Johan Fourie's blog

I'd rather be a comma than a fullstop

Archive for June 2013

Our next Great Leader

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Courtesy of paul-simpson.org

Courtesy of paul-simpson.org

In my second and last job interview in 2005, I was asked about my future research ideas. This question never has an easy answer, but for a graduate student applying for his first job, this question was loaded: should I favour one field at the cost of another; should I be specific or instead choose a more general (but vague) topic? I still don’t know how (and why!) I came up with the answer: I’d like to know whether Development can be influenced by Great Leaders, I said. I’m still not sure how I got the job.

A new paper by Matthew Andrews of the Harvard Business School, however, shows that my idea was only a decade early. Andrews argues what most economists would agree to: that development (historical change) is not the result of the decisions made by a heroic or charismatic leader, but rather an institutional structure “involving multiple actors who are mobilized to engage in a strategic, synergistic manner”:

The essence of this article’s argument is simply that there is a lot more to leadership in development than a focal hero: Heroes often end up being less than heroic; contextual factors shape opportunities for leadership and development; and multi-agent groups typically lead, not solitary heroes. The multiplicity of role players should be obvious when one considers the many ideas about what development demands. There is no way that one man (yes, heroes and benevolent autocrats are usually male) can think up, motivate, implement and institutionalize the many steps required to set up anything like the 2008 Growth Commission’s “right mix of economics, institutions, and politics supporting growth and development.” Leadership of such change, to the broad economic, governmental and political rules of a society, must span different locations, fields and time periods in the life of an emerging country. This leadership must be facilitated by the context and will only emerge when involving multiple actors who are mobilized to engage in a strategic, synergistic manner. The hero orthodoxy fails to account for this complexity, when it is perhaps the fundamental challenge of leading development.

It is an appealing thought that strong leaders can change the course of history. South Africa, in particular, has a rich history of Great Leaders: Shaka Zulu, Paul Kruger, Cecil John Rhodes, Jan Smuts, Hendrik Verwoerd and, of course, Nelson Mandela. There is no doubt that these men had immense influence, for good or bad. But, as Andrews alleges, it is probable that they were more the result of their times than the cause of it. We don’t know the counterfactual: had there not been a Verwoerd, would apartheid have existed? Had there not been a Mandela, would a miracle transition have occurred? My answer to both these questions is yes, even though I don’t deny the influence these two men had in the shaping of both events.

Now that Madiba is reaching the end of his days, many South Africans yearn for another Great Leader, a man who can lead the people towards a *fill in your preference here* future. One finds such longing for leadership across all cultural groups: it is the reason for Malema’s rhetorical appeal, and the Afrikaans song “De La Rey” of a few years ago uttered similar sentiments. Even the newly formed Agang party led by the revered Mamphela Ramphele has created a stir amongst South African voters: could Ramphele perhaps be the answer to South Africa’s search for a bipartisan leader? Don’t hold your breath. A new political party built on the charisma of one person is exactly what Andrews’s paper warns against. Only if Ramphele is exceptionally gifted to, in a very short space of time, sign up “multiple actors who are mobilized to engage in a strategic, synergistic manner” can the party have any hope of success.

More often than not, heroic leaders turn bad. Or, as Andrews puts it, “individuals who may have been considered heroes in the past often turned out less than heroic”. Mugabe was initially seen as a hero of the liberation struggle in Zimbabwe (and post-struggle economic reform), only for thousands of Zimbabweans to be killed and hundreds of thousands to flee the country. That is not the record of a Great Leader. Following the volatile years of Idi Amin in Uganda, Yoweri Museveni came to power in 1986 and was soon heralded for his progressive economic policies and dedication to eradicating HIV/Aids. He is still in power and there is mention that his son will take over. His Great Leader credentials are diminishing the longer he stays in power.

Great Leaders don’t solve countries’ problems. They are solved by building strong institutions and introducing incentives that allow people to prosper. It is, of course, far more difficult to establish the right institutions and incentives than to wait for a Great Leader. But the longer we wait for this next Great Leader, the greater our disappointment will be once he (or she) arrives.

