Sixty four percent of income in least-developed nations comes from agricultural output and only 4% of international development assistance in these economies goes to agriculture. The typical yield per hectacre (about 4 acres) in developed economies is a little over 4 tons. In these subsistence agricultural communities the average output is only 1 ton. This combination of low productivity because of an inability to supply basic farm inputs like nitrogen fertilizer and high yield seeds, combined with essentially no targeted aid in these areas creates the ideal environment for poverty traps. Here the inability to afford basic inputs limits output, which reduces savings, which further precludes necessary productivity enhancing investments. This is where official development assistance can provide not just relief or temporary aid, but over several years be a catalyst to pull economies out of the poverty trap and develop a domestic savings pool deep enough to afford the productive inputs they need to raise income, make more investments and over time diversify their productive sectors. The world (via the UN) has pledged for over 30 years to provide .70% gross national product towards such assistance, most recently via the UN Millennium Development Goals. The United States currently provides .17% GNP towards ODA, and the EU roughly twice that. As interim targets towards the two to four fold increases required to reach these goals the EU pledged in ’06 to get aid up to .5 % GNP by 2015. A report was just released monitoring progress of these pledges to get closer to meeting the initial pledges. They show that ODA fell over 4% in ’06 and over 8% in ’07 and of the $25 billion of pledged assistance to Africa, only $4 billion was actually allocated. The world community needs to meet its commitments, and not simply as a philanthropic endeavor, but because there is no more comprehensive way to engender sustainable and inclusive national security, economic development, trade and productivity growth and environmental sustainability than through targeted development aid that in essence doesn’t just “give a fish” but “teaches how to fish.” The crutch of the problem that has beleaguered the international community and led to many failures in reaching these commitments is the structure of the United Nations. There is no legal accountability or international mechanism that is not simply an aggregation of sovereign entities, which then ultimately have final authority. Countries and member states should make pledges with legally enforceable contracts or not at all.
The government sponsored enterprises Fannie and Freddie are intrinsically sound. Their profit and losses and capitalization are adequate. They have over $5 trillion in assets and have sustained very manageable losses of only about $30 billion this year. Their independent regulators have observed this many times in the last few months. Their 80%+ market cap drops since last year are unwarranted. However, because their price depreciation so negatively affects market expectations, hinders new investments, and creates “real” losses in savings and jobs via the secondary effects of financial investment losses, the recent takeover is warranted. One can only wonder if the Fed had enacted their new common sense mortgage lending standards 5 years ago if we would even be in a downturn. It is mind-blowing to think that it took all this time to get official regulations requiring income verification of borrowers, or the inclusion of insurance or tax payments in estimates, or removing punishments for early payments. There is a huge moral hazard here and we have seen the results. I don’t know why the Fed under Greenspan did not act on these years ago. The lax lending standard only acted as an accelerant for lending practices that essentially discounted the future completely to earn commissions in the very short term. This sort of principal-agent dillemma could have been prevented with common sense rules.
There will be a huge new market in clean technology exports in the next decade. Right now Germany and Japan control about 90% of the solar market because they have the pricing less wrong than the rest of the world with a cap and trade system, significant public outlays in basic research and repurchase agreements for clean energy producers or feed-in tariffs. The surest and most sustainable way the U.S. will restore fiscal and trade balance in the next decade or two would be to learn a thing or two from Japan and Germany and price carbon. This could be achieved most efficiently with a revenue neutral carbon/BTU tax, offset with reduced income and payroll taxes. There are literally tens of thousands of people in my generation that could get filthy rich in this industry if the U.S. would simply level the playing field by removing the existing artificial carbon subsidy that makes it more difficult for our clean technology companies to build sustainable revenue models. Price carbon and we will have a domestic investment driven boom and export our technological advantage to the world. The private sector is the engine, but the government has to turn the key.
The government sponsored enterprises Fannie and Freddie are intrinsically sound. Their profit and losses and capitalization are adequate. They have over $5 trillion in assets and have sustained very manageable losses of only about $30 billion this year. Their independent regulators have observed this many times in the last few months. Their 80%+ market cap drops since last year are unwarranted. However, because their price depreciation so negatively affects market expectations, hinders new investments, and creates “real” losses in savings and jobs via the secondary effects of financial investment losses, the recent takeover is warranted. One can only wonder if the Fed had enacted their new common sense mortgage lending standards 5 years ago if we would even be in a downturn. It is mind-blowing to think that it took all this time to get official regulations requiring income verification of borrowers, or the inclusion of insurance or tax payments in estimates, or removing punishments for early payments. There is a huge moral hazard here and we have seen the results. I don’t know why the Fed under Greenspan did not act on these years ago. The lax lending standard only acted as an accelerant for lending practices that essentially discounted the future completely to earn commissions in the very short term. This sort of principal-agent dillemma could have been prevented with common sense rules.
There will be a huge new market in clean technology exports in the next decade. Right now Germany and Japan control about 90% of the solar market because they have the pricing less wrong than the rest of the world with a cap and trade system, significant public outlays in basic research and repurchase agreements for clean energy producers or feed-in tariffs. The surest and most sustainable way the U.S. will restore fiscal and trade balance in the next decade or two would be to learn a thing or two from Japan and Germany and price carbon. This could be achieved most efficiently with a revenue neutral carbon/BTU tax, offset with reduced income and payroll taxes. There are literally tens of thousands of people in my generation that could get filthy rich in this industry if the U.S. would simply level the playing field by removing the existing artificial carbon subsidy that makes it more difficult for our clean technology companies to build sustainable revenue models. Price carbon and we will have a domestic investment driven boom and export our technological advantage to the world. The private sector is the engine, but the government has to turn the key.
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