NOTE: The views expressed here belong to the individual contributors and not to Princeton University or the Woodrow Wilson School of Public and International Affairs.

Wednesday, March 30, 2011

National (dis)service: Symbolic budget cuts with real consequences

Larry Handerhan, MPA

When the House of Representatives passed $60 billion in fiscal year 2011 spending cuts last month, the programs on the chopping block ranged from the perfectly logical (repetitive fighter jet contracts) to the overtly political (Environmental Protection Agency). However, these efforts can not be taken as a serious deficit reduction strategy: by primarily targeting non-defense discretionary spending, which accounts for just 12% of the federal budget, it is clear that these cuts were more symbolic than substantive.

However, even in a climate where political symbolism is the cause du jour, it is alarming – and counter intuitive – that House Republicans would defund the Corporation for National and Community Service (CNCS), the agency that administers AmeriCorps and Senior Corps.

At a time where politicians and civic leaders champion public service, there must be some other option beyond joining the military. Volunteerism has never been more crucial: as cities and states cut services in response to budget shortfalls, volunteers are increasingly responsible for ensuring that the social safety net remains intact. And in addition to supporting its own volunteers, CNCS provides crucial capacity-building to some of the nation’s most well-respected and effective non-profits like City Year, Teach for America, and Habitat for Humanity.

If anything, fiscal conservatives should appreciate such a prudent program: most AmeriCorps members serve for an annual stipend of just $12,000.

Defunding CNCS is further perplexing because national service has not been – and should not become – a partisan issue. Bill Clinton launched AmeriCorps after successful pilot programs instigated by Republican predecessor George H. W. Bush. And George W. Bush increased the size of the program from 50,000 to 75,000 participants.

As any national service champion can attest, these symbolic cuts will have real consequences.

These consequences can be measured in fewer meals served, fewer students tutored, and fewer houses built. Unfortunately, the “softer” benefits of this work are equally as important but harder to quantify.

National service invests in communities, but also invests in the volunteer. This fosters positive externalities that extend far beyond time spent in a CNCS program and are not easily captured by traditional performance metrics.


66% of AmeriCorps alums go on to work in public service, and are more likely than their peers to volunteer later in life.[1]

Volunteering has been shown to improve the mental and physical health of service-providers, particular older Americans.

And federal dollars incubate innovation. One salient example hits close to home: CNCS helped bring Teach for America to scale after it started as Wendy Kopp’s undergraduate thesis here at the Woodrow Wilson School. Due to the program’s success and popularity, it now attracts an additional $4 in private, state, and local funds for every federal dollar it receives.[2]

That sounds like a pretty good return on investment to me.

Note: Larry Handerhan served as a Team Leader in AmeriCorps*NCCC in 2005-06, aiding victims of Hurricane Katrina in the Gulf Coast.

[1] AmeriCorps: Changing Lives, Changing America – A Report on AmeriCorps’ Impact on Members and Nonprofit Organizations,” Corporation for National and Community Service, 2007.
[2] Matt Kramer (president of Teach for America), Congressional Testimony, March 8, 2010.

Taiwan, China’s recent foreign policy aggressiveness, and implications for US policy

Ian Aucoin, MPA

With a rising China, a teetering regime in North Korea facing a succession crisis, and increasingly self-reliant and assertive governments in Japan and South Korea, the economic and political order in the Pacific is changing shape. In this emerging new East Asian order, does still Taiwan matter? Does it remain a potential flashpoint of military conflict? Most importantly, should its defense remain an article of US foreign policy?

In the middle of the last century, the US took up the cause of defending the island to ensure that Chang Kai-Shek and our capitalist Kuomintang (KMT) allies would survive long enough for Mao and the communists to lose control of the mainland and subsequently reclaim China for the nationalists. With his horrible mistakes in the Great Leap Forward and the Cultural Revolution, Mao came close, but things have now changed. In both capitals the old guard is dead and economies are booming. Both parties still seek a negotiated reconciliation, but neither the “one China, two systems” that Beijing proposes nor the independence that some in Taipei desire is acceptable at present. However, with the continent’s exponentially greater resources and Taiwan’s increasing diplomatic isolation, time does not appear to be on the latter’s side. Any agreement is increasingly likely to come on Beijing’s terms.

