Thursday, August 31, 2006

Excess Baggage

August 31, 2006

Despite today's United Nations deadline for Iran to give up its nuclear bomb program, Iran has done no such thing. The next diplomatic move is supposed to be for the U.N. to impose sanctions on Iran. That won't work, either.

Certainly Iranian President Mahmoud Ahmadinejad does not seem deeply worried about the prospect of U.N. sanctions. Apart from some throwaway lines about his government's peace-loving ways, he has rejected U.N. demands, blocked U.N. inspectors, brandished samples of enriched uranium, and last week inaugurated an Iranian heavy water plant that could be used to produce plutonium. Nor did a series of extant U.N. resolutions prevent Tehran's A-team terrorist affiliate in Lebanon, Hezbollah, from launching a war this summer while Mr. Ahmadinejad pondered his options.

Some of Mr. Ahmadinejad's behavior can be discounted on grounds that he is a messianic crackpot. But there is plenty of evidence that he is making a highly rational calculation about the ease with which the U.N. can be corrupted, divided, delayed and defied -- without serious penalty.

U.N. sanctions programs depend on the agreement and cooperation of member states under a set of rules dictated not by the interests of the modern free world, but by the decayed, despot-infested collective that is the contemporary U.N. And, as prefigured under U.N. sanctions on Saddam Hussein's Iraq, major players, like Russia and China, will almost certainly cheat. Iran, with 10% of the world's known oil reserves, and the world's second largest proven reserves of natural gas, has enough resources to grease the way.

Indeed, the general greasing of Iran's important U.N. connections is already well advanced. Much as Saddam fought sanctions by dangling fat oil development deals and doling out lucrative Oil for Food contracts to win friends and influence politicians, Tehran has already cultivated a global web of current and prospective business partners. Were Iran a more benign energy-rich state, such activity might pass for nothing more than normal enterprise. But under U.N. sanctions, this setup would translate into a constant fount of pro-Iranian lobbying pressure, and incentives to cheat, within a slew of U.N. member states.

A new country survey of Iran from the U.S. Department of Energy helps illustrate the problem. Along with Iran's $100 billion, 25-year bargain with China to develop natural gas, there are deals either signed or in the offing with the following list of countries: France, Turkey, Pakistan, India, Greece, Australia, Austria, Bulgaria, Romania, Hungary, Ukraine, Armenia, Norway, Kuwait, Turkmenistan and Iraq. Projects on the table range from huge oil and gas field investments, to pipelines, oil swaps and Indian service contracts. And for the blame-America-first crowd, the survey even mentions that "a foreign subsidiary of Halliburton Co. reportedly reached agreement," along with an Iranian partner, to help develop some of Iran's natural gas fields.

Tallied against the findings of congressional inquiries, and of the U.N.'s own probe into Oil for Food, Iran's current and would-be business partners include some of the most seasoned smugglers and veteran cheats of the Iraq sanctions experience. To be sure, democracies such as India, Australia, the U.S. and France have investigated at least some of the officially documented allegations of Iraq sanctions-busting among their own citizens. Many of the chart-topping violators, notably Russia and China, have done no such thing. Damascus -- Tehran's chief terror partner -- served as a thruway for billions of dollars worth of Saddam's U.N.-prohibited traffic in oil, military imports and cash. Significantly, Iran itself enjoyed a bustling trade in forbidden Iraqi oil during the era of U.N. sanctions on Saddam -- with Iranian smuggling boats plying the coastlines of the Gulf. There is no reason to expect Iran's smugglers would do any less on behalf of their own country.

Who at the U.N., exactly, would stop violations of its sanctions, should these be imposed? On the Security Council, veto-wielding Russia -- now counseling "patience" -- has already stressed its opposition to sanctions on Iran, with China slipstreaming along. Let's just pass by France without further comment. And among those now angling for one of the 10 rotating seats on the Security Council is Venezuela's President Hugo Chavez. In his recent tours of the world's thugocracies Mr. Chavez has reportedly garnered a boost from China for his U.N. bid, as well as a medal and the promise of a $4 billion investment in Venezuela's oil fields -- from Iran.

As for the U.N. Secretariat, which would be involved in administering any U.N. sanctions, if staffers have learned anything from the multibillion dollar Oil for Food scandal, it is that inside the U.N.'s opaque and diplomatically immune bubble, there are no real penalties for dereliction, duplicity or even graft. Not a single U.N. staffer has been fired, let alone charged with a crime. Secretary-General Kofi Annan is due to step down at the end of this year; but his would be the presiding presence during the shaping of any U.N. sanctions on Iran, and his successor will inherit both the same bureaucracy and a General Assembly which -- if you believe Deputy Secretary-General Mark Malloch Brown -- shot down an administrative reform package earlier this year mainly for the perverse pleasure of sticking a thumb in the eye of the U.S.

It is quite possible that -- after years of delay and dithering by the U.N.'s International Atomic Energy Agency, the European Union and the U.S. itself -- there is no initiative that will by now stop Iran short of direct military force. But whatever the solution, it is clearly the U.S. that will have to do the bulk of the cajoling, prodding and backroom bargaining to put together any coalition both able and willing, in whatever way necessary, to get the job done. That is a challenge urgent and daunting enough, without trying to drag along the entire baggage of the U.N.

Ms. Rosett is a journalist in residence with the Foundation for Defense of Democracies.

Tuesday, August 29, 2006

The Waiting Game

Wall Street Journal
August 29, 2006

Last week Ottawa-based Decima Research released results of a poll designed to answer the ultimate question in Canada: "How many wait too long for health care?" The firm says its survey of 3,070 Canadians "reveals that more than one in three Canadian households has tried and failed to get timely access to at least one health service within the last three months."

Nearly half (46%) of those waiting to see a specialist said they experienced an "unreasonable" wait time, as did 30% of those waiting to confirm a diagnosis. Of those who sought emergency hospital treatment, 44% said their wait was too long. According to Decima CEO Bruce Anderson, "In the case of some services, the number of people satisfied with the speed of service is virtually equaled by the number of people who are dissatisfied."

The Vancouver-based Fraser Institute's "Waiting Your Turn" annual report has documented Canada's waiting-time crisis in health care for 15 years. In 2005 it found "total waiting time between referral from a general practitioner and treatment, averaged across all 12 specialties and 10 provinces, was 17.7 weeks."

At issue here is whether it is better to ration a scarce good using prices, as a free-market system would do, or using time, as is inevitably the case with nationally financed systems. As Mr. Anderson put it, "These results confirm that millions of Canadian households, in the last three months alone, experienced the anxiety of waiting what they felt was too long a period of time for a health service."

Brazil: Still the Country of the Future


RIO DE JANEIRO -- On a recent winter evening here, as a full moon crept slowly up over Copacabana and sun worshippers headed home, I went for a stroll along the water's edge.

Balmy breezes, the rhythmic pounding of the waves and the cool, sandy surf underfoot quieted my mind. I gazed at the green peaks around the bay and contemplated the Portuguese explorers who came upon this paradise. Within the hour, dusk gave way to darkness, stars blanketed the sky and Cariocas began to populate the sidewalk that runs next to the beach, walking dogs, biking, jogging and patronizing the open air restaurants.

With its breathtaking scenery and the sunny disposition of its people, this place ought to be the pearl of the Southern Cone. But it's not. Look past the natural beauty and the small surviving pockets of its glamorous past and even the better parts of town seem to be in decline.

The city looks dingy, "for sale" signs dot prime real estate on beachfront Avenida Atlântica, locals gripe about the multiplying corruption scandals in Brasília, crime dominates the news and young, educated people talk about leaving their hometown in search of opportunity. Linking it all together is an uncharacteristically discouraged private sector.

It was not only in Rio that I observed dark clouds of pessimism hanging over Brazilian heads. After two weeks in the country, I could not ignore the fact that the wider entrepreneurial community, in this nation known for its incurable optimism, is decidedly down in the dumps.

It must be noted that this nation of immigrants does not have the habitual negativity of some cultures; Brazilians are not whiners. But what seems to be tempering the hopes of even positive thinkers these days is the growing, sobering realization that the burden of socialism is exceedingly hard to throw off, even when patently obvious that it is the chief culprit producing persistent underdevelopment, poverty and misery.

Prof. Jitendra Singh of the Wharton Business School, who spoke at Wharton's annual global alumni forum held here on Aug. 11, described this problem generically as "the socialist trap." Once in, it's very hard to get out. And with Brazil's 1988 constitution -- over 200 pages long when downloaded from the Web -- charging the government with the obligation to ensure every possible human need including "education, health, work, leisure, security, social security, protection of motherhood and childhood and assistance to the destitute," Brazil is well-ensconced in the trap.

Not that Brazilians get any of those things from government, by the way. But a state with such powers has become a monster that drains the life out of the nation.

The immediate cause of the drooping spirits of entrepreneurs seems to be the way in which the presidential election, set for Oct. 1, is shaping up. While the market-friendly Geraldo Alckmin appeared poised to make a serious challenge to Brazilian President Luiz Inácio "Lula" da Silva of the Worker's Party a month ago, the latest polls show Lula pulling ahead again. "It looks like we're going to be stuck with this guy for another four years," one Brazilian entrepreneur I met in Bahia told me, "and that's not good."

Lula certainly hasn't been the worst president in Brazilian history. Despite his admiration for Fidel Castro, he has remained within the bounds of the rule of law and has not consolidated power or destroyed institutions in the authoritarian style of Argentina's President Nestor Kirchner. Also, he has been pragmatic and accepted the disciplines assigned by capital markets. His government has sought fiscal restraint, low inflation and a stable real.

That the country has not dissolved into a hyperinflationary basket case over the past four years has made the Lula presidency look almost brilliant to Brazilians and the international community. But that's only because expectations were so low.