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Written by Johan Fourie

June 25, 2013 at 21:22

One hundred posts later

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Global audience: The redder, the more read.

Global audience: The redder, the more read.

This is my 100th post on this blog. Since my first post in January 2012, I’ve had 35,563 views of my posts. I know that this is less than more popular blogs receive per day, but I am still astounded that so many people have taken the trouble to read what I’ve written. Especially since I sometimes struggle to even get my wife Helanya to voluntarily listen to my naive (but brilliant!) ideas. (My students have no choice.)

I sometimes (actually, never, but for the sake of the argument let’s go with sometimes) get asked How I Choose My Topics. The last-page-of-Time-interview answer would be: I don’t, they choose me. But that would be a lie. In fact, I sometimes have a hard time finding a topic to write about, which is the reason I struggle to keep to my one-post-per-week rule. Even so, I’ve managed to fit in 100 posts in less than 100 weeks, which shows that I did find something to write about. This is helped by the fact that I live in South Africa where there are enough silly people saying silly things to write several thousand blog posts about.

I know you want to know which one of the 100 is my favourite post. Statistically it seems obvious: The Slow Demise of the Farm Worker received a whopping 6,468 views, 34% of all the posts on my blog (if the figures don’t make sense, it’s because I’ve excluded the 16,803 visits to my Home page, Archives and About page). That post was also responsible for my Most Views per Day-record – 2,655 on 15 November 2012 – and for invitations to write for Rapport, an Afrikaans national weekly, and some consulting work for a farmers organisation. I even received a phone call to appear on an Afrikaans TV-show. But, to be honest, I don’t consider it my best piece. It was actually one of those days when ideas were in short supply. I remember thinking, after finishing the post, that this is little more than reciting a first-year Economics text book. Turns out 6,468 people wanted to know what first-year Economics could tell them about the surging labour unrest.

My favourite post would have to be Stellenbosch, Sandton and Soweto, partly because I think it is still extremely relevant. If I have to identify a theme for my first 100 posts, it would be about incentives and institutions that shape our society, and that post crystallizes most of my thinking about the (formal and informal) incentives post-Apartheid South Africa created. It also stirred some debate, which I had hoped to encourage by my strategically-positioned Coldplay soliloquy “I’d rather be a comma than a full stop”. Although I’ve received excellent feedback – on the blog itself (216 comments, an average of 2 comments per post) but also on Facebook, Twitter and on Finweek’s website, where most of my recent posts have been reposted – I hope to further encourage debate in future.

The community of Economics bloggers in South Africa is still small. Prof Waldo Krugell, department head at North-West University (Potchefstroom campus), leads the charge with his Eat, Sleep, Blog Economics-blog. Nic Spaull, recently elected as one of the 200 coolest young South Africans, is also active. The Econ3x3.org blog, run by editor Frederick Fourie (no relation) and with a prestigious editorial board, is probably best known for policy analysis on Economic issues. Yet the South African network pales in comparison to the active US bloggers like Tylor Cowen’s Marginal Revolution, Noah Smith’s Noahpinion and, of course, Greg Mankiw and Paul Krugman who established or expanded their reputation by blogging actively. People (could potentially) ask me whether it takes a lot of time writing a blog. Only about three hours, I’d say, less than half the time many of us spend on Facebook. Hopefully more South African economists will take up the baton.

This is necessary because blogging is increasingly not a domestic affair. Exactly half my viewers have been from South Africa (15,819); the other half have come from 152 countries, including the UK (4,326), India (the first developing country outside South Africa at 406 visitors), Kenya (the first African country outside South Africa at 94), and even far-off places like Nicaragua, Kazakhstan, Burkina Faso, Bahrain and Liechtenstein (all 1). Strangely enough I’ve also only had one visitor from China which, with its more than 1 billion citizens, has contributed less to my readership than visitors from the Occupied Territories of Palestina (3), the Falkland Islands (3) or the Cape Verde islands (2). In marketing terms, this is certainly an exploitable market opportunity. I’m also keen to get my first visitor from South Sudan. I hope to achieve this by writing South Sudan in this post repeatedly. South Sudan. South Sudan. South. Sudan. That should work.

