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How this man added more than 6000 jobs to the South African economy. With his left hand.

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Henry

On 18 November 2009, with 17 minutes left of extra time in a play-off FIFA World Cup game between the Republic of Ireland and France, Thierry Henry, France’s striker, handled the ball in the in-goal area, deflecting it to William Gallas who headed it into the back of the net. The goal allowed France to draw the game and win the play-off series of two games by two goals to one, which meant they qualified for the 2010 FIFA World Cup in South Africa while the Republic of Ireland did not.

Henry’s handball, I argue in a new paper with María Santana-Gallego, added close to R1 billion to the South African economy in tourism expenditure. Had Ireland qualified, far fewer tourists would have visited South Africa, as Ireland is a much smaller country (5 million vs France’s 66 million inhabitants). We use a gravity model to run counterfactual results: what would have happened had Ireland qualified instead of France?

France’s participation meant that 36,482 additional French tourists visited South Africa in 2010. In contrast, had Ireland qualified, our model predicts that only 8,234 additional Irish tourists would have arrived. The difference of 28,248 means that the ‘hand of Henry’ added R333 million in tourism expenditure during 2010 alone. The legacy effect is equally large: in the three years following the event, an additional 60,960 French tourists came to South Africa, whereas only 14,784 Irish tourists would have come had Ireland qualified for the finals. This means that tourism expenditure in South Africa during the three years following the World Cup was R545 million more because France qualified. In total, the ‘hand of Henry’ increased tourism expenditure in South Africa by an astonishing R878 million, or, using the shorthand of 12 additional tourists for each extra job, provided 6,202 more jobs.

The R1 billion touch... Thierry Henry in action against Ireland.

The R1 billion touch… Thierry Henry in action against Ireland.

The aim of our paper is to show that the tourism impact of mega-sport events like the FIFA World Cup is highly unpredictable, as it depends to a large extend on the which 32 countries qualify. Had Russia qualified instead of tiny Slovenia, or Egypt qualified instead of Algeria (both were involved in play-off games against the other), our model predicts that the South African economy would have benefited significantly more.

This, of course, is not directly useful information for tourism managers, as they cannot engineer such incidents, or influence the outcome of a play-off. But they could gear their expectations of tourist arrivals to the results of the qualification rounds. What is clear is that much of the economic impact of a mega-event like the World Cup can be determined by the random outcome of a single play-off game – or even, as in the ‘hand of Henry’ case, the ‘butterfly effect’ of a single incident.

Perhaps there’s a reason that Henry is considered a demi-god by Arsenal fans: It’s not every man that can create 6000 jobs in a split second. And do so by simply touching a ball (illegally) with his left hand.

Written by Johan Fourie

April 24, 2015 at 20:57

This is what nationalism can do to you

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Church square in Pretoria on the day South Africa became a republic

The consequences of nationalism: Church square in Pretoria on the day South Africa became a republic

Hendrik Verwoerd was the architect of apartheid. He was responsible for at least two of apartheid’s most infamous policies: the creation of the Bantustans and the Bantu Education Act (where he famously proclaimed:”There is no place for [the Bantu] in the European community above the level of certain forms of labour … What is the use of teaching the Bantu child mathematics when it cannot use it in practice? That is quite absurd. Education must train people in accordance with their opportunities in life, according to the sphere in which they live.”)  Most South Africans – black and white – now consider Verwoerd and his ideas nefarious: he led us down a road that we are still struggling to recover from.

But when and where did Verwoerd acquire his racist ideas of the world? Was it always there, simmering under the surface, allowed to boil over with the National Party victory in 1948? Or did context and circumstance gradually pull him in a certain direction? Was Hendrik Verwoerd the Evil One born or created?

I recently stumbled on a rather surprising paper. Written by Roberta Miller and published in 1993 in the Journal of Southern African Studies, the paper investigates the early professional life of Dr Hendrik Verwoerd. An immigrant from Holland, Verwoerd arrived with his missionary family in 1903 at the age of 2. After school, he moved to Stellenbosch to study Psychology, earning his PhD  (The Blunting of the Emotions) cum laude by the age of 23. He was immediately offered a position in the department.

