Sunday, July 6, 2008

"A wild beast to be caged"

Following my recent post worrying about the instinctive antagonism of many charities against private sector approaches to reducing poverty, here's an article from another writer on the same subject.

Reviewing a recent Oxfam report on the provision of basic services, the author comments on how Oxfam views the private sector as "the enemy at worst, and a wild beast to be caged at best." Sadly, how familiar.

Of course, throwing the private sector at a problem is not a solution, and can often be harmful. But private sector innovation has played a helpful role in many areas of basic service provision in developing countries around the world, not least of all in India. And surely, given decades of disappointment in public sector provision of services for developing countries, Oxfam might recognise that a shared or compromise solution - the best of the state with the best of the private sector - might be a more pragmatic option for providing poor people with the services they deserve?

Saturday, July 5, 2008

Private schools for all?

“The boom in India’s private sector has been accompanied by an outright failure of the state, and the poor – having little or no access to public services and unable to pay the high prices for private services – have borne the brunt of this failure. Children of the rich go to exclusive private schools, children of the middle class use a mix of private and public schools, and children of the poor often do not go to school at all or go to low-quality public schools. [Yet] even the late economist Milton Friedman, who advocated a school voucher system, did not want the state to withdraw totally from the field of education. The state cannot totally abdicate its responsibilities… but must provide basic education for the sake of intergenerational equity.”

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I work for a small international management consultancy, and have spent the last 5 months in our brand new Mumbai office doing a good deal of consulting work for the private education sector: private universities, private schools, English-language colleges. At the same time, I have been supporting a charity in Mumbai’s great slum, Dharavi, which pays bursaries for school fees to students from the slums. And so the extract quoted above, from an excellent article on microfinance in last summer’s Stanford Social Innovation Review, touched on an issue particularly close to both my professional and personal interests.

Much of the work I have done in the past few months has helped the education of the middle class, not the poor – because, in many cases, that is where the profit lies for private schools. But the reason these companies do so well is the vast gap between demand for high-quality teaching in India and the complete absence of public sector supply. And this yawning gap between supply of and demand for education reaches down all the way from the elite to the slums – where the charity I work with puts most of its resources into vouchers for slum children to “go private”, because sending them to the local government school is a complete dead loss. Put another way, from top to bottom of the social scale, the state in India has almost totally abdicated its responsibilities in the field of education.

Private schools, of course, are castigated as part of the problem – part of the reason for this state failure. The assumption is made that if the private sector were not there, pulling out the middle class and thereby removing political pressure for public sector reform, a strong state would step into its place and provide quality public schools for all. Certainly, it is all very well to hope that “the state provides basic education for the sake of inter-generational equity.” But how is this miraculously to happen? Political pressure in India, as any observer will tell you, actually comes from the poor, not the middle class – yet despite this the poor have sadly had no success in demanding education reform. In a country with such a notoriously inefficient public sector, one where 25% of public school teachers play truant, I cannot believe that such an appeal to public education is more than a pipe-dream solution. On the other hand, private sector initiatives in education – both for-profit and charitable – are already pushing India towards our goal of basic education for all. Private schools catering directly to the poor are flourishing in Hyderabad. Charities in Mumbai provide substitute school management, extra-curricular education or bursaries for poor children to attend private schools. The only opportunities the poor are likely to see come from this sort of dynamic bottom-of-the-pyramid innovation in private sector education, not from the deeply dysfunctional Indian public school system.

Underpinning most arguments against private (or even charitable) education in developing countries is an assumption about incentives and the role of the state. To Western eyes, though, it is a very odd incentive problem. Concerns about the role of the state in Western political discourse have for the last 30 years focussed on the damaging incentives created by the state’s tendency to crowd out private enterprise, and the disincentives to work offered in the form of benefits & hand-outs. Much recent public-sector reform – most noticeably in Germany and the UK –has been driven by the argument that if the state provides a means for the poor to live then they have no incentive to find work; hence benefits should be withdrawn. But the powerful counter-argument, of course, runs that such “incentive-based” measures are unacceptable because they risk abandoning the vulnerable of society - and hence, rightly, such European countries fundamentally maintain their strong welfare safety nets.

