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International Archive

Does the Export-Import Bank make or lose money?

Author: Donald Marron

| Posted: September 10th, 2014

 

 

0910blogExport

Suppose your aunt decides to start a business making pizza ovens. She will design and build the ovens, and her daughter will manage operations. A bank is ready to lend her $100,000 to get started, but it wants someone to cosign and be on the hook if she misses any payments. She offers to pay you $6,000 to do so.

A business-savvy friend tells you that missed payments on such a loan average $2,000, usually less, occasionally much more. He also reports that $7,000 is the going rate for cosigning.

Those insights spark lively family debate. Your aunt believes her proposal is a no-brainer. She would get to start her business, your niece would get a better job, and you would come out $4,000 ahead on average. It’s a win-win-win for the family.

Your spouse disagrees. Yes, you’d net $4,000 on average, but you would get $5,000 by cosigning a similar loan in the marketplace. Your aunt is asking you to bear the financial risk of her loan without fully compensating you. In a worst-case scenario, you might end up owing the bank $100,000. You deserve to be fairly compensated for taking that risk. Cosigning would help her and your niece and may be best for the family. But the deal is not a win all around. You would be bearing real financial risk, effectively giving your aunt $1,000, and everyone in the family should acknowledge that.

Cosigning the loan would thus make you $4,000, according to your aunt, or cost you $1,000, according to your spouse. But which is it? And should you cosign the loan?

Those questions are at center stage as Congress debates the fate of the Export-Import Bank, whose charter expires September 30. The details are more complex—imagine the Bank cosigning a loan to a restaurant in Ethiopia that wants to buy an oven from your aunt—but the issues are the same.

Like your aunt, Bank proponents argue that guaranteeing loans is a win-win-win. American exporters will sell more abroad, a win for shareholders and a win for their workers. Bank fees more than cover expected losses, so taxpayers win as well. Indeed, the Congressional Budget Office estimates the Bank will net $14 billion from new guarantees over the next decade.

Like your spouse, however, others reject the idea that the Bank is really a win for taxpayers. While it might generate $14 billion over the next decade, the Bank would gain even more—$16 billion—if taxpayers were fairly compensated for the risks they would be taking. By offering loan guarantees at below-market rates, the Bank will effectively lose $2 billion over the next decade, again according to CBO.

Your view of the Bank’s profitability thus depends on what you measure it against. Official budget accounting, which shows the gain, compares the Bank’s performance to a scenario in which it doesn’t exist. CBO’s alternative, which shows the loss, compares the Bank’s performance to a scenario in which it does exist but charges fair market rates.

Both comparisons are important. The $14 billion represents the expected fiscal gain if the Bank is reauthorized for another decade, while the $2 billion represents the subsidy that exporters get from taxpayers who aren’t fully compensated for bearing new financial risks. The Bank’s specific activities are costing taxpayers, but in purely monetary terms that is more than offset by the gains from being a commercial lender.

If the Bank’s purpose were solely to make money, we’d do better to replace it with a commercial venture that operates on market terms. But making money is not the Bank’s mission. Instead, its goal is to support American exporters, particularly in competition with foreign firms that also receive government backing.

Policymakers thus confront the same tradeoffs that arise for almost any policy. The Bank creates winners and losers. Just as you need to balance the personal cost of cosigning your aunt’s loan at below-market rates against the potential benefits to your family, so must Congress balance the costs and benefits of the Export-Import Bank. It might still be worthwhile, but it’s not a win-win-win.

Follow Donald Marron on Twitter.

Photo: Songquan Deng / Shutterstock.com

Filed under: Economic Growth and Productivity, Fiscal policy, International, Job Market and Labor Force, Monetary policy and the Federal Reserve, Public and private investment |Tags: , , ,
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Maps need context

Author: Jon Schwabish and Bryan Connor

| Posted: July 2nd, 2014

It might be the case that maps are the most data-dense visualizations. Consider your basic roadmap: it includes road types (highways, toll roads), directions (one-way, two-way), geography (rivers, lakes), cities, types of cities (capitals), points of interest (schools, parks), and distance. Maps that encode statistical data, such as bubble plots or choropleth maps, are also data-dense and replace some of these geographic characteristics with different types of data encodings. But lately we’ve been wondering if most maps fail to convey enough context.

