certain types of projects – such as technical assistance or gender-based violence prevention – tend by their nature to be heavy on labor costs and light on capital items, while food distribution or micro-lending tend to be lighter on labor costs and heavier on capital requirements.

There are two separate arguments above. The second is about differences between types of assistance projects. No one advocating for aid transparency has implied that one kind of cost structure is inappropriate. Let us see the numbers, assess them and discuss our concerns with you.

The first is an argument we hear from NGOs over and over again: that publishing their budgets will erode their competitiveness. This argument has not gotten the attention it deserves in this exchange. The most sensitive information in those budgets, even before salaries, is the Negotiated Indirect Cost Rate Agreements (NICRAs) that every NGO competing for USAID funds has, as Counterpart’s post highlights. NICRAs arrive in sealed envelopes and are carefully guarded secrets within the industry, differing widely in structure from one organization to another. Perhaps someone can explain why USAID contracting uses this system – presumably if all NICRAs were the same (or if they were all public), NGOs would be slightly more willing to disclose their budgets

In its current state, USAID’s system rewards secrecy and discourages public accountability. We applaud Bruckner for his efforts to raise these serious questions and we look forward to the viewpoints of more NGOs, USAID, and others on the topic.

Related posts:

The accidental NGO and USAID transparency test Till Bruckner Responds to Critics on Meaningful Transparency NGO Response: CNFA Reaffirms Commitment to Transparency World Vision responds on transparency USAID and NGO transparency: When in doubt, hide the data Response from Mercy Corps on Transparency NGO Transparency: Counterpart International to release budget

I have a dream: the Powerpoint aid jargon version

Recycled this on Huffington Post for tomorrow's 47th anniversary of MLK's greatest speech of all time.

This just in: there was a flood in Pakistan

We have chronicled here on Aid Watch how media coverage of disasters influences disasters, and how late the US media has been to the story of the disastrous flood in Pakistan, with apparently anemic donor response as a result. Puzzlement deepened this morning at 7:30 am when I picked up my NYT off my doorstep and saw the four column front-page headline: Much of Pakistan's Progress is Lost in Its Floodwaters.  The NYT devotes not only the huge front-page space to the flood, but also two prime pages inside of the first section. Could somebody please explain the mysterious alchemy by which a tragedy going on for a month already finally become a huge story?

In praise of the NYT, the story is great, and also has great pictures and maps like this one shown here. So please go back and read Laura's many posts on Pakistan flooding.

NGO Transparency: Counterpart International to release budget

Editor’s note: Aid Watch received the following statement from Counterpart International in response to a request for comment on Till Bruckner’s post The accidental NGO and USAID transparency test. We have checked our records regarding Mr. Bruckner's FOIA request to USAID for information about our Georgia program budget. Our server logs indicate that USAID's attempt in June to contact us about this FOIA request was unsuccessful because the message was sent to two former Counterpart employees, whose e-mail addresses were no longer active.  As a result, the Counterpart document that Mr. Bruckner received was redacted by USAID without Counterpart's input or knowledge.

With respect to Mr. Bruckner's specific FOIA request, we asked for and have now received from USAID a copy of its letter asking for our comments and recommended redactions. We have now responded, asking that only our NICRA rate - which is proprietary and competitive information - be redacted.  USAID has informed us that they will provide Mr. Bruckner with a revised copy of the budget reflecting this change.

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Related posts:

The accidental NGO and USAID transparency test Till Bruckner Responds to Critics on Meaningful Transparency NGO Response: CNFA Reaffirms Commitment to Transparency World Vision responds on transparency USAID and NGO transparency: When in doubt, hide the data Response from Mercy Corps on Transparency

Laura in NYT debate on Can Aid Buy Taliban's Love?

NYT DEBATE: Can Flood Aid Weaken the Taliban in Pakistan?

Or is it more likely that extremist groups will capitalize on the chaos created by the disaster?

Laura Freschi's answer: aid doesn't help with the Taliban, but give anyway.

