Posts by Maha Rafi Atal

In India, Size Does Matter

By , 11 December, 2010, No Comment

More ambiguous, waffly writing at Foreign Exchange. Promise to write something rich and conclusive this coming week. But for now, a slightly different take on the Indian microfinance mess:

First, a brief summary of the situation: In October, the government of Andhra Pradesh (AP), a state in the south of the country and home to A. all those call centers B. 30% of the country’s microloan industry, decided to blame microfinance institutions (MFIs) for a series of debtors’ suicides. [The relationship between poverty and suicide is not a new political subject in India: the left-wing newspaper The Hindu has made a business of chronicling in harrowing and tragic detail the suicides of bankrupt farmers in the last few years.] The suicides pointed to a growing trend, in AP and elsewhere, of over-indebted borrowers, many of whom had loans from multiple sources, a sign of the intense pressure that these mega-lenders put on loan officers to grow their portfolios. As others have noted, the ban also reflected the fact that the government oversees its own lending scheme, the Self-Help Groups (SHGs), and that the suicides presented a great opportunity to shut down competitors.

But the ‘pox on both their houses’ critique that has emerged from these facts is not helpful, not least because it doesn’t engage particular closely with what either MFIs or SHGs actually do.

Rather it seems to me that the whole sector got into trouble because it was insufficiently localized. As practiced in India, both the MFI and the SHG model have neglected the key piece that made microlending in Bangladesh work so well.

More here.

Some Soul-Searching On Inequality

By , 7 December, 2010, 2 Comments

In the early months of the financial crisis, I wrote up a post that attempted to look at the relationship between income inequality and economic catastrophes, arguing that as the U.S. economy has opened to the rest of the world, the correlation between economic growth and income growth has eroded. As a result, it’s now perfectly possible to see incomes fall even as the economy is growing. There are two problems with this: first, the kind of debt bubbles created by the gap between growth (ie consumption) and income, and secondly, the ease with which a person paying attention to that top-line growth can MISS the signs of an oncoming bubble burst if they aren’t paying attention to the income gap.

At the time, this was a bit of a crazy argument to be making, but since then I have seen versions of it pop up elsewhere. It was posed as a question–and left hanging–by Derek Thompson at the Atlantic. It was the underlying assumption of a series on the causes of inequality that Tim Noah wrote up for Slate. And it has been bandied about by senior economists at Harvard, Princeton, and U. Chicago.

Here’s what’s interesting about this trend. Most of the people making the argument against income inequality are folks who were in favor of greater redistribution before the crisis, folks who see a moral argument for greater equity irrespective of the economics, and for whom the economics is just a new arrow in the quiver.

What is China Thinking?

By , 1 December, 2010, 1 Comment

Latest post at Foreign Exchange waffles about trying to understand what’s happening on the Korean peninsula:

So here are the questions: to what extent is the DPRK acting with Chinese support, and to what extent is it acting alone? and if it is acting alone, how comfortable is Beijing with the decisions Pyongyang is making? How seriously should observers take Chinese expressions of dissatisfaction, if, as the pessimists suggest, the proposed solutions are empty? South Korean news is reporting that North Korean envoy Choe Thae-Bak is in Beijing till Saturday–is that a friendly meeting or an opportunity for reprimanding? Truth be told, we just don’t know.

What we do know is that the primary foreign policy imperative for China is its sphere of influence in northeast Asia, not the regime per se.

Go read the rest.

More on Ireland

By , 30 November, 2010, No Comment

Another quickie Ireland at Foreign Exchange today, this time looking at the politics of the deal with an Irish TD:

Going into the conversation, I was under the impression that Ireland might hope to renegotiate at a lower interest rate after the crisis has stabilized somewhat. Deputy Fleming was determined to disabuse me of this assumption.

Over time, he says, “people will begin to see that the interest rate is not so bad. If the financial situation stabilizes, by year 3 [of the loan period], it may be possible to be raising funds in the bond markets again at a rate that is lower than the rate on offer [in the EU settlement], and we may not have to draw it all down at that rate.” In other words, there’s no plan to renegotiate a better deal in Brussels, but there is a plan to aggressively hack at the deficit domestically, and then leverage the Brussels offer to renegotiate with the bond markets.

For more such optimistic predictions, read the whole thing.