The 21st century People’s Republic of China is more robust than ever before and it is starting to throw its weight around, most dramatically within the past year. In 2010, Beijing reacted with unusual venom to a routine American arms deal with Taiwan, brought economic weaponry to bear against Japan after a confrontation near the disputed Senkaku/Diaoyu Islands, repositioned missile batteries to better “encourage” Hanoi to give up its claim on the Paracel Islands, and more or less turned a blind eye to North Korean provocations on the Peninsula while reacting far more strongly to the joint US-ROK military exercises carried out in response. None of this was well received abroad. In 201, there have been indications—from President Hu’s state visit to the US and other sources—that the negative international reaction to this brand of Chinese assertiveness has been taken to heart in Beijing, but in practice we have no guarantees that it will not head down that road again.

Perhaps counter-intuitively, Taiwan and the Taiwanese government largely avoided this wave of bellicosity from Beijing, and in the short term Taiwan does not appear to be a likely flashpoint of military conflict. In fact, since the KMT regained control of the government from the more pro-independence Democratic Progressive Party (DPP) in 2008, prevailing trends in cross-Strait relations have undergone a significant reversal and are now better than ever before. Direct flights between Taiwan and the mainland resumed in the summer of 2008, the landmark Economic Cooperation Framework Agreement that dramatically lowered barriers between the two economies was signed two years later, and this past November the KMT mayor of Taipei rode to victory over his DPP opponent in an election that was widely seen as a referendum on the KMT’s strategy of engagement with the mainland. At this point, even if the DPP returned to power they would likely have to moderate their tone and accept many of these KMT initiatives as entrenched features of the political landscape.

All that said, the sweeping shifts in policy and rhetoric coming out of both capitals over the last few years and the persistent obstacles to a long-term negotiated solution indicate that it remains a little early to put this conflict to bed. And yet, there is reason for optimism in the recent turmoil in China’s foreign policy. The PRC’s missteps are an indication that it is finding its feet as an emerging power. These are formative years in which China is feeling out its place on the international stage, and while there is no reason to believe that the political, economic, and territorial interests China has recently expressed are going to change, the strategies they will employ to serve them are still highly malleable. Last year China tried to project power in the region by bullying its neighbors, and its actions were roundly rejected. Chinese leaders are going to go back to the drawing board and try to find a more efficient and effective way to get what they want. America’s preeminent position in the East Asian security structure is an invaluable tool to shape the character of Chinese foreign policy by ensuring that force and intimidation remain undesirable means to achieve China’s ends. In time, China’s need to find other avenues to serve its interests will ideally drive it towards greater participation in existing regional diplomatic organizations and the formation of new ones with greater capabilities. Though for a variety of reasons—historical, cultural, political—these institutions will differ markedly from their Western analogs, they still carry the promise of mutual benefits to all participating countries. However in the interim, while there are ongoing changes in the region’s political structure, American relationships with Taiwan and other regional actors will remain relevant as a means of deterring aggression and stimulating cooperation.

In sum, Taiwan matters, but not for the reasons it used to. Ongoing improvements in cross-Strait relations are making military confrontation between the PRC and its “wayward province” increasingly implausible. Today, the US defensive relationship with Taiwan is substantially weaker than in the past, but its value persists as a reminder of the dangers Beijing would face in pursuing an overzealous foreign policy. Additionally, it is a powerful excuse to continue Seventh Fleet operations off the southern coast of Asia, which many states in the area support, though some may be loath to admit it. Were the US to withdraw its support for Taiwan, it would lose a great deal of prestige and influence in the Pacific, with remarkably little gain. Further, Taiwan could not realistically defend itself against the full might of the People’s Liberation Army, and all parties know that. While in the event of American withdrawal of support Taiwan-PRC military confrontation would remain unlikely, this retraction would still greatly limit the Taiwanese options in bilateral negotiations and allow Beijing to commit its military resources elsewhere, better positioning it to pursue a more belligerent vein of diplomacy if it so chose. Maintaining the current American position on Taiwan buys time for other processes of regional integration to operate in an environment already favorable to stability and the interests of the United States.

