Archive for July 2015
Next week, economic historians from across the globe will descend on Kyoto for the triennial World Economic History Congress. The previous time the event was held, Stellenbosch played host. (Despite a very successful academic programme, most visitors seem to remember the bitterly cold weather. Fortunately, we won’t have that problem with Kyoto next week. I arrived in Tokyo on Wednesday, and it is hot and humid.)
So what happens at the World Economic History Congress that justifies flying half-way across the world? First, there are lots and lots of paper presentations. I don’t have the exact number, but I would guess close to 1000 papers will be presented over the five days of the conference. To give you a sense of the size, there are 18 parallel sessions (sessions running concurrently) at a time. This is an ideal opportunity for scholars to see what’s new in the field, what topics are of interest, which methods are popular, and who is carving out a name for themselves. Second, it is an opportunity to mingle. Many research ideas are molded in conference corridors and refined over dinner drinks. The most fruitful comments and critiques on my research I’ve received during teatime. Third, it is an opportunity to showcase your own work. A conference deadline is fixed, so it structures your research. And conferences are a great way to test new ideas and possibly gain the interest of an editor.
So here is my pre-conference marketing: I’ll participate in four sessions next week. First up I’m involved in the dissertation sessions on Monday morning. Here I’ll present a brief outline of my dissertation, completed at Utrecht University in 2012. That afternoon, I chair a session on the history of wealth and health in South Africa. The session includes papers on fertility, intergenerational mobility, concentration camps, credit markets and my own work (with Kris Inwood and Martine Mariotti) on white living standards during the mineral revolution. On Thursday morning, I chair another session on microdata in African history. Here I present a (very much working) paper with Dieter von Fintel on the precolonial roots of structural unemployment. Finally, that afternoon, Alfonso Herranz-Loncan will discuss work on Cape Colony railways. The full programme is available here.
A number of other LEAP members will be in Kyoto too: Sophia du Plessis and Dieter will present, as will our research associates Martine Mariotti, Leigh Gardner and Alex Moradi, and our honorary professor, Jan Luiten van Zanden. But I’m most excited for the four Stellenbosch students that will join us in Kyoto, because it was at the World Economic History Congress in Utrecht during August 2009 where I first experienced what can best be called an ‘optimistic vibe’ within the field of economic history. Economic historians, perhaps because they harbour no ambitions of making money or impressing anyone with their math skills, are a placid tribe. Not submissive, but placid. We know data sources have constraints, we understand that context is as important as numbers, we are skeptical about big theories of anything, and we are careful to propose big push policy interventions. And so we help, guide, support and, when necessary, critique with kindness. In short: economic historians tend to be a bunch of nice people.
But the WEHC is not only about the people, but also the place. And there are many wonders to explore in Kyoto. It tops the 2014 Travel+Leisure list of the world’s best cities to visit and, much like the rest of Japan, is steeped in history and mystery. Like Mount Fuji. I write this not having slept for 28 hours. Dieter and I climbed The Land of the Rising Sun’s most famous mountain last night to watch, well, the sunrise. Take my advice: don’t believe any of the online guides who describe the climb as ‘easy’. It’s not. I’ve done some pretty strenuous things in my life (like marking second-year papers), and this was easily in the top two. Maybe top three; I’ve marked first-year papers too. Maybe our experience was worse because we did fly in from South Africa the day before (another sleepless night). But still, don’t bargain on just sprinting up the steep slopes of a volcano. It ain’t happening. (For those actually interested in more detail: roughly 6 hours up. Start at around 9pm. Arrive at 3am. Hang around in the dead of night at very low temperatures till sunrise at 4h30am. Then hike down for another 3 hours. It can all be made worse by torrential rain and loud Americans. Fortunately we only had one of those.) But despite all the strain and swearing, it was great to make it to the summit. Teary-eyed special. I’m selling the movie rights.
I need some sleep. See you in Kyoto on Monday.
When Hermann Giliomee made the claim at the recent South African Historical Society conference that it is time to review the Bantu Education Act of 1953, the audience cried out in disgust. How could anyone have anything but contempt for an Act that have arguably had the most profound negative effect on South Africa’s economic fortunes, and still does? The Bantu Education Act of 1953 nationalised education for black South Africans (away from missionary education) and delineated spending on education according to race, with budgets heavily biased towards white education; in the 1970s, the per capita spending on black education was one-tenth of the spending on whites, for example. But the Act is probably most remembered for the following quote by Hendrik Verwoerd:
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?
I was reminded of this quote when Basic Education Minister Angie Motshekga said in parliament last week that one in four schools do not offer mathematics in grades 10, 11 and 12 because of teacher shortages and a low pupil enrollment. Let’s consider that again: 25% of the poorest schools cannot equip even their brightest kids with mathematics, a subject that is required to enter almost all technical fields, i.e. science, commerce, medicine, and engineering. Each of these schools might as well put a sign outside their classroom saying:
THERE IS NO PLACE FOR YOU IN THE SOUTH AFRICAN ECONOMY ABOVE THE LEVEL OF CERTAIN FORMS OF LABOUR!
