In this article, we study the rise of the Sicilian mafia using a unique dataset from the end of the nineteenth century. The main hypothesis is that the growth and consolidation of the Sicilian mafia is strongly associated with an exogenous shock in the demand for lemons after 1800, driven by James Lind’s discovery on the effective use of citrus fruits in curing scurvy. Given Sicily’s already dominant position in the international market for citrus fruits, the increase in demand resulted in a very large inflow of revenues to citrus-producing towns during the 1800s. Citrus trees can be cultivated only in areas that meet specific requirements (such as mild and constant temperature throughout the year and abundance of water) guaranteeing substantial profits to relatively few local producers. The combination of high profits, a weak rule of law, a low level of interpersonal trust, and a high level of local poverty made lemon producers a suitable target for predation. Neither the Bourbon regime (1816–1860), nor the newly formed government after Italian independence in 1861 had the strength or the means to effectively enforce private property rights. Lemon producers, therefore, resorted to hiring mafia affiliates for private protection and to act as intermediaries between the retailers and exporters in the harbors
The bigger lesson here is that the presence of wealth in a context of weak organizations (including firms, social organizations/networks, states, etc) is likely to result in the emergence of sub-optimal forms of property rights protection (which, of course, is one of the core claims of the resource curse literature).
“How persistent are cultural traits? Using data on anti-Semitism in Germany, we ﬁnd local continuity over 600 years. Jews were often blamed when the Black Death killed at least a third of Europe’s population during 1348–50. We use plague-era pogroms as an indicator for medieval anti-Semitism. They reliably predict violence against Jews in the 1920s, votes for the Nazi Party, deportations after 1933, attacks on synagogues, and letters to Der Sturmer. We also identify areas where persistence was lower: cities withhigh levels of trade or immigration. Finally, we show that our results are not driven by political extremism or by different attitudes toward violence.”
Their paper speaks to my previous post on the challenges of institutional engineering given the stickiness of institutions (and by extension the cultures that create and then reinforce them). Of course culture is a dicey subject that is often misused to explain economic and social outcomes. Instead of using the amorphous term “culture” I prefer to hear more about the reward systems that make it beneficial for individuals and communities to engage in certain cultural practices.
On a more positive note, the paper provides some evidence of the power of economic opportunities to dis-incentivize engagement in hateful cultural practices:
“Instead of reinforcing persistence, we argue that economic factors had the potential to undermine it…… Our results also lend qualiﬁed support to Montesquieu’s famous dictum that trade encourages ‘‘civility.’’
Perhaps after experiencing a Bill Easterly moment, a friend of mine (grad student here at Stanford) had this on his facebook wall:
“Hello, my name is Mr. Development Man. I know Africa so much!! I went there one summer and stayed with an NGO. I talked to my servant cook who served me food, so I know African workers. I read a few books written by white Americans about Africa, and remembered their big words. So I know African ideology. African prostitutes talked to me at my hotel poolside, so I know about relationships in Africa. I took pictures of kids at the orphanage, so I know how Africans suffer.
My conclusions: Africans are corrupt. The place is poor because of poor policies. And my knowledge can help them. If they just listened to my smart American knowledge — obtained from the 2 months at the NGO, my white man books, my prostitutes, my few words with my servant cook — they would develop!! Why don’t they listen to me?? I can help them…Stubborn, corrupt African politicians…
Signed, Mr. Development Man. Remember, I am here to help you Africa!!”
I have a sense that Mr. Development Man’s note is directed at both development practitioners and academics alike. Let us all take heed.
Chad, who is into short stories and is also a late night radio DJ, wrote this Letter to Mr development man on the dynamics of the love-hate relationship between donors and aid recipients.
African dictators enjoy some of the highest expected tenures in the world. They are also some of the worst performing leaders. Theodore Obiang of Equatorial Guinea has been in power since the late 1970s. Abundant oil and a low population makes his country be classified as a high income country by the World Bank (over $34,000 per capita income); despite the fact that over 70% of his people live below the poverty line, even as his son plans to buy the 2nd most expensive boat in the world. A huge chunk of his country’s oil money goes directly to his bank account.
This has been the story of African leadership in the last 50 years. Half a century after independence Africans find themselves in a position in which former colonial powers can still roll in and take over with minimal resistance. At the moment Cote d’Ivoire, the jewel of post-independence West Africa, is on its knees. Former colonial power, France, controls the main international airport. It is as if 1960 never happened.
It is like 1960 never happened because tiny Portugal can still roll in and take over Equatorial Guinea.