Verwoerd received a bursary to study at Oxford (the Abe Bailey scholarship, which he declined because of Bailey’s imperial jingoism) but chose instead to travel to Germany for his post-doc education. Here he spent time in Berlin and Leipzig, learning the latest statistical techniques in the field, before traveling to America for a lecture and study tour. Miller explains that the quality of Verwoerd’s scientific articles improved remarkably after these trips. While in America, he received word that he had been appointed professor in Psychology and he had to cut short his trip to be home in time for the new academic year in 1928. Verwoerd is still, as far as I know, the youngest professor ever to be appointed at Stellenbosch University.

The remarkable thing, though, is that none of his early career research or teaching could have predicted his future policies. While American sociologists were proclaiming the innate intellectual differences between black and white people based on IQ scores, Verwoerd rejected these ideas. Miller (1993: 650) writes:

Verwoerd did not believe that there were any biological differences between the racial groups. He clearly recognised the distinctions between whites, coloureds, and natives that were made in South Africa and often presented population statistics in terms of the major racial groups in the country. In the context of discussions of population growth, for example, Verwoerd presented his classes with population statistics on natives, Asians, coloureds, and Europeans, and occasionally Jews. But although many South Africans argued that biological factors contributed to the development of civilisation, Verwoerd did not. ‘There are no biological differences among the big race groups as was argued earlier,’ he told his classes, adding that because there were no differences, ‘this was not really a factor in the development of a higher social civilisation by the Caucasian race.’

Verwoerd did not deny that there were measurable differences between the performance of blacks and whites in intelligence tests, but he told his classes that it was difficult to compare test scores across groups of people with different backgrounds and experience. The critical issue, he argued, was not whether there were differences in underlying intelligence, but rather whether the differences in the test scores of various groups were due to inadequate tests and differences in living conditions.

In fact, his academic career paints the picture of a caring, open-minded pragmatist. After five years as Professor of Psychology, in 1932, Verwoerd was appointed as professor in the first Department of Sociology and Social Work in South Africa, also at Stellenbosch University. He immediately began to work on community social welfare activities in Cape Town, mostly dedicated to solving the poor white problem which had become a huge economic and political issue of the time (exacerbated by the global depression).

Because he was not trained as a sociologist, he chose to follow the theories propagated in American universities. Miller (1993: 647) explains:

Certainly the general approach of American sociology sat well with Verwoerd’s own mild socio-political ameliorism. American sociology in the early twentieth century was marked by a pragmatic positivism, an impulse toward the amelioration of social problems rather than structural social change, and a methodological reliance on empirical data.

Verwoerd’s methodological approach was ahead of his time. But his research activities received less and less attention, as the scale of white poverty became clearer. He organised national conferences on poverty alleviation; in fact, he became the spokesperson for social work education. He also worked hard to reconcile English- and Afrikaans-speaking animosities:

Rather than promoting racialism between the English and the Afrikaners, however, Verwoerd’s speech, taken in its entirety, suggests that Verwoerd was instead anticipating a new approach to dealing with poverty in which the English and the Afrikaner worked together in social welfare programmes. His goal was to ensure that the Afrikaner became a part of the country’s welfare activities rather than to eliminate English participation in welfare.

Verwoerd firmly tied social welfare to the democratic state rather than to any social or ethnic group in the state. ‘In the past,’ he said, ‘charity had been the task of a few self-appointed philanthropists; welfare work is now the task of the democracy. New times bring new problems and need new tools’ (Miller 1993: 654).

None of this suggests that Verwoerd would become one of the largest social engineers of the twentieth century. And yet he did. What happened?

The answer: The rise of Afrikaner nationalism in the 1930s. Verwoerd increasingly became agitated with the (apparently persistent) plight of the poor Afrikaner, and thought that political change was the only vehicle to achieve this. In 1937, he was offered the editorship of a new Afrikaner newspaper – Die Transvaler – funded by the Purified National Party of DF Malan. He accepted the position.

After Verwoerd left Stellenbosch, he abandoned the non-partisan politics of civil society that had previously consumed his energies and became deeply involved in party politics. The man who had insisted on joint English and Afrikaner welfare activities emerged as a strong Afrikaner nationalist. The professor who had denied that there were intellectual and biological differences among Africans and Europeans and who had proposed research that assumed them both to be part of the same South African society ultimately became an advocate of apartheid as the means to encourage and protect the differences between these groups. Finally, the academic who had commended the Jews for their contributions to world culture espoused strongly anti-Semitic sentiments (Miller 1993: 660).

