The Value of Life: A Reflection on A Social Dilemma: The CORONA EPEDIMIC: Who Should LIVE AND WHO SHOULD DIE

 

The year 2020, will come down in the Medical Books or any other book for that matter, as the year of the clinician. It is a year like no other in our recent history.

Economists, are facing literally a difficult challenge: How to forecast with any degree of confidence, the future path of the economy-- a forecast of GDP growth, the unemployment rate and the likelihood of a return to a stable financial market, under the condition of uncertainty associated with "unforecastable variable--the Covid. The challenge involves the forecast of the productive activity of a labor force that, by law or persuasion is denied the supply of their labor full services. 

A viable forecast is made more difficult if not impossible given the lack of any viable mechanism for ascertaining  the severe impact of an exogenous variable, the Covid-19, and the implications of imposed "shut down' on labor participation rate once the economy began to open, albeit slowly, and in phases.

In light of the significant loss in the contribution of labor and capital to society output and capital accumulation as well as the instability of the financial market, the economists, those by profession is called upon to chart the outlook path of the economy, are left to ponder the time path of a variable--the Corona virus, whose affliction extended beyond the confines of one country or one state.

Chartering the future path of the economy, requires not only the economist's acumen about the characteristics of an economy, labor, capital and technical know-how, but most assuredly the forecast, or (forecasts) about the path of the virus, and the likelihood of its containment. Most significant perhaps, is a need for a solid assessment of the loss of output and human capital along the path of the virus.

Economic research sheds light on the loss to society's capital, about labor force participation rate associated with the Covid, but falls short of forecasting with any degree of certainty the future path of the economy in light of the uncertainty about the severity or the duration of the Covid. Undoubtedly, an unknown variable, the future path of the virous will exert a significant influence on labor participation rate, even if the states were ready to resume normal activities-- open their economies, for fear of infection and lack of medical intervention.

With daily pronouncements about the epidemic, rarely a day goes by without being reminded of what in store for us, about the magnitude of the vulnerable population, the dire forecast about their life and death circumstances, the economist's forecast must rely on an accurate assessments of another groups-- the clinicians. Not only their assessment is critical for ascertaining the severity of the infliction but also the loss to human capital associated with the closure of medical facilities or the withholding of clinicians services during the course of the pandemic.

A plethora of recommendation from those in the knows and those who were not, did little to give confidence not to mention comfort to those most vulnerable. As to those  in the "knows" their inability to make viable forecasts about the likelihood of any one's death from the Corona, save for the elderly, but also most importantly about how might its path impact the livelihood of many , not exclusively those vulnerable. 

The question that needs to be asked is the important one: what steps if there are any ( MASK wearing aside),should be taken by the public authorities to ascertain the magnitudes of the loss of income and employment associated with a policy of lockdown. But a first step in ascertaining the magnitudes of such loss is data discovery.

In a recent study reported in the New England Journal of Medicine (September2020), addressed one of the myriad impacts of the virus on a segment of the population: the primary care physicians. The study is coauthored by 12 health care professionals in Massachusetts universities with Zirui Song MD,PhD of the Harvard Medical school, the lead author. Zirui et al, explored the economic and clinical impact of the virous, i.e., Corvid 19 on a segment of the medical providers- the practices of independent primary care clinicians in Massachusetts.

It goes without saying that the expectation would be that the primary care practice sector in the state would suffer a significant loss in revenues which, would translates into losses in employees compensation, tenure of staff, but most significantly ,the welfare of their patients whose wellbeing and mortality most often depend on the visitation to their primary care physicians.

Admittedly, the purpose of said study was to shed light on the consequences of the pandemic for both the clinicians and their staff, nonetheless, it stopped short of alluding and not necessarily estimating the loss to their patients associated with the consolidation or closure of their practices.

Given that the intent of the study was to report on events in one side of the market-- the supply side, the impact on the patients, the demand side, the buyers, is left out-- an economic issue to be sure.

The welfare loss experience by one segment of the population, the clinicians-- suppliers, undoubtedly translates into a welfare cost/if not loss to users, the demand side of the market.

Unfortunately, although the clinician's loss may be measured with some degree of accuracy, the loss incurred by their patients may not be. The clinician admittedly, had exerted an impact on such outcome-- the effect of near zero supply of clinicians 'services on the health of the buyers, which translates into welfare cost/ if not loss to users, the demand side of the market.