The relationship between property rights and economic growth

Ashok Ayyar, MPA 

"[Government] cannot take from any Man any part of his Property without his own consent. For the preservation of Property being the end of Government, and that for which Men enter into Society, it necessarily supposes and requires, that the People should have Property, without which they must be suppos’d to lose that by entering into Society, which was the end for which they entered into it, too gross an absurdity for any Man to own."  -John Locke, "On the Extent of Legislative Power," Second Treatise on Government (1689)

Locke argued above that personal property is antecedent to government, and its protection should be the principal function of government.[1] In his eyes, a state without fidelity for private property is no state at all, for it has violated the very social contract for which it was created.

Lockean thinking occupied the minds of political philosophers for nearly three centuries before recently migrating to economics. As if struck by lightning, development economists became enraptured by the idea of linking strong property regimes to GDP growth. Using conventional tools of the trade like cross-country regressions[2],  instrumental variables[3], and more nuanced institutional economics methods[4], several well-cited studies have asserted the importance of private property (qua property rights, or as part of the bundle of values sloppily lumped into the “rule of law”) for growth.

Taking this one step further, economist Hernando de Soto put forth the boldest and most articulate version of the property rights claim: not only are stable, secure, and well-defined property rights incidental to growth, but they are necessary for it. Ever the gumshoe, De Soto supported his argument by gathering ground-level observations of how property rights actually operate in poor countries. His capstone result, The Mystery of Capital (2000), tells a plausible story: though capital is indisputably the engine of economic growth, it is not simply cash or machines. Capital is the “legal expression of an economically meaningful consensus about assets.”[5] Law converts the passive potential energy of raw assets into capital, transmuting dull lead into effulgent gold. It turns a parcel of land or an enterprise into a reservoir of surplus value that can again be harvested for profit. Where developing countries have stumbled, de Soto contended, has been in their failure to establish an ordered “system of rules” that facilitates this process. And what else is such a system but law?

A well-ordered property law allows ordinary people to: 1) fix the economic potential of assets, 2) integrate dispersed information about assets in one place, 3) make people accountable for their debts, 4) make assets marketable, and 5) connect assets beyond the informal networks of their owners.[6] While Western nations gradually acquired a property law with these characteristics, developing countries remain mired in a disjointed property system that, at best, converts assets into capital at a glacial pace. People in those countries spend months or years tangled in the web of red tape.

The property rights chorus now reverberates in the halls of the World Bank and other development agencies.[7] Though there are still some dissenting voices, their cautions are muttered sotto voce, far from any actual policy-making.

Yet, as policy students, we should question the wisdom of this (and other) accepted truths. Have de Soto et. al. really conquered their foes, and convincingly made the case for formal property rights? Or is this idea, like so many others in the kitchen-sink development literature, another paean sung to a false god?

I think de Soto’s camp has won the debate for now, both on its merits and by virtue of policy-world take-up. I am inclined to believe that secure property rights are, if not the silver bullet, instrumental to economic growth. Furthermore, growth theory today has zeroed in on “institutions” as the best explanatory variable for growth. Notably, property rights appear at or near the top of most clearly-defined lists of institutions.[8] Thus, whether standing bare, or dressed in the clothing of institutions, property rights as the road to growth commands great support – and deservedly so. Only time will tell if the resulting policy of property law reform pans out.

