Economics, Literature and Scepticism

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I am a PhD student in Economics. I am originally from South Africa and plan to return there after my PhD. I completed my M. Comm in Economics and my MA In Creative Writing (Poetry) at the University of Cape Town, where I worked as a lecturer before starting my PhD.

Tuesday, February 27, 2007

Io Scrivo

Posted by Simon Halliday | Tuesday, February 27, 2007 | Category: | 1 comments


Driving the N1 is a baptism by fumes:

Total immersion in the smoky viscera

of internal combustion, their invasion

of your nostrils turns your snot black

and gritty as last week’s left-over ash.

It was midday on a Friday in December,

and the traffic was thick as turning yoghurt

left out on a summer’s afternoon.

My fingers gripped the steering wheel so tightly

the bruised leather of its contours

stuck to the skin, adhered to my

knuckle wrinkles like old, viscid malt.

* * *

Rub your thumb against your index finger

when your palms are slightly sweaty.

You should get the kind of squeaky,


“No, I don’t want soup”


that inhabited my car

(small, white, no aircon,

the tyres going bald)

Yes, you’ve got it

– that kind of hot.

* * *

I was driving the N1

out of Cape Town.

It was holiday time.

dogs of war (revision)

the dogs

(of this war)

are weakened

they’re without food

they’ve devolved to water ripple ribs

to necks so thin they look

like they’ve grown fins

I see them skulk

Langa's streets,

the other orphans of this

filial affair

sanguine and loyal

they’re left behind

without caregivers

sans family

amidst the real orphans,

the opal eyed glue-sniffers

the cup-your-hands-to-catch-

water-from-a-tap beggar boys

bent on catching something,

even if it is aids and

“they’re far too young for any of this”

and “I agree” and “it happens”

and it just doesn’t make

sense that we can’t do anything

about the fact that dogs are the

survivors of families dead by aids.

There are dogs dead

and dogs dying in the street.

That’s just the dogs.

People are doing the same thing.

And white people I know seem to cry more

about dead dogs (flies buzzing)

than lots and lots of dead,

poor, unemployed, black, people.

‘same difference’

some of them say.

the salt of lost oceans

in a kiss

I taste the salt

of lost


on your lips

one Day crafts another

Sunrise starts

its claim of Dawn

a steady consonance

the coalescence

of rays of the sun

their ocean reflections

their shimmers in rivers

their clasp on glass

form sunlight’s shackles

on Daytime

yet the lock’s decay is steady

the Aurora of night

slip the chains,

and Day is released to Darkness

Nighttime stakes its claim

unreflective, unshimmering,

but clasping and bright

as a changing Moon

that relights the night

then relinquishes its hold

as Sunrise starts

its claim of Dawn

a steady consonance

the coalescence

of rays of the sun.

just so

as we lie in the half-night

your teeth and tongue

make playful chiaroscuro

of its darkness and light

your lips cross-hatch

your mouth, your teeth are the

paper-thin white that sits

beneath every charcoal sketch

none of them have had your face

tight against this black and white

blanket, your back up and down

with night-breath, and the slight

curve of your shoulders as you clutch

the pillow to your breasts: pale,

caught by moonbeams that cleave

the curtains and tie you with the such

enormous strength of the night-time,

silk slivers of ropey darkness,

that bind to a sketch of you in bed

in the half-light, the sublime

just so you are caught in the artistry of dreams

The height of care

was the sagging skin

of my grandmother’s elbow

dipped carefully

into hot bath water

She would dip and stir

dip and stir

as she patiently awaited

the perfect temperature

she would gently sing

‘til the folded-in skin

of her elbow said:

this is right, bathe him now.

She would lift my

brother by the hefts of

baby-skin beneath the armpit

and slowly settle him down

into the water: his vetkoek feet

then his lumpy legs and

plump tummy ‘til he sat in

the bathwater solid on his bum

she soaped him with method

to end she would pour the elbow tested

water over his head,

he’d chortle. She’d laugh.

The importance of ice-cream lids

Over the back-seat

front-seat separation

a father hands his son

the lid of an ice cream tub.

The boy, held back by the

black seatbelt, strains to claim

the lid from his dad’s hands.