As I’ve written before, nationalism – an extreme form of patriotism marked by a feeling of superiority over others – is extremely dangerous. It accentuates artificial differences between peoples, using that as justification for policies of exclusion. It punishes ‘outsiders’, however defined by the ‘insiders’. It inevitably cannibalizes itself, but at an unspeakably high cost for society. And it can shape the minds of brilliant scholars, like Hendrik Verwoerd, to enact policies that will take centuries to undo.

Lest we forget.

Source: Miller, Roberta Balstad. “Science and society in the early career of HF Verwoerd.” Journal of Southern African Studies 19.4 (1993): 634-661.

This is how to build a world-class African university

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Graduation

Rhodes will fall today. After several weeks of protest, the Council of the University of Cape Town ratified the decision to temporarily move the statue of Cecil John Rhodes from its central position on campus. The removal is a victory for the #RhodesMustFall campaign, which has, despite the attempts of some groups to score cheap political points, continued to insist that the aim is to fight institutionalized racism and a colonial heritage that marginalizes black South Africans. Listening to SRC chairperson Ramabina Mahapa, I find that I agree with many of his sentiments: Why must we have Latin music at South African graduation ceremonies? Why not African drums? Why must Jameson Hall only have paintings of white men? Why can’t African universities feel more African?

One further aim of the #RhodesMustFall campaign is to demand positions for more black academics at South African universities. And a curriculum that is not so Eurocentric.

It’s of course much easier to change a hall of paintings or a graduation procession than to change the demographic make-up of university staff. But because it is difficult doesn’t make it less important. Now that Rhodes has fallen, let’s consider how to change the racial profile of our top universities. I’ll focus on the challenges at UCT and Stellenbosch, which I consider as the two best universities in South Africa. The Times Higher Education World University Rankings list both of them in the top 300 universities globally. And because I understand the context, I will also focus on my own field – Economics.

Let’s be clear: there is no easy way to resolve the issue. There is no reservoir of unemployed black professors in South Africa. Take Economics. The best and brightest black talent we graduate find incredibly lucrative offers in banks and financial institutions (Nedbank, Allan Gray), consultancies (KPMG, Bain, Genesis), or government (national and provincial treasuries, or the Reserve Bank). These jobs are often in the metropolitan areas of Gauteng that are more appealing (and more affordable) for young black graduates to live, than sleepy Stellenbosch or quiet Cape Town. From the student’s perspective the pull-factors are strong.

The main task of universities is to do ground-breaking research that can make a fundamental difference to how we understand the world and interact with it. One way to judge which universities are the best at this is to consider the objective rankings that are published annually (there are now three global rankings that are generally considered the norm, including a Chinese one). The way you improve in these rankings is to improve the quality of your research, i.e. the scholars at your institution must undertake research that can be published in top international journals. The best way to access these top journals is to spend some time in America, because US universities remain at the frontier of science. China understands this. Every year, China sends 250 000 of their best students to study at US universities. (Chinese students make up 31% of all international students in the US.)

It is only slightly ironic that during the same week of the Rhodes protests at UCT, Rhodes House in Oxford announced a new deal with the Chinese government to extent the Rhodes scholarships to Chinese students. (This was apparently on request of the Chinese after discussions of 18 months.) If our universities are to improve their international rankings, we need to appoint scholars with experience of studying in the US (and, to some extent, Europe and Australia). That is why in the Economics Departments of UCT and Pretoria you will find a large contingent of foreign scholars. They bring expertise which not only improve the research quality of their institution, but also introduce their students to techniques and networks (and funding) that are world class. Can we really improve as a discipline if we remain isolated from the rest of the world, teaching the next generation the obsolete science of the past? No. As The Economist wrote two weeks ago, the world is going to university. If we are to deliver students that can compete on an equal footing with the rest of the world, our universities should appoint and promote those that work at the frontier of science.

This, in my opinion, suggests that we have to ask a different question. Instead of attempting to find answers to how we can employ more black scholars, we should be asking how can we ensure that our brightest black students attain the qualifications and experience to become world-class researchers. The latter question seems to have more clear-cut answers: we need to follow the Chinese example. A large scholarship programme for black South Africans to study at US universities will allow our students access to the best minds in the world. (If we want the same proportion as the Chinese, we should be sending 12500 students annually!)  Even Robert Mugabe understands this. He has a scholarship programme for the best Zimbabwean students to study at South African universities.