The idea that flood aid will change Pakistani perceptions about the U.S. in a lasting and meaningful way is both unproven and based on simplistic, even condescending assumptions about the beneficiaries of America’s aid.

....

There may well be cases in which U.S. disaster aid could be used to promote security objectives, but we don’t know enough to say that it will now in Pakistan. And if ever there was a time for U.S. aid to demonstrate that it is not always and everywhere only about U.S. strategic interests, this would be a good time. As the floods continue to endanger lives and livelihoods in Pakistan, the U.S. should give quickly, fairly and generously. Not because we want something in exchange, but because it’s the right thing to do.

From Russia With Color, 1909

This amazing collection of color photographs taken in Russia in 1909-1912 is really unmissable (H/T Mari Kuraishi). The picture is of an autocrat in Uzbekistan. Since then, there has been much progress, in the form of cheap polyester suits for today's autocrats in Uzbekistan.

Our internal foreign aid program

The US Recovery Act (aka “stimulus package”) has put out this great map of where the money is being spent by Congressional District.

As I looked at where the money is being spent in the part of the country pictured (the part I know best), there did not seem to be a lot of rhyme or reason between Congressional Districts as far as population or need. Is it random? Could it be (shock!!!) that where the money is spent depends on the party, power, and skill of the Congressperson from that district?

The other interesting thing about the graph is the summation of total spending $218.737 billion and the creation of 749,142 jobs. Did it occur to them that somebody might divide the first number by the second and come up with the number per job (slightly less than $300K). Did anything think of just paying workers $300K directly, and letting them stay home and read poetry?

Of course, I am outside my area of expertise here. Perhaps the main point that I can make is that it is really GREAT that the US government was so transparent as to put these maps up (and many more – go to the web site!), so that citizens (hopefully including more intelligent commentators than me) can give feedback. When will foreign aid spending have maps like this? I hear rumors the day may be coming…

David Rieff takes on Hillary’s “new approach” to global health

In a blog post for The New Republic, author David Rieff calls Hillary Clinton’s approach to development naïve, contradictory, and muddled. His post is a response to Clinton’s speech, delivered last week at SAIS, about the administration’s six-year, $63 billion Global Health Initiative. Rieff’s critique rests on three main arguments, all of which will be familiar to Aid Watch readers.

1) Insisting that development is going to be “elevated” to the level of diplomacy and defense won’t make it so. Better to follow the money and see where the real priorities lie:

The secretary was already on record as claiming that the initiative would be a “crucial component of American foreign policy and a signature element of smart power.” On its face, this seems highly unlikely. Anyone doubting this should ponder the fact that one military program, the F-35 Joint Strike Fighter—a weapons platform that no one claims is needed for the counter-insurgency operations that are currently at the core of the U.S. military’s requirements—is on course to cost $325 billion, and may well go higher....In other words, Washington is going to spend on a ‘signature element’ of its smart power less than one-fifth of what it is already committed to spending on something that even the Pentagon does not claim is a signature element of our hard power. No, money may not be everything, but 'follow the money' remains the best advice for understanding what the priorities of the American government really are, as she has claimed before.

2) The bureaucratic structure of the initiative verges on the absurd, fails to make any one agency responsible for success or accountable for failure, and seems almost designed for a meltdown:

[I]n either designing or at least signing off on a program which grants authority for day to day running of the program to three separate agencies (USAID, the Centers for Disease Control, and PEPFAR, the Bush-era President’s Emergency Plan for Aids Relief), each with their own institutional interests, while calling on the resources and expertise of the National Institutes of Health, the Peace Corps, not to mention the departments of Defense and of Health and Human Services (“among others,” as Secretary Clinton said, without irony, in her speech), all reporting to Deputy Secretary Lew, the administration has laid the groundwork for a bureaucratic calamity.

[We would add to this only that Jack Lew, the designated leader of this crew, is leaving his post, no word yet on his replacement, which could take months.]

