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Haiti

Latin America and the Caribbean

World

OCHA’s Flash Appeal for Haiti: Reinforcing Failed Aid Modalities

On October 10, less than a week after Hurricane Matthew ripped across Haiti, the United Nations launched an emergency appeal for $120 million. Ten days later, donors have failed to fill the need, contributing just over 20 percent of the funds deemed necessary. But whom is the money being raised for? What planning or coordination went in to the $120 million ask? Are donors right to be hesitant?

An analysis of UN Financial Tracking Service data shows that the vast majority of the funds raised are destined for UN agencies or large, international NGOs. Reading press releases, government statements and comments to the press, it would seem that many lessons have been learned after the devastating earthquake of 2010: the importance of coordinating with the government, of working with local institutions and organizations, of purchasing goods locally and of building long-term sustainability in to an emergency response.

But, as one Haitian government official posed it to me, “we all learned the lessons, but have we found a solution?” Based on the UN Office for the Coordination of Humanitarian Affairs (OCHA) appeal, the answer is not yet.

Perhaps this should be of little surprise, the flash appeal is designed specifically to “fund United Nations aid activities” for the next three months, not to raise money for local organizations, the Haitian government or for long-term, sustainable projects.  But the analysis is nonetheless revealing.

Funding Destined for UN and Foreign NGOs

The appeal is largely based on individual projects from individual organizations, and does not appear to have been launched with input from the Haitian government. As can be seen below, the vast majority of funding is destined for UN agencies.

Table 1.

OCHA Appeal UN Agency 2

Looking at the above chart, one sees that 85 percent of the funding requested is for the UN’s own agencies and that, of the $28 million provided so far, 79 percent has gone to these same entities.

Of the remaining $17 million for other organizations, it is overwhelmingly allocated to large foreign NGOs such as CARE and Save the Children. Haitian organizations or institutions appear to have an extremely limited role in the appeal, if one at all.

Importance of Coordination and Long-Term Sustainability

There has also been an acknowledgement that more must be done to both coordinate with the Haitian government and the various actors on the ground and to focus earlier on in building long-term capacity. But the OCHA appeal does not have an emphasis on either.

Table 2.

OCHA Appeal Sector

As can be seen, about 50 percent of the total requirement is for the food security, nutrition and emergency agriculture sector. There is no doubt that agriculture production and food security are some of the largest concerns going forward, but most of these funds, $46 million, is for short-term food assistance through the World Food Program (WFP). On the other hand, just $9 million will go towards “restoration” of “rural productive capacity.” The WFP program has already received $7.4 million, while the restoration project has only received $800,000.

Jake Johnston / October 24, 2016

Article Artículo

Affordable Care Act

Volcker and Peterson: Ignoring the Lack of Demand Problem

Former Federal Reserve Board Chair Paul Volcker and private equity billionaire Peter Peterson had a NYT column this morning complaining that not enough attention is being paid to the national debt. The piece uses wrong-headed economics and xenophobia to try to scare readers into backing their austerity agenda.

On the economic side, it implies that the prospect of a rising debt to GDP ratio implies an imminent crisis.

"Yes, this country can handle the nearly $600 billion federal deficit estimated for 2016. But the deficit has grown sharply this year, and will keep the national debt at about 75 percent of the gross domestic product, a ratio not seen since 1950, after the budget ballooned during World War II.

"Long-term, that continued growth, driven by our tax and spending policies, will create the most significant fiscal challenge facing our country. The widely respected Congressional Budget Office has estimated that by midcentury our debt will rise to 140 percent of G.D.P., far above that in any previous era, even in times of war."

There are several points to be made here. First the ratio of debt service to GDP is currently just 0.8 percent. (This is net of interest payments rebated by the Federal Reserve Board.) This is near a post-war low. By comparison the ratio was over 3.0 percent in the early and mid-1990s. In other words, the reality is the exact opposite of what Volcker and Peterson claim, the burden of the debt on the economy is unusually low.

