Whose Reality Counts?: Fifteen Years Later

Here is a paper I wrote for a class on development management. Though I wrote it, the views expressed here are not necessarily my own.

“There is but one social science,” economist George Stigler is reported to have once said, “and we are its practitioners.”  Though Stigler meant his statement as a slight at the qualitative nature of economics’ “softer” alternatives, the “we” in his pithy remark can also double to mean “we men,” a distinction that has been borne out by a long history of female exclusion from the social sciences in general and from economics in particular.

These three themes embedded in Stigler’s remark – (1) the promotion of economics as the pinnacle of social science research employing (2) rigorous measurement and mathematical analysis thereby unconsciously resulting in (3) women having lower status within the profession – though not first identified by Robert Chambers, were perhaps best articulated by him. These ideas were included as part of his bigger project on professionalization within the social sciences and the need for participatory practices in development, which were collectively formalized in his late ‘90s work Whose Reality Counts?

It would be pleasant to believe that in the fifteen years since Chambers’ book was first released the social sciences have “learned their lesson,” lead by an infusion of humility and inclusion within the economics profession. Unfortunately, Chambers’ critiques can be levied just as easily today as they were when he initially wrote his book.

Economists as Kings and Scientists

The economics profession is still very much living in the shadow cast by Paul Samulson who first formalized its study in the 1940s by applying advanced mathematical models to what was previously a largely qualitative field – there is no math in Keynes’ General Theory, for instance. All of that has changed. Led by economists, mathematics has now spread to virtually every social science; it has leak into such non-mathematical fields as history, sometimes going by the name “cliometrics,” several sub-branches of modern philosophy, and, according to Chambers, even cultural anthropology. Only the post-positivists have remained immune from the influence of mathematics, but then that’s how they make a living.

As Chambers argues forcefully in his book, economists are at the “head of the class” according to traditional status hierarchies within the social sciences. This fact is easy enough to observe. The President has a Council of Economic Advisors; there is no Council of Sociologists. When hundreds of billions of dollars in government bailout funds are at stake it is the economists, not the historians or philosophers or feminists, that are brought to the table for discussion. Demographers are not appointed to the position of Treasury Secretary. The Federal Reserve controls the money supply and sets interest rates, power that ultimately radiates to affect the lives of billions of people worldwide; yet, an ethnomusicologist has never been considered for the job. Only those in security studies enjoy equal power in the U.S. government, with their appointments as heads of the various U.S. intelligence agency posts, presidential advisors, and, often, the powerful position of Secretary of State. Similarly prominent positions reserved for economists exist in most Western-style governments worldwide.

That economists have come to hold positions that deal with economic matters seems logical enough; however, the hubris they display through the use of formal mathematics and sophisticated statistical techniques is anything but logical. The term “social science” was meant to denote a type of analytical rigor directed toward the social world, not the conversion of “people to things,” as Chambers himself chides, or the notion that complex social systems can be studied and controlled in the same manner that a laboratory physicist can careful control and monitor her experimental setup. If there is an analogy between the social and physical sciences, economists are more like geologists – they know something, but are unable to precisely predict the location and veracity of the next earthquake, tidal wave, or volcanic eruption, and do not posses sufficient technology to easily and swiftly deal with such catastrophes when they do occur.

Of course, economists do not phrase their doctrine of mathematical rigor this way, but rather as a sanguine belief that mathematics, applied properly, can tease out casual relationships with precision as well as offer prescriptive policies. For example, economist Ed Glaeser, in his recent op-ed “The Role of Economics in an Imperfect World,” phrased things this way:

Hubris has been part of the human condition, with or without math, long before the Black-Scholes asset-pricing formula. Mathematical models create discipline. They ensure that we specify our assumption and that our conclusions then follow from our assumptions. Statistics then provide us with indispensable tests of our theories.[1]

But if this were true we would expect – or at least hope – that testing of various theories would generate consensus within the profession, anchoring a public policy question with normative prescriptions so that that the next question could be addressed and so on until a socially efficient outcome was reached. But surveys show that economists are still widely divided on most important public policy issues.[2]

And what is true about economic consensus in general is true for development economics in particular. Late last year, for instance, Twitter exploded after Daron Acemoglu and James Robinson brazenly responded to Jeffery Sachs’ Foreign Affairs review of their popular book Why Nations Fail?[3] Sachs also famously disagrees (on nearly everything) with NYU economist William Easterly, but so too does Easterly disagree with the various “poverty trap” theories put forth by Paul Collier in his best-selling The Bottom Billion.[4] If data has done anything to resolve these controversies it doesn’t show.

As Chambers puts it, “Figures so selected are then accepted, repeated, cumulatively misquoted, and used, consciously or unconsciously, to reinforce predisposition and prejudice.”[5] Economist Tyler Cowen calls this phenomenon “mood affiliation,”[6] the notion that one first unconsciously chooses a “mood” and then selects or interprets results to comport with this pre-selected world view. In the universe that Chambers and Cowen envision, data does little to resolve fundamental disputes over theory as Glaeser suggests.

In fact, such disagreement even extends to the data-heavy Randomized Controlled Trial (RTC) craze. For instance, in a 2008 blog post – again involving Jeffery Sachs – Harvard development economist Dani Rodrik cited an RTC to support Sachs’ view that insecticide-treated bed nets should be given away for free rather than sold at a nominal price.[7] However, Mead Over from the Center for Global Development quickly responded by arguing that the RTC did not at all support Sachs.[8]

Intellectual disagreement, of course, is to be encouraged. Indeed, it can be a powerful force in creating new knowledge and moving research programs forward. However, when paired with the hubris of those such as Stigler or Glaeser it can be dangerous. This is doubly true when economists are hoisted into powerful government positions and then expected by both government officials and the general public to carefully predict and steer the economy as a physicist would a laser beam. The latter two parties would do well to realize the limitations of what is possible in matters of economics, but so too should economists chisel away their patina of scientism and refrain from promoting themselves as surgeons who simply choose to operate on matters of public policy instead of on human patients.

Holy Measurement Error Batman

Part of the idolatry of the economics profession is the belief that “data” can erase all sins. To the extent that reliable data can serve as evidence to support an argument or claim there is no harm done. But the fabrication of unreliable data where data simply doesn’t exist can indeed be harmful. In Chambers’ book he references Gerry Gill’s paper Ok, The Data’s Lousy, But It’s All We’ve Got, summarizing Gill’s piece with his own colorful observation:

 At worst, they [economists and consultants] grub around and grab what numbers they can, feed them into their computers, and print-out not just numbers but more and more elegant graphs, bar-charts, pie diagrams and three-dimensional wonders of graphic myth with which to adorn their reports and to justify their plans and proposals.

In The Black Swan Nassim Taleb offers an elegant parallel for much of the data hunger in economics.[9] In his analogy you have just boarded a plane in Atlanta that is destined for New York City. Suddenly a flight attendant’s voice can be heard over the intercom, “The pilot has misplaced the map for the NYC airport,” he says, “but don’t worry he’s going to use the map for Chicago’s airport.” But Chicago is not New York, the two airports are in different parts of their respective cities, the runways are facing different directions and require different approach patterns, JFK is positioned next to Jamaica bay while O’Hare is fifteen kilometers inland from Lake Michigan. The dissimilarities are nearly endless. If placed in such a scenario Taleb argues any rational person would disembark the plane. In economics, however, researchers proudly pat themselves on the back, remarking the good fortune that they found data to apply to their cause.

Perhaps the single best example in all of economics comes from the recent developments in African GDP revisions. Economists have long known that African nations had severe obstacles in collecting the sort of data needed to construct accurate GDP figures: poor infrastructure, widespread corruption and institutional failures, low-skilled government workers, technology shortages, and so on. Yet, GDP figures were constructed anyway and indiscriminately imported into the databases of prominent international organizations such as the OECD, IMF, and World Bank. Economists have used the data for thousands, perhaps tens of thousands, of regressions to determine both the causes of poverty and to assess the multitude of macro-level poverty alleviation interventions that have been tried over the decades. And now it turns out that unreliable GDP data may invalidate a large portion of that work.

How bad is it? Alwyn Young from Britain’s London School of Economics reconstructed GDP for 29 Sub-Saharan countries using household-level income gathered in DHS health surveys. He estimates that for the past two decades the region has been growing between 3.4 and 3.7 percent per year, or roughly four times the figures reported in international data sources.[10] Compounded over time the difference between his findings and official statistics are enormous.

To give some sense of the magnitudes, in 2010 Ghana’s government revised its GDP figure upwards by 60%, meaning that roughly $13 billion worth of economic activity had been overlooked.[11] This is all the more alarming because “[o]ver the past thirty years Ghana has been one of the most scrutinized, measured, studied, pick-over economies in Africa.”[12] If the pending investigation in Nigeria yields a similar GDP revision it would be the equivalent of “40 economies roughly the size of Malawi’s” hiding in the African country.[13] Similar news is certain to appear Africa-wide as more governments undertake revision investigations at the behest of international aid organizations and researchers.

With such enormous misinformation about GDP figures – much of it dating back decades – what is really “known” about development economics becomes quite murky. This should serve as a tale of caution to economists, and indeed all social scientists, about the fallacy that some data is better than none at all.

The Second Sex

One key concept for Chambers is what he terms “Normal Professional Status” – a status hierarchy within and between practicing professions composed of five primary factors: education and training, competence and specialization, gender, influence and wealth, and location. Regarding gender Chambers writes, “The high-status professionals are mainly men, while those of lower status are mainly women, or have a higher proportion of women.”[14] Cambers continues by specifying several examples of women being positioned at the bottom of the academic ladder. Again, little has changed in the time since he wrote. Female exclusion is still prevalent both in economics and in the social sciences more broadly.

