BNET Intercom

Today on Esquire’s website, Daron Acemoglu, a professor at MIT, tackles an age-old question: Why are some nations wealthy while others are poor?

There have been plenty of sweeping theories to choose from, as Acemoglu notes.  In the 18th century, the French political philosopher Montesquieu was proposing that people in hotter places are just lazier. Today, in a similar way, Jeffrey Sachs of Columbia University’s Earth Institute says a lot of it boils down to geography and the weather.

But according to Acemoglu, while these theories may help explain aspects of poverty, they ignore the incentives that truly drive prosperity. In Acemoglu’s view, if countries create sound institutions and improve their governments, then their citizens can expect that their hard work will be protected by the rule of law and poverty can be fixed.  While rich nations may not be able to totally force their institutions onto other countries, according to Acemoglu, they can push for government reforms and even help the citizens of poorer nations by providing them with educational opportunities and technology.

Acemoglu’s connection between economic incentives and the rule of law is appealing but it ultimately fails to answer the initial question.  Certainly there is a correlation between good government and economic prosperity.  But why do some nations develop sound, transparent institutions while others settle for warlords or corrupt puppet governments?

And it can’t all come down to education.  Russia, for example, has excellent universities and a literacy rate close to 100 percent. Yet the International Finance Corporation ranks Nigeria and Pakistan as better places to do business.

Social scientists will keep on trying to isolate that single causal factor that explains wealth and poverty.  But what if there simply isn’t one to be found? After all, even Iraq was once home to the center of civilization.

According to a new report by the US Department of Agriculture, more than one in seven American families suffered from “food insecurity” sometime in 2008 and we should all be concerned that that figure is rising.  Many media outlets have eaten this report up at face value, blasting similar headlines about how more Americans are “going hungry.”

This hunger awareness drive is not new, though.  Feeding America, a nonprofit funded in large part by the food industry, and its partner, the Ad Council, have been running an Ogilvy-powered ad campaign for a year now which claims one in eight Americans “live with hunger.”  Feeding America even connected with Matt Damon to pitch its hunger talking points on the season finale of HBO’s Entourage.

Obviously, everyone is against hunger.  And whenever someone in a country as rich as America can’t afford food, it’s a disgrace. We clearly have the resources to keep everyone well-fed.

So here’s my problem: these hunger numbers just don’t seem to add up when you realize how many people in America are over-fed.

Just look at Feeding America’s own website.  Do their “faces of hunger” from across America look like they’re starving to you?

We don’t have a serious hunger problem in the land of the absurdly cheap one dollar double cheeseburger. We have an obesity epidemic.

Let’s check the government’s own data.  In 2008, only one state (Colorado) had an obesity rate that was less than 20 percent.  According to the latest CDC stats, 32.7 percent of American adults are now overweight, 34.3 percent are obese and 5.9 percent are are extremely obese.  I’m supposed to believe that roughly 14 percent of American families are “food insecure” when only 27 percent of American adults are not overweight or obese?

Many will counter that it must be poor people and the nation’s children who are “going hungry.”  But again, according to the government’s own data, around 17 percent of children are now obese. And paradoxically, many studies have confirmed a correlation between poverty and obesity. While the USDA claims that one in seven American families are “food insecure,” the CDC’s data shows that one of seven low-income, preschool-aged children is obese.

So why is Big Food trying to convince us that there is a huge hunger problem?  My theory is that Feeding America and its backers, which include Kraft, the Campbell Soup Company, Wal-Mart and ConAgra Foods, want to hype hunger so that no new regulations try to tackle obesity.  What politician would dare propose a new tax on fatty or empty calorie foods when the public thinks one in seven families can’t put enough food on the table?  And who is now going to try and stop the redistribution of tens of billions of our tax dollars to King Corn and his Frankenfood court each year?

One thing is certain.  President Obama’s controversial pick to lead the USDA, Iowa’s former Governor Tom Vilsack, and his friends at Monsanto, won’t be going hungry any time soon.

If you’re a single parent in Virginia, you’re probably going to take home a little less than $40,000 per year.  But oddly, due to various tax breaks and welfare benefits, your haul will be roughly the same, regardless of whether you’ve made $20,000 or $40,000 from actually working.

That’s according to an analysis of the “working poors’” implicit marginal tax rate from the Mises Institute, a libertarian think tank. The chart below has been popping up on other economics blogs this week, so I figured readers on BNET would be interested to see it as well.

This chart’s creator, Clifford F. Thies, is convinced slicing welfare/income data in other ways would still show the same result: for many, there is a disincentive to work for more money.

Here a few of the consequences of such government hand-out programs, in Thies’ view, even if they are well-intentioned:

For many of the working poor, the implicit marginal tax rate is greater than 100 percent. The long-run consequence of undermining the positive incentive to work is, of course, the creation of an underclass acclimated to not working; the supplement of cash and noncash benefits with income from crime and the underground economy; and the government resorting to negative incentives such as mandatory work programs.

