"Pro-Poor and Pro-Growth" Policy in Latin America: "

Will the World Bank adopt a new approach to poverty and economic growth in Latin America?:
A New Path on Latin Poverty?, by Marcela Sanchez, Commentary, Washington Post Online: The World Bank announced this week that Latin America needs to cut poverty to boost growth -- a conclusion that may be stating the obvious. But this is a big deal for the international lending institution. Since its inception, the bank has talked about reducing poverty. But for more than 15 years it has focused on market reform policies, offering loans to countries that promised to lift trade barriers, deregulate and privatize industry, and adopt austerity plans to stop deficit spending and reduce inflation. These reforms, which became known as the Washington Consensus, were supposed to unleash the economic potential of developing countries and spur growth. Growth, in turn, was to create opportunity for the destitute and lift them out of poverty.
Many Latin American countries took the loans and adopted the reforms, but they did not have the intended consequences. Latin America's performance has been disappointing, particularly in comparison with the dynamic economic growth and poverty reduction in Asian countries. The region now has "the highest measures of inequality in the world ... according to the World Bank. The authors of the World Bank report ... recognize that ... poverty can be a huge drag on ... growth. ... As the authors quantify it, when poverty levels increase by 10 percent, growth decreases by 1 percent and investment is reduced by up to 8 percent of a country's gross domestic product.
Two of their main conclusions are a breakthrough for the bank: that private-sector growth is not a panacea for the poor and that inequality must be targeted directly. A third conclusion is almost heretical for the bank: that the state needs to take on more responsibility rather than less. "Converting the state into an agent that promotes equality of opportunities and practices efficient redistribution is, perhaps, the most critical challenge Latin America faces in implementing better policies that simultaneously stimulate growth and reduce inequality and poverty," the report says.
By advocating state responsibility, particularly for redistribution of wealth, the World Bank seems to be bringing itself into greater alignment with other multilateral institutions and governments in the region. Jose Antonio Ocampo, U.N. undersecretary general for economic and social affairs, said ... "today the majority [of leaders in Latin America] recognize that the state has a function more important than ever in confronting the issue of inequality."
The great surge to the left in recent Latin American elections can be seen in this light. ... The authors of the World Bank report point out that there are specific "intervention" programs already in place in Brazil, Colombia and Mexico that manage to be "both pro-poor and pro-growth." These programs provide cash to very poor families on the condition that their children stay in school and that they take steps to improve their health. Rather than creating dependency or increasing birthrates, as some critics feared, the programs have "successfully increased human capital" in high-poverty regions.
Whether the World Bank will back up its new thinking with a change in process remains to be seen. After all, the report is not a repudiation of the Washington Consensus but simply an admission that it has been insufficient. ... If the World Bank were to make poverty reductions measures a condition for assistance, that would be a big change in the way it helps Latin America. It would be shifting from an approach that helped weaken governments to one that seeks to strengthen them."

The Pace of White-Collar Outsourcing: "

How rapidly will outsourcing of U.S. white collar jobs proceed? The consensus bet is 300,000 a year, but it all depends on how rapidly the English-literate populations of emerging markets expand: India%u2019s Outsourcing Industry Is Facing a Labor …