Meanwhile, at the level of microeconomic policy, where a pro-market attitude that respects private property is so desperately needed, another four years of Lula is a grim thought.

Take, for example, the way in which this government is dealing with intellectual-property rights in the pharmaceutical industry.

Lobbied by special interests and nongovernmental organizations, Lula has made treatment of HIV-infected Brazilians with state-of-the-arts drugs a high priority. Yet if Brazil were to pay the market rate for such medicines, the bill would put more than a dent in its underfunded socialist budget and badly impact the macroeconomic picture.

The public purse is already strained on the spending side by unsustainable entitlements such as ridiculously generous public-sector pensions, and on the revenue side by the massive informal economy which, having burrowed underground to avoid high taxes and onerous regulation, provides little government income. But rather than downsize dysfunctional government to solve this problem, Lula is working to meet his fiscal targets by threatening drug companies with compulsory licensing if prices are not adjusted downward to meet his budget constraints.

So far drug companies have complied with this arm-twisting. But one pharmaceutical company executive told me that it is like a "Damocles sword over our heads." That's not a good message for a developing country to send investors. Moreover, should the government one day move to compulsory licensing, the costs to Brazilian development could be higher than the benefits. Brazil will still have to comply with the World Trade Organization's intellectual-property rights agreement by paying royalties. Failure to do so would harm the country's WTO status and trade relations with the U.S.

Such a myopic attitude toward markets, prices and investment illustrates what Brazilian entrepreneurs have come to recognize more broadly: that socialist Lula together with the Brazilian constitution enshrining the nanny state, spells four more years of mediocrity at best. For young, talented minds eager to create, innovate and profit, such a forecast makes even an enchanting city like this one a good place to be from.

Saturday, August 26, 2006

Why Poor Countries Are Poor

The clues lie on a bumpy road leading to the world’s worst library.
Tim Harford

They call Douala the “armpit of Africa.” Lodged beneath the bulging shoulder of West Africa, this malaria-infested city in southwestern Cameroon is humid, unattractive, and smelly. On a torrid evening in late 2001, I was guided out of the chaotic Douala International Airport by my friend Andrew and his driver, Sam, who would have whisked us immediately to the cooler hillside town of Buea if Douala were at all conducive to being whisked anywhere. It isn’t. Douala, a city of 2 million people, has no real roads.

A typical Douala street is 50 yards wide from shack to shack. It’s packed with street vendors, slouched beside a tray of peanuts or an impromptu plantain barbecue, and with little clusters of people, standing around a motorbike, drinking beer or palm wine, or cooking on a small fire. Piles of rubble and vast holes mark unfinished construction or demolition work. Along the middle is a strip of potholes that 20 years ago was a road.

Down that strip drive four streams of traffic, mostly taxis. The streams on the outside are usually made up of cabs picking up fares, while the taxis on the inside weave in and out of the potholes and other cars with all the predictability of ping pong balls in a lottery machine. Douala used to have buses, but they can no longer cope with the decaying roads. So the taxis are all that’s left: beaten-up old Toyotas, carrying four in the back and three in the front, sprayed New York yellow, each with a unique slogan: “God Is Great, ” “In God We Trust,” “Powered by God, ” “Toss Man.”

Nobody who sees a Douala street scene can conclude that Cameroon is poor because of a lack of entrepreneurial spirit. But poor it is. The average Cameroonian is eight times poorer than the average citizen of the world and almost 50 times poorer than the typical American. And Cameroon is getting poorer. Can anything be done to reverse the decline and help Cameroon grow richer instead?

That’s no small question. As the Nobel laureate economist Robert Lucas put it, “The consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else.”

The Missing Jigsaw Piece

Economists used to think wealth came from a combination of man-made resources (roads, factories, telephone systems), human resources (hard work and education), and technological resources (technical know-how, or simply high-tech machinery). Obviously, poor countries grew into rich countries by investing money in physical resources and by improving human and technological resources with education and technology transfer programs.

Nothing is wrong with this picture as far as it goes. Education, factories, infrastructure, and technical know-how are indeed abundant in rich countries and lacking in poor ones. But the picture is incomplete, a puzzle with the most important piece missing.

The first clue that something is amiss with the traditional story is its implication that poor countries should have been catching up with rich ones for the last century or so—and that the farther behind they are, the faster the catch-up should be. In a country that has very little in the way of infrastructure or education, new investments have the biggest rewards.

This expectation seems to be confirmed by the experience of China, Taiwan, and South Korea—not to mention Botswana, Chile, India, Mauritius, and Singapore. Fifty years ago they were mired in poverty, lacking man-made, human, technical, and sometimes natural resources. Now these dynamic countries, not Japan, the United States, or Switzerland, have become the fastest-growing economies on the planet.

Since technology is widely available and increasingly cheap, this is what economists should expect of every developing country. In a world of diminishing returns, the poorest countries gain the most from new technology, infrastructure, and education. South Korea, for example, acquired technology by encouraging foreign companies to invest or by paying licensing fees. In addition to the fees, the investing companies sent profits back home. But the gains to Korean workers and investors, in the form of economic growth, were 50 times greater than the fees and profits that left the country.

As for education and infrastructure, since the returns seem to be so high, there should be no shortage of investors willing to fund infrastructure projects or lend money to students (or to governments that provide education). Banks, domestic and foreign, should be lining up to lend people the money to get through school or to build a new road or a new power plant. In turn, poor people, or poor countries, should be very happy to take out such loans, confident that investment returns are so high that the repayments will not be difficult. Even if, for some reason, that didn’t happen, the World Bank, established after World War II with the express aim of providing loans to countries for reconstruction and development, lends billions of dollars a year to developing countries. Investment money is clearly not the issue; either the investments are not being made, or they are not delivering the returns the traditional model predicts.

A Theory of Government Banditry

As our car slowly bumped and lurched through the crowds, I tried to make sense of it all by asking Sam, the driver, about the country.

“Sam, how long was it since the roads were last fixed?”

“The roads, they have not been fixed for 19 years.”

President Paul Biya came to power in November 1982 and had been in office for 19 years by the time I visited Cameroon. Four years later, he is still in power. He recently described his opponents as “political amateurs”; they are certainly out of practice.

“Don’t people complain about the roads?”

“They complain, but nothing is done. The government tells us there is no money. But there is plenty of money coming from the World Bank and from France and Britain and America—but they put it in their pockets. They do not spend it on the roads. ”

“Are there elections in Cameroon?”

“Yes! There are elections. President Biya is always re-elected with a 90 percent majority. ”

“Do 90 percent of people vote for President Biya?”

“No, they do not. He is very unpopular. But still there is a 90 percent majority. ”

You do not have to spend a long time in Cameroon to realize how much people resent the government. Much of government activity appears to be designed expressly to steal money from the people of Cameroon. According to the global watchdog Transparency International, Cameroon is one of the most corrupt countries in the world. I was warned so starkly about government corruption, and the likelihood that officials at the airport would attempt to relieve me of my wad of West African francs, that I was more nervous about that than the risk of malaria or a gunpoint mugging in the back streets of Douala.

Many people have an optimistic view of politicians and civil servants—that they are all serving the people and doing their best to look after the interests of the country. Other people are more cynical, suggesting that many politicians are incompetent and often trade off the public interest against their own chances of re-election. The economist Mancur Olson proposed a working assumption that government’s motivations are darker still, and from it theorized that stable dictatorships should be worse for economic growth than democracies, but better than sheer instability.

Olson supposed that governments are simply bandits, people with the biggest guns who will turn up and take everything. That’s the starting point of his analysis—a starting point you will have no trouble accepting if you spend five minutes looking around you in Cameroon. As Sam said, “There is plenty of money…but they put it in their pockets.”

Imagine a dictator with a tenure of one week—in effect, a bandit with a roving army who sweeps in, takes whatever he wishes, and leaves. Assuming he’s neither malevolent nor kindhearted, but purely self-interested, he has no incentive to leave anything, unless he plans on coming back next year. But imagine that the roaming bandit likes the climate of a certain spot and decides to settle down, building a palace and encouraging his army to avail themselves of the locals. Desperately unfair though it is, the locals are probably better off now that the dictator has decided to stay. A purely self-
interested dictator will realize he cannot destroy the economy and starve the people if he plans on sticking around, because then he would exhaust all the resources and have nothing to steal the following year. So a dictator who lays claim to a land is a preferable to one who moves around constantly in search of new victims to plunder.

I cannot confirm that President Biya fits Olson’s description of a self-interested dictator. But if he did, it wouldn’t be in his interest to take too much from the Cameroonian people, because then there would be nothing to take next year. As long as he feels secure in his tenure, he will not wish to kill the golden goose. Like the virus whose very existence relies on the bodies it afflicts, Biya would have to keep the Cameroonian economy functioning in order to keep stealing from it. This suggests that a leader who confidently expects to be in power for 20 years will do more to cultivate his economy than one who expects to flee the country after 20 weeks. Twenty years of an “elected dictator” is probably better than 20 years of one coup after another.

Staying with the simplifying assumption that Biya has absolute power over the distribution of Cameroon’s income, he might decide to steal, say, half of it every year in the form of “taxes” that go into his personal bank account. That would be bad news for his victims, of course, but also bad news for Cameroon’s long-term growth. Think of a small business owner considering an investment of $1,000 in a new power generator for his workshop. The investment is expected to generate income of $100 a year. That’s 10 percent, a pretty good return. But since Biya might take half of it, the return falls to a much less attractive 5 percent. The businessman decides not to make the investment after all, so he misses out and so does Biya.

Olson does not predict that stable dictatorships will do good things for their countries, just that they’ll damage the economy less than unstable ones. Of course, Biya might make his own investments—for instance, providing roads or bridges to encourage commerce. While they would be expensive in the short term, they would help the economy to prosper, leaving Biya with more opportunities to steal later. But the flip side of the businessman’s problem applies: Biya would be stealing only half of the benefits, not nearly enough to encourage him to provide the infrastructure that Cameroon needs.

