Matthew Grote's Weblog


Jun 09 2009

Lusailin’ …it takes me away to where I’m going

Christopher Cross believed in the organic creation of smooth music when he wrote the 1980 hit, “Sailing.” He knew that his music was a product of where he had been and everything he was. It wasn’t just the mass exporting of his killer good looks or really smooth guitar riffs. He took the fruitful region that was his life, found his chief product of music, and exported it to the world. This is probably was inspired Jane Jacobs to reflect on cities and publish her book in 1984.  She knew that cities were full of complication and needed a natural flow and order to their growth and sustainability.

Jane probably cringed at the synthesized and raucous sounds of most of the music in those years. It was interesting, but unnatural and didn’t flow from the heart. Not like Christopher Cross.  She would probably cringe at a lot of the music out there today. And she would definitely cringe at the idea’s of Qatar’s cities.  Take the developing city of Lusail for example.

“The city of Lusail is a meticulously planned urban development, unlike anything witnessed before. Within just a few short years, a dramatic new vision of the future will rise up from the desert sands. Lusail will be the ultimate in living experience for around 200,000 people.”

Being as smooth and laid back as he is, especially after sailing the whole way Qatar, Christopher Cross might say, “Wait a minute, this Lusail place might work out okay. They’ve got about a million sailboats here after all.” Jane would have to explain it to the old skipper. Sure, the city was necessary to meet the huge demands for workers in the booming oil business. In fact, the city might thrive and diversify at some level if the oil business carried on for decades to come. But the world is unpredictable, and Lusail would not be prepared if the oil market shrank significantly.

For most cities in Qatar, there is no real economic diversity — oil is across-the-board dominant.  If oil revenue would get cut back, the whole system could grind to a halt. The cities could never have existed in a desert without the huge cash influx of oil revenue.  In fact, the situation is so hyperbolized that Jacobs’ framework hardly even applies here. Every city in Qatar would have to start from scratch if they wanted to be safe from failing at the most intense level.

But what about a level down from there – sustainability of the city while oil was still in demand? This concept might intrigue Jacobs. How could a city that imports EVERYTHING be such a nice place to live? For that, she’d have to hop on a schooner with Christopher and take a cruise around the harbor and adjacent fishing villages. What better way to get to know the people and the complexity of their city?

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Jun 08 2009

Russian Bonsai

So we had the Genovese and Maghribi traders.  Now I’d like to toss the former-Soviet Russians into the analysis bowl.  As the Cold War ended, the communist Soviet Union was led by the Washington Consensus into a market economy of sorts.  Hurray for liberal democracy, right?  Well, not quite.  For their part, Western leaders had not read enough Greif to make this potentially shocking transition go smoothly – or any semblance of smoothly.

Coming from state-centric, vertically aligned communist system, many Russians had a hard time adjusting to a horizontal, state-free market economic system.  Several issues complicated the situation, including but not limited to the following. 1) The socialist state would generally look after citizens regardless of their work ethic. Under a market system, competition was introduced and citizens were expected to work harder for themselves to get by.  This was often seen as a challenge rather than an opportunity. 2) The culture of corruption was too strong to just naturally dissipate through the course of the transition to a market economy. 3) The country was left with a power vacuum after the strong-armed soviet government fell. These key factors combined to result in the rise of business oligarchs and a lack of central power. Any doing business had to pay their “dues” at every step of every process. Why would anyone work their hardest in a system where you’re bound to lose? The economy disastrously collapsed in the late nineties.

From Greif’s perspective, everyday Russians were severely lacking any coercion constraining mechanisms.  Law enforcement didn’t have the resources or were corrupt themselves. Corruption dramatically increased transaction costs. Social capital probably existed in small amounts at the neighborhood level. But as soon as any value was big enough to be noticed, it was targeted by corrupt actors.  The business oligarchs formed dense clusters of power and wealth while the majority of the middle and working classes were kept stagnant.  The culture of corruption was a well established institution. And for the transition to a market economy to succeed, Russians needed stronger law enforcement to account for this institution.