Finally, he nabs it,

grasps the booty and takes a moment

before slowly licking the

circumference of the lid

The circle of chocolate

diminishes in the face of

his concentrated ministrations.

And afterwards, left with a half-moon of

melted chocolate ice-cream,

face and fingers all dirty brown

and a once-white T-shirt

He smiles. His father in front,

who should be angry at the mess,

instead laughs, and laughs, and laughs.

And I

And I’m sitting inside this

Big house in Bishopscourt

And I’m hungry and my food

Hasn’t arrived

And the doorbell rings

And I think at friggin last

And I go out to the gate

And there’s this delivery guy

And I was going to tip him

Just under 10%

And his wife and his little baby

Are inside the cold car

And it’s raining, and it’s wet

And I have my food

And his wife and his child

Are in the idling car

And I give him over 20%

And I leave feeling slightly…

And I have so much

And he’s a delivery guy

And it’s a Friday night and his wife

And little boy are in the car

And my meal gets cold

And I eat it like that

And it still tastes ok.

Tuesday, February 06, 2007

Poverty, Education and Relocation

Posted by Simon Halliday | Tuesday, February 06, 2007 | Category: | 2 comments

Of late, I have become more and more aware of how many people are misguided about how poverty works. I don’t mean this in the arbitrary sense of choosing poverty lines and such (re: relative vs. absolute poverty measures), but rather a nuanced understanding of what poverty is, what it does, and how we can respond to it. Much of what I write here will come from the recent book Poverty Traps edited by Bowles, Durlauf and Hoff (2006). It is all based on freely available academic theory on poverty.

Ok – so poverty traps, i.e. factors which influence the perpetuation and robustness of poverty-centred equilibria, are induced or determined by three major factors:

1) thresholds

2) institutions

3) memberships theory

Each of these constitute individual reasons why poverty traps may exist and in combination they constitute a dramatic challenge to any policy maker wishing to engage with and challenge poverty.

Before we go any further, what is poverty and what is a poverty trap? Poverty can be thought about in many ways – it can be thought of purely in income terms (i.e. the amount of money to which an individual in a household has access), or it can be thought of in capabilities (a la Sen) the result of which is that poverty can be viewed as the inability to act in a certain manner, such as obtaining food, attaining an education, provide material goods for one’s family and so forth. Poverty traps therefore are factors that reinforce these situations, factors that sustain situations in which individuals begin poor and remain poor in perpetuity.

Onto thresholds. The basic idea here is that in order for an individual, a group of individuals (local small groups, or economy-wide groups) to move out of poverty they may need some basic threshold of capital in order to move from one state, or a poverty-reinforcing equilibrium to another rich-reinforcing (or possibly just a median income reinforcing) equilibrium. There are similar applications to educational attainment – individuals and groups need to reach a certain average level of educational attainment before the mean level of income, or the mean capability to provide for oneself and one’s family is taken beyond a certain point of poverty.

In terms of institutions there are several institutions factors that can affect whether an individual or an economy as a whole moves out of poverty. What are these institutions? These institutions are anything from patterns of behaviour that are effective for an individual (but not socially optimal) in a given environment, to norms of kin-altruism and kin-favouring, to hysteresis effects resulting from economic policy as far back as 17th century that have resulted in given institutional outcomes now.

Lastly, there are neighbourhood, or memberships, effects. To me these are the most interesting as they tie into the social network theory with which I worked on my master’s dissertation. The basic intuition here is that ‘neighbourhoods’ constitute given groups from something exogenous such as an individual’s race (notwithstanding the social anthropological view of the constructedness of race), to characteristics that are economically determined such as education and the area in which one lives (I hesitate to use the word suburb because it is difficult to classify some of the areas in which people live as ‘suburbs’, i.e. a township is probably not a suburb in the classical denotative definition thereof). Peer groups are the larger groups of which an individual is a member. The characteristics of such groups can pre-determine inter-generational transfers of factors that determine welfare outcomes: an individual’s race, their education, the area in which they live are often correlates of their welfare outcomes, from some as basic as life expectancy (or QUALYs - quality adjusted life years) to income. In Economics we try to capture these effects, but we have difficulty identifying whether a ‘suburb’ is actually a decently identified variable (the long and short of it is that there could be self-selection into/out of specific groups which leave us with selection bias, but let’s not go there). Role model effects can also be prevalent. These persist when there is literally a lack of role models within a community. In terms of education the basic intuition is that if there are no role models within a community of individuals that have used educational opportunities to modify their labour market aspirations (i.e. get a better job and more money from higher education) then the average educational aspirations and attainment of the average individual will remain low. As a consequence the labour market participation, or the average income (or wage received) by individuals in a community will be low and the cycle will be self-perpetuating because individuals will only see low income opportunities. Thus peer and role model effects can result in poverty traps.