The reasons for these schools not teaching maths are multifaceted. A culture of ‘liberation before education’, poor teacher quality and poor school management persists in many of these schools, a legacy of the Bantu Education Act and other apartheid policies. But there are other reasons too. Equal Education treasurer Doran Isaacs blames a too dogmatic focus on the matric pass rate:
It is a direct result of a narrow and single-minded pressure for schools to increase the matric pass rate at all costs. It is compulsory to either do maths or maths literacy. So these learners are doing maths literacy, which is basic arithmetic. The two are not comparable. Schools either push kids out or they stop offering maths altogether as a way of increasing the matric rate. This results in a new form of Bantu education where the richer kids do maths and the poorer kids do maths literacy.
Sadly, it is getting worse:
The basic education department’s reports indicate a 17% decline in the number of candidates who wrote mathematics between 2009 and 2013 (from about 290 400 to 241 400). At the same time, the number of candidates writing mathematics literacy rose sharply to 58% of the 2013 cohort.
And it is unlikely to improve fast, given the poor performance of kids at a younger age:
…less than half the learners in each cohort show foundational competence in mathematics, as indicated by the 61% of grade six learners who failed to score 50%.
It remains an awkward fact that South Africa’s highest matric pass rate for black students (writing the same exam as whites) was in 1976, the year famous for the Soweto uprising. Granted, many black kids did not reach matric and in many schools not the full curriculum was covered. But compared to the situation today, were the outcomes any worse?
This is not to say that the Bantu Education Act should be labeled anything other than unjust. It not only had massive psychological effects on black South Africans, but real consequences for the economy and society too; as Miriam Mathabane asks, if Verwoerd had not taken over black education as he did, “if black children had had the same educational opportunities as white children, would there be less crime, fewer murderers, carjackers and rapists in the New South Africa, and more teachers, lawyers, writers and nurses?” Even with the budgetary constraints and political climate of the 1950s and 1960s, a different policy was possible.
But perhaps Giliomee has a point too: we should weight the impact of Bantu Education not against the single quote of a deluded man, but against the statistical evidence of its outcomes, and, in particular, the outcomes that were to follow. When historians meet in 2051 at the South African Historical Society conference, how will they compare the South African education systems of the two decades before and the decades after democracy? Which system will be considered more unjust?
At the beginning of June, South Africa imposed two new visa regulations for families traveling to South Africa. The first was that any child who exits the country must have an unabridged birth certificate if they are to enter the country. The second was that tourists from countries that are required to have a visa now have to appear in person during the visa application process in order to obtain a biometric visa.
New data published by Statistics South Africa at the end of last month show that these policies are beginning to have an effect. A notice about the new regulations issued more than a year ago resulted in a decline in tourist arrivals between March 2014 and March 2015 of 68 323 travellers, or 20%. Air China cancelled a planned direct route between China and South Africa. To put these numbers into perspective: the 2010 World Cup in South Africa generated approximately 300 000 additional (non-SADC) tourists in the year of the event, or an increase, controlling for the trend, of 18.7% (Peeters, Matheson and Szymanski 2014). The notice warning travellers about new visa regulations – note: not the actual regulations themselves, the impact of which we will only know later this year – has thus already nullified the impact of the 2010 World Cup, a mega-event that cost us several billion to host (and continues to be a burden for tax payers). That is an absolute travesty.
Whether the decline in tourist numbers can be entirely attributed to the new visa regulations is of course not clear. Last year’s Ebola epidemic in West Africa (and, dare I add, the United States) would have affected foreign travellers’ plans, while the xenophobic attacks a few months ago in Durban and Johannesburg certainly changed visitor itineraries. The latter was perfectly illustrated by an international winter school I teach at Stellenbosch University: almost all of the Singaporean students (half the class) who would have attended the course cancelled their trips in the week following the xenophobic attacks. The sad reality is that the revenue we generate from these courses go to Stellenbosch students applying for exchanges in Europe and elsewhere; the xenophobic attacks has denied dozens of South African students the opportunity to study abroad.
And on top of all this comes the new visa regulations. The aim, according to the Department of Home Affairs, is to prevent child trafficking across South Africa’s borders. When questioned about the number of trafficking cases that the new policies has prevented, department spokesperson Mayihlome Tshwete said yesterday: “Child trafficking is difficult to detect but whether the number is five or 10 or 30 000, there is no denying that child trafficking is a reality in South Africa and we can’t tell the parents of trafficked children that their children aren’t important.”