Covering the Wikileaks

By , 29 November, 2010, No Comment

The latest at Foreign Exchange on the way news organizations are handling the Wikileaks:

as we come to see Wikileaks as just a source, news organizations are having to decide whether to cover them at all, and–as we often do with delicate subject matter–how to balance the scoop against the risk to those implicated. I have very minimal sympathy with Wikileaks’ overall agenda, which seems increasingly to be about embarrassing the US government for the sake of it rather than to advance any particular cause, but I do think that news organizations have an obligation to cover these leaks in some fashion once they’ve occurred. They can pick and choose what to include on the basis of what’s really significant, and they can avoid reprinting the actual documents if they see a risk to someone’s life, but they can’t just choose to ignore the whole development.  That’s why I think it’s deplorable that two major news organizations–the Wall Street Journal and CNN–chose to turn down access to the documents altogether, because, in essence, they were afraid of being compromised. National security reporting is inevitably compromised and risky, and to run from that challenge is unjournalistic, and wrong.

Go read the whole thing.

Germany’s Ireland Calculus

By , 29 November, 2010, No Comment

Short post over at Foreign Exchange on Germany and the Irish bailout:

…the Ireland debacle is just the latest episode in an ongoing conversation about Germany’s place within the eurozone, about the German public’s frustration with cleaning up after its weaker neighbors and about the frustration of other major EU players with German intransigence.

Here’s the question: is this particular incident (the threat to gauge the bond markets to appease to German public followed by a five year compromise that spares the bondholders with promises of stricter rules in the future), a victory over the Germans, or a victory for them? was Angela Merkel made to compromise, or was she bluffing all along? I’m guessing it’s the latter…

Go read the rest.

Thanksgiving Book Recommendation

By , 25 November, 2010, 5 Comments

I’m surfacing briefly from my food coma induced nap to type out this post, and then I’ll be climbing right back into bed. Those of you who read this blog regularly (all five of you, that is) will know that I’m preoccupied–some might say obsessed–with the conflict between the communitarian and individualist strains in liberal politics. And I keep returning to the subject in large part because I feel I’m doing a lousy job of articulating what I think–or indeed, understanding myself well enough to be articulate. Jonathan Franzen’s latest novel, Freedom, is helping me work through it, and for that, I recommend it to you.

The best analysis of the novel I’ve read is over at Apostrophe, a lit blog by a former schoolmate of mine, Amelia Atlas. Here’s what she says,

There is a totality to what he writes that extends beyond its visible horizons, a moral universe as well as a visual one.  Whether or not one believes in the fundamental enterprise of realism—a conversation for another time—there are few equal practitioners of it working in America today.

… the entirety of Freedom could be taken as one long performance of everything that Mill, in his utilitarian idealism, got wrong.

…In On Liberty, Mill outlines a vision of freedom wherein the only constraints on the actions of any one person are those which entail harm unto others.  He is not so naïve as to believe in an automatic consensus of what constitutes harm, but he does believe that it’s possible for untempered individuality to exist alongside a sense of the common good

…I make no claim that Freedom is by any stretch a kind of one-to-one test of Mill’s harm principle.  What Franzen does do, however, is capture the difference between a conceptual and an experiential politics.  Like his nineteenth-century progenitors, he checks our moral compass against its reality on the ground (this, not simply mimesis, is the heart of the realist tradition).

Really, there’s not much to do except issue a huge +1 to the above.

What spoke to me most about the book is that it solves a problem I have had in explaining my preference for communitarian over individualist liberalism to friends, colleagues etc. What I find is that EVEN when I can make a legitimate case for why the communitarian approach produces a better policy outcome in some area of public life, I face a lot of skepticism for why anyone, personally, should be drawn to it. It always seems to my listener that I’m asking them to trade IN themselves for the community, when in fact the core of communitarianism is the notion that the self is MOST fulfilled when grounded in relationships to others. Very few people seem to buy that notion of positive freedom anymore. Franzen does a pretty good job of making the case in reverse, by showing not only what hollow social doctrines Millian individualism produces, but also–and more importantly–how soul-crushing it is FOR the individuals who participate in it. It is a book about people who believe that they are acting in the general interest by fulfilling themselves personally, and it is a book about the personal tragedy that comes from this delusion.