3) Politicians who assert, as Clinton does here, that health aid can be used as a public diplomacy tool to win the hearts and minds of America’s reluctant allies are basing this view on too little evidence and simplistic assumptions about how aid recipients come to their perceptions of the US:

A far graver mystification is Secretary Clinton’s claim that investments in global health are an important tool of public diplomacy....

…[I]f the secretary really is suggesting that that recipients of foreign aid in very poor countries are so childlike that they view these contributions as dispositive about the nature of America’s values and intentions, then however unintentionally, she is speaking of these adults as if they were children.

But perhaps this hyper-conceited, hyper-complacent conviction of America’s good intention is so internalized in U.S. policymakers—even in one as intelligent as Secretary Clinton—that they are incapable of thinking clearly about how U.S. foreign aid, whether for emergency relief, health, or long-term development, is received by its beneficiaries.

Rieff’s whole, incendiary piece is worth reading in full.

Response from Mercy Corps on Transparency

Editor's note: Aid Watch received the following from Mercy Corps in response to a request for comment on Till Bruckner's post The accidental NGO and USAID transparency test. We have reproduced the Mercy Corps response here in full: Till Bruckner’s posts on NGO accountability raise interesting questions – and it is unfortunate that the discussion has devolved into insinuations about NGO motives rather than an open discussion of what constitutes meaningful accountability in aid work.  While Mercy Corps appreciates being referred to as among the “most transparent NGOs,” we would argue that the willingness to release project budget documents to a third party is not a good indicator of an NGO’s overall level of accountability to its beneficiaries and stakeholders.  By applying such a narrow focus, Bruckner unfortunately turns what could be a rich and textured discussion of aid methodology into a less germane question of responsiveness to a self-appointed watchdog.

The rest of the story on Georgia First off, a bit more background on the Transparency International research project that Bruckner referenced in the original post.  In May 2009, Bruckner contacted Mercy Corps through our main website, informing us in vague terms that a report on NGO transparency would be forthcoming.  He requested a contact email where he could send the report for our review.  Our Georgia Country Director sent Bruckner an email three days later requesting that any inquiries be directed to him; Bruckner never followed up.  We heard nothing more until the following month, when we and the other agencies received an email from a different TI official, informing us that their project had developed a ranking of NGO transparency “based on the content provided on their websites”.  TI noted that it would “be extremely happy to improve the score of your organization and re-write the relevant sections of the report if you email us the complete proposals with budgets for all your ongoing projects as public documents (we will hide individual salary information before re-posting on our website).”  However, the agencies were given just three working days to review the report and turn any information over to TI-Georgia.

Mercy Corps and the other agencies contacted had serious concerns about TI’s approach.  We felt that the web-centric methodology of the study was flawed; that the format of the resulting report misrepresented how TI had engaged with our agencies (in fact, TI had not engaged us at all at that point); and felt, as agencies in the midst of a major ongoing post-conflict aid effort, that a three-day turnaround on the demand for proposal and budget data was inadequate.  The NGOs sent a letter of reply to TI expressing these concerns, and suggesting that TI take this opportunity to engage with us in a dialog on how to move forward with aid transparency in Georgia.  TI-Georgia eventually did come to meet with the NGOs and listen to our concerns.  As a result of that meeting TI agreed to redo the survey at a later date; however there was no further contact from TI after that meeting.  Bruckner’s posts make no reference to the NGOs’ substantive concerns, nor to the subsequent dialog with TI over these issues.  Here are the original emails, as well as the NGOs’ letter of response to TI, so that readers can draw their own conclusions about whether the issue has been presented fairly.