It is therefore not a little ironic to find that the argument about the incentives and the Indian state runs in reverse. Here, we are told that the private sector is crowding out the state; here, it is private sector “benefits” – private education, private healthcare – which apparently must be withdrawn to force the public sector to step up to its responsibilities. As in the West, however, the incentive-based argument has similar drawbacks. If people do not have the skills or training to get jobs, nothing is gained by withdrawing unemployment benefits. And if a government does not have the skills, the money, the tools or the political will to establish a decent state school system, nothing is gained by calling for private education to be replaced by public. In a world where the state fails so miserably in its present task, well-meaning reformers trying to improve education excluding the private sector and thus "solving an incentive problem" do nothing but increase the vulnerability of the poor.

Monsoon Aside...

So… the monsoon. Since I’ve been living in Mumbai for the past 5 months, the monsoon was a phenomenon I was anticipating and dreading in equal measure. How would I get to work in the knee-deep waters? How would I get out at the weekend if it was always raining? How would anything stay dry?

Apparently (I was out of town) some crazy volume of water did indeed fall on Tuesday morning and flooded the city. However, since all the water had dried up by the same afternoon I suspect that this brief inundation was more related to the quality of the drains than the quantity of the rains.

And aside from that, the monsoon in practice has been rather disappointing. The city is permanently overcast, smothered by a blanket of grey. The watery sun tries & fails to shine through the clouds. The winds whistle through poorly-insulated apartments and dull brown waves crash against the waterfront of Marine Drive, showering passers-by with briny spray. Once every couple of days it rains very hard for about ten minutes and then gives up, exhausted.

In other words, ongoing heat & humidity aside, I think anyone who’s lived through an average English autumn in Scarborough would feel right at home. Can someone tell me if the Mumbai monsoon this year is particularly unusual? Am I missing something?

Muhammed Yunus' priorities

A short follow-up on my last post. Among the fuss created by the recent Compartamos listing, Muhammad Yunus was interviewed by Business Week. Sadly, his comments were typical of the way that debates within the development world too often become personalised.

“When you discuss microcredit, don’t bring Compartamos into it” he fulminated. “Microcredit was created to fight the money lender, not become the money lender… their priorities are completely screwed up.”

Of course, such passion on behalf of the poor is often a virtue. But in this case, from a Nobel Prize winner and unofficial head of the microfinance industry - a deeply influential thought-leader, in other words - it is unwise and deeply unhelpful. There are two sides to the Compartamos debate, as many, many people have pointed out. Yunus may fervently believe one of them is wrong. You may agree with him. But for Yunus to do nothing but insult the other side - not even to acknowledge nor respond to its arguments constructively, does not help his cause, or your cause, or that of the people we are all trying to defend. It simply adds to this depressing, angry, destructive polarisation of opinion among people who share the same goal.

One might suggest that his priorities are screwed up.

Not more venture capitalists...

Here’s a slightly depressing story. I was having dinner last week with a couple of old friends, both of whom work in the international development sector for large, high-profile UK charities. Both have been deeply committed to development since I met them nearly ten years ago, and both are smart people with a good deal of experience in their field. I mentioned I was interested in the role of venture capital to reduce poverty by supporting businesses in developing countries, creating wealth, jobs and so forth.

“Hmm… not more of those venture capitalists” came the deeply sceptical response. “Always sticking their nose in. We’re forever having venture capitalists coming in and trying to tell us what to do.”