This last characteristic is the main reason why I am supportive of policies that promote either or both of

a) Urban/Inner City Government Boarding Schools

b) Subsidised (and randomized) relocation of families to wealthier areas.

Regardless of the individual freedoms upon which we may infringe in the process (i.e. of a parent to claim that they have a right to determine their child’s schooling and so forth), it could be argued that removing a child from an environment of poverty where there are poor, or negative peer and role model effects and relocating them to urban boarding schooling with ‘good’ role models could constitute a viable solution to this. How? Use well-paid teachers and other providers of educational services with good educational backgrounds.

It is most important however that if introduced this program should be a randomized one (in as significant a way as possible). The implementation of such randomization would be nightmarish, but in the ideal world it would be possible (even if it is randomized at a cluster level that would be better than no randomization). In terms of the relocation project, there would be similar problems (e.g. with housing in SA if some families suddenly got randomly allocated to Rondebosch and Fourways instead of re-developed Nyanga and Soweto many would probably cry wolf and say it’s unfair, when in actuality it would be a random selection process and thus entirely fair (depending of course on whether you believe such randomization to be a fair process at all – which then comes down to your arguments about equality)). However, I believe that the rewards to these individuals could be massive – the large relocation and subsidization could quite possibly create far greater impacts than marginal and smaller interventions at a lower level. The ethics of this is admittedly complex, but I would argue that if government could come up with a randomized project that could begin to assess the impacts of such reallocations in SA then we could begin to see long run impacts down the line. There would also definitely have to be additional interventions for those others however who are not moved – simply relocating some does not mean that housing projects cannot continue, nor additionally that credit market interventions and other such should be pursued. Controls for these would simply have to be added into later research (somehow – again an issue, but this is possibly where ethics trumps rigorous econometrics).

I know this warrants more thought and definitely requires greater analysis, but I sincerely believe that several of the topics discussed above could be decent solutions to many problems. Contained in the above is also the discussion of whether education should be segregated, whether there should be emphasis on behavioural education processes (i.e. stimulating the behaviour of students in order to facilitate learning re: some new projects in the US that are focusing on just this – they go from the mundanity of slouching being disallowed during class, to ensuring that all students look at the teacher/facilitator/educator while they are teaching). Anyway, so much to write and research, so little time.

The Sidney Awards:

Posted by Simon Halliday | | Category: | 0 comments

David Brooks of the New York times wrote two columns in December last year to give out his Sidney Awards (named for Sidney Hook) – his selection of the top magazine articles in 2006. They are meant to represent good writing, interesting subject matter and as a result also be representative of the underlying zeitgeist. Here, I’ll take some time to extemporize on their nomination and their relevance to us here in South Africa.

The articles span topics from the heinousness (I would like to call it crime) of Holocaust denialism, to the growing problem of casual and emotionally uninvolved teen fellatio, to the quirks of poverty mis-measurement to letters from Iraq. Herein, I focus on two articles, one by Alan S. Blinder of Princeton University called Offshoring: The Next Industrial Revolution and a second by Matthew B. Crawford of Virginia University, Shopcraft as Soulcraft. The two have an interesting alignment, the intricacies of which I later divulge.