That process aside, there are important questions at stake here of how, and to whom, aid agencies should be accountable:

Does budget-sharing constitute accountability? Raw budget data, and the willingness to share it, is a poor proxy for real, comprehensive aid accountability – especially when divorced from the context of the project itself.  NGOs have different cost structures and different methodologies, and budget documents reveal little about which are most effective.  Certain types of projects – such as technical assistance or gender-based violence prevention – tend by their nature to be heavy on labor costs and light on capital items, while food distribution or micro-lending tend to be lighter on labor costs and heavier on capital requirements.  Posting the raw budgets of a handful of agencies reveals little about whether those agencies are effective, whether they are accountable to their beneficiaries, or whether their cost structures are reasonable. Furthermore, there can be legitimate reasons for withholding budget data.  To take one example, even Transparency International’s own handbook on Preventing Corruption in Humanitarian Operations acknowledges that “the highly volatile environments in which aid is often delivered means it’s important to recognise that public information about the value of programme resources and their transport may sometimes jeopardise staff and beneficiary security, particularly in conflict contexts.”

How does accountability make aid more effective? The ultimate purpose of accountability and transparency is to provide more effective aid.  As the SPHERE manual’s guidance note on Communication and Transparency states: “the sharing of information and knowledge among all those involved is fundamental to achieving a better understanding of the problem and to providing coordinated assistance.”  This is best achieved when the beneficiary population is involved in the design, implementation, and monitoring of that activity.  This integration of stakeholders into core parts of the project management process ensures that divergence between community needs and NGO deliverables is kept to a minimum.

What constitutes accountability to our constituents? NGO accountability focuses on our beneficiaries, our donors, and the governments of the countries where we work.  We orient our accountability systems to provide appropriate information, in appropriate formats, to these constituencies.  To prevent fraud and ensure good financial stewardship we institute rigorous financial and administrative policies (for an example, check out Mercy Corps’ Office-in-a-Box) and subject ourselves to extensive compliance requirements and a barrage of external audits.  Given the extensive burden that these requirements impose on already-stretched staff, it is often true that NGOs are less responsive to the demands of third-party watchdogs.  At a program level, NGO accountability means providing community stakeholders with means of evaluating a project’s goals, the appropriateness of its implementation strategy, and ultimately its effectiveness in meeting those goals.  Publicizing budget data may be a part of the approach depending on the context – but it is not a substitute for a project methodology that puts a core focus on community priorities and community participation.

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Related posts:

The accidental NGO and USAID transparency test Till Bruckner Responds to Critics on Meaningful Transparency NGO Response: CNFA Reaffirms Commitment to Transparency World Vision responds on transparency USAID and NGO transparency: When in doubt, hide the data

USAID and NGO transparency: When in doubt, hide the data

by Till Bruckner, PhD candidate at the University of Bristol and former Transparency International Georgia aid monitoring coordinator In my last blog post on this website, I claimed that some NGOs had instructed USAID to hide part or all of their project budgets in a FOIA response, and praised others for their openness. Aid Watch subsequently contacted all NGOs mentioned in the piece for comments.

In its response, World Vision denied ever having asked USAID to withhold budgetary information:

World Vision has checked thoroughly with all of its relevant offices and found no record of having received notification of this FOIA request by USAID or any evidence that WV asked USAID to redact information in the documents requested of USAID by Bruckner. After contacting USAID officials, we learned that the redaction was made independently by the USAID FOIA office, not at the request of WV.

Referring to a letter from the donor agency, World Vision correctly pointed out that in the letter, “USAID did not state or imply that World Vision asked that this information be withheld.”

Why had I pointed the finger at World Vision, rather than at USAID? Half a year after filing my FOIA, I had received an email from USAID stating that:

From the nature of your request, we anticipate the need to send a “submitter notification” to the companies awarded the contracts.  We notify them that we received a FOIA request for their proposals. We will afford them an opportunity to provide their arguments concerning the release or withholding of the proposal.  We will contact you when we send out the notifications.

USAID never did contact me again on this matter. When it finally provided the budgets a further eight months down the line, the type and amount of information withheld varied dramatically from one budget to the next, suggesting that the response was not the result of a process centrally managed by USAID in isolation.