One person understood this very well. But he wasn’t necessarily interested in making Russia a freer, more promising place for everyday Russians. Enter Putin. After the collapse, Putin took advantage of the corruption institution to organize the oligarchy and realize his vision of a world energy super-power. In assembling his designs, Putin took time to understand the Russian business environment well. He saw that corruption and the markets grew and evolved together. He knew it well enough to achieve his goals.

So how does the role of social capital apply to global governance? This example shows us the need of an intimate understanding of the culture surrounding a developing market by policy makers. In this case, more ground-level attention was needed than money and high-level analysis. Policy makers needed to be on the streets talking to everyone, observing and reporting. In this sense, markets are kind of like Bonsai trees that policy makers need to continually tend. Perhaps corruption was a light source that the Russian tree was growing toward; policy makers could have trimmed some branches or introduced another light source.

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Jun 08 2009

Jane walks into a bar

Haha, I feel like I’m working at Steiglitz’ version of the World Bank — I’m tasked with applying development theories to a poor country without knowing more than statistics and summaries about the place. I am Greif’s nightmare. It’s a good thing that my experiment just involves a hypothetical blog entry rather than millions of dollars in development funds and thousands of people’s livelihoods. Since I’m not an expert in developing nations, I’m going to twist this assignment a bit to fit a stagnant area in the world that I am familiar with: western Pennsylvania.

Greif might be stumped by this one. It’s an area with well-established coercion constraining mechanisms and market infrastructure. The city itself is experiencing growth – new corporate offices downtown, new restaurants and shops in all of the neighborhoods. However, the surrounding areas have been stuck with slow or non-existent growth. It’s like western PA has reached a point in the evolution of its markets that Greif’s theories don’t really apply to. Jacobs might have an easier time talking about Pittsburgh and its surrounding areas. She’d probably say that the Pittsburgh area needs to examine its imports and begin to replace them with locally-produced goods.

Like many areas in America, western PA imports almost everything. There are a few things that the area can focus on in particular though. Jacobs’ theory is that by keeping the buying and spending local, the area enters into virtuous circles and more wealth stays near to everyone’s benefit. Tourism is a good example. Almost everyone heads to the Outer Banks, NC or Ocean City, MD in the summer. There are plenty of lakes in the mountains surrounding Pittsburgh that could be just as nice as beach resorts with a little attention and care. The buying of local vegetables and farm goods seems to be on the rise too. More buying from local farmers means more local tax revenue and more local spending by the farmers themselves.

What can all of this teach us about the economic crisis in America today? Greif might suggest that the market for complex derivative products evolved with an institution of uncertainty of the products and trust in technology, all with coercion from senior executives to go through with the deals. His theories provide a clean framework for us to analyze the past, but I have trouble seeing how they apply to the future. Jacobs, on the other hand, might be more useful for looking at the future rather than the past. She’d say that the stimulus package needs to be distributed, managed, and measured according to cities and their regions rather than states or directly to individuals. She’d also say that those spending the stimulus money need to sit down and get familiar with the situations of the citizens – like shooting the bull at a local pub for a while.

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Jun 05 2009

Charlie Wilson: Throwin’ weak links left and right

For whatever the movie is worth, one scene in Charlie Wilson’s War has always been memorable to me.  Wilson wanted more funding for Afghan fighters against the Soviets, but the chairman of the appropriations committee wasn’t biting.  So Wilson took him to see the war-torn villages in person, resulting in the chairman having a change of heart. Wilson made it look easy. Why can’t we just expose our political leaders to all of the bad situations in the world and get them to sympathize like any person with a heart would do? Narayan might provide some insight into this question.