Blinder’s discussion centres on society’s progress towards a third industrial revolution – the information revolution the result of which is the offshoring [from America] of services. The reason this is important is because of the transformation of society from agriculturally based to manufacturing based (first industrial revolution), then to manufacturing based to services based (the second revolution) and from this to a hypothetical third revolution involving the knowledge economy and the ‘information revolution’. These are not new concepts. However, he clarifies that this third revolution is centrally about whether a service can only be delivered face-to-face or whether it can be provided over a `phone line, or over the internet. Hence Blinder separates services into two new categories: personal services and impersonal services. His argument advances that the prices of personal services will continue to rise (people will always need mechanics, doctors, to look and do things here), while those of impersonal services, in the face of international competition should decrease (the comparative advantage of the developing world being the lower wages that we are willing to accept for various work – skilled and unskilled). Impersonal services can be traded freely, personal services can’t.

However, one issue with Blinder’s argument is that he doesn’t cater at all for movement of persons. One of the practices that seem to be on the increase by South African doctors is secondment to the UK. They don’t feel that they can make a decent income here, so they trundle off to Blighty in order to make some cash at far higher wages, but wages still substantially lower than most British doctors would prefer. Thus our doctors, highly qualified and with a great work ethic, get jobs that possibly could be held by others. Expand this to a situation where you have highly skilled plumbers, mechanics, and others and the over-concentration of first world education (proclaimed by Blinder) on management, commerce and services and you have situation in which through movement of persons the wages of ‘personal’ services could be challenged.

This is where the intersection with the second article begins. Crawford’s thesis is that the removal of shop class in American school curricula is indicative of a fundamental flaw in education. This flaw is twofold. Firstly, there is a growing under-supply of hands-on or craftsman style work in the US. Secondly, there seems to be a widespread social under-appreciation for the cognitive capabilities required to do this (craft) work well. His argument is that the movement towards management as a (mock) scientifically based process has undermined the cognitive appreciation required for mechanical or craft work.

From the movement to a Fordian production line system we gained speed of production by workers without significant skill (or arguably pride in their work) and lost the possibility to ‘meet the man’ who made the, generally higher quality, item. No longer was an individual responsible and accountable for quality, but the manager that is not actually at all engaged with the production itself is held to some greater or lesser degree ‘accountable’. In fact, if something goes wrong the managed often manages to shift the blame – it’s the fault of the ‘system’ or the ‘process’ definitely not him. Crawford asserts that there needs to be a restoration of pride not only in so-called blue collar, or craft-based work, but also to service-based or white-collar work which has come to mirror the cognitively disengaged production processes of the assembly line.

The question therefore is how does any of this affect us in South Africa? Firstly, I applaud the government’s engagement with vocational training. Individuals have propensities, both learned and intrinsic towards specific activities. On a personal level mine happen to be staring at numbers, writing things and standing in front of a group of people talking. For my dad it happened to be working with screws, plans and making loud noises with drills. I’m an economist. He was an electro-mechanical engineer. What makes us both enjoy what we do though is the pride in the end-product, the belief that we have done something well. On a micro-level government needs to engage educators and policy-makers with the idea that work at whatever level, must be focused on production with pride and with a goal of personal excellence. This can be self-contained – from the production of high quality plumbing work that other plumbers will admire and appreciate as ‘good’, to number-crunching and report production that is of high quality and on which peers favourably comment. Pride in work is non-randomly distributed through the population – it’s a skill like any other and can be taught, facilitated and socialised. Similarly for a work-ethic. We in South Africa have a unique opportunity as a developing country to attack the problems posed by both Blinder and Crawford – reform of our education system to provide individuals with skills compatible with the coming (or current) third industrial revolution, as well as equipping society and individuals with the pride and understanding that work is not only about subsistence, indebtedness and alienation. It is about social achievement, embeddedness and pride. Not only will these individuals be able to use their skills locally, but they will be exportable as well!

Moreover, we in South Africa are also in the position to erode the hierarchy of beliefs about one profession over another. It is not the height of achievement to attain your Masters or Doctorate in a degree if you hate that kind of work – you are putting yourself on the road to depression. Conversely, the pejorative labels that some apply to blue-collar or craft work is inappropriate and inaccurate. High quality end-products at all levels require cognitive engagement, hard work and pride or enjoyment of the work itself. The rest, to quote one of my favourite films, will be simply ‘Shadows and Dust, shadows and dust’.