UP Links 07 November 2012

In some countries, provisions such as roads, hospitals, security and sanitation are largely scarce… As a result, new actors have emerged to bridge the gap in service delivery. Civil society organizations, philanthropic donors and private entrepreneurs have become key players in the development space… Do citizens still consider their governments legitimate when they are not the primary service provider?

In the new edition of the World Bank’s Economic Premise, ”Can Donors and Non-State Actors Undermine Citizens’ Legitimating Beliefs,” Audrey Sacks evaluates the growing role of non-state actors in service provision, and whether it undermines the credibility of the state. Evidence suggests that an increase in service delivery, regardless of who provides it, strengthens the citizen-state relationship.

The national investment strategy in the face of climate change shouldn’t only be about protecting what’s already there by mitigating risk, it should be about adapting to the new realities we face and nudging individuals and firms to seek out safer alternatives.

What would I like to see? At the heart of the post-2015 agenda, a recognition that low income countries need industry first and foremost, and that this will require a radical rethinking of governance, trade and aid. Buying things other than corn and cotton from poor countries is part of the deal. In the midst of a rich-world depression, however, where jobs overseas are antithetical to re-election, poor countries are very much on their own where it matters most.

…when Cringely imagines a world in which 20% of programmers are kicked out of the country, he should also imagine a world where many firms and jobs go with them. Instead of benefitting from less competition, the remaining firms and workers will find themselves less well matched, and thus less productive. Cringely’s complaints about prevailing wages of the H1-B program or a lack of literal STEM worker shortages really misses the forest for the trees. The benefits of high-skilled immigration aren’t just about employers literal inability to find native workers at any price, but about specialization, gains from trade, and thick labor markets.

What the opponents of primacy for electronic money fail to realize is that making electronic money the economic yardstick is the key to eliminating inflation and finally having honest money.The European Central Bank, the Fed, and even the Bank of Japan increasingly talk about an inflation rate like 2% as their long-run target. Why have a 2% long-run target for inflation rather than zero—no inflation at all? Most things are better with inflation at zero than at 2%. The most important benefit of zero inflation is that anything but zero inflation is inherently confusing and deceptive for anyone but the handful of true masters at mentally correcting for inflation. Eliminating inflation is first and foremost a victory for understanding, and a victory for truth… [By] far the biggest reason major central banks set their long-run inflation targets at 2% is so that they have room to push interest rates at least 2% below the level of inflation. With electronic dollars or euros or yen as the units of account, there is no limit to how low short-term interest rates can go regardless of how low inflation is. So inflation at zero would be no barrier at all to effective monetary policy… The main benefit of making electronic currency the centerpiece of the price system would be that central banks would never again seem powerless in the face of a long slump. But even setting that gargantuan benefit aside, the benefits of true price stability alone would easily make up for any inconvenience from the abdication of paper currency in favor of the new rulers of the monetary realm: electronic dollars, euros and yen.

Customers like Dilnoza face a choice between potential criminality in the private agencies and open demands for kickbacks by police officers. “The police are thieves, we see this every day,” she says.

As an ethnic minority without connections in the force, she also feels police are less likely to respond to any request for help. “It is about what you can afford and who will protect your interests better,” she says.