A lot has changed since my first post. Two summers passed. I turned 30. I graduated. Helanya and I moved into our own apartment. (A word of thanks: Helanya still edits nearly all my posts. She has saved me a lot of embarrassment.) My first post on January 22, 2012 was written in the early hours of the morning watching the sun rise.  “There certainly will be growing pains. Hurdles. Obstacles. But there is also the joy of new things, of learning and of, well, sending that cosmic question into the void. Let’s fly.”

Time flies when you’re having fun.

Written by Johan Fourie

June 18, 2013 at 22:17

On the Proteas, globalisation and a formula for winning trophies

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CRICKET- CT2013-PAK-RSA

Tsotsobe and De Villiers celebrates the dismissal of Nasir Jamshed (c) AFP, Cricinfo

Watching the Proteas beat Pakistan last night, I found myself thinking about the irony of the spectacle. I’m not referring to the two suicidal run-outs by South African batsmen (where have we seen that before?; and in any case, that would be satire) or the way South Africa ‘choked’ Pakistan into submission. Instead, I was contemplating the long road cricket has traversed to this match, played by two former colonies of England, on English soil, with barely an Englishman in sight. Pakistan fielded a team of Pakistani origin, South Africa a team of diverse origin: six white South Africans (Ingram, Millar, McLaren, Morris and two Afrikaans-speaking, De Villiers and Du Plessis), two Coloured* South Africans (Duminy, Peterson), Hashim Amla whose grandparents hail from India and Tsotsobe and Phangiso who are black South Africans. More surprisingly, the crowd was predominantly of Pakistani origin, perhaps immigrant Pakistanis or first-generation Brits who still support their parents’ country-of-origin.

England is, of course, the home of cricket. Cricket began to be played in rural southern England in the sixteenth century, not far from Birmingham where the game was played last night. It traveled abroad with the soldiers and officers of the British empire, to the Caribbean, and South Africa, and India, and Australia and New Zealand, and many places in-between. But today, cricket is not an English game anymore; it is an Indian game accidentally invented by the English, as a famous quip goes. As Fahad Mustafa writes in a new paper in The Journal of Global History, “this represents a remarkable transformation: a game that was hardly played by the millions that inhabited the British colonial territories in South Asia in the mid-nineteenth century, less than a century later turned out to be the most popular sport in these erstwhile colonies, followed with a passion that is in stark contrast with the popularity of cricket in England”.

Why did cricket so easily transfer to colonial subjects? From the colonial masters view, cricket was, according to Arjun Appadurai, “seen as an ideal way to socialize natives into new modes of inter-group conduct and new standards of public behaviour”. Schools were established in the colonies to train the next generation of colonial administrators, and a diet of athleticism was supposed to transfer vigour and manliness to the ‘lazy native’. Especially in India, Pakistan and the Caribbean, “cricket’s role as an educating and civilizing device found many supporters in colonial administration”.

In South Africa, cricket took much longer to establish itself among the colonial subjects. Albert Grundlingh writes in The International Journal of the History of Sport about the slow take-up of cricket by Afrikaners (Afrikaans-speaking South Africans descended from early Dutch, German and French settlers). Even though an Afrikaner – NJH Theunissen – represented South Africa as a fast bowler against England in 1889 in Cape Town, Afrikaners did not take up cricket in large numbers. English colonial officials were also dismissive of Afrikaners’ ability to play the game:

Writing shortly after the devastating Anglo–Boer War of 1899–1902, John Buchan forcefully vented such views. ‘It is worth considering the Boer [Afrikaner] at sport’, he wrote, ‘for there he is at his worst. Without a tradition of a fair play, soured and harassed by want and disaster his sport became a matter of commerce (shooting game for profit)’. Afrikaners to him ‘were simply not a sporting race’… (Grundlingh 2011: 99).

For much of the early twentieth century, then, cricket in South Africa was the domain of English-speaking white South Africans. Only after 1948, when the Afrikaner-backed National Party gained power, did things change.