India
As an example, consider this map of poverty rates by districts in India. It’s a fairly simple choropleth map and you can immediately discern different patterns: high poverty rates are concentrated in the districts in the northernmost part of the country, on part of the southeast border, and in a stretch across the middle of the country. Another set of high-poverty areas can be found in the land mass in the northeast part of the map. But here’s the thing: we don’t know much about India’s geography. Without some context—plotting cities or population centers—we can only just guess what this map is telling me.

Many readers will be more familiar with the geography of the United States. So when maps like this one from the Census Bureau show up, we are better equipped to understand it because we’re familiar with areas such as the high-poverty South and around the Texas-Mexico border. But then again, what about readers familiar with basic U.S. geography, but not familiar with patterns of poverty? How useful is this map for them?

To more completely understand data encoded to maps, context is important. Where are the city centers? What are the patterns of population or income or other metrics that may be important?

For example, a team (including Bryan Connor) from this year’s civic hack day in Baltimore built something to directly address this problem. This mapping tool lets you build and compare every map possibly generated from the city data (as collected and published by the Baltimore Neighborhood Indicators Alliance). Poverty can be placed next to population, racial diversity next to education data, and so on.

BNIA

The data visualization studio Interactive Things provides us with another good example with their Daily Swiss Maps project for NZZ. Over several months, they worked with an editorial team to build maps that reveal new insights about Switzerland. Some feature small multiples, others highlight population distribution, and all of them link to a corresponding editorial explanation on nzz.ch.

Maps are some of the most popular visualization types—and not just those that map favorite beer types or accents—but also those maps that provide dense levels of data in a familiar format. It’s just that sometimes those maps leave out a level of context that will help us better understand the information being shown.

Are we suggesting that every single map needs several other maps to give context? Well, maybe. Or perhaps single maps need more and better annotation in order to highlight regions and patterns of relevance.

Filed under: Baltimore, Economic Growth and Productivity, Finance, Geographies, Income and Wealth, International |Tags: , , , ,
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Too few women among principal refugee applicants

Author: María Enchautegui

| Posted: June 20th, 2014

June 20th is World Refugee Day, a day established by the United Nations to honor the strength, courage, and determination of refugees. This prompted me to find out more about who US refugees are, besides the usual portrait of country of origin. In looking at refugee data published by the Department of Homeland Security (DHS), one fact caught my eye: the low representation of women among principal applicants (that is, the people directly petitioning for refugee status).

In 2012, women made up only 30 percent of the more than 27,000 principal applicants that were granted refugee status, even though half of the world’s 43 million refugees are women, according to the United Nations. Women refugees mainly enter the United States as a family member of a man who is a principal applicant for refugee status.

What is a refugee?

Refugees, as defined in section 101(a)42(A) of the Immigration and Nationality Act, are generally people outside their country of nationality who are “unable or unwilling to return to” their home country because of a “well-founded fear of persecution on account of race, religion, nationality, membership in a particular social group, or political opinion. Applicants must apply for refugee status before entering US territory. The preponderance of men in the principal applicant pool may be due to war and political persecution stemming from these wars, since most soldiers and people directly involved in wars are men. But if these men die or are imprisoned, they often leave behind widows, sisters, and mothers who are at risk of persecution and must apply for refugee status on their own. And women are also displaced from their homelands by conflict and persecuted for their ideas.

refugeeStatusWomen-01

Asylum seekers are evenly split by gender

What got me thinking about why so few women are principal applicants for refugee status is that the gender distribution of asylum seekers is more equal. People seeking asylum must meet the definition of a refugee—meaning they have a well-founded fear of persecution—but asylees are either already in the United States (affirmative asylees) or are seeking admission at a US port of entry (defensive asylees). According to DHS, half of principal affirmative asylee applicants are women. Why is there such a big difference between women asylum seekers and women refugees?