Suppose that the clinicians were to defy the order of closure, even going further to advertise the safety of their practices, would such a defiance have been more costly than the returns reaped in term of the increase in the well being ; peace of mind, of their patients? By going along with the "rules" imposed on them by the shut-down, withholding their services, such an act presents us with in the words of Gordon Tullock ( an illustrious economist), with a"social"dilemma. In a celebrated volume, The Social dilemma (2005), the roots of conflict lie in the belief that the profits of one party must necessarily  come from losses to others (p.3).

A typical exercise  where decisions have to be made under condition of uncertainty is given in a classical study by Halter and Dean(1975). From their analysis, one would present in terms of utility values, the decision -making process facing a clinician under order of closure, by specifying the state of nature i.e. state A comply with the state order of closure, and, state B defy the order. Each state would have a payoff ( utility)with probability of occurrence. The matrix of utility under the different states of nature would have to be specified-- the probability distribution associated with alternative outcomes. Clearly, the payoff associated with any action taken by the clinician will depend on the shape of the utility function, and, the specification of nature-- if all medical practices would be open or none would be open.

One would argue nonetheless that the clinicians' decisions most often are made under conditions of uncertainty i.e. the success or failure of a given procedure. What is different here is that from repeated experimentation, a probability distribution of outcomes has been established. A Probability distribution associated with a newly "minted" virus ; the CORONA, requires repeated experimentation with methods of treatments, isolation and the likes.

Given that the monetary returns associated with the clinician decision depend on the state of nature, an exogenous variable, this makes the assignment of the probability distribution associated with any action the clinician might take difficult if not untenable. 

Having said that, it is worth noting that events like the Corona event, is not unique--societies are seldom immune from danger associated with maladies such as the current one--  they have experienced the plague, the flu epidemic and the like. What seems "novel" this time around is its "NOVELITY", as well as the controversy surrounding how it has originated.

Unlike clinicians, economists have to address not only the current cost inflected on a segment of the  population, the clinicians, or patients, but rather,  perhaps most significantly, the future cost to society measured in terms of the loss in human capital.

Thus far, the focus of  statistics and interpretations of said statistics that have been published daily has been on one SINGLE outcome-- the death count, although in some instances and some journals, the distribution of fatalities have been reported with reference to some socioeconomic characteristics of the population.

To be sure, the data is quite useful for states and towns, colleges and universities, schools, businesses as well as social groups, to evaluate the impact of the virus on their revenues, employees and their way of life. Nonetheless, it fell short of treating members of society as individuals with own aspirations, needs and concerns for their way of life. What perhaps , is most disturbing to this economist, is that the focus in reporting the loss to society has been " overwhelmingly " highlighted with reference to the age distribution of the population. In effect, some months ago, at the onset of the virus, a public official was quoted in public speech as saying what amounts to "let the old go"!

True enough , the old fox contribution to current output has diminished. But let us not forget that their contributions towards society's wealth accumulation and investments in human capital were the instrument for the welfare of themselves, but most significantly for society's welfare current and in the future.

In the mean time, as times go by, an accounting of the magnitude of the true cost to society associated with the so called COVED 19, would be forthcoming. and economists as the saying goes shall have "a row to hoe".

Attiat F. Ott, PhD. Emeritus Professor of Economics , Clark University, Worcester, MA, President of the Institute for Economic Policy Studies, Worcester, MA. Zirui Song, MD, PhD, Assistant Professor of Health Policy and Medicine, Department of Health Care Policy , Harvard Medical School, Cambridge, MA.

Two stents and you may be out

 