My friend went on to tell two stories, both concerning a British charity called ARK, or Absolute Return for Kids. Now ARK was formed a few years back by a group of former investment bankers to add a bit of private sector “rigour” (their words) into the sleepy UK charity sector. And the two stories ran as follows: firstly, ARK had approached her charity for advice, saying that they wanted “to go into education in Africa”, despite having no prior experience or expertise in the field. A fairly clear case, I think, of mission creep or unwise over-diversification by ARK. Secondly, at a recent charity dinner for super-rich city types they had included a diamond in the goody bag presented to all guests. An equally clear case of unwise and unnecessary ostentation.* She was therefore able to quote at least some good circumstantial evidence that the virtues of lean management and focused activity preached relentlessly by the private sector to the charity world are not always practised with such dedication.

Of course, this disappointing personal experience of the private sector’s charitable ventures merely reinforced her existing professional and philosophical suspicion of private sector charitable efforts – one that runs something along these lines. We work to help people; they work to make more money (perhaps, maybe, helping people along the way). They talk of economic forces and think of big-shots; we think of the personal, the little guy, and know that their economic forces are in fact self-serving and distort the truth. We have years of experience in our field; here they turn up like Johnny-come-lately, re-inventing the wheel and instructing us in how to do our job. You would likely meet similar views talking to most doctors, teachers or other public sector professionals.

In many cases, there is a good deal to this; I am by no means denying that there is often substance to these complaints, and I will try to come back to this argument another time. But for now, what seemed depressing to me was the way that an instinctive personal distaste of the private sector seems to obscure any chance of compromise or dialogue or understanding between the two sides. (The reverse is also true - it is not as if the private sector is blameless on this score). And it seems so counter-productive. Both sides share common goal; they share the same mission, if you like. Both want to improve the world they live in. Yet a difference in approach, in philosophy, in temperament almost, produces a rift between people who should be sharing ideas enthusiastically. It is all very well for academic theorists of development or economics, Marxists and Neoliberals and the like, to sit in their libraries writing yah-boo-sucks to each other. But practical people taking practical action for the benefit of others should be more, well, practical. At least as a start, could we have a recognition that each side is sincere, each has similar aims, and each could learn something from the other?

* There is an illuminating clarification to this story: no diamonds were in fact given away. The most recent ARK gala dinner concluded with a charity auction, one of the prizes being the chance to name (not own) a 100 carat diamond. Fairly ostentatious, I agree, but not exactly the same as giving gemstones away. The antagonism between charity & private sectors seems to have done the rest, distorting the rumours in the telling until the version that reached my friend involved some Marie Antoinette-style largesse.

Yet even here there is sincerity on both sides: my friend’s, that money should not be wasted so frivolously by the rich on each other, and ARK’s, that as much money as possible should be donated to helping children and that some glamorous enticement may help. Sadly, neither side is likely to see it like this.

Thursday, July 3, 2008

Thoughts on Multiculturalism

A slightly longer thought-piece. Multicultural toleration is a fundamental good, even in today's climate of suspicion. In reality, it is economic inequality which drives cultural conflict, and this inequality should be the target of our efforts to create a more harmonious society.

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Just over twelve months ago, the chairman of the Commission for Racial Equality caused widespread surprise by calling for the concept of multiculturalism to be abandoned in Britain. A “core of British-ness” needed to be asserted, he argued. Once the leading UK racial equality body is advocating the end of multiculturalism, it is no longer possible to dismiss such suggestions as extreme-right intolerance for other ways of living, as backward-looking hopes for a homogenous, mono-cultural society. As with the emergence of Pim Fortuyn’s anti-immigration platform in the Netherlands and well-known headscarf debates in France, they arise from a widespread concern that the multi-ethnic nature of Western European societies is breaking down common social ties which hold communities, and nations, together. And what is almost as problematic, there is a popular sense in the Western media that “multiculturalism” as a political doctrine protects cultures whose repressive ethics are far from the liberal values encouraged in Western public discourse. Do these twin problems of social breakdown and intolerable cultural difference finally spell the end of the multicultural road?

