Joshua Holland at AlterNet has an intriguiging post linking John Dingell’s (D-Michigan) recent loss of his Congressional Energy and Commerce Committee chairmanship to the stock market plunge of the US’s (once) Big Three automakers that week. Dingell was extremely close to the auto industry, and without their patron in power, the prospects for a federal bailout or other form of assistance have dimmed. To add insult to injury, the person who replaced Dingell is Henry Waxman (D-California), one of the most vocal environmentalists in the House and someone who will certainly be pushing for higher fuel efficiency standards in 2009.

We discuss the idea that political ties matter and that they can be quantified using stock price movements in Chapter 2 of Economic Gangsters, and Josh mentions our analysis in his piece. Thanks Josh!

– Ray and Ted

I spent a day in the crazed hyper-consumerist beach town of Dubai (yes, it is in fact like Las Vegas without the casinos) last week at a World Economic Forum planning session on how to save the world. (The World Economic Forum are the folks that organize the Davos meeting in January)

I was part of the development and economic growth group, and our task was to try to put on paper a few of the facts we know about economic development and, more importantly, think about how the WEF can help us to come up with better strategies. You can find our thoughts & suggestions here.

As in the conclusion of Economic Gangsters, you’ll see that we’re really pushing for a greater collaboration between policymakers and researchers to figure out what the development bottlenecks are, then experiment with strategies on how to loosen them. Hopefully the WEF’s oversized rolodex will help to connect us to policymakers who can make it happen. By the way, the Agenda on Economic Development is very much a work in progress, so we’d welcome any suggestions.

-Ray

A number of bloggers have picked up on Economic Gangsters, including Tukopamoja, Prof. Michael Veseth (of the University of Puget Sound), and filmmaker Ted Hope. They have added some great insights and new takes on Economic Gangsters, and the broader problems of corruption and violence. (Justin Wolfers at the Freakonomics blog at New York Times also gave his perspective on the book earlier).

One of our favorite parts of Tukopamoja’s post was the following snippet, a true story from his fieldwork in Africa:

“Eight years ago, as I crossed the Uganda-Kenya border, I was sequestered in a shack, interrogated, threatened with prison, and ultimately required to pay a bribe by border guards. After that harrowing experience, I returned to my hotel and recounted the story to the first friendly face I saw: my sympathetic colleague Ted Miguel. Ted and his colleague Ray spent the succeeding years studying violence and corruption in poor countries; and this sweet book is the latest fruit of those labors.”

He goes on to write:

“This book won’t just show you that economists can be clever (although it will show you that): It shows that economics, cleverly applied, can illuminate some of the most intractable development problems of our time. I strongly recommend it.”

Thanks, T.!

– Ray and Ted

A favored technique of forensic economists is to look at how the stock market reacts to surprises to measure how investors value things like political connections. In Economic Gangsters, for example, we value political ties in Indonesia by examining what happened to politically connected companies when President Suharto had health problems.

A recent study looks at how the market reacted to events that no one should have known about in the first place: authorizations of top-secret CIA-sponsored coups in Latin America and the Middle East. We’ve written it up for this morning’s edition of Slate (They made a killing). Take a look to see what this research might tell us about the cloak-and-dagger diplomacy of the Bush administration.

-Ray F.

We had 15+ minutes of fame a few years ago for documenting the wanton parking behavior of U.N. diplomats, and for analyzing the relationship between parking violations and home-country corruption (The Swedes double-park less than the Nigerians).

We’re often asked about the parking habits of U.S. diplomats, and in Economic Gangsters we talk about the behavior of American diplomats in London (more like Nigerians than Swedes, we’re afraid). If unpaid parking violations really do tell us something about the honor of public servants, it looks like we may have to start worrying about the law enforcers themselves. (HT: Daniel Chen)

-Ray and Ted

Ted gave a well-attended Economic Gangsters book talk at the San Francisco World Affairs Council on Tuesday October 21st and, in case you missed it, the talk is available online via podcast here.