While Chambers wrote in 1997 that no woman had every won the Nobel Prize in Economics, as of 2013 only Elinor Ostrom has achieved that honor, though even she was technically a political scientist. When the Chronicle of Higher Education created a visual representation of academic papers authored by women over the four centuries between 1665 and 2010 (using data from the University of Washington’s Eigenfactor Project), it found that only 9.7% of economics papers were female-authored. Since 1991 the percentage has increased, but is still paltry at just under fourteen percent.[15]

Again, what is true in general is also true for development in particular. It was not until 2011 when the International Monetary Fund (IMF) was first headed by a woman, Christine Lagarde; meanwhile, The World Bank has never had a female president. There has been only one female USAID administrator, Henrietta Fore, who served two years from 2007 until 2009. Yet, since its founding in 1946 USAID has disbursed a third of a trillion dollars in development loans and grants[16], the World Bank nearly $450 billion since it began[17], while the IMF currently has over a trillion dollars in pledged or committed resources.[18]

In this regard, the economics profession is not alone. The pattern of female underrepresentation is replicated throughout the social sciences. When women are represented they tend to be in those specialties associated with what feminists scholars have identified as feminine values such as community, connection, sharing, nature, life, and interdependence[19]: household decision making and subjective well-being in economics, gender and family studies in sociology, women’s studies and concept of self in anthropology, women candidates in U.S. election studies, feminist history in history, early childhood and infant learning in cognitive science, pregnancy outcomes in occupational health, hospital queuing in operations research, society and fertility in demography, minority students in education, and, of course, Lie algebras in mathematics (meanwhile a measly 1.5% of papers on Riemannian manifolds have been authored by women).[20]

But these feminine values are not appreciated in a system that treats “truth” and “measurement” eponymously. Instead, women are pushed either to the edges of their fields or must choose lower-status academic professions that place a greater value on concepts of qualitative research and intuition. This is not to say that only women express or appreciate these feminine values, but as Chambers points out, men who are empathetic to such ideas are driven to positions of lower status. Nor is it to say that all women are more interested in “community” than in “measurement.” However, it does seem true that these feminine values come more easily to women than to men and as such women are more often required to make career decisions that are at odds with personal sensibilities.


The problems identified by Chambers fifteen years ago are very much alive today. Economists still enjoy high status positions due, in part, to the way they are perceived by the general public and the important government positions they fill. They in turn sustain their status by using advanced mathematics to lend an air of science and control to the profession, in practice, however, rarely moving toward consensus.  The emphasis on measurement and data depreciates feminine values and thus drives women to the fringes instead of incorporating their viewpoint as an important and necessary alternative. Here’s hoping that fifteen years from now Chambers’ concerns will be a distant memory.


Blattman, Chris. “Africans Are Richer (and Getting Richer) Than You Think.” Chris Blattman, October 30, 2012. http://chrisblattman.com/2012/10/30/africans-are-richer-and-getting-richer-than-you-think/.

Chambers, Robert. Whose Reality Counts?: Putting the First Last. First Edition. Intermediate Technology Publications, 1999.

Cowen, Tyler. “The Fallacy of Mood Affiliation,” March 31, 2011. http://marginalrevolution.com/marginalrevolution/2011/03/the-fallacy-of-mood-affiliation.html.

Easterly, William. Easterly on Growth, Poverty, and Aid, February 11, 2008. http://www.econtalk.org/archives/2008/02/easterly_on_gro.html.

Glaeser, Edward. “The Role of Economics in an Imperfect World.” Economix Blog. Accessed February 13, 2013. http://economix.blogs.nytimes.com/2011/05/10/the-role-of-economics-in-an-imperfect-world/.

International Monetary Fund. “Factsheet — The IMF at a Glance.” Accessed February 12, 2013. http://www.imf.org/external/np/exr/facts/glance.htm.

Jerven, Morten. “Lies, Damn Lies and GDP.” The Guardian, November 20, 2012. http://www.guardian.co.uk/business/2012/nov/20/economics-ghana.

Klein, Dan. “An Amazing Consensus Among Economists: Not.” EconLog, February 6, 2012. http://econlog.econlib.org/archives/2013/02/an_amazing_cons.html.

Moss, Todd. “Ghana Says, Hey, Guess What?  We’re Not Poor Anymore! – Center for Global Development: Views from the Center.” Center for Global Development, November 5, 2010. http://blogs.cgdev.org/globaldevelopment/2010/11/ghana-says-hey-guess-what-we%e2%80%99re-not-poor-anymore.php.

Over, Mead. “Sachs Not Vindicated.” Center for Global Development, January 18, 2008. http://blogs.cgdev.org/globalhealth/2008/01/sachs-not-vindicated.php.

Rodrik, Dani. “Jeff Sachs Vindicated,” January 15, 2008. http://rodrik.typepad.com/dani_rodriks_weblog/2008/01/jeff-sachs-vind.html.

Services, USAID Economic Analysis and Data. “Standard Program Report,” February 8, 2011. http://gbk.eads.usaidallnet.gov/query/do?_program=/eads/gbk/programReport&submit=submit&output=2&unit=N&program=GBK419902.

Taleb, Nassim. Taleb on Black Swans, Fragility, and Mistakes. Podcast, May 3, 2010. http://www.econtalk.org/archives/2010/05/taleb_on_black_1.html.

The Chronicle of Higher Education. “Women as Academic Authors, 1665-2010,” 2012. http://chronicle.com/article/Woman-as-Academic-Authors/135192/.

The World Bank. “Total Disbursements by Country.” World Bank Finances. Accessed February 12, 2013. https://finances.worldbank.org/browse/select_dataset?nofederate=true&suppressed_facets%5B%5D=domain.

Tong, Rosemarie. Feminist thought : a more comprehensive introduction. Boulder, Colo.: Westview Press, 2009.

[1] Glaeser, “The Role of Economics in an Imperfect World.”

[2] Klein, “An Amazing Consensus Among Economists: Not.”

[3] Murphy, “Thanksgiving Eve Twitter Debate: Sachs Vs Everyone.”

[4] Easterly, Easterly on Growth, Poverty, and Aid.

[5] Chambers, Whose Reality Counts?.

[6] Cowen, “The Fallacy of Mood Affiliation.”

[7] Rodrik, “Jeff Sachs Vindicated.”

[8] Over, “Sachs Not Vindicated.”

[9] Taleb, Taleb on Black Swans, Fragility, and Mistakes.

[10] Blattman, “Africans Are Richer (and Getting Richer) Than You Think.”

[11] Jerven, “Lies, Damn Lies and GDP.”

[12] Moss, “» Ghana Says, Hey, Guess What?”.

[13] Jerven, “Lies, Damn Lies and GDP.”

[14] Chambers, Whose Reality Counts?.

[15] The Chronicle of Higher Education, “Women as Academic Authors, 1665-2010.”

[16] Services, “Standard Program Report.”

[17] The World Bank, “Total Disbursements by Country.”

[18] International Monetary Fund, “Factsheet — The IMF at a Glance.”

[19] Tong, Feminist thought.

[20] The Chronicle of Higher Education, “Women as Academic Authors, 1665-2010.”


Thoughts on Dubai

I was there for several days in August. It is something like being in the future or maybe what life would be like on another planet with our current level of technology. This is partly because there are so few people outside. It’s as if the air isn’t quite breathable — too much sulfer or Mars dust. In reality it is simply the heat. Near the water it is also very humid, but the air dries quickly as you move inland. Bus stops are enclosed and air conditioned. Being outside for just a few moments is exhausting. You can see it even on the faces of the locals, the heat has worn them down.

The tallest building in most cities would be of average height in Dubai and there are lots of them, especially in the area of Jumeirah. The architecture of the buildings adds to the uniqueness. There are spikes shooting off of them or they are corkscrewed or else there is some other fascinating feature. Everything is presented on a grand scale. Two of the largest malls in the world are in Dubai. A multi-story indoor ski slope with quad chairlift. The tallest building in the world. Billboards that are 20 meters high and as long as an American football field. Manmade islands so big you lose the sense you are on an island. Throughout Dubai are huge business parks: Internet City, Healthcare City, Children’s City (more of an amusement park) and several more. Each one is many, many square kilometeres in size. On a bus tour I heard the city is trying to turn the Jumeirah area itself into a city the size of Hong Kong.

You do get the sense of a bubble. There are very many unfinished construction projects and unoccupied buildings. The malls seemed far oversized for how many people were in them and hostesses stood patiently outside restaurants where no one was dinning. I was reminded of what the Olympic Park in Beijing has become in just four years since the 2008 Olympics. Could this be Dubai in five or ten years? I wouldn’t be surprised. If it does recover and continue to grow, however, this post will be moot as Dubai will be beyond description.

I was in Dubai during Ramadan and the ritual is quite strict there. I have been in Ankara, Turkey for Ramadan as well, but there it created no great problems. In Dubai, however, nothing was open. I made my way to Dubai Mall, which did have open venders in the food court, but this was only complicated by the fact that you can’t eat in public. I asked the information desk if there was anywhere I could eat. The man told me “no.” Well, he told me I could go to the underground garage and eat in my car. I was so hungry it was almost worth buying a car to bring that plan to fruition. (Have I mentioned there is no sales tax in Dubai?). Instead, I was forced to eat in a bathroom stall. Two female friends who were also there, but traveling separately, ate in a baby changing room they told me later.

The city is very international. I noticed a lot of Filipinos and when I asked a young Filipino woman (the one who sold me my food-court sandwich) why this was she simply responded, “There are more jobs here.” There were also a lot of Indians who seemed mostly to be working construction. I did see men wearing Kandura and women in Abaya. I could describe these cloak-like outfits, but then you already have an image in your mind don’t you? Why ruin it. This was the exception, however, almost everyone in Dubai dresses in what is by any measure Western attire.

My most memorable moment was waking up at 5am in my hotel room the first morning and venturing outside. I walked along the boardwalk next to Jumeirah beach. It was already shockingly hot. I found a path to the beach, and though I didn’t plan on swimming and had no bathing suit, I stripped down and ran into the Persian Gulf. I floated on my back for an hour in the warmest water I’ve ever felt as I watched the sunrise over the Dubai skyscrapers. That is a moment I will always cherish.

The Cycle of Poverty in Zambia

Start with Zambia’s geography, which is not conducive to agriculture in the first place. Next, add in nshima as the stable food and subsistence farming as its primary source. What you get are livelihoods dependent in large part on the labor-intensive cultivation of maize, a cultivation exposed to the hardship of wildlife, weather, and vandals.

Low yields and hard work mean kids go to school tired and hungry and have little free time for homework. Instead, they clean the house, maintain the crops or livestock, or fetch water. By the time they get done with chores in the evening it is often too dark to study and electricity is still a luxury few can afford. At any rate, children have few incentives for investments in their own human capital through education — the only thing they know that exists for certain is what they have seen in their village. Schools could reorient them in theory, but in practice Zambian education has a long way to go.