Child trafficking is an incredible injustice. The stories of those caught in its grip are traumatizing. But so, too, are the stories of mothers who lose their jobs. The new visa regulations will result (or have already) in the lay-off of thousands of mothers (because the tourism industry mostly employ women and often poor, rural women). These mothers will be unable to feed and support their children, the very same children that are supposed to benefit from the policy. But will we hear stories about these mothers? Probably not. The causal link between the new policy and their job security is vague; the only message they get is that they don’t need to come to work anymore because ‘in the light of the current business climate, the company is forced to retrench’.
Everything has a price. Yes, even the life of a child trafficking victim. (Bear in mind that since 2012 the South African Police has only opened 23 cases of child trafficking.) Politicians and bureaucrats continually have to decide between spending on hospitals (which clearly reduce deaths) and other types of spending, like teacher salaries. If human life is infinitely valuable, then we should spend our entire budget on clinics and hospitals. But we don’t. We trade off lives saved in hospitals versus other priorities, like maintaining a well-functioning economy.
Similarly, we cannot price two dozen child trafficking cases more valuable than protecting thousands of jobs in the tourism industry. If we do, many more children will suffer as a result.
The applications for Honours or Masters degrees in Economics at Stellenbosch University have just opened. Early next year, about 80 or so students will arrive for the quantitative boot camps which kick off the year. The Honours students will get their first taste of graduate studies. And let me be honest: it is tough. Core modules like macroeconomics, microeconomics, econometrics and mathematical economics make the first semester a long and arduous affair. And then there are several electives to choose from, including international trade, development economics and economic history (where you’ll find me). The second semester has more choice but is no less rigorous: labour economics, industrial organization, public economics, environmental economics, the economics of education, the economics of technology, institutional economics and more.
These modules reflect the primary reason why I think studying Economics is worth the effort: it provides graduates with a set of analytical tools which allow them to make meaningful contributions in many spheres of society. For some, the immense inequality and high levels of unemployment that we witness in South Africa draw them to the field, eager to find solutions. Economists want to make the world a better place, and hope to use their rigorous methods to do so. Whether it is in education policy, or health policy, or trade and industrial policy, development policy, or competition policy, or monetary policy, economists at Stellenbosch apply the methods they learn to real-world evidence and make suggestions on how to improve society. That, I would argue, is real job satisfaction.
Some want to use the analytical tools of economics to, well, make money. They use the analytical tools of economics to start innovative companies like Custos Media Technologies, a company co-founded by a recent Masters graduate in Economics that hopes to reduce internet piracy. Others become business strategists of large corporations: Michael Jordaan, former CEO of First National Bank, and Jannie Mouton, founder and CEO of the PSG Group, have degrees in Economics from Stellenbosch.
Almost all of our graduate students find work immediately. Salaries for economists in South Africa and abroad compare very well with other professional occupations. This is why consultancies like KPMG, PwC and Bain are beginning to recruit economics graduates in larger numbers. In earlier years, our best students would have found a place within the public sector, most likely Treasury or the Reserve Bank. Now, although they’re still head-hunted by government, our best prefer the top dollar of the consultancies. In addition, there are many smaller economic consultancies that employ former students: Econex (based in Stellenbosch), Genesis Analytics (who sponsors an annual graduate prize) and NKC (now owned by Oxford Economics), to name a few.
I think graduate students from Stellenbosch are particularly attractive in the job market because of the exposure they get to quality graduate training. Graduate lecturers are generally young and almost have studied abroad for an extended period of time. As all classes are taught in English only, classrooms are also diverse. About half the students that enrol for Honours obtained their undergraduate degrees from Stellenbosch; the other half join from universities in other Southern African countries (approx. 20%) and from European countries like Germany.
Most Honours students continue into the Masters degree programme. Thanks to better funding, it is increasingly likely that the best Masters students, after perhaps spending a year abroad, return to begin a PhD. The skills they gain here make them exceptionally well qualified for research and academic jobs, in South Africa and internationally.
Alfred Marshall said that Economics is the study of people in the ordinary business of life. I cannot agree more. I also liked this summary: Studying economics will develop habits of careful thought, the application of mathematics, and practice in clear writing. Economists engage the world of current affairs. Studying economics includes learning to use statistics and to read critically. Economics graduates are interesting people both because of their skills and because they can explain why economic phenomena occur and how economic performance might improve.
So, if you are a final-year undergraduate undecided about what to do next year, why not make a great decision and enroll for an Honours at Stellenbosch? Or, if you’re currently doing an Honours somewhere else in South Africa, why not consider Stellenbosch for a Masters degree in 2016? To put it in language you might understand: the marginal returns of studying Economics at Stellenbosch, in monetary and non-monetary terms, are exceptional.
**I am often asked how to best prepare yourself for an Honours degree in Economics. I would suggest that you, aside from doing third-year economics of course, also enroll for good courses in statistics and mathematics (at least up until the second-year level). And if you have more undergraduate time, do history and philosophy too. Here are some other random thoughts on what to study.