Political theorists have long argued that modern states are founded by and for a culturally homogenous nation in some form of social contract. Democracy is possible because we share a sense of national community: a tax and welfare system is seen as legitimate in a way that a global wealth tax for the poor overseas would not be, because it is provided by, for and within a community. David Miller, who in writing on international justice has long highlighted the “special responsibilities” we owe to people of our own nation because we are part of a community, draws our attention to the fact that “the legitimacy of the modern state derives in part from its role as protector and promoter of the national culture of its people.”[1] If this common culture were to fragment, the legitimacy of the state and its democracy would become increasingly suspect. The worry is this: do we live in a society which increasingly is too diverse to be a coherent political unit?

The question would be superfluous if we could assume that a policy of multiculturalism engendered a gradual process of assimilation and hybridity, gradually melding diversity into a new identity. Yet is this the case? Black communities in “multicultural” America, and many South Asian communities across Britain, are becoming increasingly physically segregated from their neighbouring communities. Such trends, and the social dislocation and suspicion they engender, are behind the widespread fear of uncontrolled immigration which so preoccupies tabloid leader-writers for Middle England. Equally damaging, is the cultural segregation which a tolerant multiculturalism permits, leading to accusations that “multiculturalism” provides cover for practices and beliefs that many find uncomfortable, dangerous or wrong. Arranged marriages, militant Islamic preaching or patriarchal ‘control’ of family votes are all beyond the pale of British culture. And so people begin to ask: should a society permit cultural practices which run counter to some of its own core beliefs?

“Educating children in a tradition”, Rowan Williams argued in his first public lecture in 2003, seems a good way out of both of these dilemmas.[2] Education, the major cultural preserve of the state, is central to the multiculturalism debate. Through education, many feel that the state can create the common culture necessary to support the social contract in a modern democracy, while also promoting the values, and setting the cultural limits, which “society” deems to be acceptable. France remains the best-known example of the assertive cultural state, but the phenomenon is hardly a European one: Turkey has a notorious tradition of state-enforced secularism to keep the dangers of multiculturalism in check (often at the expense of democracy).

Yet for all that, the state is not the solution. Not if we want to avoid a situation where culture is defined by majoritarian principles and imposed from above. One aspect of the danger is demonstrated by America, where a majority Christian society has in many states decided that public culture, the “core of American-ness”, if you like, should be overtly Christian. Despite the secularism of the First Amendment, the Ten Commandments are prominently displayed in schools, courtrooms and legislatures across the country – irrespective of the beliefs of non-Christian or non-religious minorities. Conversely, in France, Turkey and elsewhere an aggressive public secularism prevents many believers from expressing their faith. Creating some sort of obligatory cultural education – beyond, presumably, Shakespeare and the British history – is chronically illiberal. All communities have to obey a common law if they are to live in a country. But this does not entail that they must also be taught to embrace a new culture – static, elitist and largely invented for the purpose.

What the cultural nationalists and the contractarian liberals never understand is that we have always had a multicultural society. The British nation state, for example, was never built on a homogenous nation, but emerged at a time when North and South, England and Scotland, city and country were far more culturally different places than they are today. “British-ness” is not primeval but a 19th century invention. Nor can it be claimed that something has fundamentally changed in the 21st century. Miller argues that “the rise of a global culture, which makes preserving distinct national cultures an increasingly precarious business, gives the state a greater responsibility for the self-conscious defence and reproduction of national culture.” Yet why on earth should it be the state’s responsibility to “defend” some objectified national culture? In truth, “culture” only exists in the experience, beliefs and memories of individuals in their social relations with others, and will always evolve with them as they and their social relations evolves. The idea that the state has a responsibility to fix it in time, nail colours to its mast and defend it against the rising tide of globalisation is deeply misguided. The liberal good of offering individuals more freedom than a society with a state-controlled common tradition should be obvious. And the central experience of Britain’s tolerant, multicultural attitude is that at the level of the individual it allows is a fertile cross-cultural creativity where all can find their own identity from choice not compulsion.