For various reasons teachers may not show up to teach or may teach only half the day. If they happen to be dedicated, teachers must cope with classes that are too large and a severe lack of study materials. This often extends to an undersupply of even pencils and notebooks. Foreigners fund computer labs in schools with inadequate electricity to power them and no teachers knowledgably enough to maintain them. Young girls may not be able to find or afford feminine hygiene products and so are embarrassed to go to school during their period, possibly losing a week of education per month and maintaining the societal gender gap.

Unfortunately, government polices have too often only compounded the problem. Because it is poor, tax revenue in Zambia remains low. Infrastructure in the country is underdeveloped so domestic trade remains expensive. This keeps costs of necessities like fertilizer high, diminishing vital income for farmers. Healthcare remains a problem and this too the government struggles to provide. Low income in rural areas means the private sector has little incentive to invest in for-profit hospitals or other critical services.

The government has decided hunger is a problem in the nation so it has restricted maize exports, unintentionally limiting a key avenue to economic activity for farmers. Instead, it subsidies maize production; first, by offering maize seeds and fertilizer at reduced cost, and then by buying surplus maize from farmers at above market price. To compound the problem it has mismanaged the maize reserves it collects, in one case letting tens of thousands of tons rot in a state warehouse. On the whole, these policies lead to an oversupply of maize and discourage crop diversification. Families remain reliant on maize and so rural residents tend to vote into power those who will continue to subsidize its production. Maize is indeed a political crop.

Those educated or wealthy enough to escape usually do, moving to cities like Lusaka or Chabata or leaving Zambia altogether. Those who remain are mired in a poverty trap where education remains second to cultivating enough maize to survive, and where low income in turn leads to low government revenues, further inducing a lack of government services and infrastructure, reinforcing the trap.

This is to say nothing of culture, or laws, or colonial and tribal history, or national leadership, or domestic and international politics, or myriad of other factors that, along with those mentioned above, have contributed to the state in which Zambia finds itself.

Though they are mostly ideologically opposed, both William Easterly and Jeffery Sachs are concerned with this problem. Easterly wrote about “increasing returns” to skilled labor in his book The Elusive Quest for Growth. In it he posited that “brain drain” is partly a result of skilled workers’ desire to be around other skilled workers. When workers coalesce, skills are used more effectively and creatively and lead to higher incomes. This is similar to the O-Ring model. Sachs has helped start the Millennium Villages project, which basically aims to give small rural villages everything they need all at once (education, health, clean water, food, etc.). To be sure the challenges of development are great, which is the reason the area is so intellectually rich.

The Future of Zambian Agriculture

It seems simple enough: dried white maize, first pounded in a large wooden mortar, and later boiled in water over coals and then carefully stirred until the consistency is a thick paste. The result — known as “nshima” in most Zambian dialects — is the staple food to end all staple foods. In Zambia a meal without nshima is considered no meal at all. Indeed, the country has the highest maize consumption in the world — nearly sixty percent of the calories of an average Zambian come from corn in the form of nshima.[1] A full 85% of Zambians are subsistence farmers[2] and in a nation where peacefully democratic elections have now taken hold[3] the power of this enormous voting block cannot be ignored. It is no wonder, then, that Zambians are fond of couching the crop’s importance in drastic terms. “Maize is a political crop,” several professors of agriculture at the University of Zambia (UNZA) told me during a recent visit to Zambia. It is this politicized character that strips nshima of its simplicity as merely a beloved cornmeal and positions it squarely at the center of Zambia’s political and economic fortunes in the coming decade.

It took the countries of Western Europe 150 years to move from agriculture to industry. The United States did it in less than one hundred. The Asian tigers cut this timeline in half, and now many of the countries of Sub-Saharan Africa, including Zambia, are trying to improve further still on this remarkable progress, attempting to bride the gap from economically developing to developed nation in record time.

It is not simply that economic development brings with it increased cachet in some imagined global popularity contest. To be sure, a strong economy can lead to improved political standing and influence, but more importantly for poor countries like Zambia, industrialization brings with it vast improvements in the material well-being of its citizens: a boost to income, higher quality education, improved healthcare, better and safer jobs, more robust infrastructure, and so on.

It’s easy to mistakenly think that Zambia is well on its way to this new economic paradigm. In 2011 the country was featured as a case study in Steven Radelet’s Emerging Africa: How 17 Countries are Leading the Way.  Real GDP growth has hovered over 5% annually since 2000, and HIV adult prevalence has dropped from one in five adults in the late 1990s[4] to a much-improved 13.5% by 2011[5]. Between 2003 and 2007 malnutrition for children under 5 declined from just over 23% to under 15%.[6] Contraceptive use among prime-aged women (those between 15 and 49 years of age) nearly doubled from 22% in 1999 to almost 41% by 2007.[7] The country has also seen steady improvement in measures as diverse as school enrolment and price inflation, and Chinese investment has recently flooded Zambia’s Copperbelt region.

But to highlight these improvements is to ignore the obvious challenges that lay ahead. Just as statistics can build up Zambia, they can also tear it down. The country ranks 207th in the world in life expectancy at birth, sixth in the world in the rate of HIV infection and tenth in deaths (despite its improvement since the 1990s)[8]. It ranks 23rd in infant mortality[9] and despite improved use of contraception its birthrate is still remarkably high at 43 births per 1,000 people[10], placing it forth in the world. There is just one physician for every 18,000 people[11]. The World Economic Forum ranked Zambia’s infrastructure a meager 2.8 out of 7 in its 2012 profile of the country’s business competitiveness.[12]

Whatever the details, membership in the group of industrialized nations will necessarily involve Zambia moving away from smallholder farming to a system of large-scale agribusiness. To truly become an industrialized country while sidestepping large-scale commercial agriculture is not only a contradiction in terms, but would make Zambia a historical anomaly among developed nations. Nevertheless, in a country where maize is a political crop, a move away from small household farms is a transition that many in Zambia still find uncomfortable.

*     *     *     *     *

I’m sitting in the office of Obed Luwgu, a professor of agriculture at UNZA and an expert in soil management. He’s regaling me with agricultural anecdotes, stressing the importance of the Zambian context. “When was this?” I ask in amazement. “This must have been in the early nineties,” Luwgu responds. He’s just finished telling me a tragic story about the power of culture in Zambia. “There was a drought,” he began. “During this time there was no food, people were starving. The international community, they decided to send maize for the people to eat. You know, in Zambia we eat white maize, but what was sent was yellow.” Even Luwgu seems amazed at what he is about to tell me. “The people wouldn’t eat it.” “Wait,” I say, trying to wrap my head around the tragic conclusion, “people were starving, but wouldn’t eat the maize because it was yellow?” “That’s right. Zambians, we like our nshima to be very white. And the nshima made with this corn, it was yellow, so the people wouldn’t eat it.” Hold in your mind, if you can, a culture so powerful that some people would rather starve than eat off-colored cornmeal.

Culture, in fact, is the oft-forgotten part of economic development, one economists are only now coming to grips with. The long history of the “misadventures in the tropics,” as economist William Easterly has termed it, is riddled with policy failures, oversights, and bad economics — nearly all of which came as American and Western European aid organizations struggled with the age old question Adam Smith first identified almost two-hundred and fifty years ago: how can we make poor countries rich? This is not to say that poor countries themselves have not misbehaved during this time of economic experimentation — a long list of dictatorships, state-sponsored human rights abuses, and a poor understanding of fundamental economics more generally demonstrates otherwise. It is simply to say that for much of the past five decades the West has done little to remedy the situation — and in some cases actually made matters worse — despite their instance that the intellectual fad of the day had unearthed the true formula for robust economic growth, which need only be applied mechanically to every undeveloped nation in order to lift billions out of poverty.

The most recent economic incarnation, however, may be more than mere intellectual exuberance. It incorporates two necessary, but long-absent ingredients: culture and institutions. Culture is the otherwise nameless power embodied by Obed’s white-nshima-or-starve mentality, but it also covers a great many other social norms concerning family, social interaction, marriage, group behavior, and so on.

Institutions, meanwhile, are the overarching set of formal and informal rules and norms of which culture is a part. Perhaps it is best to think of institutions as “the rules of the game” and individuals and organizations as the “players” in that game. “The world is socially constructed,” the sociologists are found of saying; economists have used the slightly different language of culture and institutions to define this same sociological truth. And this new theoretical framework has proved very powerful at beginning to explain the complex issues of development.

It is clear, for instance, that property rights are one of the most important institutions in Zambia today. In general, the property rights individuals have over their land and personal belongings is key to providing incentives for personal investment — why spend time making long-term investments in my property if it could be taken away at any moment? In Zambia in particular this fact is embodied in the traditional land tenure system.

Obed tells me just such a story to drive the importance of property rights home, one about his grandfather returning to Zambia after five decades spent living in Zimbabwe. “When he returned he went to his old village, which now had a new chief whom he did not know. He went to this chief. ‘Oh I use to live here, between this tree and that one,’” Obed says while pointing at the imaginary landmarks. “And the chief just gave my grandfather the land back no problem. The people living there were forced to move.”

Such traditional land rights account for approximately 95% of land in Zambia, with the remaining 5% owned by the government.[13] By law, it is possible to receive a 99-year lease from local chiefs, which affords greater legal protection, but in practice such accommodations are rarely given to anyone but wealthy foreigners. Because they are politically powerful — presidents routinely make visits to ask for the chiefs’ support leading up to elections — rules about their power are slow to change.

Besides diminishing incentives for investment the traditional land tenure system also takes away a vital financial asset from poor farmers. With a title comes ownership and with ownership comes a great many opportunities. Land rental and land sell are two common ways to create an income stream in many developed countries, for instance, but land can also act as collateral in exchange for bank credit. A skilled farmer could use a bank loan to buy new machinery, fertilizer, or improved seed varieties and increase his crop yield, vaulting the gap between smallholder farmer and agricultural entrepreneur. As it stands, the banking sector in Zambia is dismal. A 2005 World Bank report found that only .37% of the population in Zambia has a loan. There were only 152 total bank branches nationwide and even private business paid an annual real interest rate of 28%.[14]

Without access to capital farmers in Zambia today are reduced to using hand tools or, if they are lucky, oxen to help plow fields. In this respect, as in many others we will soon see, a life based on nshima is hard work indeed.

