On Industrial Policy (In which I concur with Blattman 1001%)

I have made the case before here, here and here.

For more here’s Blattman, commenting on Industrial policy:

“You can’t pick winners” is the knee-jerk retort to the mention of anything that even rhymes with industrial policy. I would call it the triumph of ideology over evidence, except that even “ideology” feels like a generous term. Lazy thinking might be a more accurate description. Some have given the question a great deal of thought, but most have not.

I’m not suggesting that the paper above has the right answer (odds are, like most papers, it does not). I’m also not suggesting that governments can pick winners (probably they can’t). Nor am I forgetting that industrial policy is easily politicized and distorted (as surely it is). So what am I talking about?

More on this here.

jua kali will not take us where we want to go

Informal businesses provide employment for millions of Kenyans. Kiosks (both big and of the mama mboga variety), the mitumba business, matatus and even peasant agriculture are what keeps the average Kenyan going. Because of governance issues – like corruption and poor laws – the formal sector of the Kenyan economy has consistently failed to provide enough jobs for the ever growing population. That said, I believe that the jua kali (informal) sector will not take Kenya where it wants to go. Economic History teaches us that scale has merits. It provides the resources for R&D, lowers operational costs and generates revenue for the government because it is hard to hide profits from the taxman like is commonplace in Kenya’s jua kali sector. Plus if we have scale we can export surplus production to places all over the Continent thus creating even more Kenyan jobs – why should we cede these markets to the Chinese, Indians and other “Dubai” traders?

That is why I think that Jaindi Kisero has a point with regard to Kenya’s matatu-dominated transport sector. It is time Nairobi, if not all major cities and towns, had decent public transportation unlike the chaotic and thuggish matatu industry. The matatu industry has given rise to a matatu culture that has taken vulgarity and criminality to a new level – the epitome of which is the dreaded Mungiki sect. Because of this, most reasonable people would concur that “formalizing” public transportation and the matatu industry would go a long way in reducing crime and bringing some sanity to Kenyan roads. Now if only there was a place where we could purchase political will and secretly feed it to Kenyan politicians.

And in other news, Somalis in the southern part of the country will be forced to go hungry after al-Shabab kicked out the WFP. About 900,000 people will be affected by the WFP decision. 2.8 million Somalis are dependent on food relief. The WFP decided to close shop in the face of several demands from al-Shabab (the demands were not all bad, I should add. One of them was that the WFP should not import food during the harvest season in order to promote local agriculture. These al-Shabab types know something about the demerits of food aid in Africa, it seems). Somalia has not had a functional government since the fall of Siad Barre in the early 1990s. Sometimes I wonder whether instead of the US paying the Ethiopians to invade Somalia it might have been better to have the Islamic Courts Union run the country. Well, at least for some time before incentivizing their being less predatory and misogynistic. Most politicians the world over have a price. Especially once they have tasted real power.

Lastly, Somalia is not all gloomy. If you are daring enough you can make money in the land of the al-Shabab, without being involved in piracy.