Saturday, 30 November 2013

Links from the interwebs

A few links shared from my Evernote notebooks. There are many others, but I want to share some of the good ones about Higher Ed and Economics today:
  • Inomics blog has some suggestions for Economics and Econometrics YouTube channels that you can follow.
  • Derek Bok wrote at Project Syndicate that governments often misconceive the role of higher education in society - it is about more than jobs and money.
  • At the Marginal Revolution blog Tyler Cowan commented on some research about the characteristics that predict the publication productivity of Economics departments (in France). The work confirms some of us managers' ideas: Women, older academics, stars in the department and co-authors in foreign institutions all have a positive externality impact on individuals' publications.
  • The Economist wrote about firms that keep grading their staff ruthlessly: Grading performance along a "vitality curve" and sacking those in the lowest category. Now in academia, performance management is not that bad, but does this sound familiar?
Ranking and yanking is more logical in investment banks, law and accountancy firms and big consultancies: their business model is, in a sense, built on recruiting large numbers of junior staff and motivating them with the prospect of becoming a partner, even though in practice only a few of them can ever make it. 
I would like to argue that we can never go down this road. Banking or consultancy style performance evaluation would ignore the merit good characteristics of what universities should do. Our system should rather encourage collaboration and positive external benefits.
  • Mark Carrigan made some excellent points at the LSE Impact of Social Sciences blog about how the academic blogosphere mediates between research and journalism.
  • Finally, Gabriel Rossman had an excellent post on the Code and Culture blog with the title: You broke peer review. Yes, I mean you! It is quite a long post, but worth reading through. I only want to mention a few of the points of advice:
    • Do not brainstorm your review.
    • Distinguish between demands, vs suggestions, vs synapses that happened to fire as you were reading the paper.
    • There is wrong and then there is difference of opinion.
    • Do not try to turn the author's theory section into a lit review.
    • Appreciate the constraints imposed on the author by the journal.
    • Stand up to the editors!

    Women, older academics, stars in the department and co-authors in foreign institutions all have a positive externality impact on each academic’s individual outcome. - See more at:
    Women, older academics, stars in the department and co-authors in foreign institutions all have a positive externality impact on each academic’s individual outcome. - See more at:
    It is the responsibility of educators to help their students live satisfying, responsible lives. However well or badly universities perform this task, their efforts to succeed at it are worth fighting for and deserve their governments’ recognition and encouragement. After all, as Louis Brandeis observed: For good or ill, “our government is the potent, the omnipresent teacher.” If our leaders regard education merely as a means to jobs and money, no one should be surprised if young people eventually come to think of it that way, too.
    It is the responsibility of educators to help their students live satisfying, responsible lives. However well or badly universities perform this task, their efforts to succeed at it are worth fighting for and deserve their governments’ recognition and encouragement. After all, as Louis Brandeis observed: For good or ill, “our government is the potent, the omnipresent teacher.” If our leaders regard education merely as a means to jobs and money, no one should be surprised if young people eventually come to think of it that way, too.

Saturday, 23 November 2013

Review: The Long View

I thought that I am too slow in getting started with a post about JP Landman’s The Long View, but yesterday The Economist posted an article about South Africa (Braai, the beloved country) that has Twitter up in arms, so that makes my timing perfect.

In his new book JP Landman argues that if you look at the newspaper headlines, you are very likely to get swept up by this week’s drama (this week it is Nkandla).  Very quickly you will become very negative about the country and its future prospects. We should rather take the long view.

He asks what makes a modern successful society and evaluates the progress made since 1994 and future prospects against each of these requirements.

The first is a growing economy and he throws out some numbers: Over the last 19 years the SA economy grew by 77% in real terms, there has been social development and investment in infrastructure. The successes are ascribed to the end of sanctions, the opening up of the economy, prudent fiscal and monetary policies and increases in productivity. I would qualify this “success” and ask why did South Africa not receive much FDI, why have many sectors struggled to compete in an open economy (and are now asking for protection), how capital intensive is the growth in productivity? But the book just goes on to argue that South Africa has reached a level of economic development where democracy has a reasonable chance of surviving.

The second argument is that demography is pushing us towards modernity: population is growing slower than the economy, but it is still a young population, though not that young that it could cause instability.

The third requirement for a modern, successful economy is employment. The book first unpacks some numbers, showing that South Africa has not experienced jobless growth as some have argued. We have had low rates of economic growth and low rates of job creation – this has a lot to do with the capital intensity of growth. Then there are three sets of constraints to faster job creation and the NDP are said to address them: NDP for faster growth, NDP for improved transport and dense cities to bring people and jobs together, NDP for better health and education! Here JP draws on Prof Frederick Fourie’s Three Discourses article and it is worth it to have a good look at the original work or at least the econ3x3 post – his is a much more nuanced story. The book goes on to argue that there are no quick fixes and we should systematically chip away at the obstacles. The structural measures include better education (also FET), expanded measures to link work seekers with jobs, improved public transport etc. The so-called elastoplast measures include the expanded public works programme and the jobs fund.