*     *     *     *     *

There is some irony in the fact that what has become a centerpiece of Zambian culture — maize — was itself a product of colonialism. The crop was introduced to West Africa after 1500, but did not penetrate southern Africa until after 1650.[15] Each of the five primary varieties of maize — sweet, pop, floury, flint, and dint — took hold in Africa to varying extents and in different locals depending on which type was imported by the colonizers of that region, the soil and climate conditions of particular African geographies, and the sensibilities of the native peoples.[16] Indeed, it was often Africans themselves who took to maize and, while first only supplementing local crops, incorporated into their diets more predominately as time passed.[17] In southern Africa it was flint maize that first spread before later being supplanted by the American white dent known as “Hickory King.”[18] Hickory King was introduced following the completion of the railway at Kimberly in 1885 after diamonds were first discovered there in 1867.[19] This new type of maize was more tolerant of poor soil and produced higher yields than previous varieties.[20] Here, maize eventually came to all but replace foods like cassava, millet, and sorghum in the diets of southern Africans. In Zambia in particular, a usual diet consists of nshima, a leafy green called “rape,” sometimes chicken, perhaps supplemented by groundnuts (peanuts).

One late-August evening in a village near the town of Katete I had the opportunity to see nshima prepared from scratch first hand. Benson Banda, the head gardener at the Tikondane community center, had extended an invitation. A half-hour ox-cart ride down a rutted dirt road with thick bushes on either side eventually gave way to a clearing, finally exposing Benson’s village Kachipu. When I arrived, Benson’s wife Agnes had already gathered a small group of women and begun the first steps of preparation.

The steps are easy, but the techniques are not. One step, used to separate small pieces of chaff debris from the pure ground corn, involves swirling the pounded maize in a circular sieve until the debris ever so slightly separates outward toward the edge. A quick flip of the left wrist and the corn, along with the debris, are airborne for just a tenth of a second, long enough for the right hand to fly in open palmed, carving a careful arc that allows a purge of the debris while leaving the ground corn to fall safely back to the sieve.

Apart from a seven-year stint in the city, Benson has lived in the same 300-person village his entire life. As he showed us around he pointed out the site of his childhood neighbor and the tree he use to play under. “We lived next to the chief when I was a child,” he said proudly, pointing to an area now used as a roost. Though not tall, Benson has a smile fit for a man who stands fifty feet.  He is shy by disposition; if he has ever raised his voice it doesn’t show. Instead, he speaks with a calm quiet that requires an intimate lean in his direction. “Hello?” he says softly if he wants you to repeat yourself. You heard it often, only second in frequency to his favorite word: a soft “sure” followed by a little chuckle.

Benson told me he has always had a natural affinity for gardening. He first learned it at the age of 13 from several United States agriculture teachers that were brought to Zambia as part of a government program. He was the best in the class and often enjoyed the fruits –- figuratively and literally — of his labor. “Yes, they use to let some of us take our vegetables home,” he said with a nostalgic smile.

But the economic success that has accompanied his mastery of gardening has not come without notice. Though living by modest means by Western standards, Benson is clearly the richest man in his village; his wealth easily surpasses that of his headman (local chief). With wealth, however, comes jealousy. Last year alone Benson had a large portion of his maize supply stolen and his garden was set on fire. This is the insecurity of smallholder farming.

Watching Benson and his wife prepare nshima could cause one to fall victim to romantic visions of a rugged self-sufficiency. Facebook founder Mark Zuckerberg famously made it his new years resolution in 2011 to only “eat what he could kill.”[21] While Zuckerberg’s goal was a sort of forced vegetarianism, the idea of getting back to the roots of one’s food source, and indeed land and nature itself, seems to be becoming increasingly popular throughout the developed world — a sort of nostalgia for an old-word traditionalism that harkens back to the days of a simpler life. Though the life of a subsistence farmer is difficult to be sure, just as surely it seems that a glass-half-full assessment would give some credence to the simplicity of it all: cultivating crops by hand, harvesting them, and then cooking them over an open flame — almost like a type of perpetual camping.

The reality, however, is much more nefarious. Even the seemingly harmless act of preparing nshima can itself be deadly. In traditional Zambian cooking, pots with ground maize and water are boiled over simple brick ovens that take charcoal as fuel. According to the World Health Organization almost two million people die annually from indoor air pollution attributable to solid fuel use.[22] Surprisingly, the biggest cause of death among children under five in the developing world is pneumonia and half of these deaths are also caused by indoor burning. All told, smoke inhalation from indoor fuel is the tenth leading risk for mortality worldwide, and sixth in low-income countries.[23] To put death from indoor air pollution in perspective, only a third as many — 700,000 — people die annually from malaria.[24]

The repercussions go far beyond health, however. According to a report from MIT’s D-Lab, up to 25% of a family’s income can be spent on collecting firewood (compare this with just one percent of income spent on fuel among the poor in the United States).[25]

And the collection of firewood comes at an environmental cost as well. “About ten years ago is when I noticed the forests thinning,” Evans Graph, my guide through much of Zambia told me one day as we were driving through the Eastern Province. Indeed, the United Nations estimated in a recent report that deforestation levels in Zambia stand at between 250 and 300 thousand hectors per year.[26] Among the “ultimate drivers” the report identified are “agricultural expansion, charcoal production, and fuelwood collection. Deforestation and indoor air pollution are not the only forces of nature that threaten smallholder maize farming, however; wildlife attacks are rampant throughout much of Sub-Saharan Africa.

*     *     *     *     *

Standing in the small natural history museum of Chipembele it’s hard to imagine it was put together as a hobby; nearly every item in the museum just outside of the town of Mfuwe was scavenged on day trips to the nearby South Luangwa National Park. A spread of local baskets on a long wooden table each hold a handful of seeds from a different local tree. One table over are the scat of two dozen local wildlife. To the left foul feathers are tacked in pairs on a wooden display board. Round a corner, look to the floor, and a line of animal skulls sit proudly. They’re all there: hippo, croc, impala. A small elephant skull on a nearby stand completes the set. All along the walls are informational posters detailing the tracks of animals, their history, and the specifics of Eastern Zambia flora.

Long before Steve and Anna Tolan retired as officers from the Oxford police force they had dreamed of creating a conservation organization. Chipembele is that dream realized. One day after giving me a tour of their small education center attached to the museum Steve sliped me a half-sheet of paper. At the top he’s written “Therapsids,” an ancient group of mammal-like reptiles I had asked him about earlier in the day. There are nearly a dozen different species Steve has written down. “If you want to learn more about the reptiles I told you about you should check these out on the internet,” he told me.

Steve’s interest in a niche group of long extinct pseudo-reptiles may seem strange until you realize he’s a strong contender for the title of Most Interesting Man in the World. After moving to Zambia in 1998, and quickly nearing fifty, Steve thought it would be a good idea to try his hand at construction. So with no previous experience he designed and built a Street of Dreams-style home, gathering many of the stones that complete the exterior wall by hand from the nearby forest. The interior is finished with impressive tribal memorabilia and a collection of wildlife skulls that includes one of the biggest crocodile heads in the world. Five years ago, after a friend expressed interest in studying rare leucitic Yellow Baboons — those with severely reduced pigmentation — Steve promptly marched out into the national park and photographed a baby baboon with just this condition.[27] The photo was later featured in National Geographic along with the research report his friend completed after Steve’s photo helped him secure grant funding. One of Steve’s favorite pastimes is arresting poachers, which he does by venturing deep into the park on foot to stay as silent as possible. He’s one of only a handful of foreign Zambian Wildlife Authority (ZAWA) marshals allowed to make such arrests. Meanwhile, Bulu, Steve’s Jack Russell terrier, having survived run-ins with lions, poisonous snakes, and crocodiles, had his life profiled in the aptly titled book Bulu: An African Wonder Dog.

And then there is his Therapsids obsession. “God, just don’t ask about the fossils,” Steve’s close friend and my guide Karen Beattie jokingly cautioned me as we drove to the Tolan’s property from the headquarters of her own non-profit Project Luangwa, “he’ll never stop talking.” Indeed, Steve’s passion for this specialized subfield of archeology is staggering. Though he has no formal education in the subject, Steve has become a renowned expert in the ancient remains of the reptile-like creatures, working with researchers from around the world. Many of his findings have been written up in leading archeology journals.

But it is wildlife education that has kept the Tolans in Zambia. They are trying desperately to bring harmony to an age-old fight between wildlife and farmers.  Safaris are a part of southern African life, but a truth little known to the Westerners who frequent safari lodges is that the same precious wildlife they have come thousands of miles to see in national parks are, perhaps that very evening, venturing several miles out of the parks, terrorizing villagers in surrounding communities.

This fact is so misunderstood that in his satirical piece How to Write About Africa Kenyan author Binyavanga Wainaina admonishes that while African people should be portrayed as starving and naked, African fauna must be treated with an exalted dignity. “Animals, on the other hand, must be treated as well rounded, complex characters,” he wrote. “They speak (or grunt while tossing their manes proudly) and have names, ambitions and desires. They also have family values: see how lions teach their children? Elephants are caring, and are good feminists or dignified patriarchs…Elephants may attack people’s property, destroy their crops, and even kill them. Always take the side of the elephant.”

As it stands, children in Mfuwe grow up both fearing and hating the local wildlife. The very reliance on nshima, and the maize necessary to produce it, means that an elephant or hippo destroying a smallholder’s maize field isn’t just devastating, it can be deadly. No maize means no nshima — not just for a few days, but possibly the entire season. A single elephant can destroy up to seventy-five percent of a typical field in a single night.[28]

“Hippos come at night and eat the crops,” said sixty-five year old Mfuwe resident Emily Njobvu, speaking through a translator. “We scare them away with maize husks set on fire,” she told me. Elephants too are a problem she said later and while she and her family are able to scare them away temporarily using cornhusk fires “they always come back” she concluded. Njobvu admitted it was very tiresome to constantly battle wildlife.

This battle reveals yet another difficulty with smallholder farming. Just as Benson discovered that unsecure farmland can make one vulnerable to the attacks of jealous neighbors, Emily’s story shows how a life spent cultivating maize is one that is under constant threat from the vagaries of nature.

In recent years, however, several Mfuwe-based NGOs have turned to focusing on the human-wildlife conflict, encouraging Zambians to see wildlife in a new light: not simply as a threat to their smallholder maize farms, but as a draw for wealthy Westerners that could prove to be a boon for poor Zambians in the east.