In language reminiscent of current black demands that sporting teams should reflect the composition of the ‘nation’, it was argued in 1956 in Afrikaner circles that ‘until the Afrikaner takes his place on our cricket fields no Springbok team can be said to be truly representative of our country’s cricketing ability’ (p. 102).

How was this to be achieved?

This quest was not formulated in terms of present-day transformational charters, but a different route was suggested. Emerging Afrikaner interest had to be channeled into the ‘establishment of Afrikaans clubs, or rather clubs where the atmosphere is Afrikaans so that the newcomer will readily feel at home and will be able to concentrate all his endeavours on the mastery of the game itself’ (p. 102).

Was this strategy successful?

Although some predominantly Afrikaner clubs were formed, in a broader context Afrikaner interest in the game benefited from socio-economic and attendant cultural changes which permeated white society during the 1960s. With an average growth rate of 6% during most of the decade, South Africa experienced a period of unprecedented prosperity. In tandem with this there was a trend among Afrikaners away from unskilled or semi-skilled, relatively poorly paid, labour to skilled and better remunerated positions with stable career prospects in the burgeoning nationalist bureaucracy and other associated enterprises (p. 102).

The rapid economic growth of the 1960s, especially of Afrikaner incomes, created the opportunity for many young Afrikaners to attend better schools, with better facilities, and to learn the game from a young age. By 1992 (note: thirty years later), when South Africa returned to international cricket in a test match against the West Indies in Barbados, five of the eleven players were Afrikaans-speaking.

Even though 80% of South Africans are black, few black cricketers have played for South Africa at international level. Cricket remains an expensive sport, which is the reason some commentators, including Makhaya Ntini, has suggested that it is easier for black South Africans to become bowlers than batsmen, as the demands on expensive gear is less stringent.

As with many problems permeating South Africa, the solution (from our own history) seems to be higher economic growth. If we manage to grow South Africans’ incomes, expect more black batsmen to emerge and prosper. Not only will we see a transformed team, but, hopefully, also a Cup or two in the trophy cabinet.

* Coloured South Africans are descendants of liaisons between Europeans, slaves from Malaysia, Indonesia, India, Madagascar and Mozambique, and indigenous Khoesan.

Written by Johan Fourie

June 11, 2013 at 13:36

High-speed rail in South Africa: too costly to consider

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On Thursday, Business Day reported that “the Department of Transport will commission its first independent, nationwide study into the cost and feasibility of high-speed trains between major cities, running at speeds as high as 400km/h”.

“The future of rail is high speed,” Mr Vilana said. In the “intermediate” term, the focus of the government, through state-owned commuter rail company the Passenger Rail Agency of South Africa (Prasa), was on getting “higher speeds” of between 140km/h and 160km/h on the narrow-gauge infrastructure.

“Certainly, going forward, we need to move to high-speed, standard-gauge rail,” said Prasa strategic network planning GM Hishaam Emeran.

For high-speed rail to succeed it must offer a “competitive journey time of about four hours over distances of 800km-1,000km”, he said, after which the trains would start to compete with airlines.

In the discussions on high-speed trains, “Durban to Johannesburg features strongly”, he said, adding that Cape Town to Johannesburg was also being mooted, “but that is a bit on long side … (unless) you start building key intermediate stops such as Kimberley or Bloemfontein and it starts opening up — you get a different picture then”.

There was also “huge demand from Polokwane to Gauteng, and then even further north. The feasibility studies will indicate where that is necessary,” he said.

High-speed rail is not a new idea, and it is enticing: it could provide South Africans and tourists with an affordable and safe way to travel long-distance, could reduce our dependence on oil, and, much like the 2010 FIFA World Cup and the Gautrain, could signal South Africa’s rise as an emerging power on the continent. Also, other countries are doing it: it’s difficult to imagine travelling in Europe without using the high-speed rails that permeate the landscape. But high-speed rail is not just a developed-country phenomenon any more. China has a vast rail network that is continually expanding: according to ChinaTimes, the country has recently completed “a 2298 kilometer line between the capital and Guangzhou which will cut the travel time between the two cities from 22 hours to just eight, with bullet trains travelling at 300 km per hour. The journey will take passengers through six provinces, 28 cities, 35 stops in major cities such as Zhenzhou, Wuhan and Chengsha, providing rapid rail service to 400 million people in the country’s heartland.” Many other developers, from Turkey, to Taiwan, to Turkmenistan, have high-speed trains.