                 Two Stents and You May be Out

 Two days ago, the "unexpected" has become the expected. Bernie Sanders, a contestant for the presidential run for the year 2020, has succumbed to the unexpected, a heart attack, necessitating the implantation of two stents. Such a procedure is not uncommon for those of us who suffered a heart attack, not too serious enough perhaps, to take one out of running for anything or staying wherever we were.
Bernie Sanders had undergone "two stents" implants, which necessitated hospitalization for a couple of days, but for all practical purposes, this event may impact, if not take him out of the presidential run. Unfortunately, although survivability may be assured, this event is likely to cast a shadow on the contender's ability to perform his presidential duties, perhaps more so, the stress for running the campaign for the presidency.
Speaking from experience: four months ago, I had undergone a similar procedure--"two stents" implants following an unanticipated heart attack.Although I am not a candidate for the highest office in the land, I am an academic, "emeritus" professor of economics at Clark University, still quite active in research and publication in my field of study, I would not contemplate running for anything, the presidency notwithstanding.What is relevant here perhaps, is that in my case, the heart attack was triggered by the intense effort I have exerted in going over a "manuscript" in order to meet the publication deadline.
As an academic, I have faced a great deal of stress in meeting deadlines-- at Clark University, I have chaired 53 doctoral theses in economics with deadlines that had to be met for the success of my candidates for the PhD. The stress is what makes our footprints, whether that may be associated with being an academic, or in      asking one's constituents help in seeking the highest office in the land-- the presidency of the United States.
Unlike the senator, I am  a "Two timer".  My first"two stents" happened during my reading of doctoral theses several years ago. That did not give me  a card blanch-- few years later, this year I had a second round--two more stents.
With my second time around, I face a survival problem-- too many medications, less activity, but most of all , at least to my thinking then WHAT, and for HOW LONG the stents will survive.
A saying I have read somewhere, may be in a song: it is better the second time arround-- take my words, DO NOT BELIEVE IT.
My first time, with the stent implants , I did not even "Blink"; I neither knew what a stent was , nor what does it do, and most certainly I did not know that stents DO FAIL.  
Loosing one's ability to function,even for a day necessitated by the recovery process from stents implantation, for me personally, is worth a great deal more than a day or even 30 days worth of subsequent living. I do not know how others who have faced the same surgery have felt, but my experience would defy the "proverb" or "song", about the wonders of the second times around, at least as stent implantation goes-- it could not be more False.  
Mr Sanders is a"hardy" Senator from Vermont. For him  this is a  "first event". No doubt, he shall regain complete functionality in a very short time. He has a message that needs to be heard, not just  during the presidetial run, but for all time to come:
Believe in yourself and in your country's future-- that by getting together and acting our own conscious, we shall always achieve and maintain greatness.
Senator Sanders, I wish you well. Be assured that you shall recover, and, that you shall continue to serve your country and your constituents. 
I wish you a speedy recovery, and if the presidency is in your future, I wish you great luck and good health. 
 

It is my time to remember

                                      It Is My Time To Remember

It is Wednesday, September,11, 2019, a day where American throughout the continent in general and in New York city in Particular, perhaps the world at large, remember a day where hearts stopped, blood spilled, cries of disbelief, answered by the heroic acts of so many: American and many inhabitant of our world.
In remembrance of those who had fallen, and those who have given their lives for the safety and comfort of others, we pray for them and their families, above all we pray for the survival of our beliefs and our way of life.

Siting there around my kitchen table, a wine glass by my side, I looked through the wine glass, I saw an image that I knew sooner or later would be mine- a vision of someone who saw life beyond the present. Perhaps such a vision was seen by those who gave their life for ours.

Further from the kitchen table, in the dinning room, there stood an unopened, chilled bottle of Veuve Cliquot ( Rose), a gourmet Plaza Osetera Caviar, neither opened, just there to remind me of time past, a time where I would celebrate with a group of my PhD students at Clark University, the success  of one of their colleagues of being the recipient of the PhD in Economics, which I had chaired the doctoral theses.
So many years, so many PhD students I had chaired their doctoral theses and brought them to  successful conclusion; so much champayne celebrations that followed..

My own daughter, as was the case was my students, was celebrated along with her professors there at the house; she was celebrated as the recipient of PhD in Political Science from Brown University. There at the same dining room we have gathered with her professors and my own doctoral students to celebrate  another achievment; the award of a political science PhD to my own daughter.

I left the kitchen, with the vision of two events: a sad and unforgettable event,yet, with a heart full of gratitude for those who offered their life to defend our constitutionals values and the freedom the constitution affords us. The second vision is about the knowledge I was lucky enough to accumulate, and, for the qualities I was endowed with which enabled me to be a good thinker and a successful educator.

Passing the dinning room, I went to my study, where I sat wondering about the probability of survival; my own survival was the one I had to contemplate.

I recalled a note I have written to myself following a wonderful and heart worming event: Clark University dedication of the" Attiat F. Ott 'Seminar Room" : the seminar room where I have taught all my PhD students their Macroeconomic Theory, and conducted my Public Economics Seminar.
The dedication, acknowledged my contribution to graduate education at Clark University, and the Chairing  during my tenure of of 53PhD dissertations in the fields of Macro Economics and Public Economics, bringing them all to successful conclusion

I recall coming home after an unforgettable celebration, that I stood there by my desk and subconsciously wrote on  my calendar the following words: "From a Line to a Point".
Today; the September 11, 2019, I revisit what I had put down that far back.