Do you agree with Thies’ analysis?  Or do these programs and tax breaks create a necessary safety net?

Over half of academic life science researchers maintained financial ties with industry, according to survey results published in Health Affairs.

Here are the key details about the relationship between universities and corporate America, according to the Wall Street Journal:

About a third of the respondents said they had served as consultants, nearly a quarter said they had been paid speakers and 20% said they had received research funding from industry. That last figure is down from 28% of researchers who said they received research funding from industry in a similar survey conducted in 1995.

The authors suggest a number of possible causes of the drop in researchers who said they got industry funding for research, including a big increase in NIH research funding since 1995 and more scrutiny of academic-industry ties.

Interestingly, it was also found that faculty with industry support “were more productive than faculty without such support on virtually every measure.” However, we cannot conclude that corporate support caused the productivity surge, since it’s possible that the most productive researchers tend to attract the most money.

 Loading ...

Does your state bleed Barack blue or Republican red?  America seems more divided than ever between liberal and conservative regions and at this point, our public discourse has become so hyper-partisan that one starts to wonder whether half the country lives in France while the other half lives in a John Wayne movie.

If you are convinced that the dominant political philosophy in your state leads to the best economic outcomes, the new public option proposal may put your assumptions to the test.

Under Senator Harry Reid’s proposal for healthcare reform, states will have the option to opt out of the federal public option. Many are assuming that red states will stick to the status quo by opting out while blue states will put their fate in the hands of the feds.

If this proposal passes, it could set up the ultimate red state/blue state showdown, as Peter Brown suggests in a Wall Street Journal op-ed today:

Will some people migrate to states that offer it, perhaps because they are more trusting of government than insurance companies, while others head the other way for the opposite reason?

Then there is the matter of whether people attracted to states with the public option will be more or less likely to be a net plus to the accepting state’s economy, both in terms of their productivity and their need for government services.

Do you think the red state or blue state way will be better for business?  Please share your predictions below.

By 2050, between 200 million and 1 billion people could see their homelands devastated by floods and droughts due to climate change, says the Foundation for International Environmental Law and Development.  And news reports say they are bound to threaten US borders as they seek refuge in the West, even though the legal status of these “climate exiles” is still up in the air.

Ahead of this year’s huge Copenhagen summit on climate change, there have been plenty of alarmist headlines in America’s major media outlets, many focusing on new reports which outline the chaos that could result from migration due to climate change.

However, if you actually go back and read these reports, you’ll see the fine print.  No one really knows how climate change will affect global migration patterns.  A few telling quotes from a few of the reports that are making the rounds:

• “The estimates of climate-change-induced migration are highly uncertain and ambiguous.” ~ World Bank’s “World Development Report 2010″
• “Estimates of the numbers of migrants and projections of future numbers are divergent and controversial, ranging from 25 to 50 million by the year 2010 to almost 700 million by 2050.”  ~ CARE International’s “In Search of Shelter”

Here’s a lead economist at the World Bank’s take on assumptions about mass climate-caused migration:

What concerns me more is that this simplistic viewpoint has very little factual analytical backing. Data on migration trends over time are bad. Data on climate change as they relate to migration are even worse. What is worse, migration experts are not necessarily talking to the experts on climate change.

The relationship between climate change and migration should be studied.  However, trying to scare Americans into taking action by suggesting Chinese refugees will soon be pitching tents in their front yards — that’s probably counter-productive.

The 1990s were all about the white paper.  New technologies, problems and solutions–all summarized in a neat downloadable document on a company’s website.

Whenever I consult with an organization during the initial stages of their website redevelopment, there’s almost always a conversation about where all the old white papers will live on the new website.  To me, white papers seem a little dated so I typically advise against placing them front and center on a new site.  There are often handier mediums now, such as online video, to quickly illustrate the value of a product or service and entice the potential customer to want to learn more.  If your goal is to get site visitors to sign up for more information, then I generally believe that a less is more approach works best.

I don’t deny that sometimes white papers do have value for certain audiences. Everyday I see press releases from companies that keep churning them out.

Yet I wonder whether anyone really reads white papers anymore.  Because I rarely do.

Is the white paper dead?  Share your thoughts and experiences below.

Massachusetts, Vermont, New Hampshire, Hawaii, South Carolina, Georgia, Kentucky, Ohio, Utah, Arkansas, Maryland, Virginia and Tennessee.  These are the only American states without a legal gambling outlet.  But as all states look for additional revenue sources, Massachusetts and Ohio are both debating whether to join the casino club.

