Tuesday, August 28, 2007

It's About the Governance

The establishment of a commission to lead the reconstruction of eathquake areas of southern Peru hit its first bureaucratic snags almost straight away.

Prior to the Peruvian congress approving the creation of the independent body dubbed 'Forsur', the presidents of two of the three affected regions voiced their objections. President of Ica Romulo Triveño and Huancavelica's Federico Salas argued that Forsur was against the spirit of decentalization policies, and that reconstruction should be managed by regional governments.

Others expressed unease that the business members of the executive council of Forsur would not be considered public servants, and that Forsur would be able to contract directly for goods and services, bypassing normal tendering processes. This, said La Republica, was to 'confuse the emergency stage - - when such a measure is justified -- and reconstruction, which is assessed over three to four years'

At least one blogger also raised concerns about the reconstruction 'tsar', businessman Julio Favre, who sounds something like a Peruvian Bob Jones. Some past quotes:

'If I had to choose between giving work to 60o and saving 4 herons, I'd choose giving work to 600'

'It was really Marxist front organisations that were behind the protest' (speaking about a march against corruption led by Lima's archbishop).

Regarding the reconstruction project, Favre --who will receive no direct remuneration for his role -- said that 'if we follow all the bureaucratic processes we'll be starting the construction in two years, and we want to [finish] it in one year'.

In eventually approving the creation of Forsur on Tuesday evening, Congress struck a compromise. It agreed that Forsur will be able to contract directly for the removal of rubble and rehabilitation of basic infrastructure such as water and drainage, while other, non-emergency contracting will be carried out transparently through an 'abbreviated purchasing mechanism'. The directorship of the independent body will comprise three regional presidents, four provincial mayors, six ministers, and four businessman. It will be based in Ica.

This still didn't satisfy Ica president Triveño, who is planning to present a consitutional claim against the creation of Forsur on the grounds that it replicates the functions of an already-created regional organisation.

Bureaucratic tangles aside, what is happening on the ground to assist people who lost their homes and possessions in the quake?

-- The government will allocate 23 million soles ($7 million USD) to supply warm clothing, food and water for the victims of the quake. This will be managed by the United Nations World Food Programme, which will be in charge of acquiring, packing and delivering the supplies

-- 400 emergency wawa wasis (creches) will be established in the affected zones to look aftter 4,000 children between the ages of three months and four years.

-- Venezuela has sent 200 prefabricated emergency houses, and Chile 100 more

Minister of Labor Susana Pinilla announced that the Construyendo Peru programme, in which people affected by the quake are being temporarily employed to clear up the rubble, is likely to be extended from 8,000 to 12,000 jobs

-- but the Red Cross and Doctors Without Borders say there are still 'dozens' of small rural communities that have not received any aid, 10 days after the quake, and people are sleeping outside without any shelter and barely any food or water

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Monday, August 27, 2007

On With the Reconstruction

The rubble is still being cleared, and 41 bodies haven't yet been found, but plans for reconstruction in the parts of southern Peru hit by last week's earthquake are underway.

On Monday the 20th, Peruvian president Alan Garcia indicated that he would propose the establishment of an independent body charged with leading the reconstruction. He said it would be led by a an "irreprochable person of great industry and decisiveness" who would "movilize all sectors to reconstruct the affected zone".

On Friday 24th, Garcia confirmed that businessman Julio Favre would be the designated leader, working through a committe including local mayors, regional presidents, as well as relevant businesses and their technicians and architects.

The vision as elaborated by the Peruvian president appeared to be one not just of reconstruction but of modernization and transformation. He suggested that as well as erecting properly-designed buildings and infrastructure, the project would double-lane the Ica-Lima highway, and make operational the previously unused port of Pisco.

By Saturday 25,Favre, already denominated the reconstruction "tsar" had put together his project team to lead Forsur (Fondo para la Reconstrucción del Sur), and local reporters accompanied him and Pisco mayor to inspect an area of terrain to the south of the city where it was intended the rebuilding would start.

President Garcia announced that Forsur would have available a budget of 260 million soles ($85 million USD), and would also construct housing for 'one or two thousand people'.

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Saturday, August 25, 2007

After the Earthquake

Amidst the inevitable chaos, neglect of people living off the beaten track, and one or two engregious incidents of corrupt behaviour, Peru appeared to do a relatively effective job of responding to last week's earthquake

Three days after the tremor, on Saturday the 18th, local news sources reported a general sense of panic and desperation in Pisco and Ica, where people were living in improvised shelters made from sticks and sheets of plastic.

There was also widespread insecurity. As was seen in New Orleans, actual criminal acts mixed with desperate quake victims looting ruins and breaking into empty shops to find food and supplies, heightening the sense of lawlessness . There were reports of organised attacks on convoys bringing emergency help to the area, and when trucks arrived most were set upon with desperation by people who were ravenous for food and water.