Asked to clarify these apparent inconsistencies, USAID confirmed in an email that:

Yes, we did receive differing responses from the submitters. As these were grants, we had to obtain the submitters’ recommendations. Section 1 of Executive Order 12600 requires that we give submitters of confidential commercial information the opportunity to address how the disclosure of their information could reasonably be expected to cause substantial competitive harm.

This is astounding. USAID claims that it contacted its grantees, and now one of the NGOs insists that it was never contacted by its donor. Did USAID fail to contact some or all of its contractors, possibly breaching the law in the process? Did USAID go ahead and black out World Vision’s budgets on its own initiative?

Of the eight NGOs contacted by Aid Watch, only World Vision and CNFA have responded so far. CNFA’s response confirms that it regards its detailed project budgets as confidential proprietary information whose release might cause it competitive harm. However, CNFA declined to comment on a follow-up question which asked specifically whether it had been contacted by USAID, leaving open the possibility that USAID may have acted in line with its grantee’s interests without consulting CNFA in the process.

Did UMCOR, Mercy Corps and AIHA really agree to release their full project budgets in the Republic of Georgia, as I had assumed, or did USAID just throw open their books without consulting them? Did Save the Children and CARE truly instruct USAID to withhold select pieces of budgetary information? Did I mistakenly malign Counterpart International for opacity when the real culprit was USAID? Who received submitter notifications, and who did not?

Yesterday, Aid Watch asked USAID to confirm that they had indeed contacted each NGO. They replied the same day with this statement:

As a matter of standard operating procedure, USAID notified in writing all the organizations whose budgets were sought under the FOIA request. When we did not receive a response from some of the organizations, the FOIA office followed the regular process regarding redactions. USAID redacts trade, commercial, financial, and personally identifying information in order to protect USAID's and external organizations' business and personal data.

For more information, please see http://www.usaid.gov/about/foia/foireg.htm

So the default position is non-disclosure: USAID is legally bound to contact each NGO, but if USAID’s message gets lost, or if the NGO decides not to respond for any reason, then USAID redacts their data for them. Incentives are thus set up for aid agencies NOT to respond, and for USAID NOT to disclose.

I have begun to doubt that we will hear back from any of the other NGOs that Aid Watch has emailed. What incentives are there for NGOs to take part in an open dialogue, when their own funder sets such low standards for transparency and accountability?

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Related posts:

The accidental NGO and USAID transparency test Till Bruckner Responds to Critics on Meaningful Transparency NGO Response: CNFA Reaffirms Commitment to Transparency World Vision responds on transparency

Superstition and Development

By Peter T. Leeson, BB&T Professor for the Study of Capitalism at George Mason University. Gypsies believe that the lower half of the human body is invisibly polluted, that supernatural defilement is supernaturally contagious, and that non-Gypsies are spiritually toxic.

Far from irrational, these superstitions are central to Gypsies’ system of social order. Gypsies can’t rely on government-created legal institutions to support cooperation between them. Many of their economic and social relationships are unrecognized or illegal according to state law. Yet Gypsies’ need for law and order is as strong as anyone else’s.

To provide such order, Gypsies leverage superstition.[1] Consider Gypsies’ belief that non-Gypsies are spiritually toxic and that supernatural toxicity is contagious. Unable to use government to prevent cheating, Gypsies must use the threat of ostracism to prevent socially destructive behavior.

The problem is that Gypsy societies are tiny islands in a sea of non-Gypsies. Ostracism isn't much of a punishment if ostracized Gypsy cheaters can integrate and interact with the larger outside society. To give the threat of ostracism “teeth,” Gypsies cultivated a strong belief that outsiders are supernaturally polluting, that their pollution is contagious, and thus that interacting with outsiders would supernaturally contaminate them too.

Under this belief, the threat of ostracism is serious indeed: cheating cuts one off from all social contacts. This deters Gypsies from socially destructive behavior. Perhaps unexpectedly, Gypsies’ superstition promotes law and order.