At the risk of sounding like a dependence theorist, the reality is that external domination of the African Continent only ended on paper. Poor leadership has continued to confine the entire region in the sick ward of the world. The numbers tell it all. The region’s maternal and child mortality figures are mind-boggling. In many places the standards of living belong in centuries long past.
What is on the mind of Laurent Gbagbo as he continues to destroy the lives of millions of Ivorians? What is Idriss Deby’s plan for Chad, and its oil money that he continues to steal with alacrity? Why does Mugabe think that he is God’s gift to Zimbabwe? And why does Zuma of South Africa continue to be embroiled in useless and shameful sideshows involving his sexual life instead of assuming the important task of leading this rudderless continent out of mediocrity?
“I think we have gone too far in the pro-poor direction…… we don’t necessarily have trade-offs. Factories are pro-poor.” Chris Blattman, Yale University
I am on record as not being too enthusiastic about “pro-poor growth” as it is currently practiced. Loans to the poor and other approaches that completely bypass those with a higher probability of succeeding at creating big business – the educated and middle class – will at best only keep the poor afloat and at worst divert resources from much needed long-term investment. I am not saying that the educated have a monopoly on entrepreneurship. All I am saying is that what we want is to create sustainable jobs. This requires scale. And scale comes with big business and industry.
Blattman neatly summarizes this point:
The difference between a country with $1,500 and $15,000 of income a head a head is simple: industry. All the microfinance and microenterprise programs in the world are not going to build large firms and import technology and provide most people with what they really want: a stable job, regular wages, and a decent work environment.
The Central African Republic (CAR) is perhaps the biggest joke as far as states within the international system go. Francois Bozize, the Gabon-born dictator that currently runs it, has failed to meet even the barest of needs of his countrymen. The IRIN reports:
“There is plenty of fertile land in the region [south east of CAR] but violence is interfering with traditional ways of life such as agriculture, hunting and fishing, with farmers often afraid to stray far from town to work their fields for fear of attack. This has reduced production, pushing up prices to the point at which not everyone can afford to buy food, even when it’s available,” said Christa Utiger, the International Committee of the Red Cross (ICRC) economic security coordinator for the CAR.
4.8 million people live in the country. A person born in the CAR can expect to live to be 50. The literacy rate is a woeful 49%. Per capita income (PPP) is US$ 700 (yes, PPP). Gold and timber are the main export earners, with the vast majority of people living on subsistence agriculture. 16% of CAR’s children under 5 are acutely malnourished. Rebel groups, including Uganda’s Lord’s Resistance Army routinely use CAR’s territory as launching bases. The only people who appear to be benefiting from the existence of CAR as a country are the thugs who run it, from David Dacko, to the self-proclaimed Emperor Bokassa to Francois Bozize.
Forget about the elections in Tanzania or the Ivory Coast. What matters for the American audience as far as news from Africa go are human interest stories such as this one which made it to the front page of the New York Times.
I echo the point of the Times piece. It really sucks being a hunter-gatherer in Botswana. And by extension, it really sucks being a citizen of Chad, Niger, Uganda or any one of the 40 other countries that make up sub-Saharan Africa. Despite the “good news” (see earlier post below) things are really bad on the Continent.
Africa deserves all the bad press it gets. Period. The only problem is that Africans have not been able to participate effectively in the discourse on their continent or attempted to contextualize the bad press. The continent long lost the game of framing the narrative.
Pourism, aka poverty porn, is not restricted to the third world. In the West it is cheaper than having to buy a plane ticket, among other expenses, to go visit people villages in Rwanda or Kenya. You can get it all online.
The Economist has an interesting debate going on about Africa’s growth prospects. The consensus appears to be that structural factors – such as institutions, culture, colonial history and what not – are the main culprits in the tragic tale of African underdevelopment. I agree. Bad governance, the historical accident of colonialism which halted the natural processes of state formation, among other things such as historical low population densities and a culture that mystifies most things are what continue to deter African nations from realizing their full potential.
Gilles Saint-Paul argues that:
“most African countries are trapped at a “low-trust” equilibrium where basic property rights are not enforced and corruption is rampant. Essentially if I do not expect others to fulfil their side of the contract, it is rational for me not to fulfill mine, and transactions eventually disappear“
One of my favorite economists, Daron Acemoglu, adds that:
“The economic problems of African nations are a consequence of their postcolonial institutions, which are themselves the continuation of the precolonial institutions.“
But Lant Pritchett is quick to remind us of the folly of lumping all the sub-Saharan African countries together, pointing out the stark differences between places like Botswana and Somalia or Cote d’Ivoire and Mozambique.