Narayan partially builds off of Putnam’s work. Putnam argued that social capital clearly makes a difference. To me, it was refreshing to see someone back up common sense and good intentions with a reasonably sound framework and empirical evidence.  Although it seemed ironic when he use Machiavelli to demonstrate his ideas. I remember old Nick’s book justifying doing wrong for the common good, which makes him seem more like Putnam’s southern Italians rather than the northerners.  Putnam shows even more how Machiavelli was definitely a shark in the northern Italian fishtank.

In a sense, Narayan takes a step after Putnam and creates a framework. But how does he inform Wilson’s case? He says that informal institutions and networks pick up where formal institutions leave off.  In Wilson’s case, the formal networks were Congress and the chairman’s links to his constituents, the military, and the Soviet Union; the informal network was the weak link he made with the Afghan village.  Narayan says that, in developing nations, informal networks provide cohesion through tying together disparate groups — those in power and those not. This, in turn, creates cohesiveness and helps everyone rise.

This gets to the idea that national and international leaders need to get their hands dirty once in a while — create weak ties to add major value now and again. “But no,” you say, “a Congressman who makes connections with problems all over the nation and the world would be too bogged down to get anything done. Leaders can’t fix ALL the problems.”  Well, with an attitude like that, we’d end up with some pretty close-minded leaders. Maybe even something resembling… the Washington Consensus! Gasp!

If we follow Narayan, leaders should make all of the connections they can; or at least he says that if government won’t do it, civil society will or should.  It seems that formal policy institutions usually aim to 1) put most of the problems on the table, 2) organize and value them by their impact, 3) prioritize them, and 4) create action plans for solving them — then 5) sit around and talk about it all for a while. (Just kidding.) Creating all of these loose connections “builds social capital,” that is, it opens peoples’ eyes to others’ worlds and problems, and it helps them value and prioritize what needs to be done first. So to answer the question, there is no good reason why we shouldn’t expose our leaders to more, especially with the organization and presentation powers of technology being readily available.  Let’s get on it!

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Jun 05 2009

Results: You get what you measure

Being an auditor, I naturally tend to look for what we call ‘internal controls.’ But those can be so awfully boring that you might have a violent reaction when reading about them.  So instead, I’ll talk about performance or effectiveness metrics in development.  It’s commonly accepted that programs usually don’t aim for success as much as they aim to meet their performance measures. Here I’m suggesting that metrics are institutions that create high transaction costs if they aren’t met, and that they might be used in creative ways to get better results in social programs.

When contractors are tasked with the goal of building a telecom network in a rural area, they usually focus on getting the infrastructure in place as quickly and cheaply as possible.  Their metrics are time and cost: when they come in over budget, they might pay the difference themselves; when they come in behind schedule, they could face financial penalties outlined in their contract.  In these formal institutions, the costs for not meeting milestones are financial.  Through the danger of costs created by metrics, program managers vie for the cheaper option of running effective programs.

This is all well and good in the contracting business, but how does it apply to social programs? Can the metrics of any development program be directly connected to political values like job creation,.education, political stability, or trade & broader economic performance.  Usually in these cases, the metrics are informal institutions. Everyone knows that a school’s goal is to graduate as many children as possible, or that it’s a politician’s job to create economic stability so more jobs can be created.  So why doesn’t this always work? It’s go to be caused by the structure of the networks surrounding these social organizations. The only people paying the costs of the missed milestones are the citizens.

Is there a way we can successfully increase accountability in social organizations?  How can we modify the relationships in these networks to do this?  Is there a way to create more costs to failing political leaders or more benefits to successful ones? How can citizens hold more power than just by voting leaders out of office?  This is a reason why some states stay perpetually under-developed — because there’s no accountability for political leaders. Perhaps newspapers play the role of a powerful network hub advocating on behalf of citizens. Maybe the answer lies in the promises of technology: extremely low costs to news and opinion dissemination and also for the creation and dissemination of hard metrics data on exactly what political leaders are contributing. This seems to have led us to a greater question than I anticipated, and I’ll end by conceding that it’s not something that can be solved in a simple blog entry. (At least not one of MY simple blog entries.)