This makes for tough reading. The characters are unpleasant people, and get worse as the book–and their individualist experiment–progresses. There are no good guys and no light moments of relief from the ugliness the book sets out to expose. It will upset you. That’s not everyone’s cup of tea. One of my former colleagues thought it could have been a better novel if it gave us more lovable faces. But my favorite thing about it was its unrelenting tone, an urgency and desperation, as if Franzen were the last sane man in the asylum screaming to be heard before the individualist madness engulfs him too. The fact is, I’ve not read anything that felt so completely of–and in response to–its moment than this book in about ten years.

Read it. And Happy Thanksgiving!

Too Little Too Late

By , 19 November, 2010, No Comment

Regulators in the US, UK, Spain, Italy, Germany, Canada and the European Commission are finally getting serious about privacy. First, there’s the bevy of cases and crackdowns recently introduced against Google’s Street View. Secondly, there’s the EC’s new privacy proposal, mandating that in the future companies ask such consent for all the data they take, and (more radically) make it possible for users to have it deleted at any time. They’re calling this the ‘right to be forgotten.’ [A direct response to Eben Moglen, perhaps?]

This is comforting news for those of us who have been talking about data and digital rights for some time, to be sure. But I am wondering it’s ultimately too little too late.

See, most of the major holders of user data online are–or are close to becoming–monopolies within their niche: Google in search and advertising, Facebook in social, etc. And it seems to me that the history of monopolies is that once they get in place, it’s very difficult, legally, to break them up and almost impossible to muster the political will for radically restricting their business practices when a massive majority of the populace are their customers. [Can you see I've been reading Tim Wu?] That’s one reason that I’ve been arguing for two years that the way to best Google on privacy was to take it to task on antitrust issues early on, before it became unbeatable.

But given we haven’t done that, it now seems to me that the best possible scenario is [and I can't believe I'm saying this] NOT to sue Google’s more offensive services out of existence, or to try and take it apart, but to essentially acknowledge it as a legitimate monopoly, and then slap it with a huge list of monopolist’s burdens: forbid it from further M&A activity, say, forbid them from collecting things like payload data, and mandate that all data-collecting services become voluntary, not at the individual level, because that’s now untenable, but at the municipal level. If the majority of a town’s population votes to be mapped, Google can photograph in the town. I think the municipal level is basically the smallest level that is still feasible, and the largest level that is still democratic. Is this a crazy idea?

As for the right to be forgotten, I regard it as pretty sound when I think of individuals and companies like Google or Facebook, but I am less convinced about how it might extend to other types of websites. Jeff Jarvis has correctly pointed out that a very broad reading of such a clause could lead to the idea that people can demand takedowns of news stories about them. Which is something that doesn’t make any sense to me, not least because news coverage is NOT something you consent to have written about you. It is not data YOU give away (and therefore own) but data which we as a society have decided can be collected involuntarily so long as you have the right to correct the record, and to extract a pound of flesh when the journalist is wrong. I’m inclined to say that the right to be forgotten should apply to everything except IRS and other federally mandated disclosures, and stories about you in the press. But I must admit that my sense of surety about these issues has declined the more I learn about them, so, please, sound off.

Thinking About Food

By , 17 November, 2010, No Comment

Latest at Foreign Exchange:

Lately, I’ve been perusing some new research into the global food crisis: the dramatic spike in prices in 2007 and 2008 and the price volatility, inflation, and hunger that has followed it in search of some cases to probe in longer-form.

It’s an issue whose significance did not come home to me until I was reporting on sugar shortages in Pakistan. It was clear that the shortages were a political risk for the government, and that they were indicative of a much wider spectrum of economic mismanagement. But at a more basic level, I got the sense that hunger, even more than poverty, was the index against which people measured their suffering. That’s when I started reading up food and water in earnest.

Here’s the thing: we in the business press have a tendency to cover commodities like these in two ways, first as fodder for this-or-that futures market, and secondly, as raw materials for biofuels. We don’t spend nearly enough time on food and water as the nuts and bolts of subsistence. And yet, to me, the most exciting thing about following wheat prices or sugar prices or water management is that these are data points that cut vertically and geographically across the global economy. It is one of the few things I’ve covered that feels like I’m scratching at the edge of something universal. I’m still looking for the story that will let me communicate that. But in the meantime, here’s the picture of the crisis I have so far:

For the details, read the whole thing.

More on the Rally

By , 16 November, 2010, No Comment

via the voracious media-consumer bjkeefe, I’m watching this video now, Jon Stewart and Rachel Maddow on the Rally. I won’t make any comments, as you already know my take on the event.