In response, the government increased the number of military units in the Pisco area from 400 to 1,000, sending army, navy and air force units in addition to more than 2,000 police. The Minister of Defense, Allan Wagner, reported that by Saturday morning the assaults on vehicles bringing aid had been 'neutralized'. But reports of looting still drifted in.

On Sunday 19th, Peru's civil defence agency Indeci announced that 503 people were dead, 1,042 injured, and 33,939 families had suffered damaged or destroyed homes. The agency also reported that 2,800 tonnes of clothing, food, shelter, and other goods had been delivered. Statistics varied: the regional president of Ica, Rómulo Triveño, claimed that 45,000 homes had been damaged or destroyed in Ica alone, affecting 253,000 people .

Seventy-two hours after the earthquake, electricity and water were being restored, though this was a slow task in the areas of Pisco and Ica most affected by the quake. In Pisco, where less than 10% of the city had electricity, emergency and medical operations were being powered by generators.

Other Peruvian regions and municipalities rushed to organise aid, and the National Stadium in Lima was the designated centre for collection of donated goods. Thousands of limeños headed to the stadium to give clothing, tinned food and useful equipment, while at least 500 volunteers worked round the clock to collect and pack the donations.

The Peruvian earthquake was also a popular international cause, and offers of help flooded in. In addition to the countries that had already given help, by Monday Mexico, Ecuador, Panama, Brazil and Italy had also dispatched aid. Chile sent further assistance, while Argentina set up an 'air bridge' to Pisco. The Mormon church (with 430,000 Peruvian members) promised a 747 loaded with supplies from Salt Lake City while the Pope himself sent $200,000.

But for people off the beaten track, help was slow to arrive. Reporters from La Republica found that in the settlement of El Bosque, just 15 minutes from the centre of Pisco, people complained that after three days they had not yet received any assistance. On the Wari-Liberatadores highway inland from Pisco to Huancavelica, settlements where the majority of dwellings were destroyed had not seen any help by Sunday.

President of the Council of Minister Jorge del Castillo justified the lack of help for outlying areas, saying that it was necessary to 'prioritize the places worst affected by the earthquake'. Some blame could be directed to the authorities for not having better systems of distribution. But people's inability to reach central areas where aid was being distributed, or insecurity about leaving their few remaining belongings for fear of robbery, reflect everyday reality in Peru.

Meanwhile, the government was looking ahead to future issues of reconstruction. Minister of Labor Susan Pinilla announced on Saturday 18 that a programme called Construyendo Peru would be set up to begin reconstruction work. People affected by the quake would be given priority for the 4,000 jobs, the first week's wages paid in advance.

With the need to spend large amounts of aid money quickly, there's always a risk of misappropriation and corruption. Minister del Castillo announced that the government would establish 'mechanisms of transparency' to keep clear account of national and international aid.

Of course, no mechanism can prevent the dishonesty of individuals, as was seen when a Civil Defense employee in the Lima barrio of La Victoria was caught with half a tonne of donated goods that she'd taken home for 'safe keeping'.

In the local media there were many critics of the government response as delayed, disorganized and haphazard. To be fair, some of the defects which exacerbated the quake's effects -- precarious building construction, ancient water and electricity infrastructure, isolation of people in peripheral areas -- are chronic ones that can't be blamed on any one administation.

But the most notable feature was the outpouring of good will and solidarity. Temporarily, the different sectors of Peruvian society -- central and local government, private companies, civil society groups and individuals -- were united at least in the wish to alleviate the suffering of those less fortunate.

If only, as several columnists wrote, that attitude could be sustained past times of crisis.

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Sunday, August 19, 2007

More Daily Minion

As promised, there's a new story on the Daily Minion front page -- "Republicans May Finally Have Suitably Charismatic, Conservative Candidate" and a new 'brief' -- "Cullen Promises Special Treat for Well-behaved New Zealanders". Hopefully there'll be a few more stories and updates coming soon.

Saturday, August 18, 2007

Earthquake in Peru

It's always a worrying sign when the death toll rises rapidly. The first news I heard about the 7.9 Richter scale Peruvian earthquake was several hours after the event, and already early news reports of deaths in single figures had blown out to 330 in later reports. It now looks as though the death toll will be around 500, while an estimated 17,000 people have been left homeless.

Worst hit were the towns of Ica,Pisco, Chinca and Cañete, three--five hours to the southeast of Lima. The majority of casualties appear to have occurred when buildings simply collapsed on top of their occupants.

It's worth checking out this video clip (click to play, audio in spanish) to get some idea of just how badly Pisco has been damaged. The piles of rubble make it look like a particularly war-torn part of Chechnya. Reports say that between 60 to 80 percent of the city has been destroyed. The Guardian has a good summary of events, and some geological background to the quake.

Injured people are being ferried by 'air bridge' to Lima hospitals, and aid and supplies are coming in from the government, Red Cross and private companies. International agencies have already given or offered $40 million of aid. Chile was one of the first countries to assist, sending a Hercules transport plane, while Spanish and Bolivian rescuers helped to look for survivors, and Colombia was reported to have discpatched a ship with supplies to the port of Pisco. Peruvian president Alan Garcia, never one to miss an opportunity to make a wider political point, said that "this gesture shows the brotherly relations of Peru and Chile despite differences over the maritime border".