Economic theory suggests that infrastructure is a key building block of economic growth: it facilitates lower transport costs, boosting trade and market integration. (Read a longish overview here.) Several economic history papers also show the significant long-term implications of rail infrastructure: Dan Bogart proves that transport revolutions before and during the Industrial Revolution decreased freight charges by 95 percent in real terms from 1700 to 1870 implying an annual TFP of more than 2 percent, meaning that “transport improvements were major factor in raising the standard of living in Britain and were as significant as other innovations”. Alex Moradi and Remi Jedwab show how two railway lines built in Ghana between 1901 and 1923 unintendedly opened vast expanses of tropical forest to cocoa cultivation, allowing Ghana to become the world’s largest producer. And in a recent essay, Bantu Mahali, a graduate student at Stellenbosch, shows how Free State farmers in the 1880s successfully agitated the colonial government to remap the proposed railway line to the mines in the interior to avoid passing through Basotho territory, then the bread-basket of the rapidly growing mining settlements. The result was that affluent Basotho farmers lost huge market share to cheap imports from the United States and Australia from where grain could be transported at a much lower cost to the mines (a distance of more than 8000 km!) than the grain grown on the slopes of the Drakensberg mountains just 300 km away. Incidentally, because of the persistence of railway lines, those spatial patterns still exist today.

High-speed rail seems to be the panacea to our problems. So I’ve let my imagination run wild and mapped what the ideal high-speed rail system would look like: Stage 1 would see a connection between Durban and Johannesburg, and between Johannesburg and Louis Trichardt (the North-South corridor). Stage 2 would extent this network to East (Maputo through Nelspruit) and West (to Gaborone through Rustenburg, and to Bloemfontein through Welkom). Stage 3 could see Bloemfontein extend it’s network to Kimberley and Maseru. Stage 4 would then link Bloemfontein to Cape Town through the arid Karoo. Further stages could be added extending north into Africa.

HighSpeelRaidSA

But, in truth, this can be no more than a pipe dream. The reason: it is simply too expensive. China currently builds the world’s cheapest high-speed rail, at $24 million per kilometre of line. (Germany is double that, Korea slightly lower at $40 million.) A railway line between Johannesburg and Durban would be about R120 billion (assuming a distance of 500 km and an exchange rate of R10/$), less than the R160 billion touted by Japan International Consultants, but still significantly more than the Medupi power plant that is currently under construction. If all the links on my map above were to be built, the (very conservative) costs would total R1 128 000 000 000 (or R1.1 trillion). That would double South Africa’s current external debt.

And these are just the construction costs. Land has to purchased to allow the new rails to be built (remember, South Africa’s existing railway lines are all smaller-gauge, which means they will have to be replaced entirely by standard-gauge on which these high-speed trains run). Land is probably cheap in the Karoo, but less so in the urban centres. And then there are the operational costs: these will hopefully be covered by user fees, but who will pay if they are not? In an earlier study, Estian Calitz and I looked at the financing options for the Gautrain and other such infrastructure projects. The construction of the Gautrain was financed by government (i.e. South Africa’s current and future tax payers), while the operational costs are paid for through user charges (tickets). The same model would apply to high-speed rail, but it is unclear whether there will be enough users to even cover operational costs. A plan to build a high-speed rail between Sydney and Melbourne in Australia was recently abandoned for these exact reasons.

A South African high-speed rail network sounds like a great idea. And there’s no doubt many will benefit from the greater freedom that low-cost travel brings. But, unfortunately, the cost of construction is simply too great, the opportunity cost simply too high. High-speed rail cannot be an option, at least for the foreseeable future.

Written by Johan Fourie

June 2, 2013 at 09:57