When Biya came to power in 1982, he inherited colonial-era roads that had yet to fall apart completely. If he had inherited a country without any infrastructure, it would have been in his interest to build it up to some extent. Because the infrastructure was already in place, Biya needed to calculate whether it was worth maintaining, or whether he could simply live off the legacy of Cameroon’s colonial rulers. In 1982 he probably thought the roads would last into the 1990s, which was as long as he could reasonably have expected to hold onto the reins of power. So he decided to live off the capital of the past and never bothered to invest in any type of infrastructure for his people. As long as there was enough to get him through his rule, why bother spending money that could otherwise go right into his personal retirement fund?

Bandits, Bandits Everywhere

But perhaps Biya is not in control as much as it first appears. A little traveling in Cameroon reveals that whether or not Biya is the bandit-in-chief, there are many petty bandits to satisfy.

If you want to drive from the town of Buea to Bamenda, farther north, the most popular way to make the trip is by bus; minibuses ply all long-distance routes in Cameroon. Designed to seat 10 people in comfort, they will depart as soon as 13 paying passengers have boarded. The relatively capacious seat beside the driver is worth fighting for. The vehicles are old bone-shakers, but the system works pretty well. It would work a lot better if not for all the roadblocks.

Bullying gendarmes, often drunk, stop every minibus and try their best to extract bribes from the passengers. They usually fail, but from time to time they become determined. My friend Andrew was once hauled off a bus and harassed for several hours. The eventual pretext for the bribe was his lack of a yellow-fever certificate, which you need when you enter the country but not when riding a bus. The gendarme explained patiently that Cameroon had to be protected from disease. The price of two beers convinced him that an epidemic had been prevented, and Andrew caught the next bus, three hours later.

This is even less efficient than Mancur Olson’s model predicts. Olson himself would have admitted that his theory in its starkest form underestimates the damage that bad governments inflict on their people. Biya needs to keep hundreds of thousands of armed police and army officers happy, as well as many civil servants and other supporters. In a “perfect” dictatorship, he would simply impose the least damaging taxes possible in whatever quantity was necessary and distribute the proceeds to his supporters. This approach turns out to be impracticable, because it requires far more information about and control over the economy than a poor government can possibly muster. The substitute is government-tolerated corruption on a massive scale.

The corruption is not only unfair; it is also hugely wasteful. Gendarmes spend their time harassing travelers in return for modest returns. The costs are enormous. An entire police force is too busy extracting bribes to catch criminals. A four-hour trip takes five hours. Travelers take costly steps to protect themselves: carrying less money, traveling less often or at busier times of the day, bringing extra paperwork to help fend off attempts to extract bribes.

The blockades and crooked police officers comprise a particularly visible form of corruption, but there are metaphorical roadblocks throughout the Cameroonian economy. To set up a small business, an entrepreneur must spend on official fees nearly as much as the average Cameroonian makes in two years. To buy or sell property costs nearly a fifth of the property’s value. To get the courts to enforce an unpaid invoice takes nearly two years, costs more than a third of the invoice’s value, and requires 58 separate procedures. These ridiculous regulations are good news for the bureaucrats who enforce them. Every procedure is an opportunity to extract a bribe. The slower the standard processes, the greater the temptation to pay “speed money.”

Inflexible labor regulations help ensure that only experienced professional men are given formal contracts; women and young people have to fend for themselves in the gray market. Red tape discourages new businesses. Slow courts mean that entrepreneurs are forced to turn down attractive opportunities with new customers, because they know they cannot protect themselves if they are cheated. Poor countries have the worst examples of such regulations, and that is one of the major reasons they are poor. Officials in rich countries perform these basic bureaucratic tasks relatively quickly and cheaply, whereas officials in poor countries draw out the process in hopes of pocketing some extra cash themselves.

Institutions Matter

Government banditry, widespread waste, and oppressive regulations are all elements in that missing piece of the puzzle. During the last 10 years or so, economists working on development issues have converged on the mantra that “institutions matter.” Of course, it is hard to describe what an “institution” really is. It is even harder to convert a bad institution into a good one.

But progress is being made. We’ve just seen one kind of institution: business regulations. Sometimes, it can be improved with simple publicity. After the World Bank revealed that entrepreneurs in Ethiopia couldn’t legally start a business without paying four years’ salary to publish an official notice in government newspapers, the Ethiopian government scrapped the rule. New business registrations jumped by almost 50 percent immediately.

Unfortunately, it is not always so easy to get corrupt governments to change their ways. Although it is becoming clearer and clearer that dysfunctional institutions are a key explanation of poverty in developing countries, most institutions cannot be described with an elegant model like Mancur Olson’s, or even with careful data-gathering by the World Bank. Most unhappy institutions are unhappy in their own way.

Such a uniquely backfiring setup was responsible for the world’s worst library. A few days after I arrived in Cameroon, I visited one of the country’s most prestigious private schools—Cameroon’s equivalent of Eton. The school boasted two separate library buildings, but the librarian was very unhappy. I soon understood why.

At first glance the new library was impressive. With the exception of the principal’s palatial house, it was the only two-story structure on campus. Its design was adventurous: a poor man’s Sydney Opera House. The sloped roof, rather than running down from a ridge, soared up in a V from a central valley like the pages of an open book on a stand.

When you’re standing in the blazing sunlight of the Cameroonian dry season, it’s hard to see at first what the problem is with a roof that looks like a giant open book. But that’s only if you forget, as the architect apparently did, that Cameroon also has a rainy season. When it rains in Cameroon, it rains for five solid months. It rains so hard that even the most massive storm ditches quickly overflow. When that kind of rain meets a roof that is, essentially, a gutter that drains onto a flat-roofed entrance hall, you know it’s time to laminate the books. The only reason the school’s books still existed was that they’d never been near the new building; the librarian had refused repeated requests from the principal to transfer them from the old library.

I was tempted to conclude that the principal was in an advanced stage of denial when I stepped inside the new library to see the devastation. It was in ruins. The floor contained the stains of countless puddles. The air carried the kind of musty smell associated with a damp cave. The plaster was peeling off the walls. Yet the library is only four years old.

This is a shocking waste. Instead of building the library, the school could have bought 40,000 good books, or acquired computers with Internet connections, or funded scholarships for poor children. Any of these alternatives would have been incomparably better than an unusable new library. The school never even needed a new library in the first place—the old library works perfectly well, could easily hold three times as many books as the school owns, and is waterproof.

If the library was such a pointless endeavor, why was it built at all? It’s all too tempting for the visitor in Cameroon to shrug his shoulders and explain the country’s poverty by presuming that Cameroonians are idiots. Cameroonians are no smarter or dumber than the rest of us. Seemingly stupid mistakes are so ubiquitous in Cameroon that incompetence cannot be the whole explanation. There is something more systematic at work. We need to consider the incentives of the decision makers.

First, most of the senior education officials in northwest Cameroon come from the small town of Bafut. Known as the Bafut Mafia, these officials control considerable funds for the education system, which they hand out based on personal connections rather than necessity. Not surprisingly, the principal of this prestigious private school was a senior member of the Bafut Mafia. Wanting to convert her school into a university, the principal needed to build a library of university size and quality. It was irrelevant to the principal that the current library was more than sufficient, and that the taxpayers’ money could have been better spent in other ways or by other schools.

Second, nobody was monitoring the principal or her spending. Staff members are paid or promoted not on merit but at the principal’s command. This is a prestigious school with good conditions for teachers, so staff members would be particularly eager to keep their jobs, which meant keeping in good favor with the principal. In fact, the only person able to defy the principal was the librarian, who was accountable only to the Voluntary Service Overseas office in London. She turned up after the library was built but was at least in time to prevent the book collection from being transferred and destroyed.

Either the principal was so stupid that she did not realize water ruins books, or she did not care very much about the books and simply wanted to demonstrate that the library had some books in it. The second explanation seems more likely. With the money at her fingertips and nobody to object to the wastefulness of building a second library, the principal had full control over the project. She appointed a former pupil of the school to design the library, probably to demonstrate the quality of education provided by the school; she did prove a point, although perhaps not the one she intended. But no matter how incompetent the architect, the flaws in the design would have been spotted if anybody concerned had a strong interest in making sure the library functioned as a library. But that was never the prime concern of anybody with authority. The people in power simply cared about putting up something that could qualify the school as a university.

Consider the situation: money that was provided because of social networks rather than need; a project designed for prestige rather than use; a lack of monitoring and accountability; and an architect appointed for show by somebody with little interest in the quality of the work. The outcome is hardly surprising: A project that should never have been built was built, and built badly. The lesson of the story might appear to be that self-interested and ambitious people in power are often the cause of wastefulness in developing countries. But self-interested and ambitious people are in positions of power, great and small, all over the world. In many places, they are restrained by the law, the press, and democratic opposition. Cameroon’s tragedy is that there is nothing to hold self-interest in check.

Does Development Have a Chance?

Development specialists often focus on helping poor countries become richer by improving primary education and infrastructure such as roads and telephones. That’s surely sensible. Unfortunately, it’s only a small part of the problem. Economists who have pulled apart the statistics, or studied unusual data such as the earnings of Cameroonians in Cameroon and the earnings of Cameroonians who immigrate to the United States, have found that education, infrastructure, and factories only begin to explain the gap between rich and poor. Because of its lousy education system, Cameroon is perhaps twice as poor as it could be. Because of its terrible infrastructure, it’s roughly twice as poor again. So we would expect Cameroon to be four times poorer than the United States. But it is 50 times poorer.

More important, why can’t the Cameroonian people seem to do anything about it? Couldn’t Cameroonian communities improve their schools? Wouldn’t the benefits easily outweigh the costs? Couldn’t Cameroonian businessmen build factories, license technology, seek foreign partners, and make a fortune?