Imagine 12500 black students returning every year with a degree from a top US university! Most of them will find well-paying jobs in the private sector or government, where they will contribute to the economy by creating jobs or better policies. (Here’s another interesting fact: Iran has more US-graduated PhDs in its cabinet than the US Congress.) But a small minority of these returning students, perhaps only 50, will want an academic job because of the great lifestyle and the fulfillment that comes from scientific breakthroughs.

And, you know what, universities country-wide will fall over their feet to appoint these graduates. Because that, they will know, is how you build a world-class African university.

Written by Johan Fourie

April 9, 2015 at 08:47

The trouble with bad social science

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PantoneRace

I don’t often read Foreign Affairs – the leading political science magazine published by the Council on Foreign Relations – but when, ahead of a 14-hour flight back to South Africa, I found an airport bookshop displaying the March/April issue with the provocative title ‘The Trouble with Race’, I decided that it would make for good airplane reading. Here was one of the world’s most authoritative magazines writing about an issue that affects everyone everywhere, but it is in South Africa during March 2015 that racial injustices has been brought into the limelight. Race, and racial prejudice, is the underlying theme of #RhodesMustFall, a movement by thousands of students across the country agitating for the dismantling of white power structures two decades after apartheid formally ended. Discussions of race and racial exclusion has emerged at campuses across the country. Rhodes will fall, but the future is murky.

And then I spot the article in Foreign Affairs titled ‘Apartheid’s Long Shadow: How Racial Divides Distort South Africa’s Democracy‘. Finally, I thought, some answers to our country’s qualms. From the leading thinkers of Foreign Affairs.

I turn to page 41. The paper is by James Gibson, Professor of Government at Washington University in St. Louis and (to my surprise) Professor Extraordinary in Political Science at Stellenbosch University. It starts brightly: South Africa is a diverse and unequal society. ‘The future of South Africa’s multiracial democracy depends heavily on minimizing animosity and hostility among these groups. Can South Africans of different races continue to get along?’ Wonderful. Answers.

RaceThen Gibson attempts to explain who these peoples are: Black South Africans, the ‘descendants of the original inhabitants of the area’, who constitute different ethnic and linguistic subgroups. ‘Apartheid eliminated such distinctions by grouping all blacks together and, in essence, expelling them from South Africa.’ This is awkward: had Gibson attended a first-year History class (or even my second-year Econ History class), he would know that there existed a group of original inhabitants known as the Khoesan. (Or Khoisan. Actually they are not, in fact, a single group but for the purposes of this post, let’s assume they are. More about them here.) Blacks did arrive south of the Limpopo (around 300 AD) long before whites , but they did not enter vacant land, no more than the Voortrekkers trekked into vacant territory when they crossed the Gariep (as the apartheid apologists wished to believe). The sad truth is that the original inhabitants of South Africa have been mostly wiped out.

And he goes on: ‘A third group is referred to as Coloured, a term that applies to an extremely diverse group of people whose mixed heritage attests to decades of intimate contact between three different peoples: Europeans, certain groups of black Africans, and slaves brought to the area by European colonists from Madagascar and Southeast Asia.’ Again, where are the Khoesan? Surely they can’t be classified as ‘certain groups of black Africans’? (In a paper with Erik Green, I call them the ‘Missing People‘. Gibson’s paper shows why.)

But these factual errors aside, Gibson’s paper is about evolving racial prejudice in South Africa. He argues that race relations are not really improving, despite two decades of democracy. Using the Institute for Justice and Reconciliation’s South African Reconciliation Barometer, a survey among a representative sample of the population, he finds that ‘intergroup prejudice is not the exclusive problem of black people in South Africa, but as a group, they express considerably more prejudice against their fellow South Africans than do the members of the minority races’. And ‘Whites and Coloured South Africans who have more contact with people of others (sic) races are considerably less prejudiced. Among black and Asian South Africans, however, not only does contact with members of other groups not reduce prejudice; it actually seems to increase it.’

These are powerful conclusions on an emotionally-charged topic, yet Gibson provides little empirical justification to support these claims. Yes, he shows that some race groups have higher self-reported prejudice than others, but as any social scientist should know, correlation does not equate causation. To say that black South Africans are more prejudiced suggests that you’ve controlled for other observable characteristics that may also affect prejudice, like income, location, and education to name a few. But perhaps it’s not black South Africans that are more prejudiced. Consider, instead, that it is poor education that cause people to be prejudiced. But because poor education outcomes are highly correlated with race in South Africa, by implication you will also find a high correlation between race and prejudice. Race, as Gibson uses it, is likely to just be a proxy for other things.