[1] Do not forget the founding fathers enshrined his thinking as the cornerstone of the new republic. See Richard Hofstadter, The American Political Tradition (1948), pp. 10-12.
[2] Robert J. Barro, “Determinants of Economic Growth: A Cross-Country Empirical Study,” National Bureau of Economic Research, Working Paper No. 5698 (1996).
[3] Ibid. See also Daron Acemoglu, Simon Johnson, & James A. Robinson, “The Colonial Origins of Comparative Development,” American Economic Review, Vol. 91 (2001).
[4] Oliver C. Williamson, “The New Institutional Economics: Taking Stock, Looking Ahead,” Journal of Economic Literature, Vol. 38 (2000).
[5] Hernando de Soto, The Mystery of Capital (2000).
[6] Ibid.
[7] At the Bank, the high priest of property rights is Phillip Keefer, and he seems to have won over his colleagues. See Stephen Knack & Phillip Keefer, “Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures,” Economics and Politics, Vol. 7 (1995).
[8] Take it from no less an authority than Douglass North. See Douglass C.  North, Institutions, Institutional Change and Economic Performance (1990), noting the most important source of underdevelopment is because of the absence of stable property and contractual rights.

Wednesday, March 23, 2011

The future of US naval primacy: A response to Mark Helprin

Nathaniel Adler, MPA

Earlier this month, Mark Helprin of the Claremont Institute wrote an opinion piece in the Wall Street Journal about the decline of US naval dominance. Here I respond to his argument and offer a few thoughts of my own.

In short, I think his case is heavily overstated.

First, there are good legal, logistical, and political reasons that the administration hasn’t attacked Somali pirate bases, so I find Helprin’s suggestion that our restraint is a “symptom of a sickness” both confusing and troubling. The United States Navy (USN) is successfully working with its counterparts all over the world to combat piracy off the coast of Somalia, and to interdict pirate ships whenever possible.

Piracy and its disruption of maritime commerce in the region is undoubtedly a growing problem; however, given the fact that these pirates rarely hurt anyone, hunting them preemptively hardly seems like the first step towards re-establishing America’s naval might.

Helprin misses the point that the problem in the Gulf of Aden is not the size of the USN, but rather the lawless and destitute condition of Somalia, an entirely separate issue. As Chairman of the Joint Chiefs Admiral Michael Mullen and General David Petraeus have said in a different context, we can’t kill our way out of this one.

Helprin laments the reductions in US naval forces, and worries about the ability of the USN to defend the seas and to project power globally. However these reductions only look dramatic relative to where our own gargantuan navy used to be. The United States has 11 of the world's 22 aircraft carriers, and no country outside the NATO alliance has more than one. (Note that China has zero.) Additionally, the non-US carriers are largely symbolic, often too small to have much strategic utility outside humanitarian assistance.

This striking asymmetry in US naval power exists not just with carriers, but with other warships as well, so the sense that we are following the Royal Navy “into near oblivion” seems premature. Is the US retiring aging vessels from its massive and immensely expensive navy? Sure. Does it have a peer competitor that is anywhere near challenging it? No.

This brings us to China. I understand that it is a golden rule of all alarmist op-eds on military affairs to always include at least one vague suggestion that China threatens to overtake the US at something sometime in the future, lest the warning sirens not be fully activated. However, the hypothetical naval parity with China that Helprin warns of is very far away (if it ever happens at all).

Is China modernizing its navy? Yes. Should we keep an eye on it? Absolutely. Should we cast the priorities of the United States’ force posture, at exorbitant cost, and at a time of tremendous financial hardship, in terms of an endless effort to maintain past margins of relative global superiority? I’m not so sure.

Finally, Helprin also fails to address the body of evidence suggesting that increasingly capable and cheap anti-ship cruise missiles and anti-ship ballistic missiles (plus advances in submarine technology) will make large surface naval warfare vessels almost obsolete in future conflicts. If this is true, does it really make sense to continue investing billions in maintaining such a massive fleet of large warships? Maybe; but if so, Helprin hasn’t convinced me.

So what are we to make of all this?

Ultimately, the most interesting and thought-provoking thing about Helprin’s piece is that it is not just about the US’s waning margin of naval dominance, but it is also about something larger, the fear of decline. Helprin, whether intentionally or not, seems to use the erosion of the United States’ naval power as a harbinger for a diminishing US posture in the world more broadly.