We often look down on the superstition of “others,” such as Gypsies. But Europeans also have a rich history of superstitions, some of which may also have been socially productive. When medieval judges were unsure about a criminal defendant’s guilt or innocence, they ordered him to undergo an ordeal.[2] In the hot water ordeal, for instance, the defendant was asked to plunge his hand into a cauldron of boiling water. If the defendant’s arm showed signs of severe burning or infection three days later, the court convicted him. If his arm showed no such signs, the court exonerated him. These ordeals were based on a superstition according to which God performed a miracle for innocents, permitting them to escape trial by fire unscathed.

As in Gypsies’ case, what appears to be an irrational belief on the surface, on closer inspection, is socially productive. Confronted with the specter of boiling their arms at ordeals, guilty defendants would always decline them. They believed in the superstition according to which God exonerated the innocent and convicted the guilty through ordeals. So they expected to be burned and then convicted if they went through with them. Better to fess up or to settle with their accusers instead.

In contrast, innocent defendants would always want to undergo the ordeal. They also believed in the superstition that underlaid ordeals. So they expected God to prevent their arms from boiling, and thus to exonerate them, if they went through with them. Innocent defendants had nothing to fear from undergoing the ordeal. So they were willing to undergo them.

Since only guilty defendants would decline an ordeal and only innocent ones would undergo one, judges learned whether defendants were guilty or innocent by observing how they reacted to the specter of the ordeal. Medieval citizens’ superstitious belief facilitated criminal justice and, with it, law and order.

This isn’t to say that all superstitions promote law and order. They don’t. But we shouldn’t dismiss the possibility that some bizarre, scientifically unfounded beliefs may actually improve social cooperation by substituting for institutions of government where those institutions don't exist or work well. Which superstitions in developing countries are in this category?

[1] For a comprehensive economic analysis of Gypsy superstition see, Leeson, Peter T. 2010. “Gypsies.” Mimeo.

[2] For a comprehensive economic analysis of medieval judicial ordeals see, Leeson, Peter T. 2010. “Ordeals.” Mimeo.

Aid Watch addresses an unexpected embarrassing problem

We’ve noticed a strange phenomenon on Aid Watch: our April 10, 2010 post Famine Africa stereotype porn shows no letup has also shown the least letup of any of our posts, showing up with traffic day after day. It is now the fourth most popular post of all time on Aid Watch. I was rather slow to figure out what was going on, which just shows what being raised as a Methodist in squeaky-clean rural Ohio can do to you. The rest of you have already figured this out. “Africa porn” (and variations) is a very popular search term on Google, for reasons apparently not related to the finer points of dignity and empowerment of malnourished people. Those searching this term frequently get our post, as our crack research team verified (we were the fourth site listed on said search, sites 1 through 3 reportedly cannot be described in a family blog). Our stat team found 721 searches like this over the past month that wound up at our site.

I am really not sure what point to make based on all this. Choose any of the following:

1. We have a big opportunity here to educate perverts about economic development.
2. Africa has more potential than previously realized in the adult entertainment industry.
3. Metaphor attempt: “just like entrepreneurs trying innovations, we never know whether or why a blog post is going to succeed.”

The Ground Zero mosque and cognitive biases

Among the many other things involved in this controversy, stereotypes of Muslims are not exactly helping. As this blog is (excessively)  fond of arguing, ethnic stereotypes are partly fueled by an obscure cognitive bias known as Reversing Conditional Probabilities. As a long ago Aid Watch post argued (sorry for indulging in self-quotation, but hey it's August, time for reruns):

{People perceive} from media coverage that the probability that IF you are a terrorist, THEN you are a Muslim is high. Unfortunately...{we are confusing} this with the relevant probability, which is the chance that IF you are a Muslim, THEN you are a terrorist (which is extremely low even if the first probability really is high, because terrorists are very rare).

This blog is so obsessed with Reversing Conditional Probabilities (RCP) that we have also linked it to exaggerating the effect of Affirmative Action on women's careers and why Dani Rodrik likes industrial policy.