- Ray and Ted

Nick Kristof gave Economic Gangsters a thumbs up on his blog today, calling it “smart and eminently readable”. In earlier New York Times columns, Nick had already written about the link between extreme weather and violence in Africa. In his post he supports the Rapid Conflict Prevention Support (RCPS) idea that Ray and Ted advocate in Economic Gangsters to try to stop armed conflicts before they start :

“The book also promotes the idea of automatic aid flows to vulnerable countries affected by climate shocks, such as drought. The idea is that otherwise, these countries risk being torn apart by conflict, even civil war — and that is far more costly to the global community than modest amounts of aid to cushion the shock. Since the average civil war in Africa imposes costs to itself and its neighbors of $100 billion, that sounds like a good idea.”

We couldn’t have said it any better ourselves.

- Ray and Ted

It’s  a sad irony of economic development that many of the countries “blessed” with natural resources are also some of the poorest places on the planet, and also the most violent - the so-called natural resource curse. When oil (and coffee and wheat and other commodity) prices were going up over the past few years, these resources became even more valuable. Do we expect that would result in more or less conflict and violence in countries cursed with too much oil or fertile soil? And what will happen now that commodity prices have taken a sudden nosedive?

According to a recent study by Oeindrila Duba and Juan Vargas, it hinges on the labor intensity (the number of workers you need to extract or nurture the resource relative to the number of buildings and machines). We’ve given a more detailed description in a recent Slate column of why higher prices means less violence in places with labor intensive resources (like coffee and other agricultural commodities), but more violence in those with capital intensive resources (like diamonds and oil):

Will there be blood?

It’s also something we discuss in some detail in Chapters 5 and 6 of Economic Gangsters, based on Ted’s work on civil war in Africa and witch killings in Tanzania (among other things).

-Ray F.

Development economists were dismayed - though not surprised - to hear Barack Obama scale back his pledge to increase aid to poor countries as a result of the current U.S. financial crisis if elected. If history is any guide, this is at least one promise he’s likely to keep. As David Roodman of the Center for Global Development explains in a recent article, four donor countries - Japan, Finland, Norway, and Sweden - have had financial crises since 1970, and in each case aid has dropped significantly.

In the U.S., much more development aid is channeled through private philanthropy, but there’s every reason to expect that this will similarly take a big hit from the current economic downturn (see our recent op-ed in Forbes for a discussion of how the financial crisis will impact philanthropy more generally, and what to do about it).

And most troublingly, banking problems in the U.S. have already had massive ripple effects throughout the donor world (you can bet that Iceland isn’t going to have much left in the state coffers for helping anyone, let alone themselves), putting aid budgets elsewhere on the budgetary chopping block in years to come.

All this will add up to less aid just as we head into a global recession, which is exactly when the world’s poor will need it most.

-Ray

With the global banking system teetering on the edge of collapse and the Dow Jones Industrial Average experiencing a series of stomach-churning gyrations, it’s easy to get nostalgic for the good old days when our biggest worry was $120/barrel oil. Given the single-minded focus in recent days on the financial crisis and its myriad causes, it may have escaped your notice that the price of oil has quietly made its way back down to $80/barrel. Other commodities have seen similar declines, with wheat and corn prices off by 40 percent from their recent highs. This should provide some relief to recession-battered American consumers. But what does it mean for the countries where those commodities come from?

For some poor farmers, life may have just got a whole lot harder. The after-effects of some earlier commodity collapses suggest that civil war and genocide may also be on their list of worries: In 1989, the price of Arabica beans, the economic lifeblood of Rwanda’s poor farmers, fell by 50% and didn’t recover until 1995. But by this time, perhaps a million Tutsis were dead, victims of mass genocide arguably driven in part by the economic desperation of their Hutu countrymen.

In a Forbes op-ed yesterday, we describe this tragic nexus between commodity markets, poverty, and violence, and what the international aid community might do to prevent further tragedies:

How to Prevent War and Famine

The proposals we mention here are described in detail in Chapters 5 and 6 of Economic Gangsters: Violence, Corruption, and the Poverty of Nations.

-Ray & Ted