A continued debate about whether we can or should be maintaining such a robust navy given the financial crisis and our massive deficit will have to be left to comments or later posts, but it seems worth noting that other great naval powers in history have facilitated their own decline by not being dynamic enough to adjust to ebbs in their own capabilities. Rather, they bankrupted themselves by continuing to project force onto far away conflicts that they could not afford, often in an effort to maintain appearances, as if they were still at the height of their capability. In J.H. Elliott’s article “Managing Decline: Olivares and the Grand Strategy of Imperial Spain,” he describes the last throes of the Spanish Empire:

The Mantuan affair illustrates, I believe, the extreme difficulties of disengagement for an imperial power. The sheer extent of its commitments means that almost everything is perceived as affecting its vital interests. Hence the prevalence of the domino theory in the Madrid of the 1630s. But it is legitimate to ask whether anyone in the Spain of Olivares advocated an alternative foreign policy – one that would seek to reduce the area of its vital interests and, if necessary, sacrifice reputation to solvency. In other words, did anyone dare to think the unthinkable, the possibility of a staged retreat from empire?

If anyone nowadays is daring to think the unthinkable, it certainly isn’t Helprin, and for now I probably agree with him. I don’t think the US is teetering on the precipice of decline, and unlike Helprin I don’t think US naval primacy is going anywhere anytime soon. Naval and maritime power is vitally important for a major power like the United States, and sufficiently maintaining that force is currently, and will continue to be, a priority.

Nevertheless, in light of history, it does also seem important to think critically about what exactly we can afford, where our priorities as a nation should be, and what kind of role the United States should play in a contemporary rather than bygone international order.

With international aid, it’s not always the high profile things where focus is needed

Kim Bonner, MPA

We sat on the dusty porch and exchanged self-congratulations as people trickled in, signed up to receive the bed nets, and returned home. This was my second national bed net distribution drive in Tanzania and I was ever vigilant to make sure it ran as smoothly as possible. All was going well on the final day of our pilot run, and after two hours watching others put the finishing touches on our successful campaign, I strolled around the back of the medical clinic dispensary, where a smattering of village residents had gathered, but not to pick up their free bed nets.

There were two rows of women stretched around the perimeter of the porch. Awkwardly trying to be friendly, I greeted the older woman nearest me and asked her why there was such a crowd on the dispensary porch. Her neighbor leaned in and told me that this woman’s daughter had lost so much blood in labor that after delivering the baby that she had collapsed. She was lying inside the dispensary, still bleeding.

“But,” I sputtered, “Why isn’t anything being done? Why don’t they just give her stitches?”

The woman leaned in again. “They don’t have anything here. No medicine. No needles. Nothing to stitch. The clinic worker called the district hospital for an ambulance almost two hours ago, and it still hasn’t arrived.”

Horrified, I thought of the NGO’s landcruiser that had been sitting out front the dispensary the entire time. We moved the car around back just as the ambulance arrived. Heavily supported by her mother and the clinic worker, the woman climbed in the car. It was the last we saw of her.

To this day, I have no idea of this woman’s fate. I hope that she survived, that she’s enjoying watching her child take his or her first few steps right about now.

What stays with me is the nagging feeling that many crucial areas in health are being overlooked. While I am happy to report that many more people have bed nets, I can’t say how many dispensaries have a full supply of medicines at any given time.

In a world where donor governments are willing to give billions to the highest profile diseases, there is no reason for logistics and procurement maintenance to be neglected. The interplay of conditional aid and decision-making in cash-strapped governments can create perverse incentives to neglect lower profile components of the health system. Foreign assistance for health has been associated with a consequent decrease in government expenditure for health, ranging from a $0.43 to a $1.14 decrease per $1.00 received. [1]

Much of this foreign assistance is earmarked for certain high-profile diseases. The Global Fund alone has granted $22 billion for HIV/AIDS, tuberculosis, and malaria since its inception in 2002. [2] Consequentially, countries that displace domestic health funding with foreign assistance encounter restrictions on how much of their budgets can be used to support the mundane, but crucial, task of running a health system.