The gender imbalance among principal refugees is troublesome and raises questions about whether women are getting a fair share of refugee admissions. The State Department, which is responsible for the Refugee Admissions Program, should look closely at the refugee application and determination processes to make sure women have as fair a chance of receiving safe haven as men do.

Filed under: Families, Family structure, Immigrants and Immigration, Immigration policy, Integration, International |Tags: , , ,
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What about LGBT refugees in the United States?

Author: Erwin de Leon

| Posted: June 20th, 2014

 

 

LGBT_statueOfLiberty-01

A line in a recent Christian Science Monitor article asks, “Are children fleeing Central American violence refugees who need asylum or illegal gold-diggers who need to go home?”

Politicians, talking heads, policymakers, and those of us interested in immigration have been transfixed by the surge of unaccompanied minors at our southern border. Whether these children are refugees worthy of asylum will eventually be determined by immigration courts, if and when their cases finally get there.

Another group fleeing violence but not getting as much press – if any at all – are lesbian, gay, bisexual, and transgender (LGBT) refugees. In a report prepared for the US Department of Health and Human Services’ Office for Refugee Resettlement (ORR), the Heartland Alliance estimates that around 3,500 LGBT refugees arrive in the country annually. Another 1,250 are granted asylum every year.

Arriving in small numbers, they tend to fly under the public’s radar. Some also choose to remain in the shadows, due in part to the conservatism of their own ethnic communities. LGBT refugees might enjoy more freedoms here, but they often live among fellow immigrants, who tend to be more socially and religiously conservative than native-born Americans.

Queer women and men flee their homelands because of the oppression they suffer based on their sexual orientation or gender identity. They are routinely subject to human rights abuses, including sexual assault and corrective rape, physical violence, torture, imprisonment, and murder. In Iran, Mauritania, Saudi Arabia, Sudan, Yemen, and parts of Nigeria and Somalia, people can be put to death for same-sex conduct. In an additional 76 countries, LGBTs can be imprisoned for living openly. While gay and transgender people are still subject to discrimination in some parts of the United States, their rights are generally and increasingly protected.

In my last post, I discussed the crucial role immigrant organizations play in the lives of immigrants. These community-based nonprofits are community centers, social service providers, advocates, and network builders. They prop up the immigrant safety net. However, there are not enough to serve the needs of immigrant communities.

There are far fewer organizations for refugees. In 2012, over 58,179 refugees were admitted into the country and 29,484 individuals were granted asylum. A quick search with Urban Institute’s National Center for Charitable Statistics reveals a mere 128 community-based organizations dedicated to refugee relief.

Aside from limited capacities, these organizations are rarely equipped to deal with the housing, employment, medical, mental health, safety, and legal needs of LGBT refugees. While gay and transgender refugees avail of the same services as other refugees, they benefit from a sensitivity resulting from an awareness of queer concerns and realities. In 2011, ORR Director Eskinder Negash expressed concern for the lack of resource materials tailored for queer refugees, which are critical to their successful resettlement and integration: “The current resettlement network has limited understanding of the LGBT community.”

A lot of work is left to be done, from advancing international and domestic policies protecting queer refugees to increasing the number and capacities of refugee relief and resettlement organizations. But it all begins with education and storytelling. A trickle of LGBT refugees, however, simply isn’t as compelling as a tsunami of undocumented child migrants.

Illustration by Tim Meko

Filed under: Advocacy organizations, Crime and Justice, Crime and justice statistics, Human services organizations, Human trafficking, Immigrant-serving organizations, International, Nonprofits and Philanthropy, Social impact, Victims of crime |Tags: , , , ,
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A simple remake for a simple chart

Author: Jon Schwabish

| Posted: June 19th, 2014

I had a hard time visually picking out the story in a simple chart published by the Financial Times earlier this week. There was nothing special or particularly complex about the chart—it’s a simple clustered column chart—but the fact that I couldn’t easily see the story made me think there must be a better way.

The FT article focused on how average household income in the United Kingdom is higher than in many other European countries, but that average household income in the bottom 20% of the income distribution is much lower in the UK than in the rest of Europe. The FT story mirrored the message in this report from the High Pay Centre, which used data from the Organisation for Economic Co-Operation and Development’s (OECD) Better Life Index.