Of course, there could be the same cognitive bias about Christians from the Muslim side (which will no doubt be exacerbated by the Ground Zero mosque controversy). The probability that IF you are an anti-Muslim bigot, THEN you are Christian could be reasonably high. But since explicit bigotry is still pretty rare, the correct probability -- IF Christian, THEN anti-Muslim bigot -- is far lower.

Most of our readers don't seem to share our enthusiasm for RCP, the most boring, wonkiest topic of all time. But the obstinate educator never gives up hope that teaching probability theory could promote world peace.

World Vision responds on transparency

Editor's note: we are posting the following note received in its entirety from World Vision. World Vision Statement

In response to the Aid Watch post: The Accidental NGO and USAID Transparency Test

World Vision has investigated allegations posted on August 18, 2010 by Till Bruckner, a guest blogger.  The blog post charges WV and other NGOs with lack of transparency in responding to Bruckner’s request to the U.S. Agency For International Development (USAID) under the Freedom of Information Act (FOIA) for program budgets for the Republic of Georgia.  Mr. Bruckner alleged that World Vision “apparently requested that USAID black out all information in their budget except for the grand total.”

World Vision has checked thoroughly with all of its relevant offices and found no record of having received notification of this FOIA request by USAID or any evidence that WV asked USAID to redact information in the documents requested of USAID by Bruckner.  After contacting USAID officials, we learned that the redaction was made independently by the USAID FOIA office, not at the request of WV.

The reasons for the redactions done by USAID were detailed to Bruckner in a letter from USAID dated July 14, 2010.  World Vision has obtained a copy of this letter and has verified that USAID did not state or imply that World Vision asked that this information be withheld.

We regret that Mr. Bruckner did not get all the information he was seeking.  It is also regrettable that he chose to suggest in his blog that WV had withheld that information when he had no evidence to support that accusation.

As a member of InterAction (one of the largest associations of nongovernmental organizations), World Vision is “committed to full, honest and accurate disclosure of relevant information concerning its goals, programs, finances and governance.”

Media now cares about Pakistan; aid workers’ surprising lack of confidence in Afghan army protection; North Korean jeans

Now abundant coverage of Pakistan flood, is it making up for previous non-story? Sorry, Karzai, Aid workers do want to keep their own guards in Afghanistan, as compared to corrupt and incompetent offical Afghan forces.

I always argue that comparative advantage is surprising, but even so was caught off guard by newly fashionable North Korean jeans.

NGO Response: CNFA Reaffirms Commitment to Transparency

Editor's note: We emailed every organization mentioned in Till Bruckner's recent blog post, The accidental NGO and USAID Transparency Test to ask for their comment. CNFA sent us a response (also posted on their website) this afternoon, which we are reproducing here in full: Transparency and accountability are core values of CNFA. Our programs are designed to be cost-effective – producing maximum output for the least cost. CNFA is fully accountable to our clients, compliant with our donors' policies and procedures, and responsible to our beneficiaries. Our program management practices are broadly inclusive and transparent, involving all relevant stakeholders, donors, partners and policymakers. This is all a matter of "practicing what we preach." CNFA's most important goal, implemented through our programs, is to encourage local partner institutions to adopt transparent business practices, for the purpose of promoting private investment and commercial finance.

Recently it has been suggested that CNFA's choice not to release financial proposal data falls short of this commitment to transparency. In reality, the competitive process used by USAID and most other donors to award contracts is designed to foster innovation, lower costs, improve efficiency, and generate better long-term results. CNFA firmly believes that our unique approach to economic development has been demonstrated to improve rural incomes by promoting entrepreneurship as well as empowering the private sector to lead to economic growth and expanding commercial agriculture and agribusiness. So, given the highly competitive environment for donor-funded grants and contracts, CNFA is naturally reluctant to provide its proprietary information, including its cost approach, publicly to everyone, including its competitors. This does not mean that CNFA hides this information from its donors or does not comply with all reporting requirements imposed by them.