I feel that “taking the long view” and doing some hand waving about education, transport or public works may understate the depth of the challenges facing South Africa. Prof Servaas van der Berg and the RESEP group’s work on education paints a more somber picture.

The other requirements for a modern successful society include open societies, creative individuals, learning and social capital. With these you are either an optimist, pointing at the Constitution, the success of the World Cup and talking about leadership. Or you are a pessimist listing fraud and corruption, talking about extractive institutions. The Long View strikes a positive note, but with few examples and no evidence.

In the final sections JP presents a balance sheet of forces pushing growth up and down. The down-side forces are the familiar challenges of political uncertainty, strikes, social unrest, poverty, inequality, crime, weak public sector institutions, low productivity. The up-side forces that are listed include planned infrastructure investment, rising employment, property rights and a sound legal system, the ability to adopt new technologies, increasing relations with the BRIC countries and integration into sub-Saharan Africa. It is argued that we can muddle through with growth of 3%, that “even low growth weaves its magic”. The long view is that our bigger ambitions lie in the NDP. The stepping stones to this are massive infrastructure development, the Industrial Policy Action Plan and “various proposals under the NDP”, including promoting exports, support for SMEs and a more responsive labour market. Moving beyond economics, the arguments are that government and the private sector need to trust one another, that we need an ambition to perform and that leadership is critical.

Overall I think that there is a lot that recommends the book, but we probably don't need another one like it. Amongst policymakers and pundits there is agreement on the challenges and the possible solutions, also about the fact that it will take time. I wonder about the political sustainability of a middle-income, low-growth trap. Will we muddle through, or just muddle? Are there examples of countries that have muddled through? What did they do, how did they do it? Why will the NDP be different from all the previous plans? Are there examples of an NDP making all the difference? How exactly will the social capital-trust-leadership thing work? Who are those future leaders? How can we make institutions and growth inclusive?

Sunday, 17 November 2013

Links from the interwebs

A few links shared from my Evernote notebooks:
  • The big story was that Udacity's Sebastian Thrun announced that they are changing course, turning it into a e-learning corporate training company. There was a lot written about this in EdTech circles, but the Ed Techie blog makes a number of good points:
After all that hype. All that "Napsterisation of higher education", the "end of universities", the "10 global providers of education" nonsense, what do we have? A corporate e-learning company. 
… Thrun seems to have 'discovered' that open access, distance education students struggle to complete. I don't want to sound churlish here, but hey, the OU has known this for 40 years. It's why it spends a lot of money developing courses that have guidance and support built into the material, and also on a comprehensive support package, ranging from tutors, helpdesk, regional study centres and so on.
  • In another much-hyped field, Lant Pritchett argued on the CGD blog that the use of RCT's in development should be considered in terms of the emerging technologies hype cycle (which is interesting to look at anyway).
  • David McKenzie had an excellent three-part series post on the Development Impact blog on the intersection between industrial organisation research and development.
  • Johan Fourie warned of the dangers of Sangomanomics. Also check out the comments.
  • Reuters had an interesting article on how Mugabe and ZANU-PF has destroyed manufacturing in Zimbabwe.
  • Via Marginal Revolution blog I found this interesting story on how corrupt police officers in Kenya receive bribes via their mobile phones and M-Pesa accounts.

Tuesday, 12 November 2013

Review: Zumanomics Revisited

With the celebration of 20 years of democracy and a general election around the corner, political economists are looking back and looking forward. This year JP Landman has offered The long view (read the Business Day review here) and recently Goldman Sachs published their report with the title Two decades of freedom: What South Africa is doing with it and what now needs to be done. Prof Raymond Parsons takes to this field with Zumanomics Revisited: The road from Mangaung to 2030 (buy it here).

In the first Zumanomics published in 2009, Prof Parsons edited the contributions of a number of authors and anticipated some of the issues that would be important to an ANC government headed by President Zuma. It outlined the socio-economic challenges facing policymakers and offered a range of recommendations. Since then, the global financial crisis has clearly shown the obstacles to reducing unemployment, poverty and inequality in South Africa and limited the policy room to maneuver. Growing the economy at a rate of two to three percent per annum is not good enough and in Zumanomics Revisited Prof Parsons returns with a view to how we can do better.

First there is a look back at the performance of global and South African economies. Briefly, it is the story of a recession forcing the deleveraging of private and public debt. The slow recovery has been supported by significant monetary expansion but global inflation seems to be well anchored. As economic growth picks up, this era of cheap money will come to an end and have implications for South Africa. Tapering in the U.S. and its impact on developing country currencies have recently been in the news. Prof Parsons argues that the outcomes of global changes will depend on how South Africa is able to respond and our degree of resilience in doing so. The confidence factor matters.