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John & Belle Have A Blog: If Wishes Were Horses, Beggars Would Ride -- A Pony!: "If Wishes Were Horses, If Wishes Were Horses, Beggars Would Ride -- A Pony!
I think Matthew Yglesias' response to Josh Chafetz' exercise in wishful thinking was about right, even if Brad DeLong's is more nuanced. I'd like to note, though, that Chafetz is selling himself short. You see, wishes are totally free. It's like when you can't decide whether to daydream about being a famous Hollywood star or having amazing magical powers. Why not -- be a famous Hollywood star with amazing magical powers! Along these lines, John has developed an infallible way to improve any public policy wishes. You just wish for the thing, plus, wish that everyone would have their own pony! So, in Chafetz' case, he should not only wish that Bush would say a lot of good things about democracy-building and fighting terrorism in a speech written for him by a smart person, he should also wish that Bush should actually mean the things he says and enact policies which reflect this, and he should wish that everyone gets a pony. See?
John came up with this "and a pony" scheme during a discussion we were having about crazy libertarians. (He was bathing Zo? as I told him about the article I'd read, and Zo? chimed in that she wanted to get a pony too. Duly noted.) Reason recently published a debate held at its 35th anniversary banquet. The flavor of this discussion is indescribable. In its total estrangement from our political and social life today, its wilfull disregard of all known facts about human nature, it resembles nothing so much as a debate over some fine procedural point of end-stage communism, after the state has withered away. Child-care arrangements, let's say. Position A: there will be well run communal creches! Position B: nonsense! the amount of work required from each individual to maintain a perfectly functioning society will be so small that people can care for their own children and those of others on a spontaneous basis, as the need arises!
Allow me to summarize.
Richard A. Epstein: even in the libertarian utopia, some forms of state coercion will be required. If we must assemble 100 plots of land to build a railway which will benefit all, and only 99 owners will sell, then we may need to force a lone holdout to accept a fair price for his land. Similarly, the public enforcement of private rights and the creation of infrastructure will require money, so there will have to be some taxes. [Note to self: no shit, Sherlock.]
Randy Barnett: Not so fast! Let's cross that bridge when we come to it rather than restricting liberty in advance. We'll know a lot more about human liberty in the libertarian utopia, and private entrepreneurs will solve these problems somehow without our needing to grant to governments the dangerous ability to confiscate our property in the name of some nebulous "public good." And as for rights enforcement -- look it's Halley's Comet!
David Friedman: Epstein places too much confidence in his proposed restrictions on government power. Rights could be enforced privately, and imperfect but workable solutions to the holdouts in the railway case could also be found. "To justify taxation we need the additional assumption that rights enforcement cannot be done by the state at a profit, despite historical examples of societies where the right to enforce the law and collect the resulting fines was a marketable asset."
Now, everyone close your eyes and try to imagine a private, profit-making rights-enforcement organization which does not resemble the mafia, a street gang, those pesky fire-fighters/arsonists/looters who used to provide such "services" in old New York and Tokyo, medieval tax-farmers, or a Lendu militia. (In general, if thoughts of the Eastern Congo intrude, I suggest waving them away with the invisible hand and repeating "that's anarcho-capitalism" several times.) Nothing's happening but a buzzing noise, right?
Now try it the wishful thinking way. Just wish that we might all live in a state of perfect liberty, free of taxation and intrusive government, and that we should all be wealthier as well as freer. Now wish that people should, despite that lack of any restraint on their actions such as might be formed by policemen, functioning law courts, the SEC, and so on, not spend all their time screwing each other in predictable ways ranging from ordinary rape, through the selling of fraudulent stocks in non-existent ventures, up to the wholesale dumping of mercury in the public water supplies. (I mean, the general stock of water from which people privately draw.) Awesome huh? But it gets better. Now wish that everyone had a pony. Don't thank me, Thank John.
UPDATE: John wants me to point out that he got the idea from a Calvin and Hobbes strip in which little Susie first wishes that Calvin was nicer, then realizes she might just as well wish for a pony while she's at it. So, thank that Calvin and Hobbes guy, or something.
2ND UPDATE: Thanks to Ben Wolfson for alerting us to the miracle of searchable Calvin and Hobbes! (Now get to work on your abandoned wasteblog, Ben.) Here is the original 'might as well wish for a pony' strip. I humbly submit that it deserves to be a catch-phrase. Just say 'plus a pony' on suitable occasions and watch your opponents whither away like the state itself.

Did Anti-Anti-Dumping Activity Lead to Antitrust Accusations?: "

Accusations of price fixing against Chinese firms: As China's Trade Clout Grows, So Do Price-Fixing Accusations, by John R. Wilke and Kathy Chen, Planned Economy, WSJ: Ten years ago, China's pharmaceutical firms had a sliver of the world's market for...

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Reform of the Health Care System--Posner's Comment: "

President Bush has proposed a number of incremental improvements in the regulation of health care, and, as Becker explains, they seem desirable. Incremental improvements are doubtless the only ones that are politically feasible until crisis hits. But I …

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Health Care Reform-BECKER: "

The American system of health care has many attractive features, and the evidence indicates that Americans of all ages greatly value the large increase in life expectancy and the health quality of life that occurred during the past several...

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Martin Wolf's Economists' Forum: "

The Financial Times is starting an online webloggy "Economists' Forum," with the excellent Martin Wolf as the ringmaster: FT.com / Martin Wolf's economists' forum : Forum: Introduction by Martin Wolf What are the risks to the world economy? Is the …

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