Evidently not. Mancur Olson showed that kleptocracy at the top stunts the growth of poor countries. Having a thief for president doesn’t necessarily spell doom; the president might prefer to boost the economy and then take a slice of a bigger pie. But in general, looting will be widespread either because the dictator is not confident of his tenure or because he needs to allow others to steal in order to keep their support.

The rot starts with government, but it afflicts the entire society. There’s no point investing in a business because the government will not protect you against thieves. (So you might as well become a thief yourself.) There’s no point in paying your phone bill because no court can make you pay. (So there’s no point being a phone company.) There’s no point setting up an import business because the customs officers will be the ones to benefit. (So the customs office is underfunded and looks even harder for bribes.) There’s no point getting an education because jobs are not handed out on merit. (And in any case, you can’t borrow money for school fees because the bank can’t collect on the loan.)

It is not news that corruption and perverse incentives matter. But perhaps it is news that the problem of twisted rules and institutions explains not just a little bit of the gap between Cameroon and rich countries but almost all of the gap. Countries like Cameroon fall far below their potential even considering their poor infrastructure, low investment, and minimal education. Worse, the web of corruption foils every effort to improve the infrastructure, attract investment, and raise educational standards.

We still don’t have a good word to describe what is missing in Cameroon and in poor countries across the world. But we are starting to understand what it is. Some people call it “social capital,” or maybe “trust.” Others call it “the rule of law,” or “institutions.” But these are just labels. The problem is that Cameroon, like other poor countries, is a topsy-turvy place where it’s in most people’s interest to take actions that directly or indirectly damage everyone else. The incentives to create wealth are turned on their heads like the roof of the school library.

Tim Harford, a columnist for the Financial Times, is the author of The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor—and Why You Can Never Buy a Decent Used Car! (Oxford University Press), from which this article is adapted.

Friday, August 25, 2006


A felicitous blend of old, new

Open, airy Getty Villa expansion is restrained and refined but still embraces the present.
By Christopher Hawthorne

Times Staff Writer

"Something about the place embarrasses people," Joan Didion wrote of the Getty Museum in Malibu, which opened in 1974 just up the hill from Pacific Coast Highway.

A gleaming replica of a Roman villa, the museum leapfrogged the emerging postmodernism of 1970s architecture, with its loose and often ironic quotation of classical forms, and went straight for verbatim transcription. Critics dismissed the building as vulgar — though, as Didion pointed out, Roman culture was plenty vulgar itself.

More than three decades later, an expanded Getty Villa has begun welcoming small groups of invited visitors, with the long-awaited public unveiling set for Jan. 28. The reopening of the villa site — always much-loved despite its infamous lack of parking — is easily the most anticipated architectural event in Southern California since the debut of Frank Gehry's Walt Disney Concert Hall two years ago.

With the old-master paintings and gilded furniture now comfortably installed in Richard Meier's 8-year-old Getty Center in Brentwood, Boston-based architects Rodolfo Machado and Jorge Silvetti have reconceived the Malibu location as a showcase for Greek, Roman and Etruscan antiquities — a collection that has become the center of legal controversy in Italy and Greece over charges that museum officials knowingly trafficked in looted artworks.

The expansion is in many ways more ambitious than the original 1970s villa project: It refurbishes the museum building while adding an amphitheater, auditorium and cafe, along with new research and conservation facilities. At $275 million, it is certainly more expensive.

But it is hardly going to embarrass anyone.

On the contrary, the addition operates like an anti-icon. As a means of disguising its bulk, it burrows into the canyon walls that rise on the edge of the site. The carefully choreographed and richly textured pathways that lead, rather indirectly, from a new parking garage to the galleries are lined by high walls faced in horizontal layers of concrete, red porphyry stone, travertine and bronze. They are meant to suggest the striated walls of a huge archeological dig that has unearthed, of all things, the 1974 villa.

The overall effect is one of tasteful refinement and restraint — so much so that the architecture, at times, brings to mind a Calvin Klein boutique al fresco.

But in carving out a space of literal and architectural independence for the much-maligned villa building, Machado and Silvetti make timely assertions about authenticity, camp and the definition of history in Southern California.

Even more significant, the design provides a useful road map for future development in ever-more-crowded Los Angeles — a fresh, thoughtful means of figuring out how to deal with the baldly striving architectural landmarks that abound here.

The villa project has been buffeted by conflict and controversy from the start. Early in the design process, owners of houses bordering the site sued to keep the Getty from adding an amphitheater. Eventually the two sides reached a compromise that cut the capacity of the amphitheater to 450 and restricted its performance schedule.

More recently, the one person who could accurately be called Machado and Silvetti's client, Getty antiquities curator Marion True, was caught up in controversy on two fronts: Charges that she conspired with art dealers to buy looted art for the museum, which are now being heard in a Rome court, and suggestions that a loan she received to pay for a vacation home in Greece violated the Getty's ethics guidelines. After helping guide the villa expansion for a decade, she resigned seven weeks ago.

The very act of hiring Machado and Silvetti seemed to guarantee that the architectural reception of the new villa, on the other hand, would be uproar-free. The pair, who met as young men in Buenos Aires, have in recent years perfected an approach mixing a firsthand understanding of the field's cutting edge with respect for urban history and, perhaps more important, an old-world politesse. With a small record of built work, the architects have been known more as power brokers than trendsetters.

Indeed, rather than treat the 1974 villa with avant-garde aggression, or try to tamp down its visual impact, Machado and Silvetti have instead identified it as the biggest single artifact in the museum's collection — if also the least authentically antique and the most decidedly immovable.

At the heart of the architects' plan is a series of paths, draped in greenery, that carry visitors from the new garage on the lower section of the site, near PCH, through an open-air entry pavilion and up along the western edge of the property. The trip offers carefully framed glimpses of both the ocean and the restored villa. It terminates in a plaza connecting the base of the amphitheater with a new entrance to the galleries on the villa's long western facade.

Perhaps the most surprising thing about the revamped site is that the 1974 building, designed by the Los Angeles firm Langdon Wilson Architects with historical consultant Norman Neuerburg, seems to be flourishing as a result of this renewed attention. With a cafe, bookshop, atrium and auditorium encircling it, the villa is not just more open but more comfortable in its own skin. Asked to do less, it appears capable of doing more.

Inside, the look is both airier and, in terms of the materials and rich, dark color scheme Machado and Silvetti have chosen, more stripped down and masculine than before. The double-height atrium just inside the new front doors is now topped by a retractable opening in the ceiling, flooding it with light. Taking advantage of the fact that sculpture can handle more natural light than paintings, the architects have also added skylights to many of the upper galleries.

With display cases and elaborate inlaid floor patterns designed by the architects, the galleries show many of the antiquities to dazzling effect. A new stairway connecting the villa's main floors helps clarify the circulation patterns inside, but with its bronze and glass detailing is also entirely too precious.

With their design for the Malibu site, Machado and Silvetti have completed Southern California's first example of a new wave in museum architecture: expansions that defer to older works of architecture without giving up a claim on the present.

The approach is plain to see in Renzo Piano's design for the Morgan Library in New York and in plans by Steven Holl for the Nelson-Atkins Museum in Kansas City, Mo. In those projects, both under construction, the new architecture makes no effort to copy the forms of the existing buildings but also buries most of its square footage underground.

Whether these designs will mark a new maturity in American architecture when it comes to mixing new and old or a period of conservatism — or a bit of both — remains to be seen.

For Los Angeles, the significance of the Getty Villa expansion is plainer to see. The site, to be sure, is hardly a thickly urban location. It doesn't offer the opportunity for serendipitous encounter that is a prerequisite for a truly civic space.

But we have to take our corners of the public square where we can get them around here, even if they are tucked away on estates near the ocean and dipped in nostalgia. And compared to the symbolism of Meier's citadel-like Getty Center, the Machado and Silvetti scheme represents a heartening turn toward a new kind of architectural engagement — one that is both active and thoughtful — with local landmarks.

If it seems odd to think about a confection of a building such as the 1974 villa as a landmark, well, welcome to Southern California. The region is full of such buildings, pieces of architecture that loom large on prominent sites and appeal to the public more for nostalgic or atmospheric reasons than for aesthetic ones.

Too often we have treated those buildings — Myron Hunt's Ambassador Hotel offers the sorriest recent example — with a combination of disdain and neglect.

In other instances we have celebrated them, at least in a superior, ironic sense, as billboards advertising our own pride in L.A.'s refusal to bend to the demands of traditional good taste.

But if we want to create a public sphere here that will actually draw people out of their cars — as opposed to a cityscape filled with shiny, look-at-me attractions that we can gaze at through our windshields — we are going to have to admit that there is a place, even an esteemed one, for smart, well-designed architecture that is content to fill in the city's gaps.

Indeed, as building sites go, gaps are just about all we have left.

Machado and Silvetti's approach in Malibu argues that a mature and workable city will contain several layers of architectural history, some masterfully designed, others banal and all of them historically legible. Even Las Vegas, of all places, has begun to learn this lesson as it grows.

In Los Angeles — embarrassingly enough — we still struggle to absorb it.

Thursday, August 24, 2006

The Ayatollah's Answer

WSJ - Editorial Page
August 24, 2006

Two months ago the U.N. Security Council offered Iran a choice: Stop enriching uranium in violation of its treaty agreements and the world would negotiate better diplomatic and commercial relations. Keep enriching the fuel for nuclear weapons, however, and face isolation and sanctions. Tehran's rulers have now given their answer: They won't stop enriching uranium, but they're happy to keep talking about it.

Yesterday, the Bush Administration said it is still studying the Iranian proposal but that the reply "falls short of the conditions set by the Security Council." You can say that again. After three years of Iranian stonewalling since their nuclear deception was discovered, the June resolution was deliberately written to make an end to enrichment a first-order obligation.

