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Category: Miscellaneous

Published September 30, 2011

Coughing Tiger, Sickened Dragon

In dozens of rural villages in China’s western provinces, one of the first things primary school kids learn is what made their education possible: tobacco.

“On the gates of these schools, you’ll see slogans that say ‘Genius comes from hard work — Tobacco helps you become talented,'” said Xu Guihua, secretary general of the privately funded lobby group Chinese Association on Tobacco Control. The schools are sponsored by local units of China’s government-owned monopoly cigarette maker. “They are pinning their hopes on young people taking up smoking.”

Anti-tobacco groups say efforts to reduce sales in the world’s largest cigarette consumer, such as a ban on smoking in public places introduced in May, have been hampered by light penalties, a lack of education about the dangers of smoking and the fact that the regulator, the State Tobacco Monopoly Administration, also runs the world’s biggest cigarette maker, China National Tobacco Corp.

This is from an article on Bloomberg.com in which I learned that China has 320 million smokers. Like Princeton’s Anne-Marie Slaughter replied over Twitter, that’s almost the size of the US population!

And regarding the State Tobacco Monopoly Administration owning China National Tobacco Corp., I think I’ve found the perfect counterexample for when I teach about incentive compatibility in the law and economics seminar I teach in the spring…

Published September 28, 2011

Development Inventiveness

My wife’s a Mennonite, and they had programs in Bangladesh. It had hit me between the eyes that homeless people in Denver were living on $500 a month, but there were people overseas living on $30 a month. So I took a trip to Bangladesh.

Some farmers were using hand pumps, but biomechanically, that’s a lousy way to raise water. A Mennonite guy had invented a rower pump that would pull up enough to water a half-acre of vegetables. They had installed 2,000 over five years, and those farmers seemed to be making a lot of money, so I said, “Why don’t we do a project, with an objective of selling 25,000 a year?”

We hit that pretty quickly. One or two Mennonites objected — they considered the idea of selling something to poor people immoral. But we kept at it, and then we found the treadle pump. It was brilliantly simple, it could be manufactured by local workshops, and a local driller could dig a 40-foot well and install it for $25. Studies showed that farmers made $100 in one season on that investment.

That’s from a New York Times interview with Dr. Paul Polak, an inventor who has spent a good amount of time creating devices to improve the lives of the world’s poorest individuals. Here is his answer, when asked about the biggest mistake made by aid and development agencies:

As we were developing our pump, the World Bank was subsidizing deep-well diesel pumps that could cover 40 acres. The theory was that you’d get a macroeconomic benefit, but it was also very destructive to social justice. The big pumps were handed out by government agents; the government agent was bribeable. The pump would go to the biggest landholder, and he’d become a waterlord.

Interesting throughout, as they say. I am a bit skeptical about the “studies show” bit above — skeptical about what the studies show, not that the studies actually exist — but selling 25,000 units is a reasonably good test of the welfare impacts of Polak’s treadle pump.