The Tolans are among those that believe tourism could save Mfuwe and that, despite the obvious harm done by elephants and hippos, there is still a moral and economic imperative to wildlife conservation. Toward these ends, the Tolans have begun promoting unique alternatives. One such method is the erecting of so-called chili fences, which can be constructed with moderately priced supplies: timber poles spaced two feet apart and spanned by cloth dipped in a mixture of dried, crushed chili, used motor oil, and elephant dung. However, the fences need fortnight maintenance and add labor to the already burdensome endeavor of smallholder farming, and in practice the fences aren’t always effective.

For now the Tolans are fighting an uphill battle. Safari lodges employ a small coterie of Zambians, but the wealth attracted to the park has yet to trickle down — or out — of the National Park lodges. Chili fences, meanwhile, are still uncommon in Mfuwe and at present the human-wildlife conflict continues. While in Mfuwe I heard several stories of elephant destruction in the past year; one case was so severe that ZAWA rangers were forced to kill the offending elephant and sell its meat in order to reimburse the farmer for destroyed maize.

Nevertheless, some in Zambia hold out hope that the tourism model can in time lift Mfuwe out of poverty. One such figure is Charles Banda, Eastern Province Minister. In late September of 2012 he made a surprise visit to the 290-billion-kwacha road being paved from Mfuwe to Eastern Province hub Chipata that is expected to be completed next year.[29] During the visit he urged construction to continue on schedule and stressed the road’s importance to increased tourism and economic progress. Improving infrastructure generally, and access to Mfuwe in particular, could be an important step to encouraging trade between Mfuwe and its wealthier, more industrialized neighbors. The question is whether increased tourism to the park will improve the prospects of everyday Mfuweians, and that question won’t be answered until the project is completed in 2013.

One man already laying the groundwork to support an increased boom when it finally does arrive is newspaperman turned social entrepreneur Will Colston. After spending much of his life editing for some of the biggest names in U.S. news — the New York Times, the Chicago Tribune, and the LA Times — Colston turned his sights east, moving to Zambia to settle down for good. He now manages the Kenneth Kaunda Center for Practical Agriculture in Mfuwe.

Under Colston’s leadership the center has undertaken the novel approach of providing fresh produce directly to the national park safari lodges, circumventing a current delivery system that has tomatoes, carrots, and other common produce sent from as far away as Spain. “I thought that was ridiculous,” Colston said during an interview at the center. “If we could get these people to diversify away from maize — just set aside a small part of their land to start a garden — they could grow that produce right here and send it thirty minutes down the road to the lodges.”

Colston’s model is simple. The center first allots fruit and vegetable seeds free of charge to local community members. Farmers set aside a portion of their farmland normally reserved for maize and instead create a small vegetable garden. Once or twice a week participants meet up at the center and turn in their produce. So far only a small number of farmers in Mfuwe are participating in the project, but Colston hopes to see the program grow.

To date one lodge, Flatdogs, has a standing order, which amounts to only a large crate or two of produce per week. In exchange, Colston turns one hundred percent of the revenue over to the farmers themselves. The center is funded by Colston’s own savings to the tune of $75,000 per year (though the center runs several other programs in addition to supplying lodges), which demonstrates his enormous personal and financial dedication to the center.

Though Colston is bullish on the idea, and on smallholder farming in general, the project has been fraught with difficulty; in fact, at times it seems as though the program is working almost too well. So much produce is being cultivated that a surplus has accumulated, more than Flatdogs is willing to purchase on a weekly basis. What’s more, having seen how successful selling to the lodges can be, a few local farmers are taking their goods directly to the lodges, undermining Colston’s attempts to expand. Finally, revenue from Flatdogs is distributed equitably, but this is only frustrating those who feel their produce is of higher quality and should demand a premium. “It’s difficult,” Colston says simply when asked about the process of deciding who will bring what produce over the course of a week and how the resulting revenue will be divided.

When I bring up the idea that Zambia will have to turn to commercial agriculture eventually, Colston responded thoughtfully: “I think that’s right. But right now the country is not set up for that. The people need jobs or else how are they going to buy the commercially produced agricultural products? Right now the only thing they know how to do is farm.”

Here it’s hard to argue with him. “How can we possibly extricate rural farmers from the infrastructure required to carry their goods to market, or government regulation from the creation of that market, or education from job prospects for the educated?” I wrote in my journal after reflecting on our conversation. What Colston touched on, and what is easily observed in Zambia and many other developing nations, is poverty’s complicated, interwoven nature.

Start with Zambia’s geography, which is not conducive to agriculture in the first place. Next, add in nshima as the staple food and subsistence farming as its primary source. What you get are livelihoods dependent in large part on the labor-intensive cultivation of maize, a cultivation exposed to the hardship of wildlife, weather, and vandals.

Low yields and hard work mean kids go to school tired and hungry and have little free time for homework. Instead, they clean the house, maintain the crops or livestock, or fetch water. By the time they get done with chores in the evening it is often too dark to study and electricity is still luxury that eludes most rural villages. At any rate, children have few incentives for investments in their own human capital through education — the only thing they know that exists for certain is what they have seen in their village. Schools could reorient them in theory, but in practice Zambian education has a long way to go.

For various reasons teachers may not show up to teach or may teach only half the day. If they happen to be dedicated, teachers must cope with classes that are too large and a severe lack of study materials. This often extends to an undersupply of even pencils and notebooks. As I saw first hand, foreigners fund computer labs in schools with inadequate electricity to power them and no teachers knowledgably enough to maintain them. But computers are sexy, pencils are not. Young girls may not be able to find or afford feminine hygiene products and so are embarrassed to go to school during their period, possibly losing a week of education per month and maintaining the societal gender gap.

Unfortunately, government polices have too often only compounded the problem. Because it is poor, tax revenue in Zambia remains low. Infrastructure in the country is underdeveloped so domestic trade remains expensive. This keeps costs of necessities like fertilizer high, diminishing vital income from farmers. Healthcare remains a problem and this too the government struggles to provide. Low income in rural areas means the private sector has little incentive to invest in for-profit hospitals or other critical services.

The government has decided hunger is a problem in the nation so it has restricted maize exports, unintentionally limiting a key avenue to economic activity for farmers. Instead, it subsidies maize production; first, by offering maize seeds and fertilizer at reduced cost, and then by buying surplus maize from farmers at above market price. To compound the problem it has mismanaged the maize reserves it collects, in one case letting tens of thousands of tons rot in a state warehouse. On the whole, these policies lead to an oversupply of maize and discourage crop diversification. Families remain reliant on maize and so rural residents tend to vote into power those who will continue to subsidize its production. Maize is indeed a political crop.

Those educated or wealthy enough to escape usually do, moving to cities like Lusaka or Chabata or leaving Zambia altogether. Those who do remain are mired in a poverty trap where education remains second to cultivating enough maize to survive, and where low income in turn leads to low government revenues, further inducing a lack of government services and infrastructure, reinforcing the trap.

This is to say nothing of culture, or laws, or colonial and tribal history, or national leadership, or domestic and international politics, or myriad of other factors that, along with those mentioned above, have contributed to the state in which Zambia finds itself.

Despite the enormity of these challenges, however, for now Colston remains bearish on agribusiness and instead wants to continue promoting smallholder farming. If the highway gets built on schedule, and if Colston can bring more lodges on board his program and overcome the obvious challenges of running a growing business, he might just help bring economic redemption to many of Mfuwe’s villagers. As a result they may eventually have the funds to replace chili fences with real ones, protect their maize, invest in their land, educate their children, and, perhaps one day, move away from maize altogether.

*     *     *     *     *

The dialogue around the commercialization of food is fraught with unintuitive results that seem to run counter to much of the public discourse regarding the benefits of local food sourcing. Like Colston, many consumers and advocates around the world now view locally grown organic produce as superior — environmentally, economically, and health wise — to large-scale agribusiness now reliant on extensive use of genetically modified organisms (GMOs).

Some NGOs beg to differ, however. Chief among them is the powerful Bill and Melinda Gates Foundation, which has recently invested more than $1.8 billion in agricultural development, primarily in Africa, with hundreds of millions directed toward GMO crop programs.[30] The foundation is drawing on a growing body of research that, perhaps surprisingly, suggests GMOs may provide a healthy, environmentally friendly, and highly productive agricultural option.

For instance, in 2008 two researchers from Carnegie Mellons published a study in Environmental Science and Technology, which looked at the lifecycle greenhouse gas (GHG) emissions of food production. Surprisingly, the study found that the production phase dominated all other phases of the cycle, accounting for a staggering 83% of emissions.[31] All told transportation made up just 15% of GHG emissions despite an average “food-mile” distribution distance of 6,760 km when all transportation factors were added. The authors found that cutting meat consumption just slightly was much more effective at cutting total GHG emissions than consuming locally grown food. A 2011 study published in the same journal by a team of researchers at UC-Santa Barbra found similar results.[32]

When economist Steve Sexton examined the efficiency of local versus commercial agriculture in the Unites States, he found an all-local, “150 food-mile rule” would require an extra 214 million acres of arable land, a roughly 30 percent increase in fuel costs, and increased fertilizer use between 35 and 61 percent depending on the crop.[33] “The direct environmental costs of large-scale agriculture are clearly non-trivial,” wrote Sexton, however, the key question, he concluded, is whether a system based on local agriculture is superior in terms of its environmental, economic, and health outcomes.

Indeed, looking more closely at Colston’s project reveals the difference in efficiency between agribusiness and his locally-grown option. “I haven’t looked at the accounts, but I would say we are about breaking even,” he revels when pressed about the financial condition of the project. According to Colston, Flatdogs pays his operation roughly the same price it offered its old Spanish supplier. Put differently, a tomato shipped across nearly the entire continent of Africa can arrive at a safari lodge in Mfuwe at an identical cost to what Colston and his farmers are able to manage from just fifteen miles down the road. To be sure, Colston’s farmers will improve their crop yield and reduce costs over time, and equally as certain, the project is benefiting farmers in Mfuwe who need income more than even the poorest Spaniard. The debate over local crops versus the commercially distributed GMO alternative does not end there, however. Many tout the health benefits of local, organic products, but here again, the science makes the matter much more complex.