Sadly, there have also been numerous reports of criminal gangs taking advantage of the darkness in Chincha and Ica to loot and attack houses. It is thought that prisoners that escaped from the Tambo de Mora penal facility during the earthquake may be responsible for some of the criminal activity. Frightened citizens rang TV and radio stations describing armed gangs roaming the streets. President Garcia has announced that he will send an additional 600 police to the affected areas.

Supplies including water, food, medicine and tents have been dribbling in along damaged highways. TV cameras -- always efficiently deployed -- showed people in Pisco living a post-apocalypse reality, huddled on dark streets in blankets and improvising communal meals. But they were still better off than those in isolated rural areas, who were reported to still be with out assistance, 48 hours after the quake.

As terrible a tragedy as this, perhaps the real story is that a complete catastrophe was only just avoided. In Lima, buildings wobbled and swayed, leaving residents shaken but largely unharmed. The city has close to 10 million people, many in dense concentrations of poorly-constructed brick, plaster and concrete. Had the quake been centred a bit further to the north, the results woud have been scarcely imaginable.

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Saturday, August 11, 2007

Are Policy Analysts Causing Inflation?

As with most Anglo-Saxon cultures, New Zealanders have a strong anti-intellectual streak and an ambivalent relationship with the State. It's therefore unsurprising that little respect should be accorded to the role of the public servant, and in some circles 'bureaucrat' is practically a swear word.

The country's most successful comedy show, Gliding On, was based on lampooning the (lack of) activities in a Wellington government office. To this day, in a very different political and economic environment, it's still an a priori truth that the 'pdf pushers' in Wellington are overpaid, unproductive drain on the taxpayer that contribute nothing to society's well being.

But it would seem a bridge too far to blame public servants for causing inflation and raising mortgage rates, right? Not according to Stuff columnist Bernard Hickey , who appears to claim just that. Hickey aspires to be "provocative and unconventional [and] question the consensus". Here, however, he is satisfied with peddling an exaggerated version of conventional wisdom.

His column is a classic case of bait-and-switch. He has a larger, ideological claim to make (government spending is contributing to inflation and should be reigned in) but spends most of the time appealing to kneejerk contempt for bureaucrats by making cheap points about advisors and policy analysts – whose salaries in reality form only a tiny proportion of total government spending

The core part of his post is simply listing the jobs for analysts and advisors, which by definition can't be adding any value (question: if they were, how would we know?) He is shocked to find 29 jobs listed in the Dominion Post for such roles. Are these to replace people who have left, or are they new jobs? We don't know, because his assumption is simply that 29 must be 29 too many.

He then skips to a Trade Me search of government jobs and find that – horror – 22 are offering salaries more than $80,000. Twenty-two out of how many? If we run his search again across all salary bands, it turns out that this is 22 out of 152 government jobs – about 15 percent. And 84 (approximately 60 percent) are in the $0—50,000 category. I would hazard a guess that this is actually quite similar to the NZ labour force as a whole.

The only piece of hard data that supports his larger argument is that public sector wages have grown faster (20.6 percent over seven years) than in the private sector (15.6 percent)
But -- having focussed the attention on analysts and advisors -- he conveniently ignores the fact that the 'public sector' includes all government-funded occupations, including doctors, nurses, teachers, police, social workers et al. Investigation will almost certainly show that these have absorbed the great majority of extra expenditure.

Of course, Hickey will probably still want to argue that spending has grown too much and too fast. But he then has to acknowledge that these are things people have actually (repeatedly) voted for.

His second graph does show a steady increase in the core public service (bureaucrats). One could argue that ANY organisation that expands its operations will see a proportionate expansion in administrative functions, and areas like research and analysis (which in the private sector is often considered to add value). But even if we assume that all 40,000 bureaucrats are fundamentally useless and unproductive, their totality still constitutes less than 2 percent of the NZ labor force (around 2.1 million). This 2 percent is causing inflation? Come on...

The post includes a set of colourful graphs presumably intended to add intellectual rigour. But this is the most dishonest part of all. Increases in public spending and bureaucrat numbers since 2000 are compared to a long steady decline in NZ's relative economic standing against the OECD, US, and Australia. The problem is that this graph starts in 1970, and the big decline is 1970-90 – i.e. in NO way caused by current policies. In fact, if you actually look at the bit of the graph that is post-2000, the lines are more or less flat – indicating that in recent times NZ has held its own, especially against the OECD average and the US. Not bad, especially with all those bureaucrats weighing us down...

In a future post, I'll discuss what the motives might be for the type of claim peddled by HIckey. Meanwhile, the popular view of public servants as unproductive parasites is, well, pretty unfalsifiable. But let's be clear -- the suggestion that they're somehow responsible for New Zealand's macroeconomic difficulties is nonsense.