The main graphic in both the FT story and in the High Pay Centre report was a simple clustered column chart:

Financial Times High Pay Centre
FT HPC

Notice the slight changes FT made to the High Pay Centre’s chart: they aligned the country names at a 45 degree angle instead of at 90 degrees; used a blue color scheme instead of orange and grey; reduced the number of zeros on the y-axis by converting the data to thousands of dollars; and made some other minor changes to the legend, gridlines, and title. Aesthetically speaking, I prefer the FT approach because it does a better job of reducing clutter and highlighting the data. I did, however, like the way the High Pay Centre helped focus the reader’s attention on the United Kingdom by using a different color for the country label on the x-axis.

But both versions of the graphic fail to effectively visually communicate the information.

Here’s the passage from the FT article that discusses the figure:

The High Pay Centre found that, with average household incomes of $53,785, the richest 20 per cent in the UK were the third richest in their bracket of all EU countries measured by the OECD, lagging behind Germany and France.

However, a very different story applied to the bottom 20 per cent in the UK whose incomes were much lower than in other, more equal countries with a similar average income.

The OECD calculates the average income of the bottom fifth of UK households at just $9,530, much lower than the poorest 20% in France ($12,653), Germany ($13,381), Belgium ($12,350), the Netherlands ($11,274) and Denmark ($12,183).

I found it difficult to navigate the text to FT’s graph (and the High Pay Centre’s version as well) for two main reasons. First, with 39 columns, it was a challenge to compare the different measures across the different countries. I couldn’t, for example, easily see how average incomes in the bottom 20% for the UK compared with the other countries. Second, the columns share one color palette, so values for the United Kingdom don’t stand out.

Instead of a clustered column chart, I tried a different approach. In this “dot plot,” I first rotated the graph—this rotates the country labels so that they are easier to read. I then plotted each data series as dots instead of columns and linked them with a thin line. In this way, I think it’s easier to track differences in each data series across countries and to make comparisons of the different values within countries. Finally, to better highlight values for the United Kingdom—the central facet of the FT story—I used shades of red for the dots and red for the text country label. One could imagine doing even more to highlight those values, such as brighter or different colors, or maybe some annotation.BetterChartFor those of you interested in the technical aspect of constructing this version, there’s nothing too fancy going on here. This was all built in Excel using three scatterplots and some data labels. (There was a little bit of trickery with the axis to get the country labels to fit on the chart; if you’re interested, contact me on Twitter.)

I think this remake shows that even simple charts can be redesigned to more effectively communicate information. In this case, especially when a single country is of interest, highlighting those data (not just the label as in the High Pay Centre version) can be especially important.

Filed under: Asset and debts, Economic Growth and Productivity, Income and Benefits Policy Center, Income and Wealth, Inequality, International, Job Market and Labor Force, Labor force
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Serving troubled families

Author: Susan Popkin

| Posted: November 21st, 2013

 

 

Humboldt Gardens 2

Last month, I had the opportunity to meet Louise Casey, director of the United Kingdom’s Troubled Families Programme. Casey has served in three successive British cabinets and is passionate about finding solutions to the deep problems that have trapped many families in intergenerational poverty. Unusual for a public official, before deciding on an approach, she personally interviewed a number of families to learn about their lives.

Much of what she learned is sadly familiar to those of us in the United States who are working to find solutions for the most vulnerable. Most depressingly, she was struck by how many people she interviewed described experiences with family violence and sexual abuse as a “normal” part of life—something they didn’t like, but also accepted as inevitable.

Sexual violence, joblessness, and psychological distress—these are just some of the problems that the most vulnerable families face, so any intervention with a chance of succeeding would have to intervene on multiple fronts. But if successful, the benefits would be undeniable. Casey estimates that serving these families effectively could save the United Kingdom billions of pounds per year in reduced costs for emergency room care, social services, and child welfare.