The program in question, the Georgia Agricultural Risk Reduction Program (GARRP), was part of the US Government's $1 billion pledge to aid Georgia's recovery following the 2008 war with Russia. Of the $19.5 million total program cost, $16.5 million, or 85%, went directly into the hands of Georgian farmers and businesses for the purchase of agricultural inputs and services. In turn, GARRP helped nearly 40,000 conflict-affected families stay on their farms and produce crops worth over $70 million at harvest, speeding the recovery of their livelihoods and their return to economic independence.

CNFA has always been and remains committed to delivering the best value to the U.S. taxpayer, to all its donors and to the beneficiaries of the programs we implement around the world. We believe that our results, our success in competitive donor awards and our publicly available financial records speak for themselves.

Did Gates and Buffett do more good as businessmen than as philanthropists?

Provocative case for "yes" in today's Wall Street Journal (gated link), by Kimberley Dennis,  President of Searle Freedom Trust:

Wealthy businessmen often feel obligated to 'give back.' Who says they've taken anything?

Full disclosure: DRI benefits from post-docs indirectly funded by the Searle Foundation.

Till Bruckner Responds to Critics on Meaningful Transparency

The following post was written by Till Bruckner, PhD candidate at the University of Bristol and former Transparency International Georgia aid monitoring coordinator. In response to my recent post here, Scott Gilmore of Peace Dividend Trust argues that asking NGOs to share their budgets is misguided. He correctly points out that we should be concerned more with project outcomes than with financial details. However, while aid beneficiaries can and do judge NGO projects by their impact on the ground, Western taxpayers and private donors are unable to do so from afar. Transparency has many dimensions, including financial transparency. As a taxpayer, I have the right to ask what my money is being spent on as well as the right to ask what those expenditures actually achieved. Plus, if I cannot even find out what the total cost of a project was, how can I judge whether it was worth my money?

Scott Gilmore also states that access to budgets will not help to curb corruption, and recommends a focus on audits instead. While it is true that I cannot look at a budget and see whether the money was misappropriated in a legal sense, it does enable me to see what the money was allocated for in the first place. My original aim in requesting these budgets was not to muckrake, but to analyze what percentage of NGO project funds in Georgia flows back into donor countries in some form or another. I need to be able to distinguish between expenditures for local versus international salaries in order to find this out.

The aid industry has created a system that conveniently defines corruption so that expats can live a good life within the rules, whereas locals on far smaller salaries and with larger family commitments frequently get branded as corrupt for breaking these rules. In my experience, Afghan villagers do not share this narrow legalistic definition of corruption. When a project fails to deliver benefits to the poor, and the expat project manager at the same time lives a life of (locally) unimaginable luxury on designated poverty alleviation funds, villagers logically conclude that the project is failing due to corruption: instead of helping them as originally promised, the NGO is only helping itself. NGOs' arrogant attitude - "we're accountable by our own standards so we don't need to tell you where the money goes" - does little to change this perception.

Finally, Scott Gilmore raises the question of competition within the aid industry. I suspect many private donors would be dismayed to learn that some charities seem to orient their practices around the competition for government contracts. In any case, competition for a project ends when a funding decision has been made and taxpayers' money gets disbursed. Putting all successful proposals into the public realm as a matter of course will not only improve inter-agency learning, but will also discourage backroom dealing on contracts. This will create a more level playing field for all aid implementers, whether they are commercial contractors or NGOs. If Oxfam, UMCOR, Mercy Corps and AIHA can share their budgets, it is hard to see why other aid agencies cannot do the same.

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Original post and responses: Till Bruckner: The accidental NGO and USAID transparency test Scott Gilmore: Transparent, Yes. But Transparent What? Transparency Extremist: Transparency in the Aid process Scott Gilmore: Useful Transparency vs. Meaningless Paper Chasing