Social scientists solve these issues by using statistical techniques such as regression analysis. Even with a standard regression, though, causality is difficult to determine. Usually we use experiments or, because this is often not possible in a social setting, natural experiments. One* excellent example of this is Martin Abel’s work on forced removals during apartheid. Abel, a PhD student at Harvard University, investigates whether the people that were moved during apartheid are more (or less) prejudiced towards people of a different race today than their counterparts who were not moved. He finds:

…that those living close to former resettlement camps have higher levels of trust towards members of their social network and people in general. They are also more trusting towards members of both their own and other ethnic groups. This effect is larger for people born after 1975 who did not witness the forced removals, which suggests that events had long-term effects on social capital. This is also reflected by lower crime rates in these communities. Exploring causal mechanisms, I document that resettlement camp areas are more ethnically diverse and that diversity is positively correlated with measures of social capital only in areas affected by relocation. Interacting with people from different backgrounds and adopting a shared identity as displaced people may explain why relocation communities have higher levels of social capital despite potential short-term conflict over resources.

Abel’s careful statistical design and analysis forces him to draw exactly the opposite conclusion than Gibson does from his simple correlations. Deeper integration makes people less prejudiced, not more. The policy implications are profound.

#RhodesMustFall shows that there is indeed much value to investigating how and why prejudices evolve. But the way James Gibson does it in Foreign Affairs is not the way to do it. We should be skeptical of causal claims based on simple correlations. That Foreign Affairs accepted an article with factual errors and wonky causal claims on a topic of such importance is worrisome. We should expect better science from our social scientists.

*I received a message on Facebook from MIT PhD student Dan de Kadt: I read this article too, and had a similar reaction. Johan, in some other work Melissa Sands and I address the exact hypothesis Gibson proposes… We find that contact does partially explain cross-racial voting (whites who are in contact with blacks are more willing to vote ANC, and blacks who are in contact with whites more willing to move from the ANC). But there’s very little in our data to say that racial attitudes are affected (so little that we don’t report it in the paper). And there’s no evidence that contact has differential effects depending on race (as one assumes Gibson is proposing).

Flocking to a new future

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Vuli Nyoni's Murmuration at the GUS Art Gallery in Dorp Street last year.

Part of Vuli Nyoni’s ‘Murmuration’ at the GUS Art Gallery in Dorp Street last year.

There is no doubt that the Rhodes statue should move from its current location. It should have moved a long time ago. The remarkable thing is not that there are students – black and white – that demand its removal. Instead, it is remarkable that a man that caused so much pain expropriating the lands of blacks across southern Africa and Boers in the Republics could escape the furies of so many for so long. Not anymore.

#RhodesMustFall is a no-brainer. But what should substitute Rhodes’ statue is the far more difficult question. Not only on the premises of UCT, but across South African campuses. Offensive names across the country – like the DF Malan centre at Stellenbosch University (despite my attempts last year to suggest that it can be seen as a victory over the past) – have changed. But, as far as I can see anyway, there is no discussion about forging a new, inclusive identity. This has to do with the unfortunate way the Rhodes statue has given rise to groups that want to score cheap political points; the poo-throwing, militaristic, nationalistic and even extremist sentiments expressed in many of the student meetings are an unhappy result of UCT dragging its feet. Now Rhodes’ statue will fall at the hands of opportunists instead of a progressive movement for change.

It’s necessary to recast the past, of course. It’s also easy. What is much more difficult is to define an inclusive vision of the future.

So let me try. On Thursday evening I attended the International Food Evening at Stellenbosch University. More than a thousand students descended on  Academia residence to taste the cuisine of our international  visitors; food from Belgium (who won first prize) to Zimbabwe (who came third) was on offer, as well as that of 23 other countries. It was fun and festive, delicious and diverse. These are not the pictures, unfortunately, the Cape Times report on their cover, because they don’t fit the stereotypical image of Stellenbosch as the last bastion of Afrikaner racism. Instead, Congolese and Canadian, Zulu and Zambian, Swazi and Swiss, Angolans and Afrikaners were conversing under the stars, tasting foreign foods and drinking beer. That image, to me at least, represents a future Stellenbosch, and a future South African society.