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Jun 05 2009

Building a dam that’s bound to break

For those of us who have gone through the experience, it’s not just a rumor that the hiring process for the federal government is atrociously slow and daunting. It seems all the more ironic since so many people are currently looking for jobs and politicians are focusing on the creation of jobs to stimulate the economy.  Instead of looking at why it’s so slow, I’m going to introduce the key actors and propose a new relationship structure that could eventually result in effective changes.

First of all we have the potential employees trying to get jobs and ending up stuck at the mercy of The Man.  Bureaucrats control the system and look to keep the status quo; they avoid risk from law suits at a high cost of inefficiency. Political figures have control over the bureaucracy and can force change. Advocates and think tanks can identify problems and come up with innovations and solutions. News media also plays a role in the political process as well creating hype and momentum.

There are several relationships that keep things from changing, however. Citizens have no direct power over the bureaucrats. The bureaucrats themselves are slow to change and can even make processes worse when the proper pressure is not applied by political powers. Advocates might have good ideas, but they have little to no influence on the system itself. Political figures can tap advocates and the bureaucrats to change the system, but they risk spending their time and political capital on something their constituents might not care about. Here’s where things get interesting. The potential employees are also constituents and therefore very powerful over the politicians.
The strategy for persuasion relies on sequencing and an opportunity structure similar to the existing  structure. A change to the hiring system is something that can’t forced by an outsider — it needs to happen on its own.  But, we can help make minor tweaks to the network so the major hiring system revision happens sooner than later. First we build connections between citizens and the advocates as a place for citizens to vent and document their frustrations. The advocates collect moving stories and factual, telling statistics. The advocates keep preparing their stories, statistics, and potential solutions like a dam that keeps filling up as a river pours into it.  They build up pressure with solutions in hand ready to be presented.

Then one politically heated incident of someone not getting a job because of the dreadful system will be picked up by the news media and perpetuated, breaking the dam. The advocates release their fuel and step forward with the solution.  The politicians hear the collected stories of their constituents, take the advocates’ solution as their own, and demand the bureaucrats make the fix. Everyone has jobs, the economy recovers, and peace ensues happily ever after.

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Jun 05 2009

Global networks and regional clusters

Designing a network for the first time — I feel like I’m reading about de Goya and turning around to finger paint.  Let’s get started… States comprise the strongest group of nodes in the network. They’re are influenced by links to their citizens. They’re influenced by other nations. And they’re influenced by financial institutions and NGOs. Financial institutions have fewer connections to be influenced by, lessening their accountability (or vulnerability to influence) within the network.   NGOs may lack links to be influenced by, but they also struggle for links to exert influence on other nodes.  One thing this structure shows is how Stiglitz’ Washington Consensus will persist unless more connections between nodes are made to increase influence on the financial institutions. However, we can’t have everyone connected to everyone. And banks
aren’t run by the public – that’s not how things work.  They’re sort of an inherently closed network or small world.  So what exactly do we need to shift the trajectory of the whole network?

What struck me most in the reading for this session was Scott’s and Storper’s article complaining about the lack of regional focus in recent literature.  As amateur as I am at international affairs, it was an exciting notion that I completely agreed with.  Where was the case-by-case analysis?  How is studying the issues at the macro-economic level useful if we spend more time examining trends than trying to solve individual problems? Collier did touch on regionalism in his bad-neighbors trap, but curiously I didn’t see Scott and Storper cite him. I understand that some failures result from systemic happenings and that leads people to question problems with the system.  But usefully applying insights from network will ultimately come down to individual cases.

This helps in understanding the problem our newly-sketched global network.  Perhaps these regions would represent a sort of small cluster that can collectively exert more influence than they could additively.  A few random connections between these clusters and the financial institutions could result in new ideas and changes that hadn’t occurred before.  Likewise, it’s the weak links that NGOs have that could start a serious change in the way the financial institutions behave.