As an educator, seeker of knowledge, I would do no less than search for the probability of ONE specific event, everything else remains the same ,calculating such a probability , all pertinent variables had to onsidered. Unfortunately, we seldom,if ever possess such a knowledge.

After so much reading about the likelihood of the occurrence of that Specific Event, I have decided on the wisdom of a saying I have learned as a child in a french school a long time ago; a saying that was popularized in a song by a very popular American actress: "QUI SERA, SERA".

May be that how one should  look at the future!

It Is My Time to Remmeber

A Reflection on the US presidential Election of 2016

                                         A Reflection on the US Presidential Election of 2016


 Have you ever faced a "Colossal Defeat? If so how did you deal with it?

I ask these questions having witnessed yesterday (November 9), Hillary Rodham Clinton dealing with such a loss, not an ordinary loss, a loss of a national election to the highest office in the land, if not the world-- the Presidency of the United States of America.

Whether you have voted for her or for the other candidate-Donald Trump, her concession speech ought to have touched your soul.

 In her concession speech, she has exhibited both serenity in defeat and uplifting of her countrymen spirit.
I was touched by her eloquence; she exhibited a "real" class. As a female member of the species, I wish her well. I wanted her to win, not necessarily because of her "unsurpassed" qualifications, or better judgment or truthfulness, but because of her "gender", yes her gender.

A woman president would have placed this country among the great, both in ancient history and in modern times for their recognition of "Women". Unfortunately, that would not be.

Hillary Clinton should have won; should have won not because she advocated a vision for America that put it on a par with great "democracies", not because she expounded on the need to embrace people of all nationalities and origin , but to me because she was a" woman"- a candidate representing a gender that was beat down by a system that discounts the qualifications of women, against those of not their betters but for the fact of gender-- being men.

With sadness I view her defeat and accept the judgment of the people. That what democracy is about-- win or lose you must uphold as "sacred" the "will" of the people. In this 2016 election, the people spoke more loudly than ever.

Hillary Clinton has accepted in good grace the "decision" of the people. I salute her and wish her the best. . 

 

A Vexing Problem II: A Follow Up

A gathering of 50 leaders (Presidents and Prime ministers) from the African Continent took place in Washington D. C. USA per invitation from President Obama. The meeting described as the US-Africa leaders Summit (not quite a G-50 Summit), took place on August 3-6, where experts from the US and Africa tackled many issues least of which the form of aid to the African Nations.

Such an unprecedented gathering, by all accounts would result in a myriad of sessions, panels of experts, public policy advisers, as well as invited guests all addressing one or another aspects of development, trade and foreign assistance.
President Obama, the host of the conference, placed emphasis on two issues: that, “investing” in the next generation is at the core of a government responsibility; that a trajectory of African growth requires a shift from a donor mentality to a model of “business networking”. During the following two days, the conferees had the opportunity to discuss ways of:
• Stimulating growth,
• Unlocking opportunities and,
• Creating enabling environment for the next generation.

A tall order to be sure. Nonetheless, planning for the future is what governments do, or ought to do.

Economists, for long have recognized that the individual’s decision regarding consumption, saving and investment is carried out in an inter-temporal setting. That is, the individual in making a choice of what goods to buy, whether to save or invest as well as allocation of time between work and leisure, does so with an eye to the future. The objective is to allocate lifetime income to get maximum satisfaction (utility) over one’s lifetime.

“Good” governments could not afford to do less. The returns to individuals living in a society, depends on a societal allocation of its resources that maximizes returns to its members over their lifetimes.

Achieving such an optimal inter-temporal allocation both at the individual level, and in societal context is “vexing” at best. That does not mean that it should not be sought. Attendees and presenters at the President- Leadership summit made a valiant effort in identifying those pillars on which a society should construct its future. The multitude of sessions that have taking place during the Summit, put forth ideas and recommendations as well as made pledges for funding support for various projects initiated by governments and US business.

The task of stimulating growth, and, creating enabling environment for growth in the 50 African nations, as the saying goes, may be easier said than done. The 50 African countries differ significantly in terms of their natural and human resources, levels of literacy and educational attainments, levels of corruption and legitimacy of their governments- elected or dictatorial. That being said, one needs to add that, one ought not throw one’s hands and give in to a future that perpetuates the status quo. Addressing future needs of society have to go hands in hand with current needs.