That is, a society that is not uniform (where we all look, think, act the same), but united in our purpose to build a prosperous society for all. For too long in our history, those in power had a vision of South Africa that excluded those who lived in it: Rhodes’ vision of a British Empire in Africa had no space for black or Boer. The Afrikaners’ vision of apartheid South Africa had no space black South Africans. And, in truth, the current regime seems to hell bent on disenfranchising amakwerekwere, Africans from countries outside South Africa. A recent estimate suggests that at least 5% of the people in this country are Zimbabweans, more than 3 million in total. What is happening to them is much the same as what happened to blacks during apartheid.

How do we build this inclusive, prosperous future? First we must step away from the strive toward uniformity. Nationalism is an idea that has been tried before and it has failed, again and again. When we flock, as Vuli Nyoni pointed out in an US/Leuven Thinktank seminar earlier on Thursday evening, we tend to lose track of our personal convictions, our personal identities. Perhaps our emphasis on ubuntu – I am who I am through other people – has made us (and here I include not only black South Africans because I think Afrikaners have this characteristic too) prone to groupthink, or flocking. Birds of a feather flock together is what we like to say, but instead of shared appearances we should be focusing on a shared purpose.

Second, we must grow. I don’t want to discuss economic policy here, but consider the collective entrepreneurial spirit of the Asian countries over the last three decades. Government, business and civil society shared a vision of a prosperous future, implementing pro-growth policies that allowed millions to escape poverty and thousands to become millionaires. India, China, and South Korea, despite their own legacies of colonialism, now have large middle classes that can enjoy the fruits of capitalism. South Africans, by focusing so much on the injustices of the past, should be wary of trying too hard to create a new past instead of a new future.

Which brings me back to Rhodes’ statue. What will replace it? Once we’ve (finally) destroyed the myth that we should all be English, or Afrikaans, or South African, what next? Que vadis young South Africa?

Written by Johan Fourie

March 21, 2015 at 11:47

Buffalomania

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Sable

Bidders had come from far to attend what was widely speculated to be the auction of the year. The rich and famous of seventeenth-century Dutch society were present; all with the aim to acquire some of the most unique tulip bulbs on offer at exceptional prices. The auction at an orphanage in Alkmaar on 5 February 1637 was the height of tulipomania, one of the first and most spectacular financial bubbles in history.

Tulips have no intrinsic value. They are beautiful, of course, but there is no explanation for the rapidly escalating prices of tulip bulbs during the 1630s and especially during 1636 and 1637. Everyone in Holland, it seemed, were captivated by the craze; tulips were cultivated with the aim to produce distinct and unique varieties that would attract even higher prices at auctions. One of the most expensive varieties – a Viceroy – sold for two lasts of wheat, four lasts of rye, four fat oxen, eight fat swine, twelve fat sheep, two hogsheads of wine, four tuns of beer, two tons of butter, 1000 lb. of cheese, a complete bed, a suit of clothes, and a silver drinking cup. A futures market even developed, which would later help the development of Amsterdam as a financial center. The only reason for the escalating prices, it seems, was that buyers believed prices would continue to increase.

SemperAugustus

The Semper Augustus, the most expensive tulip sold during Tulipomania

And then, of course, the bubble burst. Not long after the Alkmaar auction, another auction was held in Haarlem. The auctioneer offered the first bid of Witte Croonen (White Crowns) for 1250 guilders. Silence. After an awkward moment, he put in a lower bid. More silence. And then panic. The news soon spread across Holland that tulip prices were on the decline. The fortunes that had been created over the preceding years were wiped out in an instant. Those that had gambled their life savings on tulips, were ruined.

I was reminded of these events when reading about a game auction in South Africa earlier this year. The auction on Piet du Toit‘s farm in South Africa’s North-West province saw record prices for unique variations of game: R7.5 million for one impala, R9.5 million for a gemsbok, and R13 million for one wildebeest. That is R30 million (or $2.4 million) for 3 antelope. Also sold were 25% shares in a West Zambian Sable bull (pictured) for R15.5 million each, valuing the animal at R62 million (or $5 million). Buffalo prices are similarly high: South Africa’s richest man, Johann Rupert, paid R30 million for a bull in 2013, and Cyril Ramaphosa, the country’s vice-president, paid R20 million in 2012. But it is the high prices of the antelope varieties that has drawn attention recently. As research from the Western Cape department of agriculture shows, more than half of all price records for game were set in 2014 alone.