UK program echoes US intervention

The program Casey designed echoes the design of the HOST demonstration, with a family intervention worker (case manager) assigned to coordinate targeted support services for individual families. Like HOST, the United Kingdom’s program uses a strengths-based approach, asking families to set their own goals, like better school attendance for their children or stable housing. Casey hopes that this targeted and strategic intervention will finally break the cycle of poverty for these very vulnerable families.

Although the United Kingdom’s program is government-supported and large scale, the similarities to HOST—and to other service models targeting “frequent fliers” who drive up health care and social service costs—are striking. HOST targets the most vulnerable public housing families with intensive, two-generation service models with the goal of stabilizing both individual families and the larger community. Our new series of policy briefs highlights the complex challenges that keep these families stuck in poverty, including serious physical and mental health problems among adults and children, weak work histories, and low levels of educational attainment. Housing assistance has not protected them from other forms of hardship, and even those who are working report high levels of food insecurity.

The communities they live in can compound the family vulnerabilities. It is no surprise that Casey notes that many of the families her program serves live in social housing; as in the United States, many of these communities house large numbers of extremely poor households and have high levels of community and family violence. In Chicago’s Altgeld Gardens, one of the two HOST sites profiled in our briefs, even residents who truly want to make their community a safer place for kids distrust and fear their neighbors so much that they are unable to act. The other HOST site, in Portland, is mixed-income. Residents there report higher levels of community cohesion and trust, and from our observations, seem more likely to come together to protect children and their community.

Louise Casey is gambling that the investment the UK government is making in its most troubled families will pay off in better outcomes for kids and lower costs to taxpayers. Her team is evaluating the program and tracking costs and will have early results in 2014. Although HOST is much smaller, we and our partner housing authorities and service providers are hoping that it, like its predecessor the Chicago Family Case Management Demonstration, will show enough positive results for children and families to encourage other housing authorities to take on the challenge of addressing the needs of their most troubled residents.

Filed under: Adolescents and Youth, Affordability, Aging, Child care, Child welfare, Children, Children's health and development, Delinquency and crime, Economic well-being, Economic well-being, Families, Homelessness, Housing and Housing Finance, International, Low-income working families, Metropolitan Housing and Communities Policy Center, Neighborhoods and youth, Poverty, Poverty, Vulnerability, and the Safety Net |Tags: , , , , ,
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What we can learn from the debate about Syria to improve crime policy

Author: John Roman

| Posted: September 9th, 2013

 

syriaLast week, the Senate Foreign Relations Committee announced that it had reached an internal agreement on the parameters authorizing the Obama administration to use military force in Syria. The administration’s stated goal of military intervention is to deter and degrade the Assad administration’s ability to serially mass murder its own citizens. This week, the full Congress will take up the issue and debate the limits on the U.S. military’s use of force.

If the congressional military authorization limits the military to a level of engagement short of the removal of Assad, the whole debate can be neatly summarized as one designed to establish the performance targets that will signal victory. It will answer the question of what needs to be accomplished in Syria in order for the US and its allies to have “won.”

It also raises an interesting corollary question. If we as a nation cannot engage in military action without a consensus about how it fits with broader strategic goals, the specific objectives of the mission, and performance targets to define success, why are we willing to engage in social policy without defining any of those critical first principles?

Consider my area of study, crime and justice. Crime is extraordinarily expensive, causing perhaps as much as $2 trillion in harms annually. More than 7 million Americans are under criminal justice system supervision at any given time. There are more than 14,000 law enforcement agencies in the U.S. with more than one million employees.  Private security forces also employ about one million people (and interestingly enough, this one-to-one ratio of public law enforcement to private security mirrors the ratio of U.S. soldiers to private contractors in Iraq at the height of the war).

Thus, it seems reasonable to expect that the sheer scale of the crime problem in the U.S. demands the identification of first principles of crime fighting similar to those under discussion with respect to Syria.

Today, the U.S. is about as far away from consensus on crime fighting as a unified nation can be. For instance, the predominant policing strategy in America today—though by no means the only policing strategy—is what is known as hot spots policing or COMPSTAT. The strategy is employed by as many as 70 percent of law enforcement agencies.