One of the specific recommendations/ pledges that came out of the Summit is that the USA pledges, in partnership with business, to continue their efforts for the “Power Africa” initiative. The President announced on August 5th that private companies and government institutions are providing additional $12 billion in aid to the administration’s electrification program in Africa. The federal government would add $30 million to supplement this effort. Conferees at the Summit applauded the effort. Since the US government funding requires Congressional approval, that did not deter the US business community from pledging support to the effort to invest in power, and power infrastructure in sub-Saharan Africa (for details on this announcement see Juliet Eliperin, Obama to announce expansion of electrification in Africa, The Washington Post, August 5th ).

This brings me once more to the comment I have made in my August 2nd blog, prior to the US-African leaders Summit. There, I have suggested in response to an announcement by the GDN/Gates foundation asking for proposals that would recommend a way or ways to “reinvent foreign assistance”. My suggestion to whoever cared to listen is that the highest returns an investment would reap are through investing in education. No society in my view can prosper, let alone, compete in tomorrow’s world without a literate population. Once again, I endorse in the recommendation that “education” unlocks the door to prosperity.

My endorsement for education as the “right” approach to the so called “reinventing foreign aid”, elicited a response from one of my formal Doctoral students, currently a professor of economics with a great deal of expertise in development policies. I would like to share with you a brief exert from his note as it is quit enlightening:
“…the biggest bang for the foreign aid/ development assistance dollar may not be education expenditures, whose worthwhile returns are derived from other functional conditions being in place, but an investment in the necessary initial conditions that makes an economy organically and sustainably develop and progress. These include, inter alia, the establishment, enforcement, and education about the culture, of property rights, which includes the opportunity for people getting a competitive return on investing in their own education and human capital development”.

As I stated in my previous blog, I am not a development economist. Yet, I cannot help but wonder how a society in the African continent, with more than one third of its population are illiterate (the definition of literacy is that a person aged 15 and over is able to read and write), can possibly achieve those conditions that make an “economy organically and sustainably develop and progress”. A sustainable development would only prevail in a society whose members are literate.

Hopefully, an expansion of the “power Africa” project would bring the light of literacy to all citizen of the African continent.

A Vexing Problem: How to Fashion Development Assistance

There has been and will always be vexing problems facing the inhabitants of Earth. Every generation faces multitudes of problems some get eventually solved while others fester from one generation to the next. One such problem is “Economic Development”.

Economic textbooks on development economics abound, all claiming their authors offer solutions to the “vexing” problem of developing the “less developed”, or as most often put the “underdeveloped” world. An often cited solution is “development assistance” to give the underdeveloped world a head start towards the so called “Take Off”.
The economic textbooks on development for the most part were successful in putting forth the idea that development is a long term process, that one shoes solution does not fit all. With the preponderance of evidence about the slow pace of development in many regions of the world in general, but in the African continent in particular, it is abundantly clear that development economists have “a long road to hoe” to claim success for the thesis put forth about development strategies.

As I am not a development economist, I cannot claim either success or failure of what the development economist has accomplished or failed to accomplish. Nonetheless, as a macro/public economics specialist, I feel that we economists have failed somewhat in putting forth clear and workable solutions to the vexing problem of economic development, and most significantly the role development assistance should or ought to play.

Development assistance espoused by policy makers, mostly on the advice of political economists and development practitioners, as a policy tool to lift humanity in the less developed world out of the desperate status most face, seems not to have delivered what was hoped for. Yet, not many would advocate that development assistance should be scraped (an exception is the CATO Institute who advocated eliminating US foreign development assistance altogether), or that the plight of humanity in many less developed countries should not be of concern to the many fortune individuals in the developed world.

There is ample evidence that most if not all members of the developed world believe that development assistance, although is only one of the pillars for successful development, has a place to play in the development of the less developed world. One such evidence, indeed one that prompted me to write this essay, is the “continual” search for the most effective means to promote development as parlayed in the following announcement.

Appearing in “The Economist” journal (July 19th-25th ) is the following announcement:
GDN (the Global Development Network) in partnership with the Bill& Malinda Gates Foundation seek suggestions from “any one with ideas” about development assistance. As the announcement indicates what they are seeking is “ideas” which would answer the question of “How to Reinvent Foreign Aid”. Individuals with the winning essays would each receive $20,000 and that their ideas would be promoted by the sponsors.

(I wonder how many students of developments would apply.)
Although I do applaud GDN and the Gates Foundation for seeking ideas as to how to “ reinvent” foreign assistance, I nonetheless find it a bit “ simpleminded” as to believe that simply by offering a sum of money (not significant at that) to the readers of The Economist, they would gain insight that could not have been gained from reading most if not all texts on economic development, and most significantly from the voluminous literature, policy papers, testimonies and other forums on the failure of many well designed publicaly and privately funded programs of foreign assistance. What would have been, perhaps most informative was to provide a focus to the inquiry.