The carrots are supposed to follow, not precede, Iran's promise not to take further steps toward becoming a nuclear power. Iran's reply looks like a calculated attempt to conquer the Security Council by dividing its members with the promise that more talk might some day, down the road, in return for who knows what, lead Iran to stop going nuclear.

And already yesterday, the mullahs' strategy was paying dividends as Russia and China took the bait and urged further negotiations. These countries have their oil or nuclear energy deals with Tehran, and they don't seem to worry all that much about Islamic radicals getting the bomb. Perhaps they figure that's America's problem, or Israel's, though how an Islamic regime with a nuclear arsenal helps Russian or Chinese interests is a mystery.

So Secretary of State Condoleezza Rice will have a difficult time mobilizing the world to contain the growing Iranian threat. She sold the idea of offering direct U.S. talks to the mullahs in return for their cooperation on uranium as a way to keep the coalition together. And it worked for that one U.N. resolution. But now that the offer has been rejected so slickly by Tehran, we'll see if she's been out-maneuvered by the Ayatollah Khamenei.

* * *

The obvious next diplomatic step is to show Iran that the world meant what it said by following through with the toughest achievable sanctions. A myth has developed in some circles that there are "no good options" available to pressure Iran, but that's more excuse than analysis. Iran's mullahs are unpopular at home and their citizens will notice if they are declared a global pariah state. Sanctions on travel by Iran's government officials, diplomats and sports teams may be largely symbolic, but such symbolism will not be missed on the Persian street.

Iran is also vulnerable economically. Sanctions on banks that deal with Iran can limit the regime's access to global credit markets for trade and other financing. Despite its oil exports, Iran also imports some 40% of its refined gasoline. A ban on selling gasoline to Iran would surely lead to gas lines and other shortages there, with possible domestic political repercussions. And it is domestic discontent that the mullahs rightly fear the most.

The worry in the West is that Iran would respond to a gasoline embargo by playing its oil card in retaliation, withholding its supplies and sending world oil prices perhaps to $100 a barrel. But the mullahs can't eat oil. Amid other economic sanctions, they would need their income from oil sales more than ever. They are also watching closely to see if the world is serious when it says it won't allow them to go nuclear, and they know better than anyone that gasoline imports are their biggest political danger. They'll know a wrist slap from a serious policy.

* * *

Anyone who still thinks a nuclear-armed Iran won't pose a serious, and perhaps mortal, threat ought to consult this week's bipartisan staff report from the House Intelligence Committee. Drawing on open-source information and mindful of classified background, the report lays out the history of Iranian nuclear deception and its attempts to promote trouble throughout the Middle East. It notes that "Iran probably has an offensive biological weapons program." And it discusses in detail Iran's support for Hezbollah and other terror groups, as well as its continuing support for insurgents who are killing Americans in Iraq.

"A nuclear-armed Iran would likely embolden the leadership in Tehran to advance its aggressive ambitions in and outside of the region, both directly and through the terrorists it supports -- ambitions that gravely threaten the stability and the security of U.S. friends and allies," says the House Intelligence report. With a nuclear arsenal that they felt protected them from retaliation, the mullahs would also be more likely to use conventional military force in the Middle East. The domino effect as Turkey, Egypt and the Saudis sought their own nuclear deterrent would also not be "stabilizing," to cite the highest value of our Middle Eastern "realists." And don't forget President Mahmoud Ahmadinejad's vow that "Israel must be wiped off the map."

The most dismaying part of the House report may be its admission that there are huge gaps in U.S. intelligence about Iran and its weapons programs. That was also the conclusion of the Robb-Silberman report on intelligence last year, and the House Committee also recommends that U.S. spooks devote far more resources and attention to Iran as a strategic threat.

No one wants a military confrontation with Iran, but those who want to avoid one have an obligation to show the mullahs that continuing on their current path will lead to isolation, economic suffering and worse. A U.N. Security Council that passes resolutions it refuses to enforce is itself a threat to global security.

Cheap Food, Societal Norms And the Economics of Obesity

WSJ: Econoblog
August 25, 2006

During the past two decades, obesity rates in the U.S. have jumped dramatically. An estimated 30% of adults over the age of 20 -- more than 60 million people -- are obese, defined as those with a body-mass index of 30 or higher. (Read more on obesity definitions from the Centers for Disease Control.1)

Are economic reasons under-girding our ever-widening waistlines? The Online Journal asked academics Carol Graham, of the Brookings Institution, and Darius Lakdawalla, of the Rand Corp., to discuss their different economic takes on our burgeoning national girth.

* * *

Darius Lakdawalla writes: It's no secret that Americans have been getting fatter over the last several decades. But in fact, weight has been rising for more than 150 years, as shown by the economic historians Dora Costa and Richard Steckel3. From the Civil War to the 1990s, the weight of a 6-foot-tall American male increased by about 30 pounds on average.

These historical trends are not hard to understand. As we have gotten wealthier and more technologically advanced, food has gotten cheaper and work more sedentary. Both these factors have contributed to rising weight over the time-frame of centuries, and the recent rise in obesity has likewise been fueled by reductions in the price of food.

Since 1976, food has fallen in price by more than 12% compared to other goods. My colleague Tomas Philipson and I have shown that this reduction in price can explain at least half the recent growth in obesity4. Shin-Yi Chou, Michael Grossman and Henry Saffer reached similar conclusions about the importance of price. In addition to its overall price, they stressed the increasing availability of food service establishments5.

While it is not entirely clear whether restaurants make people heavier, or heavier people attract more restaurants, there is no question that eating is cheaper and easier than it used to be.

As if that were not enough, the most calorie-dense foods have seen the biggest price reductions. David Cutler, Edward Glaeser, and Jesse Shapiro have shown that technological advances have especially lowered the price of processed and snack foods6 -- like french fries and vending machine treats -- which are particularly high in calories.

The evidence above suggests that obesity is a by-product of prosperity and technological advance. In much the same way that traffic fatalities accompanied the boom in automobiles, roads and freeways, we now face the side effects of our efficient food production system and knowledge-based economy. I do not think it would make us better off to "roll back" advances in agriculture and food processing, or the shift away from physically demanding work. Instead, our goal ought to be to manage the consequences of obesity, by addressing its health impacts and making people accountable for bearing the costs and enjoying the benefits of their own weight choices.

* * *

Carol Graham writes: There is no doubt that cheap food and sedentary lifestyles play a major role in the increase of obesity. But an unanswered puzzle is the concentration of incidence in lower income groups. Obesity is largely a problem of the poor. If it's merely a story of cheap and readily available food, why then aren't the rich the fattest?

In recent research at Brookings7 with Andrew Felton, we use well-being (happiness) surveys to help explain the variance in obesity incidence across socioeconomic cohorts in the U.S., with a focus on the role of norms and expectations. Our hypothesis is that there is less incentive to prevent or reverse obesity if it is the norm to be in obese in one's racial or socioeconomic group and/or there are low expectations of rising into professional groups where obesity uncommon. It used to be the norm for the rich to be fat, to show off their prosperity8.

Nowadays, our president brags about how fit he is9. Isn't it interesting to see how norms change? And in developing countries, weight norms still suggest that obesity is a sign of prosperity. Our research finds that in Russia, obesity is concentrated among the rich, rather than the poor. In the U.S. we find that the poor suffer the highest well being costs (gauged by reported depression) from being obese, but these costs are concentrated among poor whites rather than among blacks or Hispanics. While obesity among the latter two groups is higher, they do not seem to suffer the same well-being costs as poor whites. We think that differences in norms -- and related stigma or lack of stigma -- may explain this. Respondents who depart from normal weight levels for their rank/profession also suffer higher well being costs than the average, and stigma is higher for those in higher status professions.

Finally, we find that obesity is negatively correlated with upward income mobility. We do not yet know, however, if this is due to lower expectations and effort by obese individuals or because of greater discrimination in the job market. Regardless, the results suggest that tailoring public health messages to marshal the attention of different cohorts in the U.S. -- and taking into account different norms and expectations -- might make them more effective.

* * *

Darius Lakdawalla writes: Without a doubt, obesity rates and body weights are higher among the poor than the rich, as they have been for decades. However, weight has been rising just as rapidly for the rich as for the poor. The "equal opportunity" spread of obesity points to causes that affect all groups in society, causes like cheaper food and more sedentary activities. Data from the CDC's National Health Interview Survey10 -- one of the primary sources of information about trends in American health -- illustrate how the growth in weight has cut across class lines in America. From 1976 to 2001, a 5-foot-10 high-school dropout would have gained 16 pounds, but a college graduate of that height actually gained slightly more. Moreover, during this period, the rate of obesity doubled among high school dropouts (growing from 12% to 25%), but it tripled among college graduates (rising from 5% to 17%). Today, more than one in six college graduates is obese.

This makes it very difficult to argue that obesity is a problem of just the poor, or of any one particular group in society, because obesity growth has cut across lines of age, sex, race, annual income, and just about any other characteristic that can be measured. As Tomas Philipson and I have argued11, rich people can afford more food, but they are also more inclined to demand better health. When it comes to body weight, these two effects of wealth oppose each other.

As such, it is not clear whether the rich will weigh more or less, and as Dr. Graham notes, the difference between rich and poor body weights varies from one country to another. The presence of different weight norms only adds to the complexity of this gap, which is certainly interesting and important. However, the uniform growth in weight points to changes that are unrelated to rich-poor differences, but instead related to broader and more sweeping societal transformations that affect all of us.