For instance, a recent Stanford School of Medicine study titled Are Organic Foods Safer or Healthier Than Conventional Alternatives and published in the September 2012 issue of Annals of Internal Medicine, systematically reviewed existing medical literature, but found that “the published literature lacks strong evidence that organic foods are significantly more nutritious than conventional foods.”[34] The authors, however, were quick to note that more long-term research is required to reach a definitive conclusion on GMO health outcomes.

The Stanford study echoed previous research on the cautiously optimistic nature of GMOs. “The development of…GMOs offers the potential for…improved nutritional value that can contribute directly to enhancing human health and development,” a 2005 World Health Organization report concluded. But the report acknowledged the possibility for long-term unintended health consequences, “Many genes used in GMOs have not been in the food supply before,” it continued.[35] As far back as 2000, the United Nations Food and Agriculture department recognized the potential for certain GMOs to “improve the health of many low-income communities,” but ultimately recommended “a case-by-case approach” to GMO health assessment.[36] In 2004 the National Academy of Sciences released their position on GMOs, writing simply that, “To date, no adverse health effects attributed to genetic engineering have been documented in the human population,” but recommending “an appropriate safety assessment” based on the particular type of genetic modification in question.[37] Finally, in June of this year the American Medical Association released their position, recommending mandatory GMO premarket safety checks on the basis of the “potential for adverse [health outcomes],” but dismissing mandatory labeling, instead noting that over the twenty years since they were first consumed, “…no overt consequences on human health [from GMOs] have been reported and/or substantiated in the peer-reviewed literature.”[38]

GMOs may also be better for the environment. A study published earlier this year in the journal Nature found that Bt cotton, a common genetically engineered version of the crop, reduces pesticide use, thereby encouraging natural predators that can help minimize the harmful aphid population.[39] What’s more, these benefits extended to crops like soybeans and groundnuts in neighboring fields. The study was conducted over a twenty-year period (1990 – 2011) and took place in China where 95% of the cotton grown is now of the BT cotton variety. A separate study, which appeared late last year, also in the journal Nature, found that globally, non-organic growing methods produced five to 35% more yield than organic crops.[40] Since GHG emissions are embodied mostly in production, higher per-hector yields mean a more environmentally friendly product.

Even the technologically conservative Amish have embraced GMOs. “Amish law doesn’t say anything about growing genetically modified tobacco,” Amish tobacco farmer Dan Dienner told Joshua Davis of Wired Magazine back in 2003.[41]

None of this is to say, however, that GMOs are the right path for Zambia. And some are fighting back against the Gates Foundation’s partnership with agri-giants Monsanto and Cargill and its recent lobbying of the Zambian government to allow GMOs. Kasisi Agricultural Training Centre in Lusaka has started a campaign to fight against the Foundation’s efforts, for example.

“Biodiversity. That’s the biggest concern,” Victor Shitumbanuma head of UnZa’s Soil Management Department tells me. “Zambians are concerned about losing their traditional crop varieties.”

Of course, GMO implementation could be coupled with a simultaneous move toward agribusiness, allowing rural farmers to maintain whatever seed varieties they have currently. Even here there are concerns, however. European markets are notoriously strict on GMO importation, erecting the toughest GMO trade barriers in the world.[42] A move toward genetically modified crop use would likely mean Zambia would be cutoff from European markets, a crucial trade partner. Even a small portion of a country allowing GMO use is enough to get every crop in the nation banned from European import.

And the spread of GMOs has been a problem even in countries like the US where Midwest winds may disperse seed material from GMO fields to neighboring ones miles away, fertilizing those crops and creating a type of GMO contagion. Since many GMOs are patented, the second field is often in legal violation of federal law, sometimes resulting in small farmers being forced to pay licensing fees to the likes of Monsanto unless they can prove the contamination was natural and accidental.[43] Property right laws are still struggling to catch up to such modern phenomenon.

Obed believes that while an eventual move to large-scale agribusiness is necessary for Zambia’s future, GMO use is not. “Yields are not the problem,” he says, though he is not necessarily opposed to GMOs in general. His research at the Golden Valley Agricultural Trust (GART), has found various methods to help commercial farms increase yields to levels near those in developed countries. And for now, despite the Foundation’s persistence, the Zambian government is maintaining its current legal prohibition on GMOs.

*     *     *     *     *

Back in the bustling metropolis that is present day Lusaka the government’s Ministry of Agriculture is trying hard to encourage conservation farming, which they believe can increase yields without resorting to genetically modified crops.

The efforts cover a wide range of government programs. Traditionally, the Fertilizer Input Support Program (FISP) and Food Reserve Agency (FRA) have used economic policies to try and ensure farmers have cheap inputs on the front end and higher income on the back. The logic is simply: first, provide cheap fertilizer and later help support maize prices by purchasing the crop at above market prices. But the programs aren’t always effective. “You don’t even need to be a farmer to qualify for the fertilizer program,” Shitubanuma tells me. “Some people will join a farming organization and just receive the discounted fertilizer and then try to sell it for a profit. But other people actually want to start a small fertilizer business — they want to produce fertilizer themselves and sell it to farmers — but they could never compete with the prices offered by the government, so this policy discourages some small businesses from starting.”

In the past, the Food Reserve Agency has faired no better, supporting farmers by purchasing maize at up to two-and-a-half times the market price. However, in recent years they have undertaken an effort to restructure Zambian agriculture altogether, encourage farmers to move away from monocroping maize and towards more diversified practices. In addition to maize, at times the FRA now buys sorghum, millets, cassava, and cotton. What’s more, natural cross-breading methods have now created a white sorghum similar to the maize that is used in nshima, and a variety that Zambians accept in traditional cooking. This is being buttressed by increased private sector activity. Breweries, for instance, are now starting to produce a type of beer made from sorghum.[44]

Finally, the Government Extension Program (GEP) is increasing efforts to educate farmers. “They even have radio commercials,” Obed says with amusement. “What do they say?” I asked. “ Oh, you know, ‘The weather forecast is so-and-so’ and ‘This is how you can use fertilizer,’ ‘Here is how you should plant your crops.’ The GEP is doing a good job actually these days.”

Velvet beans are another alternative being promoted by the government. “Oh they taste horrible, you can’t eat them,’’ Shitumbanuma says with a smile. “But they are good for the soil. They are nitrogen fixing and they help stop erosion. You can plant them in the off-season and they create a lot of residue, which is great for the soil.”

Nitrogen depletion is a continual problem in Zambia, an inevitable result of repeated nitrogen-based fertilizer use. The most common solution is to use lime, Shitumbanuma tells me, but the chemical is still not widely available in-country.

Overall, the GEP program is encouraging because of its simplicity. With a few simple techniques farmers can increase yields without the need for more fertilizer or expensive equipment. “They are telling them [the farmers] to use minimum tillage,” Obed explains. “Now farmers will sweep away crop residue and burn corn husks. It’s not good for the soil actually. So the government is telling them simply, just let the crop residue stay on top of the soil, and in a few weeks the soil will absorb it and this will increase fertility. Or, if you can, rotate your crops, use some legumes. They will help bring nitrogen back to the soil, and next time you plant maize, you will see higher yields.”

For now though Shitumbanuma tells me conservation farming is slow to catch on. Those who can afford it still use fertilizer and techniques like minimum tillage are not widespread. Neverthless, Obed thinks the government is on the right track, though he admits reforms are needed. He concludes our conversation by pleading for the creation of a more robust agricultural market: improvement of current subsistence farming methods to help increase productivity and incomes along with a relaxation of government policy and a slow movement toward non-GMO agribusiness.

While sensible, the future of Zambian agriculture is not for Obed to decide. The new urban middle class is still partial to nshima and their increasing political power has them voting to maintain policies that keep nshima inexpensive.[45] The large rural population, meanwhile, relies on maize for their livelihoods, both in terms of economics and nutrition, and they too are partial to keeping things as they are. Chiefs remain politically powerful, and any threat to that power, including increased rural incomes, is likely not in their interest.

On the other side of the power struggle is the Gates Foundation and their continued pressure for agricultural reform. With hundreds of millions, perhaps billions, of dollars at stake in the coming decades from the Foundation and other powerful NGOs and international aid organizations, the Zambian government may find it increasingly difficult to resist their advances for GMO-based agribusiness. What’s more, Zambia and a handful of other African countries have found themselves at the epicenter of a global struggle between the United States and Chinese private enterprises, both battling for a position at the head of the table as Africa’s economic rise continues. China has taken control of Zambia’s Copperbelt, but U.S.-based businesses like Monsanto are pressing hard to establish an agricultural presence in the region.

There is no telling how this economic and political game will play out. One thing is for certain though, maize will play a major role in Zambia’s path over the next two decades, whatever that may be. After all, maize is a political crop.

[1] James McCann, “Maize and Grace: History, Corn, and Africa’s New Landscapes, 1500-1999,” Comparative Studies in Society and History 43, no. 2 (2001): 246–272.

[2] CIA World Factbook, “Zambia Country Report (2012)”, September 11, 2012, https://www.cia.gov/library/publications/the-world-factbook/geos/za.html.

[3] Steven Radelet, Emerging Africa: How 17 Countries Are Leading the Way (Center for Global Development, 2010).

[4] CIA World Fact Book, “Zambia – HIV/AIDS – Adult Prevalence Rate”, n.d., http://www.indexmundi.com/g/g.aspx?c=za&v=32.

[5] World Economic Forum, “Zambia Country Profile”, 2011.

[6] CIA World Fact Book, “Zambia – Infant Mortality Rate”, n.d., http://www.indexmundi.com/g/g.aspx?v=29&c=za&l=en.

[7] CIA World Factbook, “Zambia Country Report (2012).”

[8] Ibid.

[9] Ibid.

[10] CIA World Fact Book, “Zambia – HIV/AIDS – Adult Prevalence Rate.”

[11] CIA World Factbook, “Zambia Country Report (2012).”

[12] World Economic Forum, “The Global Competitieness Report 2011-2012: Zambia Profile”, 2012.

[13] Obed Luwgu, “UNZA Interview,” In Person, September 14, 2012.

[14] Aaditya Mattoo and Lucy Payton, Services Trade and Development: The Experience of Zambia (World Bank Publications, 2007).

[15] McCann, “Maize and Grace.”

[16] Ibid.

[17] Ibid.

[18] Ibid.

[19] Ibid.