These prices are extraordinary. There is no way buyers can recoup their investment except if prices continue to increase. Yes, foreign hunters are willing to pay excessive prices for unique varieties, but not in the order of magnitude of these numbers. (At best, a unique variation can earn maybe $50 000 in hunting income.) The only reason that prices are increasing is that buyers believe prices will continue to increase. That is the logic of bubbles: if prices go up, they will continue to go up.

Until they don’t. No one can be sure when and how this will happen. But I can imagine something along these lines: a large gathering of bidders on a farm in South Africa’s Limpopo province. Much excitement as the first bid – an impressive Zambian sable bull – is presented for R20 million starting price. Silence. A lower starting price perhaps: R10 million. More silence. The realisation, suddenly, that no one is buying; the awkward silence broken by discreet phone conversations to anxious owners: ‘The bubble, sir, has burst.’

Sources: 1) Mike Dash. 2001. Tulipomania. Broadway books. 2) Louw Pienaar, Western Cape Department of Agriculture.

An Afrikaans version of this first appeared in Rapport newspaper.

Written by Johan Fourie

March 16, 2015 at 06:30

The remarkable Maori experience

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Moari Haka

Human height provide economic historians with a wonderful tool to measure living standards in the past. A society’s average height, it turns out, is to a large extent determined by the environment it inhabits during the early stages of life; the more proteins (e.g. milk and meat) we eat at a young age , the taller we tend to grow. This was especially true in the past, when people were poorer and nutrition varied more in different parts of the world.

The past week I attended a conference on Heights and Human Development, organised by Tim Hatton and Martine Mariotti of the Centre for Economic History at ANU in Canberra, Australia. The invited authors used historical heights to measure the diverse impacts of slavery (Rick Steckel), migration (Zach Ward), colonisation (Joerg Baten), social transfers (Diana Contreras Suarez), Chinese industrialisation (Stephen Morgan) and technological change (my own, with Mariotti and Kris Inwood, which will hopefully soon be available as a working paper).

But I particularly enjoyed a paper by Kris Inwood (with two colleagues) that investigated the heights of New Zealand’s Maori over the last two centuries. When the Pakeha (the whites from Europe and their descendants) arrived in New Zealand early in the nineteenth century, they described the native peoples as tall and strong. Yet, as Maori lands were taken up by Pakeha farmers, their stature declined: by the beginning of the twentieth century, Moari people had lost their reputation as a tall and strong people, and Inwood et al’s evidence shows that they were significantly shorter than their white countrymen.

This gap in the heights of the two groups persisted for more than fifty years, but, and this is the surprising result, by the 1970s the gap had narrowed and by the 1980s had closed completely. Children born to Maori parents in the 1980s are today as tall as their Pakeha compatriots. The exact reasons for this convergence in heights are unclear: Inwood suggested that it was due to government social transfers during the Golden Age, but clear causal evidence is lacking. Yet, I would argue, this is an incredibly important event to understand, because it has implications elsewhere, most notably in South Africa.

Whites in South Africa today are about 8cm taller than their black compatriots. There is no reason to expect that this has always been the case; the gap was almost certainly smaller at the beginning of the twentieth century and, although we have limited data, probably much smaller (and possibly even negligible) at the beginning of the nineteenth century. Two centuries of land dispossession and prejudiced policies saw a divergence in the living standards of South Africa’s different race groups. When exactly this happened, and by how much, is the question of ongoing work by myself, students and collaborators. (I will hopefully have more to report later this year.)

Yet Maori convergence suggests that the current discrepancy in height between black and white South Africans is not fatalistic, that aggregate differences in height are not set in stone as most people would tend to think. And more, Inwood et al’s evidence show that this could happen relatively quickly: Maori heights increased by 8cm over a 25 year period (from 170cm to 178cm between 1955 to 1980). If black South Africans experienced the same after the end of apartheid, we would have seen the large divergence in height disappearing within this decade.

By all accounts, though, despite many improvements in the living standards of black South Africans, the height discrepancies remain. We therefore need to learn whether it was better nutrition, female education, a stronger economy, luck, or maybe even a strengthening of Maori identity and pride (as was suggested at the workshop) that led to the remarkable Maori experience of the mid-twentieth century. This is the challenge for us as economic historians. As the Maori would say: Ma tini ma mano ka rapa te whai. By many, the work will be accomplished.

Written by Johan Fourie

March 9, 2015 at 06:05

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