* * *

Carol Graham writes: I agree with Dr. Lakdawalla that there has been an increase in weight across groups over the past three decades, and I think that his argument does much to explain it. Still, there are stark and persistent differences in obesity across socioeconomic and racial groups. For all racial and ethnic groups combined, women of lower socioeconomic status are approximately 50% more likely to be obese than those with higher socioeconomic status. Men are about equally likely to be obese whether they are in a low or high socioeconomic group. And why are black men the thinnest group and black women12 the most obese? Income and manual labor can't explain that much of it. The fattest cities13, meanwhile, all have 2002 per-capita incomes of less than $30,00014, while the thinnest cities are all greater than $30,000. Plus, the thin cities are artsy, athletic cities -- Denver, Santa Fe, Burlington, etc. -- while the fattest cities are all down-and-out rust belt or poor southern cities. It's not very likely that Denver has more people working manual jobs than San Antonio does.

There must be something else going on. Dr. Lakdawalla notes that there are certain things driving the health behavior of the rich that mediate the effects of cheap food, sedentary life styles, and so on. That is precisely what our work tries to get at. What ARE those things? We focus on the role of norms in lifestyle and appearance, across socioeconomic and racial groups and across professions, as well as on the role of expectations. The idea here is that if you are in a socioeconomic group or profession where it normal to be obese or overweight, and you do not have high expectations of future mobility, then the incentives to make investments in healthy food and exercise that richer people seem to are much lower.

Changes in social norms about smoking15, for example, seem to have made a difference in reducing incidence smoking. Thus, if it's the norm in your social group to be obese, then that is one less reason to do something to either prevent or reverse a very difficult problem. Also, norms tend to be passed on from parents to children. On the other hand, if you have high expectations and want to move up the professional socioeconomic ladder (and the research of several scholars16 finds that discrimination against overweight and obese individuals is higher in higher status professions), then there is at least more incentive to make those kinds of investments. Our own research finds that a) the well-being costs -- or put another way, the stigma -- from being obese are much higher in high-status jobs than in low-status occupations and that b) obese individuals are less likely to have upward mobility than non-obese individuals. While we do not know if it is low expectations or discrimination in the labor force that drive the lower levels of mobility for obese individuals, both could well be at play.

There is a well-known study of the Pima Indians in Mexico and those in the southwestern U.S. (abstract17). They have the same genetic composition, but those in Mexico are engaged in farming and other agricultural activities, while those in the U.S. have one of the highest obesity incidences in the world. Surely sedentary lifestyles and cheap food play a role, but it is also quite likely that life on reservations, with low expectations for future mobility and high levels of depression/alcoholism also play a role.

While it is extremely difficult to precisely isolate the effects of norms and expectations versus those of cheap food and sedentary lifestyles, it seems very plausible that differences in the former set of factors play some role in explaining differences in incidence. Our research suggests that stigma against obesity is much lower in some racial, socioeconomic, and professional groups than others, and that accords with the higher obesity rates among those groups. It also suggests that obese people are less likely to experience mobility into higher status professions where obesity is rarer.

Merely accepting that there is some difference in norms and expectations has major implications for public health policy. Those with higher obesity norms and/or with lower expectations are much more likely to either ignore or be skeptical of public health messages about obesity.

While this makes the challenges for public health policy even greater, identifying the challenge is usually a first step toward designing appropriate policy.

* * *

Darius Lakdawalla writes:

To clarify our discussion, it is helpful to distinguish between two questions:

(1) Why has obesity grown so much over the past 30 years?

(2) Why do body weight and rates of obesity vary across the population at a single point in time?

Dr. Graham and I agree that society-wide changes in the price of food and the strenuousness of activity are necessary to understand the first question, of why obesity has grown so much. However, we differ in how best to explain variation in weight across the population. I find incentives to be a more compelling explanation, while she favors a norms-based explanation.

Dr. Graham points out that rich cities are thinner than poorer cities, and asks why the rich choose healthier weights. In its variation between rich and poor, weight is no different than other health conditions, where social norms are less likely to be relevant. Richer people live longer, have fewer diseases of all kinds18, and spend less on curative medical care. Surely we would not argue that it is more acceptable among the poor to die earlier, develop brain tumors, or be stricken by heart attacks.

Moreover, health behaviors where norms might be potentially important, such as obesity and smoking (which, as an aside, lowers obesity, but not enough to explain much of its remarkable growth19), explain very little of the vast difference in health between rich and poor. Since the rich are healthier in ways that norms cannot explain, one has to ask why they should be deployed in explaining the specific case of weight, but not the many other illnesses that exhibit the same rich-poor variation without social norm differences.

Moreover, incentives explain the variation between rich and poor at least as well as social norms. The seminal work of Michael Grossman, in 1972, argued that richer and more educated people have higher demands for health, because they stand to lose more20in the way of lifetime income if they die young. Dr. Graham's examples make this point as well. For instance, she cites recent work by Jay Bhattacharya and Kate Bundorf that shows "discrimination against overweight and obese individuals is higher in higher status professions." In fact, Bhattacharya and Bundorf argue that people with health insurance face a larger wage penalty if they are obese, because their employers end up paying for their higher medical costs. They rely on incentives, not social norms, in explaining the phenomena they observe. Incentives also have several important practical advantages over social norms. Norms-based theories always involve a "chicken-and-egg" type problem. Are people fatter because it is more acceptable to be fat, or did it become more acceptable when more people got fat? Finally, and perhaps most importantly, it is often difficult to act on a theory of social norms, because policymakers can change incentives much more easily than social norms.

* * *

Carol Graham writes: Dr. Lakdawalla and I actually agree on a role for incentives. That is precisely why Andrew Felton and I focused on mobility and discrimination in the workplace in our work. Our focus on expectations for future mobility is linked to the whole issue of incentives -- for investing in education and work, and in healthy behaviors. We think that norms and expectations interact with each other. Just because this is difficult to measure and there is a chicken or the egg problem in looking at the role of norms does not mean that their role should be dismissed or that they are irrelevant to policy.

I agree with Dr. Ladkawalla that the evidence is clear that rich people are healthier, and no doubt, demand better health care. Richer parents are also more likely to invest in their children's education. And there are strong links between education levels and health outcomes. One plausible explanation is that those with lower expectations for their own and their children's future mobility have higher discount rates.

In other words they are less willing to delay present consumption or income for future benefit. If the future is uncertain or bleak, why bother? In addition to our research, the discount rates hypothesis is explored in this paper (abstract21).

Our argument is that the whole issue of incentives is moderated by norms. Investing in healthy eating habits and exercise takes time and resources. If the economic incentives to do so are high, because there is professional discrimination against obesity and high economic rewards to attaining those professional opportunities, then there are clear incentives to make those investments. If, in contrast, there are not many opportunities for upward advancement and the norm in the lower-paying professions is overweight or obese, then the incentives to make those investments are very low. Professional norms are interacting with incentives here.

Some other evidence which provides indirect support for the role of norms is the effects of junk food on childhood obesity. A recent paper by Patricia Anderson and Kristin Butcher22finds that a 10% increase in the availability of junk food in school cafeterias leads to a 1% increase in students' body mass index. But that effect is driven entirely by students who have an overweight parent. It is likely that genetic susceptibility to obesity is interacting with family-based norms -- about how much of the available junk food it is appropriate to consume -- in driving higher obesity rates among certain adolescents and not others.

Norms are more difficult to change than incentives. And, as Mary Burke of the Boston Fed23writes, changing norms takes time: "The lagged adjustment of weight norms helps to explain recent observations that obesity rates have continued to rise since the mid 1990s, despite an apparent leveling off of price declines." Still, norms are changeable via both public health education and peer pressure, as the smoking story indicates. And eventually, there can be cascade effects, as noted in this paper24by Cass Sunstein: "Should Government Change Social Norms?"

Finally, this week's New York Times magazine features25a woman working to reduce obesity in schoolchildren, and makes them recite a pledge: "I do solemnly swear… to be healthier, to eat low fat, to eat high fiber, to drink lots of water and get lots of exercise." She is actively trying to change social norms, although it's not easy. Some children are responding; however, after the schoolwide assembly to introduce the full program last September, one frantic parent called to report that her child was refusing to eat anything in the house that was not healthy. "I can't afford to throw everything away," the mother said. "Please tell her to eat."

* * *

Darius Lakdawalla writes: We are left with one remaining question: What role can social norms play in explaining why some groups are more obese than others? The show-stopper for social norms is the impossibility of validating a theory that includes norms at all.

Norms may change behavior, or behavioral changes may produce new norms. To be sure, this chicken-and-egg problem occurs throughout economics: Do more restaurants make people fatter, or do fatter people attract more restaurants? Physical scientists solve these problems with randomized trials: Begin with two identical groups, and treat one group differently; the resulting difference between groups must then reflect the difference in treatment and nothing else. The analogous approach in economics identifies policy changes that treat one "group" but not an otherwise similar group. For example, what happens to weight in two similar U.S. states -- one that reduces its sales taxes on food, and one that does not? This general approach, widely used by economists to study important policy questions, is well-described for a general audience by Levitt and Dubner, in their popular book Freakonomics26.

This is the best -- and perhaps only known -- way to sort out the chicken-and-egg problem, but it is impossible to use for social norms. We would need to find two very similar societies, and isolate a sudden change in the attitudes of one, but not the other. The very fact that norms change slowly makes them impossible to validate scientifically, as well as extremely unwieldy for policymakers. We can certainly theorize about social norms, but it seems quite difficult, if not impossible, to demonstrate their relevance in the real-world.

* * *

Carol Graham writes: I accept that it is very difficult to isolate the role of norms, particularly as their effects seem to interact with the role of other factors, such as expectations. That said, we know that norms can tip quite suddenly and induce very radical changes in social behavior. Recent Nobel Prize winner Tom Schelling's work on segregation is one example. He documented, in a very simple and straightforward way, how modest changes in seating assignments in army and other cafeterias could result in outcomes ranging from complete segregation to complete integration. My Brookings colleague Peyton Young's work on norms27-- based on data for agricultural planting practices -- shows how modest changes in norms can then have cascading effects. Josh Epstein and Rob Axtell, also Brookings colleagues, have used agent-based computational models to demonstrate long lags and then tipping points in the response to policy changes28, such as changing the retirement age. The U.S. retirement age was lowered to 62 almost a decade before a significant number of people began to retire at that age.