The general idea is that police keep detailed data not only on the number and types of crimes, but also where and when the crimes occur. This allows police to identify times and places that become “hot” (i.e., experience an unusual amount of crime in a short period of time). The approach is intuitive, and has been credited by its proponents with substantially reducing crimes (although there are critics as well).

One criticism that has received too little attention is that this approach, in its most basic form, simply seeks to drive crime back to baseline levels. It’s the Whack-A-Mole approach to policing—as long as crime rates don’t shoot up to conspicuous levels, everyone is off the hook.

This helps explain why the U.S. tolerates astonishingly high levels of crime. The U.S. homicide rate is four times greater than Canada’s, more than 10 times greater than Japan’s, and higher than every single NATO country and most of Eastern Europe.

A lot of the blame can be laid at the feet of federalism, which prohibits a national policing authority and thus prevents best practices from being rolled out nationwide.

But perhaps the Syria debate can shake loose some creative thinking about the criticality of first principles and objective performance targets. We should have a national dialogue about how much crime we are actually willing to tolerate and set performance targets that define what is acceptable.

We should also follow the lead of our colleagues in the education sector, who face the same barriers from federalism, but have managed to create—without the federal government—Common Core State Standards for education that define success for schools and students.

If it is important enough to set defined goals for education and military interventions, it is certainly important enough to do so to fight crime.

Syrian flag illustration by Tim Meko, Urban Institute

Filed under: Crime and Justice, Crime and justice statistics, International, International civil society and democratic institutions, International Development, International public administration and local government, Justice Policy Center |Tags: , , , ,
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Lighting the way to municipal prosperity

Author: Mary Larzelere

| Posted: September 3rd, 2013

 

 

kosovo

When was the last time you thought about street lights? They’re certainly something I’ve always taken for granted, until a recent trip to Kosovo as part of an Urban Institute program supported by USAID, the Democratic Effective Municipalities Initiative (DEMI).

DEMI is a three-year, $20 million project dedicated to helping Kosovo municipalities achieve good governance at the local level. DEMI undertakes steps to make local service delivery more transparent and inclusive, and make local officials more accountable for results, a true challenge in any democracy, let alone a new one such as Kosovo’s.

As the project is coming to an end, I traveled to Kosovo in July to help close our office in Pristina. While there, I had the opportunity to visit some of the municipalities with which we’ve been working. Several of these municipalities chose to implement public lighting projects, which was surprising to me, since public lighting has never seemed as politically essential as education or public health.

At dinner one night, our in-country team leader explained the impact these lighting projects have. In Kllokot, a Serb-majority municipality (population 2,500) with a newly elected government, installing street lights has allowed citizens to feel safer walking around at night, which results in increased profits for businesses that are now able to stay open later. These businesses recognize that a service provided by the local government is benefitting them and have started paying their taxes more regularly. This increased municipal revenue in turn allows the municipality to provide further services to the citizens.

Something as seemingly simple as partnering with a municipality to help them provide a basic service has far-reaching effects. Indeed, the value of Kllokot’s public lighting project is twofold: not only has the municipality strengthened its own revenue sources and improved quality of life for its citizens, the public administration has also gained a key insight into governance.

DEMI’s support of the lighting project came only after (and is conditioned upon) municipal efforts to survey citizens on desired public service improvements, design a project and budget for implementation, and carry out a public bidding process that met international standards. As onerous as these requirements were to implement, the positive feedback of increased revenue and a healthier local economy have reinforced the importance of public participation to Kllokot’s government.

Photo Prizren Municipality, Kosovo, by DEMI staff, Urban Institute 

Filed under: Center on International Development and Governance, Economic Growth and Productivity, Geographies, Infrastructure, International, International civil society and democratic institutions, International Development, International municipal and intergovernmental finance, International public administration and local government, International urban development and the environment, Neighborhoods, Cities, and Metros, Other, Public and private investment |Tags: , , , , ,
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The continued decline of North Korea demonstrates why Inclusive Politics must be part of the next round of Millennium Development Goals

Author: Charles Cadwell

| Posted: May 20th, 2013

 

 

nKorea_NASA

There’s been a lot of talk about North Korea in the news cycle of late, but little of it relates to the most prominent humanitarian crises occurring within its borders.