Second, if interest rates rise precipitously, which they imply will happen for unexplained reasons, we can always buy back the debt at large discounts, thereby reducing the debt-to-GDP ratio. This would be an absolutely pointless move, but if distinguished people who can get columns in the NYT think the debt-to-GDP ratio is important, it can be done to humor them.

Finally, the widely respected Congressional Budget Office (CBO) has repeatedly been wrong in predicting that interest rates will rise. (They also seriously over-estimated the cost of the Affordable Care Act and health care more generally.) Ever since 2010 CBO has projected that interest rates will bounce back to pre-recession levels. Each time they have been shown wrong as interest rates remained low.

The reason for the low rates is the weak level of demand in the economy. In this context, the deficit is a good thing and a bigger deficit would be better. It would generate more demand, output, and employment. It would also make us richer in the future since at higher levels of output firms invest more. Also, many workers who are out of the workforce for long periods of time can end up permanently unemployable.

As a result of the low deficits and weak demand in the post-recession years the widely respected Congressional Budget Office estimates that the economy's potential GDP in 2016 is almost 10 percent smaller (almost $2 trillion) than the potential it had projected for 2016 before the crash in 2008. This "austerity tax" is costing the country $6,200 per person in lost output. For some reason, Volcker and Peterson would have us ignore this huge and growing burden that the country now faces as a result of a sustained period of weak demand and instead concern ourselves with the improbable scenario they paint in their piece.

CEPR / October 22, 2016

Article Artículo

United States

Workers

What Paid Sick Days Mean for Domestic Violence Survivors

Some may see evidence of domestic violence as a visible mark on the body — a bruised face, perhaps a broken arm, or much worse for many victims. However, what we may not see are the economic consequences suffered by those who have been abused: how many days of work a victim has missed due to domestic abuse, or how many jobs she or he may have lost due to their abuser’s actions. Domestic violence isn’t limited only to acts of physical violence; abuse may result in financial and economic consequences that take away a survivor’s autonomy. Public policy can help mitigate these devastating effects of domestic violence. A key policy that can help is paid sick days that cover time off to deal with legal and health consequences of abuse. If implemented, such paid sick days laws would positively impact all workers, and also benefit domestic violence survivors.

Paid sick days laws are starting to sweep the country — there are now 37 jurisdictions that have paid sick day laws in effect or where such laws will be implemented soon. Paid sick days provide economic security for victims of domestic violence so that taking time off to deal with domestic violence issues — court appearances, doctors’ appointments, meetings with social workers, or healing — wouldn’t mean survivors have to forfeit income or put their employment in jeopardy. All five states that have passed paid sick days laws — Connecticut, California, Massachusetts, Oregon, and Vermont — include provisions where sick time can be used for specific “safe time” purposes. This allows workers to take time off for purposes related to domestic violence. However, not all city jurisdictions with paid sick days include this provision, an oversight that needs to be corrected. Paid sick days would allow victims time to seek lifesaving services from local domestic violence programs.

CEPR and Tillie McInnis / October 18, 2016

Article Artículo

Robert Samuelson is Worried About Debt

Yes, what else is new? Today's column highlights the growth in debt-to-GDP ratios in both the public and private sectors in the last decade. There are three points worth making on this issue.

The first one is that Samuelson's concern, as noted in the headline, is that the growth of debt will leave us open to another financial crisis. The problem here is that it goes along with the myth that the financial crisis was something that sneaked up on us that no one could detect. In fact, the financial crisis, was a crisis because a bubble was moving the real economy. The housing bubble was driving well over $1 trillion in demand through its impact on residential construction (which was a record high as a share of GDP) and consumption, as people spent based on bubble generated housing equity.

The surge in both areas was easy to see for anyone who looks at the data. It was an astounding failure of policy makers (think Alan Greenspan and the Fed) that they somehow either didn't see the bubble or didn't realize the importance of its collapse to the economy.

This matters because it is wrong to imagine that a potential economy wrecking bubble can grow without any sentient beings seeing it. The policymakers and economists who totally missed the housing bubble have a stake in pretending that it was all very difficult, but their story is not true. It was simple, they just chose not to look at the data and think for themselves.

CEPR / October 17, 2016