To begin with: The announcement ought to have made it clear that development assistance by NGO that is non-governmental organization accounts for only 15-20% of total development assistance; that the other 80% or so is provided by governments mostly by the United States under the auspices of the Agency of International Development( AID). According to statistics provided by the OECD development aid amounted to $134.8 billion in 2013. Development Aid provided by private voluntary agencies amounted to $29.7 billion in 2012 of which the US contributed $22.1 billion. Hence any effort to enhance such a contribution would be most welcomed. Another issue is that public sector donors as well as private donors have their “own’ agenda in dolling out said assistance. Most importantly is the fact that the host country is friendly toward such largess – that it would accept whatever strings donors are bound to impose. Hence it would have been helpful in shaping up a response— reinventing foreign aid proposal, to know whether or not a donor is likely to withhold assistance to a country based on its political standing.

It is worth noting that two centuries have passed since development assistance was inaugurated. The most successful of course is the “Marshall Plan” which was instrumental for the development of Europe following the destruction of WWII. But this is not the development assistance the solicitation of proposal has in mind. It seeks I believe ideas that would break the cycle of underdevelopment in the less developed world. In some sense, the GDN and the Gates foundation hope to elicit new suggestions as to device and put in place a successful (hopefully) assistance program. But once again: is there a shoe that would fit all. No one is likely to think so.

Few months ago I watched a couple of televised hearings by a “Congressional Committee” on foreign assistance. Appearing before the committee was an administrator from AID, as well as representatives from private agencies that are engaged in providing development assistance. Obviously the Congressional Committee in scheduling such hearings is acting as the “Watch Dog” guarding our interests as US taxpayers in that, it needs to insure for us that money taking out of our pockets yields a higher rate of return than if left there (not all obviously would agree, but then in a democracy one ought to believe that it is so). One of the issues that came up in one of those hearing was in relation to a program called “Power Africa”. Before the hearing started, and before hearing AID’s administrator makes his statement, I wondered what such a program is about. What “power” are we US citizens want to impair to Africa. Thankfully, the administrator did not keep me guessing for long. He was reporting on an initiative with a public- private partnership to double the number of people with access to “Electricity” in six focus countries: Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania. The program engages both the African governments and the private partners—the World Bank, the African Development Bank as well as other private partners in such effort.
As a taxpayer I applauded such effort, not only because electric power is an enabler but also because it conveys a message that we should always adhere to in our life: “let there be light”.

There are a host of private-public partnerships in Africa and other developing countries that aim to fill a gap in knowledge about resource use or supplement existing resources through access to resources not available at home. Physical and human capital is needed to be combined to produce output, whether such output is for consumption or to augment the productive capacity of a country. This in essence is what development assistance is all about. Unfortunately good intentions may not always yield good outcomes.

I have read and participated in conferences as well as written papers on some aspects of developments, in particular that which deals with the role of the public sector. On August 19-21, 2008, The Institute for Economic Policy Studies, Worcester, MA, USA sponsored a conference that was held in Gaborone, Botswana with a theme: “Developing the African Continent: Who is in charge”, papers from that conference appears in a special Issue of the journal; International Advances in Economic Research, August 2009.The conferees were academician as well as policy makers in the field of development. The most striking facts arising from the conference sessions are: first, an overwhelming level of corruption still persists in many sub-Saharan African countries, hence impacting the use of foreign assistance; secondly, that aid should be channeled into activities that not only complement and enhance current investment, but also provide the environment to attract further investment and thirdly, perhaps most significantly is that a “better understanding” of human development and its impact on growth is imperative for the development of a successful development assistance program.
Now I offer my “two cents” and not a “$20,000” suggestion:

An Integrated Approach to Development no matter in which Area, or for which Country.

In the “Power Africa” initiative, for example, it is not enough to build cables to supply electricity. It does not do much for a country where the majority of its inhabitants have no decent housing to make use of electricity, nor for education attainments if there are no schools that can make use of electric power to deliver education to students throughout the year. Perhaps that was the reason for the pilot project of the “Power Africa” program to limit the program to six sub-Saharan African countries.

A final word: Education should be the Road on which Development Assistance Ought to Travel.

My Anonymous Readers: Thanks

Once in a while most if not all of us get down in the “dump”. Thankfully we pull ourselves up and as the “Brit” would put it “get on with it”.