While there has been a shifting focus towards strengthening health systems in general, a demonstrated national and global commitment towards the lower-profile health activities is yet to be shown. [3] Fortunately, increasingly donor governments are shifting to health basket funding, where unrestricted aid is contributed directly to ministries of health. While this system faces challenges in accountability and timely disbursal of funds, it enables governments to spend funding in accordance with their priorities. While these priorities don’t necessarily make for photos as lovely as our bed nets, they are just as necessary for improving the quality of healthcare in Tanzania and around the world.

[1] 95% confidence interval. Lu C, Schneider MT, Gubbins P, Leach-Kemon K, Jamison D, Murray CJ. “Public financing of health in developing countries: a cross-national systematic analysis,” Lancet (375: 9723), 17 Apr 2010, pp. 1375-87.
[2] The Global Fund to Fight HIV/AIDS, Tuberculosis, and Malaria. Grant Portfolio.
[3] Waddington C. “Does earmarked donor funding make it more or less likely that developing countries will allocate their resources towards programmes that yield the greatest health benefits?” Bulletin of the World Health Organization.

How to make the most of $40 million: The Clinton-Bush fund should re-direct its energies towards attracting FDI in Haiti

LaSean Brown, MPA

Thousands of NGOs and other notable entities in the international community are still trying to figure out how to effectively deliver aid and promote economic development in Haiti, now 14 months after the catastrophic earthquake that struck in January 2010. Given that Haiti is one of the Western Hemisphere’s poorest and most fragile states, it stands to reason that help from the international community is not only necessary, but has the potential to be highly effective given the resources available to international donors. Unfortunately, outside of providing immediate humanitarian assistance, aid agencies have done precious little over the last 14 months to address the systemic economic challenges in Haiti that prevent a business-friendly environment to take root.

Enter the Clinton Bush Haiti Fund (CBHF), an organization that raised a meager $40 million, but earned the immediate international attention and respect given its presidential namesakes. The Fund’s literature asserts that it wants to make tangible long-term differences in Haiti, but how can this be done effectively given the limited funds available to the organization? To date, CBHF has provided small grants of no more than $500,000 to projects with specific service delivery goals. Some of the grants do indeed promote some business activity, but the impact of these programs will be moderate at best.

The CBHF is thus wasting a prime opportunity to use the support of two American presidents to do something for Haiti that isn’t already being done by the plethora of NGOs on the ground; namely, encouraging foreign direct investment (FDI). What is missing in Haiti is not aid, but FDI. Clearly, “aid” is not working.

Case studies suggest that FDI leads to better economic performance in developing countries. Rwanda is an excellent example of the power of foreign direct investment as an instrument of stable economic development. President Kagame has been adamant about encouraging FDI while simultaneously refusing most forms of aid that is typically provided to developing countries by the international community. This combination has led Rwanda to experience many years of high economic growth.

CBHF can also take note of the way Kagame courts investors. The president commissioned a team of international “experts” to fly around the world and meet with potential investors to pitch them on the idea that Rwanda is no longer a high-risk investment market and that returns-to-investment in developing contexts are generally very high. (This has even been demonstrated in Haiti, as Digicel, a large telecommunications firm, operates in Port-au-Prince with a significant profit margin. This suggests that despite its infrastructural issues, Haiti is capable of successfully hosting multi-national corporations.)

Therefore, CBHF should spend its remaining funds devising and implementing a strategy to court FDI on behalf of Haiti. President Clinton has already demonstrated his fund-raising prowess through his foundation’s annual Clinton Global Initiative summits. Successfully attracting foreign direct investment could not only provide Haiti with a much more sustainable economic development strategy, but could encourage even more investment in the country, producing a cycle of ever-growing influxes of investment capital.

The question remains whether such a strategy will be successful in Haiti. Sure, CBHF could play it safe and continue to fund small projects that will have a moderate effect at best. Or, it could choose to gamble, re-purpose itself and commit its resources to encourage FDI, knowing that such a strategy could prove a monumental triumph (or colossal failure).

Welcome to 14 Points Blog!

As students we have too few opportunities to share ideas on the topics and current events that matter to us. We all come from interesting personal and professional backgrounds, and care deeply about or worked on issues in public policy that for some reason aren't elicited in an intro course.

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