[20] Ibid.

[21] Leo Hickman, “Facebook CEO Mark Zuckerberg Only Eats Meat He Kills Himself,” The Guardian, May 27, 2011, http://www.guardian.co.uk/environment/green-living-blog/2011/may/27/mark-zuckerberg-kill-animals-meat.

[22] World Health Organization, “Indoor Air Pollution and Health,” WHO, September 2011, http://www.who.int/mediacentre/factsheets/fs292/en/index.html.

[23] World Health Organization, Global Health Risks: Mortality and Burden of Disease Attributable to Selected Major Risks (World Health Organization, 2009), http://books.google.com/books?hl=en&lr=&id=Ycbr2e2WPdcC&oi=fnd&pg=PR5&dq=%226:+Deaths+attributed+to+19+leading+risk+factors,+by+country+income+level,%22+%22blood%22+%22blood%22+&ots=aeB70wZi3x&sig=H9PssPhLOVwqz5n4chRZGySbang.

[24] World Health Organization, “WHO | 10 Facts on Malaria,” WHO, n.d., http://www.who.int/features/factfiles/malaria/en/index.html.

[25] MIT D-Lab, “Fuel from the Fields: Charcoal” (Massachusetts Institute of Technology, 2004).

[26] R. Vinya et al., “Preliminary Study on the Drivers of Deforestation and Potential for REDD+ in Zambia: A Consultancy Report Prepared for Forestry Department and FAO Under the National UN-REDD+ Programme Ministry of Lands & Natural Resources.” (Lusaka, Zambia, 2011).

[27] Wildlife Extra News, “Leucistic Baboons of the Luangwa Valley”, May 18, 2009, http://www.wildlifeextra.com/go/news/baboon-leucistic009.html#cr.

[28] Karen Beattie, “Interview at Kenneth Kaunda Center for Practical Agriculture,” In Person, August 1, 2012.

[29] Inside Zambia Magazine, “Chipata-Mfuwe Road to Boost Tourism”, September 27, 2012, http://insidezambiamagazine.com/?p=2388.

[30] Bill and Melinda Gates Foundation, “Agricultural Development Strategy Overview”, August 2011.

[31] Christopher L. Weber and H. Scott Matthews, “Food-Miles and the Relative Climate Impacts of Food Choices in the United States,” Environmental Science & Technology 42, no. 10 (May 1, 2008): 3508–3513.

[32] David A. Cleveland et al., “Effect of Localizing Fruit and Vegetable Consumption on Greenhouse Gas Emissions and Nutrition, Santa Barbara County,” Environmental Science & Technology 45, no. 10 (May 15, 2011): 4555–4562.

[33] Steve Sexton, “Does Local Production Improve Environmental and Health Outcomes?,” Agricultural and Resource Economics Update 13, no. 2 (2009): 5–8.

[34] Crystal Smith-Spangler et al., “Are Organic Foods Safer or Healthier Than Conventional Alternatives?A Systematic Review,” Annals of Internal Medicine 157, no. 5 (September 4, 2012): 348–366.

[35] World Health Organization Food Safety Department, “Modern Food Biotechnology, Human Health and Development: An Evidence-Based Study”, June 2005.

[36] World Health Organization Food and Agriculture Organization, “Press Release: FAO Stresses Potential of Biotechnology But Calls For Caution”, March 15, 2000.

[37] National Academy of Science, “Safety of Genetically Engineered Foods: Approaches to Assessing Unintended Health Effects”, 2004, http://www.nap.edu/openbook.php?record_id=10977&page=8.

[38] American Medical Association, “Report 2 of the Council on Science and Public Health (A-12): Labeling of Bioengineered Foods”, June 19, 2012.

[39] Damian Carrington, “GM Crops Good for Environment, Study Finds,” The Guardian, June 13, 2012, http://www.guardian.co.uk/environment/2012/jun/13/gm-crops-environment-study.

[40] Verena Seufert, Navin Ramankutty, and Jonathan A. Foley, “Comparing the Yields of Organic and Conventional Agriculture,” Nature 485, no. 7397 (May 10, 2012): 229–232.

[41] Joshua Davis, “Come to LeBow Country,” Wired Magazine, February 2003, http://www.wired.com/wired/archive/11.02/smoking.html?pg=1&topic=&topic_set=.

[42] John Davison, “GM Plants: Science, Politics and EC Regulations,” Plant Science 178, no. 2 (February 2010): 94–98.


American Medical Association. “Report 2 of the Council on Science and Public Health (A-12): Labeling of Bioengineered Foods”, June 19, 2012.

Beattie, Karen. “Interview at Kenneth Kaunda Center for Practical Agriculture.” In Person, August 1, 2012.

Bill and Melinda Gates Foundation. “Agricultural Development Strategy Overview”, August 2011.

Carrington, Damian. “GM Crops Good for Environment, Study Finds.” The Guardian, June 13, 2012. http://www.guardian.co.uk/environment/2012/jun/13/gm-crops-environment-study.

CIA World Fact Book. “Zambia – HIV/AIDS – Adult Prevalence Rate”, n.d. http://www.indexmundi.com/g/g.aspx?c=za&v=32.

———. “Zambia – Infant Mortality Rate”, n.d. http://www.indexmundi.com/g/g.aspx?v=29&c=za&l=en.

CIA World Factbook. “Zambia Country Report (2012)”, September 11, 2012. https://www.cia.gov/library/publications/the-world-factbook/geos/za.html.

Cleveland, David A., Corie N. Radka, Nora M. Müller, Tyler D. Watson, Nicole J. Rekstein, Hannah Van M. Wright, and Sydney E. Hollingshead. “Effect of Localizing Fruit and Vegetable Consumption on Greenhouse Gas Emissions and Nutrition, Santa Barbara County.” Environmental Science & Technology 45, no. 10 (May 15, 2011): 4555–4562.

Davis, Joshua. “Come to LeBow Country.” Wired Magazine, February 2003. http://www.wired.com/wired/archive/11.02/smoking.html?pg=1&topic=&topic_set=.

Davison, John. “GM Plants: Science, Politics and EC Regulations.” Plant Science 178, no. 2 (February 2010): 94–98.

Food and Agriculture Organization, World Health Organization. “Press Release: FAO Stresses Potential of Biotechnology But Calls For Caution”, March 15, 2000.

Food Safety Department, World Health Organization. “Modern Food Biotechnology, Human Health and Development: An Evidence-Based Study”, June 2005.

Hickman, Leo. “Facebook CEO Mark Zuckerberg Only Eats Meat He Kills Himself.” The Guardian, May 27, 2011. http://www.guardian.co.uk/environment/green-living-blog/2011/may/27/mark-zuckerberg-kill-animals-meat.

Inside Zambia Magazine. “Chipata-Mfuwe Road to Boost Tourism”, September 27, 2012. http://insidezambiamagazine.com/?p=2388.

Kenner, Robert. Food, Inc, 2008.

Luwgu, Obed. “UNZA Interview.” In Person, September 14, 2012.

Mattoo, Aaditya, and Lucy Payton. Services Trade and Development: The Experience of Zambia. World Bank Publications, 2007.

McCann, James. “Maize and Grace: History, Corn, and Africa’s New Landscapes, 1500-1999.” Comparative Studies in Society and History 43, no. 2 (2001): 246–272.

MIT D-Lab. “Fuel from the Fields: Charcoal”. Massachusetts Institute of Technology, 2004.

National Academy of Science. “Safety of Genetically Engineered Foods: Approaches to Assessing Unintended Health Effects”, 2004. http://www.nap.edu/openbook.php?record_id=10977&page=8.

Organization, World Health. Global Health Risks: Mortality and Burden of Disease Attributable to Selected Major Risks. World Health Organization, 2009. http://books.google.com/books?hl=en&lr=&id=Ycbr2e2WPdcC&oi=fnd&pg=PR5&dq=%226:+Deaths+attributed+to+19+leading+risk+factors,+by+country+income+level,%22+%22blood%22+%22blood%22+&ots=aeB70wZi3x&sig=H9PssPhLOVwqz5n4chRZGySbang.

Radelet, Steven. Emerging Africa: How 17 Countries Are Leading the Way. Center for Global Development, 2010.

Seufert, Verena, Navin Ramankutty, and Jonathan A. Foley. “Comparing the Yields of Organic and Conventional Agriculture.” Nature 485, no. 7397 (May 10, 2012): 229–232.

Sexton, Steve. “Does Local Production Improve Environmental and Health Outcomes?” Agricultural and Resource Economics Update 13, no. 2 (2009): 5–8.

Shitumbanuma, Victor. “UNZA Interview.” In Person, September 14, 2012.

Smith-Spangler, Crystal, Margaret L. Brandeau, Grace E. Hunter, J. Clay Bavinger, Maren Pearson, Paul J. Eschbach, Vandana Sundaram, et al. “Are Organic Foods Safer or Healthier Than Conventional Alternatives?A Systematic Review.” Annals of Internal Medicine 157, no. 5 (September 4, 2012): 348–366.

Vinya, R., S. Syampungani, E.C. Kasumu, C. Monde, and R. Kasubika. “Preliminary Study on the Drivers of Deforestation and Potential for REDD+ in Zambia: A Consultancy Report Prepared for Forestry Department and FAO Under the National UN-REDD+ Programme Ministry of Lands & Natural Resources.” Lusaka, Zambia, 2011.

Weber, Christopher L., and H. Scott Matthews. “Food-Miles and the Relative Climate Impacts of Food Choices in the United States.” Environmental Science & Technology 42, no. 10 (May 1, 2008): 3508–3513.

Wildlife Extra News. “Leucistic Baboons of the Luangwa Valley”, May 18, 2009. http://www.wildlifeextra.com/go/news/baboon-leucistic009.html#cr.

World Economic Forum. “The Global Competitieness Report 2011-2012: Zambia Profile”, 2012.

———. “Zambia Country Profile”, 2011.

World Health Organization. “Indoor Air Pollution and Health.” WHO, September 2011. http://www.who.int/mediacentre/factsheets/fs292/en/index.html.

———. “WHO | 10 Facts on Malaria.” WHO, n.d. http://www.who.int/features/factfiles/malaria/en/index.html.


[43] Robert Kenner, Food, Inc, 2008.

[44] Luwgu, “UNZA Interview.”

[45] Victor Shitumbanuma, “UNZA Interview,” In Person, September 14, 2012.