A couple of days ago, I was there—down in the dump. The unending snow storms, the unsavory cold weather, the wind, the pile after pile of dirty snow finally got to me. When we contemplated a move from D.C. to New England, so many years ago (it seems now like eternity), I was so delighted to see a city blanketed in snow. The sun cast a lovely spell on the City, I basked in the beauty of New England, and hence we stayed. That was ages ago.

Today, like many others in my city I find myself surrounded with “mountains of dirty snow”. And, if you had to depend on someone to plow the driveway for you, you see the money disappearing faster than the ice melting on your roof or on your front door. Mind you, I did not mind then, neither the snow, nor the dirty roads. Once I got to my classrooms, the sun shined on me, my graduate students made my day.

During my carrier as a professor of Economics, I had the good fortune to graduate so many doctoral students (50 PhD), and as their doctoral thesis chairman, I had successfully placed most, if not all in very rewarding positions, a feat that even today I remain thankful for.

A couple of days ago, as the snow kept mounting on the roof, the ice accumulating on windows and glass doors, the water spilling into the house through the glass frames, I felt perhaps for the first time the chill of winter. I asked myself “had I came to the end of the road?”

My Blog “The End of the Road” posted few weeks ago, perhaps articulated how one feels when one reaches the end of the road. As one gets older, as one’s formal supply of labor is depleted, one cannot help but delve in such thoughts. I wondered: “Had I truly reached the end of the road?” Then, I opened my e-mail. There, I found a lovely note from an anonymous reader commenting on my Blog: “Marvelous, what a wonderful site. Keep it up”.

My anonymous reader reminded me of the task that I have dedicated myself to- Economic Education. This simple line lifted the “fog” that had engulfed me for a few days. I knew then, that I have yet to reach the “end of the road”. It is a road that we must travel nonetheless. So to whomever, wrote that short note my sincere thanks. Tomorrow, I start working on a new blog: “Tax Reform: the elusive dream”. Till next week then.

The End of the Road: A Reflection on Value

There was a song I have heard a long-long time ago which had started or ended, I am not quite sure with the following words: “the king of the road”. Sitting on my desk pondering whether or not I should begin work on my next book, about the state of the Federal Budget and the unsustainable levels of debts in the US and most EU member countries, I found myself recalling this particular tune. The mind works in mysterious ways, as so many believe.

Why this tune, and at this point in time. I am sure psychologists can answer this question. For me, a trigger prompted me to recall it. I have just published a paper on the “Rate of Return to Aging: A capital Stock Approach” (International Advances in Economic Research, November 2013, vol.19, pp.355-366), where I came up with the finding that the rate of return to aging if not negative is close to zero. Another and perhaps a more subtle reminder about the implications of aging is the relationship between old age and work, especially the value of work. On reflection I knew why I associated the song with age.

I am fond of watching a program on PBS called “Window to the Wild”. There the host of the program, perhaps in his 60’s or early 70’s takes his viewers into the “wild”. A day or two ago, I saw an episode where the host of the program took his viewers into a place in Massachusetts quite deserted called “Dog Town”. What prompted me to think, I believe about the song and the title of this blog is a most interesting statement carved on one of the town boulders that stated: “When Work Stops Value Diminishes”. Whoever thought of it did well to carve it in stone.

Not every one, I am sure will realize or envisage how this small, yet a most powerful sentence pricks the mind. For an economist, value is a very important concept in the economist’s repertoire. Value has two characteristics: Value in “use”, and value in “exchange”. An inquiry into the history of economic thought leads you to the question of what determines value.

Value defines a good or service. A good such as bread or water have a value to the user but may not have a value in exchange. For example, water in a river can be obtained free of charge, and if the water is available to all, it will have no exchange value. On the other hand, if water is not available to all, and it is useful to users, then it will have a value in exchange. Whoever possesses the water can exchange it for other commodities or for money.

Determining a good's value in exchange has been at the foundation of economics from Adam Smith’s the Wealth of Nations (1776) to Leon Walras Elements of Pure Economics (1873) and Alfred Marshall (1890) to name a few. Through the history of economic thought one of the issues that have occupied the classical and neo- classical economists has been the determination of value in exchange. Although the analysis differed, one thing they have settled on was that “LABOR” determines the value in exchange (For a review of the history of economic thought on this issue see Attiat F. Ott with Sheila Vegarie: What Economists Do: A Journey Through the History of Economic Thought i Universe LLC, 2013, ch.4).
If “Labor” as our forefathers put it is the source of value in exchange, then the statement carved in stone in the Dog Town is quite remarkable.

