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incentives-matter

Famine stalks Ethiopia once again:

The spectre of famine has returned to the Horn of Africa nearly a quarter of a century after the world’s pop stars gathered to banish it at Live Aid, raising £150m for relief efforts in 1985. Millions of impoverished Ethiopians face the threat of malnutrition and possibly starvation this winter in what is shaping up to be the country’s worst food crisis for decades.

Yes, of course we should buy food and feed it to the starving. It’s difficult to think of any system of morals worthy of being called such that would deny them that or us that duty. However, while we go looking down the back of the couch for that spare change which will keep our fellow human beings alive, it’s still worth pondering why this keeps on happening.

Land ownership is another important election issue. The opposition believes the best way to fight poverty is ending the state’s ownership of all land, and argues farmers must be free to buy and sell property and develop wealth. The government insists the state must own land, arguing it gives more security to farmers.

Yes, all land is State owned. There is no incentive for a farmer to invest in improving the productivity of his land for it simply ain’t his land. In more detail, Meles Zenawi, the Ethiopian Prime Minister:

Now we have, as I am sure all of you know, rejected the concept of changing land into a commodity in Ethiopia. We feel that this choice in our context is not economically rational. That is why we don’t accept it. Why do we think it is not economically rational? By fully privatizing land ownership, one starts the process of differentiation. The creative, vigorous peasant farmer gets to own larger pieces of land and the less effective get to be left to live in doubt.

He then goes on to reject this and insist that as they have lots of peasants thus they should have lots of peasant farms. Oh, and, while the land is held by the peasant “in perpetuity” the government still reserves the right to reallocate at any time. So it’s not actually in perpetuity and of course as it cannot be owned privately it cannot be used as security for a loan to improve its productivity.

Until those incentives are sorted out Ethiopia is condemned to have repetetive famines, sadly.

Just for a little further illumination, Zenawi, after a couple of years medical studies, joined the “Marxist Leninist League of Tigray” where he presumably got his education in economics. The MLLT were Hoxaist. That is, the people who thought that Joe Stalin had actually got it right on agriculture.

Which, if you want to starve the peasantry, is probably correct.

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incentives-matter

Yes, we’ve just had the figures out for the number of teenage pregnancies and yes, that’s still something that Britain tops the European leagues in. Various ideas are, as they are every year when the results come in, put forward as to why this might be so. We don’t do enough sex education, we do too much, not enough of the right type, we’re naturally promiscuous and I’m sure there’s someone out there who will blame the alienation of capitalism and the anomie of modern life. We’re also often compared to our close neighbours, the Dutch, who have a much lower rate of such pregnancies:

Everyone’s always going on about the Dutch and their marvellous approaches to this subject – sex ed from kindergarten basically and few unwanted teen pregnancies. What nobody ever says is that the Dutch aren’t hung up about sex and consider it a normal part of life, to be discussed en famille.

Could be of course, but quite how to change the entire British culture is another matter. It’s also true that this might be something to do with the difference:

Teenage parents in the Netherlands receive little financial support from the state until they are 18, and even then still depend partially on their parents’ support until they are 21. Babies born to teenage mothers are assigned a legal guardian (usually a parent of the mother) to whom child benefit is paid. The website of a local government-sponsored youth-work organisation explicitly states that: ‘If you are a teenage mother and younger than 18 and living at home, you will not qualify for benefits’.8 Mothers aged under 18 rarely qualify for housing benefits and are generally expected to continue to live with their parents.

Now, no, I don’t regard the Family Education Trust as an entirely unbaised source on this matter, but that does indeed seem to be what the benefits system in Holland is. Further, no I don’t think that that is the only reason (or reasons) for the difference: I’m sure that there is something in the cultural DNA over and above the differences in how the welfare state works.

But we do know very well that the more you subsidise of something the more you get of it: clearly we believe this to be true with farming, with education, with green and ecological behaviour, for that is indeed the reason that we give for the subsidies, that we desire more of such things (umm, to be accurate, that politically powerful groups use this as their argument for their subsidies perhaps). So why should we be at all surprised that if we subsidise behaviour that we don’t particularly desire (for everyone does indeed say that teenage pregnancy is undesirable, even if that isn’t my own view) that we get more of that behaviour that we don’t desire?

As I imply above, I’m not particularly against (nor particularly in favour) of teenage pregnancy, but I would be in favour of people realising that we have, by creating a subsidy system for it, increased the liklihood of it happening.

After all, incentives do matter.

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