Dr. Lakdawalla references the very exciting new work in economics that mimics scientific research via the use of randomized trials. Why is it impossible to envision a randomized trial experiment where one takes a number of school cafeterias that are similar in their socio-demographic make-up and introduces a policy intervention designed to change norms -- such as those described in the New York Times article referenced above -- in some cafeterias and not in others? At the least it could help answer the question of whether norms can be changed via such interventions.

Understanding the effects of norms on social behavior is far from an established or exact science. But dismissing the role of norms -- about professional appearance and aspirations, about investments in education and in healthy lifestyles, and about eating habits, and how these norms vary across various socioeconomic and professional groups -- risks missing an important part of the story of how and why obesity in the U.S. keeps going up in the midst of an increased barrage of public health warnings about its dangers.

* * *

Hyperlinks in this Article:
(3) Health and Welfare during Industrialization---1997.pdf
(5) obesity paper.pdf?uniq=-vxujr2
(18) wallets.pdf#search=%22smith healthy bodies and thick wallets journal of economic perspectives%22

Darius Lakdawalla is an economist at the RAND Corp., in Santa Monica, Calif. His research focuses on the economics health risks and the causes of contemporary trends in health and disease. Some of his previous work has explored reasons behind declining use of nursing homes by the elderly, acceleration in the rate of new HIV infections, and the growth in disabilities among younger Americans. Dr. Lakdawalla received his Ph.D. in economics from the University of Chicago. He is currently a Faculty Research Fellow at the National Bureau of Economic Research, in Cambridge, Mass., and an associate professor of economics at the Pardee RAND Graduate School of Public Policy.

Carol Graham is professor of public policy at the University of Maryland and a Senior Fellow in the Economic Studies Program at the Brookings Institution, where she also co-directs the Center on Social and Economic Dynamics. Her research focuses on poverty, inequality, and measurements of well being in both developed and developing economies. Some her previous studies have explored the role of low expectations and high inequality in explaining poverty traps and sought to explain high levels of public frustration with globalization. She is the author of "Happiness and Hardship: Opportunity and Insecurity in New Market Economies" with Stefano Pettinato among numerous other books and articles. She received her doctorate in political economy from Oxford University.

An Insider Explains Italy, Land of Cheery Dysfunction

In Italy, red lights come in many varieties. A rare few actually mean stop. Others, to the Italian driver, suggest different interpretations. At a pedestrian crossing at 7 a.m., with no pedestrians around, it is a “negotiable red,” more like a weak orange. At a traffic intersection, red could mean what the Florentines call rosso pieno, or full red, but it might, with no cars coming, be more of a suggestion than a command. It all depends.

The red-light mentality, as the journalist Beppe Severgnini sees it, explains volumes about Italy and the Italians. “We think it’s an insult to our intelligence to comply with a regulation,” he writes in “La Bella Figura,” his witty, insightful tour of the Italian mind. “Obedience is boring. We want to think about it. We want to decide whether a particular law applies to our specific case. In that place, at that time.”

This principle applies to traffic regulations, taxes, solemn laws and personal behavior. Everything is personal and open to discussion. As a result, Italy totters along in a state of amiable chaos, its situation desperate but not serious, which is more or less the way Italians like it, those in charge and those, in principle, being led. “Controllers and controlled have an unspoken agreement,” Mr. Severgnini writes. “You don’t change, we don’t change, and Italy doesn’t change, but we all complain that we can’t go on like this.”

Mr. Severgnini, a columnist for the Milan newspaper Corriere della Sera, turned a fond eye on the United States in his last book, “Ciao, America!,” but this time around, on his home turf, he bites harder and deeper. The paradoxes of Italian life engage him. They bring out the reflective wit that, he argues, is native to most Italians and may be their most potent weapon in the struggle with bureaucracy and social dysfunction. Intertwined with native wit is a strong sense of self-esteem enjoyed by even the humblest Italian, as well as a fatal weakness for beauty and surface appeal, “la bella figura.”

Italians, in other words, would just as soon look good as be good. The country suffers from an ethics deficit, most clearly visible in the attitude toward taxes. Lying outrageously about one’s income is considered normal. In the United States the public regards tax evasion as morally reprehensible. If he were to cheat on his taxes in Italy, Mr. Severgnini writes, “two neighbors would come round to ask me how I did it, and two more would loathe me in silence.” No one would report him.

Mr. Severgnini presents his guide as a tour that is partly geographical and partly conceptual. Over the course of 10 days, he travels from Milan to Tuscany to the far south: Sicily and Sardinia. But the places are merely excuses for little treatises on beaches, restaurants, cellphones, airports, condominiums, piazzas, gardens and offices, all sprinkled with clever observations and telling statistics.

The differences between Italian and British flight attendants, illustrated in a hilarious vignette, help explain the Italian sense of personal drama and the national talent for creatively responding to small crises. Italian flight attendants are poor at serving you coffee but good at cleaning it up and sympathizing when you spill it. Some of this is merely glib. Mr. Severgnini, himself no stranger to the lure of la bella figura, would just as soon turn a beautiful phrase as make a point, and he might do well to heed one of his own points about the restlessly fertile Italian brain: “you can’t amaze everyone every three minutes.”

At the same time, Mr. Severgnini, as he skips lightly from one topic to the next, manages to sneak in some revealing statistics. One in three Italians finds a job through a relative. One in five has moved in the last 10 years, half the European average. Telecommuting is virtually nonexistent, engaged in by only 0.2 percent of the work force — in part, Mr. Severgnini theorizes, because it deprives Italians of the social drama of the workplace.

The Italy that Mr. Severgnini describes seethes with frustration. Government works poorly. The legal system barely functions. Too many Italians are crowded into too little space. Fear of failure stymies innovation. Mr. Severgnini is dismayed at the national genius for enjoyment and the Italian inability to plan for the future. “Our sun is setting in installments,” he writes. “It’s festive and flamboyant, but it’s still a sunset.”

Yet in many areas Italians have jumped at modernity and thrown over tradition almost casually. Cellphones are a national mania. They allow Italians to be Italian in new, entertaining ways. The shopping mall (but not Internet shopping) is popular because Italians pretend that it’s a piazza. New nonsmoking laws, widely predicted to be an absolute failure, have been accepted without a fuss. They created new gathering places and new forms of conviviality. One young man cited by Mr. Severgnini started smoking as a way to meet girls. Restaurants go in for all sorts of newfangled gadgets in their bathrooms, and Mr. Severgnini has a field day with the automated sinks, concealed light switches and baroque flush technology that challenge the Italian diner today.

There is one rule, by the way, that cannot be violated. It is wrong, and possibly illegal, to order a cappuccino after 10 a.m. This is worse than eating pizza in the middle of the day. It is nonnegotiable. Discussion over. Rosso pieno.

Does government stupidity know any bounds?

By John Stossel

These are tough days for political satirists. Any satire about government boondoggles is soon upstaged by an actual government program that's more inane than anything comedians could invent. After the 9/11 attacks, Congress passed a compassionate piece of legislation called the Supplemental Terrorist Relief Act. It was to give low-interest loans to small businesses disrupted by the attacks, allowing them to rebuild. The loans were supposed to help hotels, retailers, and small service businesses in lower Manhattan.

But, as usual, the government passed your money out everywhere. Terrorist Relief Act loans went to Dunkin' Donuts shops in Connecticut, Pennsylvania, Georgia, Vermont, and Ohio. The manager of the Essex Junction, Vt., Dunkin' Donuts defended his loan, saying 9/11 affected his business. "Instead of getting probably a large coffee and a couple of doughnuts," Tony Silva said, his customers got "a small coffee and a doughnut."

The Patriot Act was supposed to provide federal funding to states to equip the fire, police, and EMS officers who serve at the front lines of a terrorist attack. But the congressmen who wrote the law apparently believed that patriotism starts at home. Money was allocated under a complicated formula where each state, regardless of its size or location, got an equal slice of the pie before risk was even considered.

One result is that the police and fire departments in Casper, Wyo., (population 49,644), can talk to one another, and to their hospitals and EMS units, on a brand-new communications system. New York City (population 8,000,000) is still waiting for a similar system. Colchester, Vt., got $58,000 for a rescue vehicle capable of boring through concrete to search for victims in collapsed buildings. Colchester has a population of 18,000 souls and a severe shortage of big buildings.

It gets worse. Government health programs require states to pay for men's erections. I'm all for men having good sex lives, but why would government subsidize that?

Because our bloated government just cannot stop vomiting out the money. For years Medicaid has been spending millions of dollars on Viagra and other erectile dysfunction drugs. The Clinton administration told states they had to pay, because the law requires that Medicaid pay for any FDA-approved drug deemed medically necessary. Bush administration officials kept the policy. They wouldn't agree to a television interview about it.

Doctors are so addicted to government funding that even insane and embarrassing subsidies are passionately defended. "Erectile dysfunction is not fun, it's a disease," said Dr. Steven Lamb, who appears often on ABC. "It needs to be treated. It needs to be paid for."

I gave him a hard time about it. "Sex is a government entitlement now? Do you ever think about budgeting? What the taxpayer pays?"

"What we're trained in is to be your advocate," he said. "I do not take costs into account."

Of course not. Government-funded medical programs invite doctors to declare endless "needs" -- knowing someone else will bear the cost.