As a professor of Economics who spent all my academic life teaching and writing about economic issues and principles, my value to my profession was determined by my labor. When dispensing labor services stops—comes to an end with retirement, value unquestionably diminishes. A person who has retired from the work force, his/her labor clearly has value in use but little in exchange in a monetary economy.

Everyone knows that, if a good has an exchange value, and if such a good has a limited life span, (an exhaustible resource) from instantaneous to a relatively longer duration, at some point in time it will cease to command a value in exchange. Labor is such a good, its services fall under the label of exhaustible resource. By labor, it is meant not only physical existence, but also the embodiment of said labor in value in exchange. When labor diminishes, or erodes through the passage of time, so does its value.

The law of Economics, since Adam Smith still holds. Labor is the source of value in exchange, and when work stops, as it happens sooner or later, “VALUE DIMINISHES” and that is the end of the road.

Shutting down the Federal Government: It is Time for a Nationwide Recall of Our Representatives in Congress

“Here we go again”. These four words were uttered by former president Ronald Reagan during a televised debate in New Hampshire back in the late 1970’s during the primary. Frustrated over a repetitive question raised by his fellow contestants for the White House, Reagan admonished his fellow contenders for such behavior so that they move on to address issues of national priorities. The admonishment seems to have worked—they moved on and Reagan won the presidency in 1980.

President Obama should do no less. He should remind the Republicans of the futility of hanging on the one issue that is holding the government and the people hostage to “ideology. President Obama articulated such behavior best in stating (October 1) that “”holding the function of government hostage to ideology is “‘unseemly”.

The American public should be indignant about the shutdown of the Federal government. True, the Republican minority that are holding the functioning of the Federal government over the Affordable Care Act—Known best as the Obama’s care plan are acting on behalf of their constituents who share their ideology. This is how democracy functions. They were sent there to represent their constituents, their votes offered or withheld should reflect those of their constituents. But in this instance, they are not acting the way they should in a representative democracy where a vote up or down is governed by a simple majority. The issue on which government shutdown rests is irrelevant. The Affordable Care Act or the so called Obama’s care plan is the law of the land. It has been challenged, and the challenge was defeated as the US Supreme Court affirmed its legality. The ideology was put to test and in the case of the Obama’s care plan was defeated. In a representative democracy, this how a democracy functions. Our representatives have to either accept the outcome of a single majority vote, or insist in cases that divide their constituents according to ideology, that the issue should be determined by a 2/3 majority.

The American public should not let the government shut down go by the wayside. Our representatives are sent to Washington (their accountants only know how much they spend to get there) to serve the public and not the private interest. That may be an old fashion concept but that what democratic institutions are about. The segment of the Republican Party in the House of Representative that are holding the government functioning hostage to their unsuccessful effort to defeat the Obama care law, when they had the opportunity to do so, should reserve their fight for another day. Win or lose they must honor a system that allowed them to be there. A democratic system of government built on simple majority rule. Failure to achieve simple majority on any issue should be hammered out to insure the survival of democracy. The blame game should be beneath men and women in both houses of Congress. It is unworthy of representatives who pride themselves in living and serving in a democracy.

This is not the time or place to argue for against the Obama care law. Those who failed to stop it from becoming the law of the land, if they adamantly believe it to be injurious to their constituents should, in a democracy, garner the support of a majority to repeal it. That is how a democracy survives and avoids the pitfalls of autocracy.

The current ideological battle is not one that it ought to be fought by shutting down the government. Just look at what the battle is about: not to repeal the law, that battle was fought and lost, but to delay the funding for one year. You should ask: then what? Will the government be threatened with a shutdown next year, or the year that follows? Will the delay impede the implementation of the law? Just listen to what president Obama said in his televised speech: “The government is shutdown but the health care act is alive and well--the uninsured are ready to get insurance; to bail themselves out of a burden for long has been on their shoulders”.

Yesterday an American citizen reacting to the President speech put it to the Network carrying the speech: “do you know a country in either the Eastern or the Western Hemisphere where they shutdown the government because of differences in ideology?” The question was left hanging there.

The last shut down of the Federal government that took place 17 years ago lasted 21 days. How many days will it last this time around? Placing the responsibility of the shutdown on the shoulders’ of either Senator Reid or Representative Boehner does not help matters much. The American people should hold members of Congress; Democrats and Republicans hostage for their votes.
It is time for a “Nationwide recall of our representatives in Congress”. If they cannot discharge their obligations to govern, they should be sent home. The country will not be worse off than it is today.