According to the American Gaming Association, which represents commercial gambling facilities, casinos are a great employer and revenue source for local governments. Here are their key stats for 2008:

• Employed 357,314 people
• Paid wages of $14.1 billion
• Contributed $5.66 billion in direct gaming taxes
• Earned $32.54 billion in gross gaming revenues in 2008

Casinos are relatively resilient during the recession too, at least according to AGA.  Although Vegas has been hit hard, new properties in Pennslyvania, Missouri and Indiana are doing well.  2008’s haul was only 4.7 percent off 2007’s record earnings.  Approximately 54.6 million people went to American casinos in 2008 and AGA argues that entertainment dollars will still flow their way because these facilities also host sporting events, plays and concerts.  Americans are cutting back on entertainment but not cutting casinos out of their lives.

Furthermore, according to an AGA-sponsored survey, 81 percent of Americans are cool with casinos.  Most people also “see that there are myriad benefits that casinos can bring to communities, including job creation, tax contributions, increased tourism and economic development,” according to AGA’s 2009 industry report.

So is this all true?  Are casinos really that good for the economy?

Casino opponents counter that there are costs which outweigh these benefits.  Many of the costs related to gambling addictions become a burden on those local budgets. Lower-income residents waste their precious dollars gunning for the big win.  Often, the casino owners are from another state and take the lion’s share of the cut with them.  Casinos can bring broken dreams and crime to the community.

Do you think more casinos should be built? Would you want a casino in your backyard? Please share your thoughts below.

An education “expert” hired by Pearson finds that students who rely on web searches rather than Pearson’s textbooks “are woefully inadequate when it comes to processing real information they need.” Barack Obama complains that his healthcare reforms have stalled because there’s been too much “misinformation” circulating over the last few months. Columnists at traditional newspapers warn the public about the dangers of relying on the blogosphere, rather than professional journalists.

The message from the gatekeepers of knowledge is the same: there is now too much information online and your Average Joe just can’t handle it.

It’s not like consumers seem to care, though.  Online at least, they’ve consistently chosen the almost-good-enough free option over paying for the professional version.   Nevertheless, many professionals who suddenly see their economic self-interest threatened by this revolution keep arguing that we should care and pony up for the real deal.  And if we don’t, society will suffer. Without facts from Pearson, tomorrow’s firefighters won’t be able to tell left from right.  Without the Washington Post, we could end up with a Palin presidency.

In many ways, I am sympathetic to these arguments.  Take the media, as the most obvious case.  Back when there were only a few media outlets for each region, the public could at least argue over the same set of facts.  Now one can get information solely from the endless feedback loop of partisan news sources.  Keith Olberman fans and Rush Limbaugh disciples might as well live on other planets.

But I am not so sure that the abundance of the web is causing this problem.  Perhaps the student who was too lazy to check whether 2+2 really equals 5 would have probably failed his math test, with our without a Pearson text book.  Maybe hardcore blog fanatics from the Left or the Right aren’t the type that can be persuaded to check opposing viewpoints, no matter how many media choices they have.

At the end of the day, I am an optimist who believes the web is more or less self-correcting and that most people can process a lot of information without the paid guidance of the gatekeepers. But I do concede that it just takes one misinformed loon to cause a lot of damage.  Please share where you stand in the comments section below.

There are already a bunch of organizations (Fortune, the EPA, Greenpeace) which score American corporations on their environmental and social responsibility efforts. But this looks like the most ambitious effort to date by an authoritative third party.

Newsweek has ranked every company in the S&P 500 to determine the greenest large corporations in America. Their top 10 are HP, Dell, Johnson & Johnson, Intel, IBM, State Street, Nike, Bristol-Myers Squibb, Applied Materials and Starbucks. Ideally, rankings like this will cause corporations to take real steps towards sustainability as they fight for customers and talent.  Such a green arms race could theoretically save the planet and the American economy.

The magazine pulled in some heavyweights from academia (Yale’s Dan Esty), the nonprofit sector (John Steelman of NRDC) and the CSR consulting world to help them develop their methodology, which primarily factors in greenhouse gas emissions, water use, solid waste disposed and acid rain emissions. The data was normalized by revenue to allow comparisons between corporations of varying sizes.

But the apples and oranges issue will nonetheless fuel the debate over the validity of Newsweek’s effort, as green business consultant Joel Makover has noted:

It may not be surprising that half of the top-10 rated companies (as well as half of the top 20) are technology firms, and that 8 of the 10 lowest-rated are energy utility or coal-mining companies. That makes sense: Most tech companies don’t actually manufacture anything themselves these days — they mostly purchase components from other manufacturers — while utilities and mining companies are known to make quite a mess, in terms of emissions and other impacts.

Furthermore, many of Newsweek’s greenest corporations are conveniently consumer-oriented companies that are more likely to advertise with the weekly.  That might also contribute to skepticism.

If most people don’t really buy into these rankings, Newsweek may sell a few more magazines as the world keeps on turning as before.  Please share whether you think these rankings will make a difference in the comments section below.