It is however important to distinguish between the factors over which a country like South Africa has little or no control and domestic policies. For South Africa the financial crisis has meant pressure on consumers, exporters and government finances. A small open economy will be influenced by global events, but should be able to develop the flexibility and adaptability to address new opportunities and risks.  For policy, Prof Parsons turns to the National Development Plan (NDP).

The focus of the NDP is not new and he rightly asks, why are we here again? Since 1994 there have been numerous diagnostic documents and socio-economic programmes, ranging from the RDP, to GEAR, to ASGISA, to the New Growth path, to the NDP. Good economics do not always make good politics and Prof Parsons provides some interesting political economy views of our policy efforts. He argues that the very nature of the ANC-COSATU-SACP alliance has made for a constant “tug of war” over economic policy. The result has been mixed and negative signals about, for example, nationalization or a youth wage subsidy. The question then becomes, can the NDP also overcome the challenge of implementation?

Prof Parsons classifies the challenges facing the NDP as five key deficits that need to be addressed. These are the social deficit, fiscal deficit, trade deficit, delivery deficit and the trust deficit.

The social deficit combines the obvious issues of unemployment, poverty and inequality.  Addressing these will require sustained growth, which requires improvements in education, along with the social safety net. The role of government is however constrained by the fiscal gap. In 2012 ratings agencies lowered South Africa’s sovereign debt rating.  Fitch argued that: "Economic growth performance and prospects have deteriorated, affecting the public finances and exacerbating social and political tensions".  Moody’s reasoned that unemployment and inequality increased socio-economic pressure in South Africa and this jeopardised the ability to manage economic growth and increase competitiveness. This is coupled with increased public debt, infrastructure gaps and rising labour costs. In the 2013/14 Budget the Minister of Finance again consolidated the fiscal stance and outlined plans to reduce debt levels and rebalance spending towards investment. The result is limited room to maneuver. In turn, monetary policy may come under pressure from tapering in the U.S., linked to South Africa’s sizable deficit on the current account of the balance of payments. In the meantime, it seems that South African exporters are losing competitiveness and service delivery is hampered by the poor quality of institutions.

These challenges are familiar to anyone who follows developments in South Africa’s economy, but it is when Prof Parsons relates them back to a trust deficit and the importance of social capital that the book comes to its right. He argues that we need to think more long term and trust can be built slowly. This requires leadership at all levels and business, labour and government working together. The end result can be the “social compact” that the NDP has proposed.

For Prof Parsons the key is pragmatism and action. In the final chapters he outlines the risks and opportunities facing the implementation of the NDP, from political scenarios to entrepreneurship. He examines the role of business in the mixed economy and impact assessments as a policy tool.

Finally he concludes that the implementation of the NDP may define President Zuma’s place in history. “The President has to rally the country, not just special interest groups. He needs to forge a consensus which has leverage to achieve outcomes, even a few small quick successes to build confidence”.

So can South Africa prove the skeptics wrong? Prof Parsons thinks so.

“South Africa needs a new burst of energy and effective leadership to make more things possible. We urgently need to build a national economic purpose. The battle for the future is now. Without an overall framework like the NDP at this juncture, we cannot generate an economy that will be bigger, stronger and better by 2030. A vision for 2030 provides the reason and hope on which all South Africans must build their future.”

If you are interested in the South African economy and politics, Zumanomics Revisited is required reading for your summer vacation.

Thursday, 7 November 2013

A few quick thoughts

I am shocked, shocked to realise that I did not get around to any blog posts in October. After the ESSA conference the month became a blur of admin paperwork and reading the work of students who want to submit their thesis or dissertation. That and marking and participation marks and meetings. Lots of meetings. So before I can't call myself a part-time blogger anymore, a few thoughts.

  • Still in October I was part of a group from our TRADE research niche that visited UNCTAD's Virtual Institute in Geneva. I made a post about the research at the School's blog.
  • On trains and at airports I had time to read JP Landman's new book: The long view. I hope to post a review here before the end of the month.
  • I am also due to write a review of Prof Raymond Parsons' new book: Zumanomics revisited, before the end of this month and will post it here as well.
  • Linked to those, I would like to comment on the Goldman's report 20 Years of freedom. Not everyone is keen - Richard Poplak warns of an unholy alliance in The Daily Maverick.
  • And then there is an ERSA Economic History workshop coming up in Potch early in December. I am putting something together with Johan and looking forward to seeing the Economic Historians again.
  • Finally, I was at one of those open dialogue with the rector events yesterday and the profs threw around some ideas about the nature of the university and research. I have some of my own, but in the meantime here is some interesting reading on management and university performance via Vox.Eu. I like this bit: the positive correlation (between better management and better outcomes) is driven mainly by incentives which matter for both research and teaching. Monitoring and targets are much less important in explaining performance.