There are limits. Asserting the values of public cultural tolerance and pluralism neither draws on nor entails a philosophy which asserts that any cultural belief is acceptable. On some issues, as mentioned above, the same laws must apply to all. Nobody expects a multicultural society to tolerate the racism of the BNP. On others, such as the freedom of speech question in Birmingham, the very philosophy of multiculturalism contains a belief in tolerance and freedom of speech which must apply equally to Sikhs and to Christians protesting outside “Jerry Springer: the musical.” That is a matter of philosophical coherence: a consistent belief in the right of individuals to judge for themselves the insightful from the insulting, the crass from the clever. And on yet other issues, such as arranged marriages, multiculturalism must not be a blanket under which debate is stifled – that debate must be conducted at the level of society, but must not become the preserve of the state, whose involvement in the private affairs of families should surely be kept to a minimum. After all, as regards family life, there are beams in our own culture which should be addressed before we start sending the state to extract motes from others. In the end, the importance of multiculturalism as a philosophy for public politics is that it allows interaction between different cultures without prioritising any or attempting to set up a national standard, that it encourages tolerance of and respect for diversity and a willingness to seek the good in any society, culture or individual. It is a liberalism which must be defended against illiberalism in other societies and cultures and in our own.

I would like to make one final suggestion about the apparent problems of multiculturalism in modern Britain. That is, that our primary concern is not a cultural one at all. It is economic. Compare race relations, or beliefs about cultural and social diversity, in rich neighbourhoods and poor ones, or among rich and poor young people. Rich people are not nicer. Rather, the “diversity problem” in our society is a problem of “economic diversity” – inequality – more than cultural difference: the depth of the former contributes significantly to the aggressive assertion of the latter. Concerns about “culture” reflect fears arising from economic insecurity, whether felt by the relatively well-off (immigration) or the poor (benefits discrimination). Conversely – and without being too cynical – many find it easier to love one’s neighbour from the comfort of a large detached house and a secure job. Yet multiculturalism is not thereby misguided, elitist or utopian. The correct conclusion is not to condemn socio-cultural pluralism but to address ourselves more strongly to the problem of economic inequality and insecurity. Improve people’s economic security, and fears of social fragmentation or “too much” cultural tolerance melt away. We need a multicultural liberal society; we need more multiculturalism, not less. But the only way we will secure that is by building a society which is not only more tolerant but also more equal, more secure and more prosperous.



[1]
David Miller, “Immigrants, Nations, and Citizenship,” The Journal of Political Philosophy,
2007

[2] http://www.archbishopofcanterbury.org/sermons_speeches/2002/021219-Dimblebylecture.doc


Compartamos... again...

You know a story has "made it" when you see the leader in The Economist...

This week's edition of the liberal standard-bearer includes this editorial supporting Compartamos, with the key argument being that "by charging an interest rate that generates a profit, the bank can grow fast and provide many more 'micro-entrepreneurs' with the finance they need." Compartamos, of course, stands accused of making millions from its recent share listing while its impoverished loan customers groan under the weight of 80% annual interest rates.

Now many people far more qualified and experienced than I have dissected this issue properly - DefeatPoverty.com has a very thoughtful, balanced piece on the problem here. But I would like to highlight one question which arises from this particular story but which has very general implications; one which to my mind needs more research. Even if one accepts that Compartamos are fundamentally trying to do good, and not to fleece their impoverished customers to the benefit of rich shareholders, it still remains unclear whether The Economist's line of defence is really that robust. Is it honestly ok to charge such staggeringly high interest rates if the profits thus generated enable you to serve more of the poor?

On the one hand, given the huge scale of the task of financial inclusion and the still-limited money available, it seems obvious that generating profits to re-invest in expanding services is a good thing. But how much are the poor benefiting from "inclusion" if it comes with an 80% interest rate price tag?

Any research or data which might shed some light here would be very welcome.