The Chick-fil-A Situation and an Economics Lesson

The economics lesson will come in a moment, but first I want to talk about the situation more generally. But before doing so let me quickly reveal my biases. I am decidedly in favor of same-sex marriage. I have a lot of gay friends. I walked in Seattle’s Gay Pride parade this year. I follow George Takei on Facebook. It’s pretty much the only issue that informs my vote — not the economy, or healthcare reform, or foreign policy. I’ve never heard an argument anywhere near cogent for denying this right to same-sex couples. I also don’t remember having ever eaten at Chick-fil-A — I don’t even know where one is if I wanted to. I will certainly not be eating there in the future.

But as always our discussion of the situation lacks the clarity and precision I prefer. First, let’s state what is obviously true. Chick-fil-A did not donate money to anti-LGBT organizations. “Chick-fil-A” is an abstract human conception. It cannot donate money, just as the table in my dinning room cannot. The idea of Chick-fil-A is useful as a shorthand in many discussions and analysis, and, indeed, has specific meaning and importance in the area of law. But let’s not kid ourselves by conjuring up imagines of everyone at Chick-fil-A gathered around a drumstick shaped conference table one Monday afternoon to determine where this year’s donations would be sent. Undoubtedly, a very small group of people somewhere relatively high up, if not at the very top, made the decision about how to distribute these funds.

I say this only because I fear a certain amount of persecution for those individuals unfortunate enough to be on the front lines of the company’s franchises. I know from first hand experience that many of us know relatively little about the companies for which we work. I would not be surprised if the fry guy, or the checkout guy, or the chicken girl knew nothing of these donations before the recent brouhaha. I say this realizing that the company is outwardly religious in its mission statement. But even if employees were aware of the donations perhaps we should still cut them some slack. I doubt they were attracted to low-level positions at Chick-fil-A because of the company’s questionable values. More probably these employees have relatively few options for employment and are doing the best they can to carve out a living. Sometimes people make tough choices when their livelihood is on the line, and I for one am not going to blame them for that. Sure, some employees share the views put forward by the company’s mission statement, but I’m keeping an open mind as to which employees these might be.

On the other hand, it does seem fairly clear that these donations went to organizations that are openly hostile to same-sex marriage. You can view a complete list of Chick-fil-A recipients here. With a little poking around it seems that promoting traditional family structures is one of the core missions of these organizations. And it is troubling that their budgets are now thousands or, in one case, a million dollars richer.

Opponents have reacted just as they should — protesting, sure, but more importantly not purchasing Chick-fil-A food products. People purchase items when the price of the product is less than the expected value (or utility) they receive. But value is not utilitarian in the strict sense. Embedded in value are all kinds of non-traditional forms of utility like aesthetics, the importance of the brand, and the moral principles of the company compared to the those of the purchaser. (That’s why Apple products can garner a premium despite having nearly identical hardware components). So clearly, using this all-encompassing definition, Chick-fil-A products have lost value in light of recent events. Some have pointed out that Chick-fil-A’s values have not changed for years; but, again, what has changed is the information available in the public forum about these values. Behavior, aptly, responds to new information.

Social movements are an underappreciated aspect of capitalism, but just as surely are part of the modern capitalist system. What is unrecognized by most participants in social movements, however, is that these movements can be very good for the corporations at which they take aim. I don’t mean in some vague sense relating to free publicity and so on, I mean in a real economic sense.

Remember that $5 ATM fee Bank of America proposed charging late in 2011? An online petition against the fee was started by Molly Katchpole, a part-time nanny, and quickly gained over 300,000 signatures, causing BofA to cancel the planned increase. This seems like a victory for consumers, and in some sense it is, but it’s also a victory for BofA because they learned something about the elasticity of their ATM services. The term “elasticity” is used by economists to denote the relationship between quantity and price. If the price increases do consumers cut back a lot, a medium amount, or not at all? A high elasticity means consumers cut back a lot when price goes up. I suppose something like chocolate would be a good example because there are so many substitutes for those who have a sweet tooth. A low elasticity implies the opposite. We might think of cancer drugs as falling into this category. You’re likely to make sacrifices in other areas of your life in order to continue purchasing your cancer medication even if the price, say, doubles. In this second case, there really are no substitutes.

Firms want to charge the highest price possible without losing customers — the price that maximizes profit. But figuring out what that prices is isn’t so easy. Sure, you could do focus groups, but nothing beats 300,000 consumers collectively screaming out, “That’s too much!” “No problem,” says the bank, “we won’t charge that much.” The information embedded in these social movements is extremely valuable. Now there’s a bigger question about why a company is raising prices in the first place — maybe they are losing money or have a poor business model more generally — but elasticity information about particular services can help steer structural reforms in the business and guide executives’ decisions about the best overall method to reduce costs.

The same holds true for Chick-fil-A and the information they were able to garner. The company now has all kinds of demographic data by region (based on franchise location) showing customer loyalty and political beliefs, and can adjust local marketing campaigns accordingly if they so choose. The company also now knows roughly what percentage of total product value is due to their corporate values.Turning to the macro scale, Chick-fil-A now knows how consumers at large will respond to future charitable giving.

Overall technological improvements have caused collective action to work more quickly. Now social movements can easily garner support in days and weeks instead of months and year. But increased technology has also sped up the response time of businesses and likewise increased the sophistication with which firms can analyze the inevitable stream of data that occurs when masses of consumers willingly reveal their preferences and elasticities for particular services.

On net it’s unclear whether the companies or consumers benefit. Perhaps the loss in customers more than offsets the value of the information firms collect. Or perhaps the lost revenue from not being able to implement a $5 ATM fee will lead to more devastating cuts in other areas. Because of technology customers were able to come together and quickly bridge the information gap. Within days, millions of BofA customers knew about the proposed fees and had their outrage validated by strangers across the country. On the other hand, perhaps in the absence of a social movement there would have been a steady leakage of BofA customers away from the bank, with a policy reversal coming only after many more customers had left. The quick response from customers allowed BofA to respond equally quickly, perhaps keeping many customers that would have otherwise left.

But even if particular businesses don’t benefit the industry as a whole surely does since, for example, other major banks can us the BofA experiment to infer information about the elasticity of their own ATM services. In the case of Chick-fil-A, consumers gave a signal to businesses throughout America about the consequences of certain types of corporate giving. BofA and Chick-fil-A were “first movers” in their respective business policies. The widespread response of consumers articulated all kinds of important information to firms throughout America. This information may even counteract the reasons behind the social movements in the first place.

The State of America’s Retirees

Via Economist’s View, a new study presented at a National Bureau of Economic Research conference examines the wealth of Americans 70 years old and older between 1993 and 2008. It uses data from the Health and Retirement Study, which gives retirees surveys every two years until their death.

On the bright side:

Between 1993 and 2008, it found, unmarried older individuals had median wealth of about $165,000 roughly a year before they died — a figure that includes current and future Social Security income, job-related pension benefits, home equity and financial assets. In the same period, the median wealth for continuously married senior citizens, roughly a year before they died, was more than $600,000.

Not bad you might say. But on the other hand:

[A]bout 46 percent of senior citizens in the United States have less than $10,000 in financial assets when they die. Most of these people rely almost totally on Social Security payments as their only formal means of support…

More than a little depressing. And as the article notes, this doesn’t provide much of a cushion to protect against a wide variety of shocks. Co-author James Poterba frames the policy implications like this:

“There is a lot of divergence in how people are doing,” Poterba says. Those disparities also complicate the public-policy issues relating to the new findings.

“One of the clear messages is that it is very hard to do a one-size-fits-all retirement policy,” Poterba says. “We need to recognize that, for example, if we were to substantially reduce Social Security benefits for those later in life, that there is a share of the elderly households for whom that would translate very directly into reduced income, because they seem to have accumulated little in the way of financial resources.”

Proprietary Trading and the Volker Rule

In response to this Econmix article by Simon Johnson, a professor of mine wrote a short post expressing surprise that more people are not concerned about proprietary trading, or, what he termed, “gambling.” Indeed, NPR Planet Money had a great podcast a couple of years back entitled Gambling With House Money, which discussed the issue of proprietary trading and its risks and benefits. One benefit is market liquidity. On the issue of “gambling” I agree with Adam Davidson: Banks are always gambling with our money. A loan to a small business is a gamble because the business might fail and the loan might not be paid back. The difference is that proprietary trading often deals with more obscure financial instruments and the risk profile, while modeled with sophisticated statistical techniques, in reality is unknown and therefore invites decisions that might lead to financial loss. Small business loans and mortgages, meanwhile, are well-known entities.

However, I would add that if a bank wants to be a going concern, it always has an incentive to stay in the black over the long-run. Though prop trading can use customer deposits, it often uses corporate profits. To the extent that FDIC insurance covers customer losses, it seems to me that a bank should be able to make whatever bets it wants. The Darwinian nature of capitalism should select for those banks that are prudent.

This, of course, assumes a profit and loss system. But a long history of US government bailouts has called into question how much banks should fear going under (i.e. moral hazard may be a non-trivial factor in risky bank behavior). This gets to the point of too big to fail; Simon Johnson has been the most boisterous voice on this front as the econmix article alluded. Moreover, FDIC insurance negates any incentive customers might have to hold banks accountable. Who cares if my bank fails, I still get my money (and FDIC is paid for with bank fees not taxpayer dollars, doubly nice for me as a consumer). Without such insurance customers would undoubtedly be much more scrupulous about where they put their money and banks would be forced to engage in more conservative investment strategies. The same way that without spell check I would be forced to memorize how to spell ‘scrupulous’.

As far as investment banks go, in his book Bailout Nation, Barry Ritholtz argues that the real problem is the high leverage that large financial institutions enjoyed (he claims levels up to 40-to-1 though the SEC has responded thoughtfully to similar claims). Ritholtz also cites the movement away from partnerships as a primary model for investment institutions.  In other words, banks weren’t just gambling, they were gambling with other people’s money. As Milton Friedman long ago advised, “Very few people spend other people’s money as carefully as the spend their own.”

As far as the Volker Rule, its design will likely lead to poor efficacy in practice. Banks clearly need to be able to hedge specifically so they can protect our money. But the line between a hedge and a speculative bet is fine. So fine that banks will always claim they are hedging even when they aren’t. As always, regulatory capture is a concern.