Eventually there was outrage. Sadly, not merely because people woke up and realized that government shouldn't fund Viagra. No, only when money was needed for Hurricane Katrina relief and it was revealed that the government was giving Viagra to child molesters did Congress allow Medicare and Medicaid to stop paying for erections. Congress allowed states to stop. But some states still pay.

Will Rogers once said, "Thank goodness we don't get all the government we pay for."

I say we still get, and pay for, more than enough.

Wednesday, August 23, 2006

1938 Revisited

In his upcoming book about the horrors of the 20th century ("The War of the World"), the British historian Niall Ferguson has a chapter called "The Pity of Peace." It is about 1938 when World War II loomed and Britain did precious little to stop it. The warnings of Churchill were ignored and the government under Neville Chamberlain obstinately pursued a policy that forever after has made the word appeasement one of the most odious in history. Somehow, though, it looks like 1938 all over again.

The events in the Middle East are often compared to 1914. The Great War, the war to end all wars -- is actually the all-purpose war. It not only began for what seemed like a trivial reason (the assassination of a non-head of state), but it was fought with tenacity and brutality for what now seems no reason at all.

But when it comes to the Middle East, 1938 is also a pretty instructive year. At the moment, the United Nations has committed itself to maintaining peace in Lebanon. It has done so by saying it will interpose an armed force between Israel and Hezbollah. The Lebanese army will -- as it has already started to do -- invade its own country (gasp!), securing the south for the first time in decades.

A critical part of that plan is the establishment of the international peacekeeping force. It is supposed to have 15,000 troops, which will join another 15,000 Lebanese troops to ensure that Hezbollah is not rearmed with Iranian and Syrian missiles and Israel not only pulls out of Lebanon, but stays out. The backbone of the international force is supposed to come from Europe, particularly France. It was France that was most insistent on the establishment of the force.

Now France is having second thoughts...or cold feet...or mere questions. If only questions about the command structure vexed the French, there would be little cause for worry. But there are ample signs that more is at work here than a table of organization. Maybe the French and other Europeans have just plain lost the political will. The upshot is that there is no international force in Lebanon willing and able to shoot.

This inability of Europe to get its act together is what suggests 1938. You don't have to have Churchillian prescience to see that what happened once in Lebanon can happen again. Hezbollah's avowed aim is to eradicate Israel. Listen to what it says. Pay attention. It will renew its attacks the first chance it gets. This is why it exists.

When George W. Bush used the term "Islamic fascists," he had a point. But it's futile to use colorful language when, in reality, you're out of the conversation altogether. This is another baleful consequence of the Iraq War. The U.S. is not only preoccupied, it is loathed. The leadership it once was able to exert -- especially in the Middle East -- is a thing of the past. If it is going to have its credibility restored, another president will have to do so. In the meantime, as we always learn, Europe without American leadership is a mere tourist destination.

What's striking about Mr. Ferguson's account of 1938 is the almost total absence of Franklin D. Roosevelt. The American president is almost never mentioned -- sidelined by the Great Depression and, more important, American isolationism. That year, too, Europe was left on its own and England, pathetically, was not up to the job. Now, by default, the leadership of Europe has slipped to France. We can all sense war coming and a kind of crazy chronology forming like storm clouds for all to see -- 1938 becoming 1914.

Monday, August 21, 2006

Life and Death


The simple back-and-forth of war can create the illusion that both sides have a legitimate point to make even when this is not so, and it is clear that Hezbollah's cause has greatly benefited from war's "equalizing" effect. This Shiite militia seems to have known that merely fighting Israel would gain legitimacy for its cause. A cease-fire would make it a "partner" in peace. The Goliath Israeli military would make it a David whose passion proved the truth of its cause. But amidst all the drama of this war there has been very little talk of exactly what Hezbollah's cause is.

And, of course, it is not just Hezbollah's cause. There is Hamas, one more in a family of politicized terrorist groups spread across the Muslim world. Beyond these more conventional groups there is the free-floating and world-wide terrorism of groups like al Qaeda. In Europe, there are cells of self-invented middle-class terrorists living modern lives by day and plotting attacks on modernity by night. And around these cells there is often a nourishing atmosphere of fellow traveling. Then there are the radical nation-states in league with terrorism, Iran and Syria most prominent among them. From nations on the verge of nuclear weapons to isolated individuals -- take the recent Seattle shootings -- Islamic militancy grounded in hatred of Israel and America has become the Muslim world's most animating idea. Why?

I don't believe it is because of the reasons usually cited -- Israeli and American "outrages." No doubt Israel and America have made mistakes in the Middle East. Certainly, Israel was born at the price of considerable dislocation and suffering on the part of the Palestinians. And yes, there will never be a satisfying answer for this. Yet every Israeli land-for-peace gesture has been met with a return volley of suicide bombers and rockets. Palestinians have balked every time their longed-for nationhood has come within grasp. They have seemed to prefer the aggrieved dignity of their resentments to the challenges of nationhood. And Hezbollah launched the current war from territory Israel had relinquished six years earlier.

If this war makes anything clear, it is that Israel can do nothing to appease the Muslim animus against her. And now much of the West is in a similar position, living in a state of ever-heightening security against the constant threat of violence from Islamic extremists. So here, from the Muslim world, comes an unappeasable hatred that seems to exist for its own sake, a hatred with very little actual reference to those it claims to hate. Even the fighting of Islamic terrorist groups is oddly self-referential, fighting not for territory or treasure but for the fighting itself. Standing today in the rubble of Lebanon, having not taken a single inch of Israeli territory, Hezbollah claims a galvanizing victory.

* * *

All this follows the familiar pattern of a very old vice: anti-Semitism. The anti-Semite is always drawn to the hatred of Jews by his own unacknowledged inadequacy. As Sartre says in his great essay on the subject, the anti-Semite "is a man who is afraid. Not of Jews of course, but of himself." By hating Jews, he asserts that his own group represents the kind of human being that God truly wants. His group is God's archetype, the only authentic humanity, already complete and superior. No striving or self-reflection is necessary. If Jews are superior in some ways, it is only out of their alienated striving, their exile from God's grace. For the anti-Semite, hating and fighting Jews is both self-affirmation and a way of doing God's work.

So the anti-Semite comes to a chilling place: He easily joins himself to evil in order to serve God. Fighting and even killing Jews brings the world closer to God's intended human hierarchy. For Nazis, the "final solution" was an act of self-realization and a fulfillment of God's will. At the center of today's militant Islamic identity there is a passion to annihilate rather than contain Israel. And today this identity applies the anti-Semitic model of hatred to a vastly larger group -- the infidel. If the infidel is not yet the object of that pristine hatred reserved for Jews, he is not far behind. Bombings in London, Madrid and Mumbai; riots in Paris; murders in Amsterdam; and of course 9/11 -- all these follow the formula of anti-Semitism: murder of a hated enemy as self-realization and service to God.

Hatred and murder are self-realization because they impart grandeur to Islamic extremists -- the sense of being God's chosen warrior in God's great cause. Hatred delivers the extremist to a greatness that compensates for the ineffectuality in his world. Jews and infidels are irrelevant except that they offer occasion to hate and, thus, to experience grandiosity. This is why Hezbollah -- Party of God -- can take no territory and still claim to have won. The grandiosity is in the hating and fighting, not the victory.

And death -- both homicide and suicide -- is the extremist's great obsession because its finality makes the grandiosity "real." If I am not afraid to kill and die, then I am larger than life. Certainly I am larger than the puny Westerners who are reduced to decadence by their love of life. So my hatred and my disregard of death, my knowledge that life is trivial, deliver me to a human grandeur beyond the reach of the West. After the Madrid bombings a spokesman for al-Qaeda left a message: "You love life, and we love death." The horror is that greatness is tied to death rather than to achievement in life.

The West is stymied by this extremism because it is used to enemies that want to live. In Vietnam, America fought one whose communism was driven by an underlying nationalism, the desire to live free of the West. Whatever one may think of this, here was an enemy that truly wanted to live, that insisted on territory and sovereignty. But Osama bin Laden fights only to achieve a death that will enshrine him as a figure of awe. The gift he wants to leave his people is not freedom or even justice; it is consolation.

White guilt in the West -- especially in Europe and on the American left -- confuses all this by seeing Islamic extremism as a response to oppression. The West is so terrified of being charged with its old sins of racism, imperialism and colonialism that it makes oppression an automatic prism on the non-Western world, a politeness. But Islamic extremists don't hate the West because they are oppressed by it. They hate it precisely because the end of oppression and colonialism -- not their continuance -- forced the Muslim world to compete with the West. Less oppression, not more, opened this world to the sense of defeat that turned into extremism.

* * *

But the international left is in its own contest with American exceptionalism. It keeps charging Israel and America with oppression hoping to mute American power. And this works in today's world because the oppression script is so familiar and because American power cringes when labeled with sins of the white Western past. Yet whenever the left does this, it makes room for extremism by lending legitimacy to its claim of oppression. And Israel can never use its military fire power without being labeled an oppressor -- which brings legitimacy to the enemies she fights. Israel roars; much of Europe supports Hezbollah.

Over and over, white guilt turns the disparity in development between Israel and her neighbors into a case of Western bigotry. This despite the fact that Islamic extremism is the most explicit and dangerous expression of human bigotry since the Nazi era. Israel's historical contradiction, her torture, is to be a Western nation whose efforts to survive trap her in the moral mazes of white guilt. Its national defense will forever be white aggression.

But white guilt's most dangerous suppression is to keep from discussion the most conspicuous reality in the Middle East: that the Islamic world long ago fell out of history. Islamic extremism is the saber-rattling of an inferiority complex. America has done a good thing in launching democracy as a new ideal in this region. Here is the possibility -- if still quite remote -- for the Islamic world to seek power through contribution rather than through menace.

Mr. Steele, research fellow at the Hoover Institution at Stanford, is the author of "White Guilt" (HarperCollins, 2006).