Okay. Enough finger paining. Let’s bring some technology into this. I’ve been itching to bring this up and it’s going to tricky to tie into the architecture of our network, but that’s the great thing about blogs – no rules!  Hans Rosling works at and they’re doing some cool stuff with data visualization.  Watch this quick clip.

Rosling’s graph gives us spatial relations showing life expectancy and GDP moving over time. Can we apply this kind of modeling to our global network?  It leaves out the direct links (representing relationships) between all of the different nodes and what they mean.  But it does show show how technology brings network theory to life through visualization.  While the links are left out, spatial relations can still play an important role visualizing a network.  Rosling takes massive amounts of data and inspires us through new ways of understanding to draw new conclusions.

I’d love to see our network of nations, banks, and NGOs placed into a tool like Rosling’s.  We would be able to see growth, movement, trends, and changes in relationships that in turn change the shape of the network.  If we were able to see how the banks grew into power and where they might be in a few years, we might better understand what kinds of connections need to be made to move the network in the direction we want.

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May 21 2009

Kaleidoscopic Structures

What is my intellectual network like?
Well, it looks more like a kaleidoscope than an easily sketched-out graph.  My strongest intellectual ties are certainly my professors, my classmates, and the authors I read.  The thing is that my classes and reading assignments not only extremely diverse to begin with, but are constantly changing by the weeks and semesters.  So while one connection lights up with intensity for one class session, it dwindles to a thread by the next class.  That’s sort of what grad school is all about though – collecting a million of these loose connections through all of the reading writing we do.  On top of CCT, I’ve got my work connections (which are more professional and practical) and my friends & family (which are entirely practical).  When I talk to my coworkers or friends & family about my school, I’m usually humbled when I try to make connections between my studies and real life.  It usually takes a bit more explaining than a business or law school student would need.

My family, friends, and coworkers acted like anchors with a sort of leash attached to me. From there I could go exploring new and radical theories, ideas, and frameworks that I might or might not be able to apply to my life practically.  The experience rewards me in the form of a liberal mind and greatly increased analytical and expression skills.  But I always come back to the common set of professional values of my coworkers and real, down-to-earth values of my friends and family.

And how does this provide insight in the development of the Washington Consensus?
This question gets to the heart of CCT as an academic program.  Like we discussed in class, those involved in the Washington Consensus had a very tight-knit group that, for decades, rewarded conformity and scorned diversity (unless of course it was the kind of diversity that looked like dollar signs). So for them, sailing away to explore new ideas and concepts wasn’t worthwhile if they were making good money just keeping with the status quo.  No one was creative or influential enough to successfully pull their closely-connected nodes in another direction.

What new development strategies could change this? And how can they be encouraged?

Expand the network!
The more people involved, the more influence can be exerted on a small world like the Washington Consensus.  Local stakeholders know their communities best.

Use what’s already there! It’s harder to start from scratch, than to just tweak the current incentive system. Let them keep playing the game and making money, just level the playing field a skosh.

Sunlight is the best disinfectant! What better for a kaleidoscope than sunlight? Bad PR can be more harmful to profits than a touchy-feely development project.

Spotlights are even better!
Give great PR and buzz to a few firms and projects doing their jobs well.  Remember when Collier got the UN to focus on the “bottom billion”? Remember when it became cool to be “green”?  Leaders need to create the same buzz around fair and successful development projects.

How in the world do these strategies tie into my own intellectual network?
Great question.  Maybe somehow this idea (from me as a node) will cause a tiny oscillation in the small world of CCT and somehow loose connections between a faculty member and Kevin Bacon then Kevin Bacon and Robert Zoellick will miraculously change the direction of international development practices.  Okay okay, so maybe the Kevin Bacon part was a little far fetched….

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