In 2000, all 193 U.N. member states, including North Korea, agreed to meet eight human development goals by 2015, including:

  • Eradicating extreme poverty and hunger,
  • Achieving universal primary education,
  • Promoting gender equality and empowering women,
  • Improving maternal health,
  • Reducing child mortality rates,
  • Combating HIV/AIDS, malaria, and other diseases,
  • Ensuring environmental sustainability,
  • Developing a global partnership for development.

Since these “Millennium Development Goals” (MDGs) were adopted, some 600 million people worldwide have escaped abject poverty, which is defined as living on less than $1.25 a day.

But as the contrast of North Korea and its neighbor China show us, this progress has been lopsided.

Most of the global reduction in extreme poverty comes from the dramatic growth in China, India, and a few other countries.

On the other hand, in North Korea, with the loss of markets in the Soviet Union and elsewhere in the communist world, per capita income fell by 50 percent, life expectancy has declined by at least five years, and child and maternal mortality has increased. On top of that, one-third of North Korea’s population faces food shortage.

Proving the adage that a picture is worth a thousand words, the famous nighttime satellite image of the Korean peninsula tells the same story.

So while North Korea’s missiles may be a threat to the millions living in South Korea, its own government policies threaten the lives of its 12 million citizens who live in extreme poverty, and the one-third of its children who are stunted by malnourishment.

And, of course, these measures do not account for the burden North Korea’s human rights record imposes on its people. The surest sign of this political and social oppression is perhaps the flagging rates of productivity and innovation.

So as the 2015 date for achieving the MDGs approaches, and as the international community begins considering new goals for improving the human condition, North Korea’s case highlights a broader gap in the current MDG roadmap and a topic that needs to be part of the framework going forward.

While North Korea’s declining living conditions can be visibly and unarguably connected to its politics, there are plenty of other countries where government policies—more so than geography, climate, colonial history, or natural resources—are the main impediment to meeting the MDGs or any new set of targets.

North Korea provides a clear illustration of a vital component missing from the original MDGs: inclusive political institutions are essential to sustained growth.

It is therefore somewhat refreshing that concepts generating buzz in the discussions of post-2015 development goals are an “inclusive future” and “inclusive growth.”

Precise definitions for these concepts are a work in progress, but they generally hone in on the development community’s concerns about growing inequality and the lack of shared benefits resulting from post-2000 development.

It is hard to be against “inclusive growth,” especially in an era of increasing income and wealth inequality. But it is hard to agree on how this can be achieved. In meetings organized by the United Nations and other international institutions, people with various interests and perspectives on how poverty should be eliminated are weighing in.

In their 2012 book “Why Nations Fail,” academics Daron Acemoglu and James Robinson theorize that inclusive economic policies are only sustained in places with inclusive politics.

“Inclusive politics,” as general a concept as it is, is at least more specific than “inclusive growth,” and targets political processes and structures that sustain a polarizing status quo in many places.

This is an advance on the simple-minded ideas that led to past fads in goal-setting, such as “participatory development,” in which excluded groups were invited into discussions of development projects and programs.

These efforts were not wrong, but they never confronted the growth-killing political climates of the countries in question.

Now, as we go about setting new post 2015 targets, we have the opportunity to integrate politics into the thinking and activities of the development/anti-poverty community.

Activists and policymakers serious about making headway would do well to revisit Mancur Olson’s Power and Prosperity, which anticipated the vital nature of politics when it comes to progress.

Olson explained that market-augmenting institutions provided by a capable, but democratically constrained state are the necessary other invisible hand.

I doubt the North Koreans would have agreed to the UN’s 2000 MDG commitment if it had listed “inclusive politics” amongst the goals. But if we’re serious about “inclusive growth,” we should include these goals in the 2015 batch and be clear what we mean, even at the risk of having fewer members of the General Assembly sign up.

Nighttime view of the Korean Peninsula from NASA

Filed under: Economic Growth and Productivity, International, International Development, International social sector reform, International urban development and the environment
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