People are passionate about their online groceries. And they are very passionate about milk, specifically Tuscan Whole Milk sold at amazon.com. Reading these 700+ reviews of a gallon by teens and tweens from around the world did make Statastico feel a bit old. (And uninformed.)

But it does raise an issue: how much of the time we spend blogging, reviewing products and updating Wikipedia while at work? How does this affect worker productivity? Wikipedia arguably increases efficiency. Buying the product you want on the first try because of user feedback helps consumers and producers alike.

If I had more time, I’d try to correlate the average number of product reviews on Amazon to the unemployment rate. Alas, Statastico is going to the U.S. Open to watch Agassi beat Baghdatis tonight. Any volunteers Statasticos out there, or have you all gorged yourselves on a gallon of milk during the past hour?

In July of this year, Baghdad was in crisis. Death squads roamed the streets abducting at will and killing more than 50 civilians per day. Starting on August 7, Operation Together Forward concentrated 8,000 additional U.S. troops on 5 of the most deadly neighborhoods in Baghdad - Doura, Ghazaliyah, Rashid, Ahmariya and Mansour (see map).

At the beginning of the operation, Senator John McCain grilled U.S. General John Abizaid about troop movements in Iraq, especially the redeployment of 3,500 troops from Mosul to Baghdad. He was concerned that we were simply putting out bigger and bigger fires, responding to flare ups rather than developing a strategy, saying:

“What I’d worry about is we’re playing a game of whack-a-mole here.”

Yesterday the L.A. Times offered a preliminary assessment of Operation Together Forward:

“An ambitious military sweep appears to be dramatically reducing Baghdad’s homicide rate, U.S. and Iraqi officials said Sunday. …

Similar sweeps in Baghdad and elsewhere since the U.S.-led invasion in 2003 have reduced violence. But the bloodshed would increase when U.S. forces moved on. …

U.S. and Iraqi officials describe the Baghdad security plan as a last-ditch effort to stave off civil war and to shore up Maliki’s government, which has struggled to contain sectarian violence and deliver essentials such as electricity and gasoline.”

Twenty-two days after the operation began, it does seem that violence in Baghdad has been significantly reduced. Calculated on a monthly basis, there has been a 77% decrease in the number of civilian deaths.

Senator McCain has repeatedly called for more troops in Iraq to snuff out the sectarian violence once and for all. Is he right? By increasing the total number of U.S. soldiers in the Baghdad area from by 24,000 to 32,000, the troops are also becoming more efficient at preventing civilian deaths. In July, there were 76 civilian deaths for every 1,000 U.S. troops in Baghdad. During Operation Together Forward, that has dropped to 10 civilian deaths for every 1,000 troops in Baghdad.

But McCain’s comparison to Whac-A-Mole indicates that he believes troops movements within Iraq are a zero-sum game. As we move troops from hot spot to hot spot we are always chasing new problems. Perhaps. After the 3,500 troops in Mosul were moved to Baghdad, violence in Mosul did not increase significantly. Those 3,500 troops from the Stryker Brigade may have helped save as many as 622 Iraqi lives.

What’s more, U.S. troops in Baghdad appear to have a lower casualty rate in August than in July. Perhaps this is all due to the fact that militias such as those loyal to al-Sadr simply abandon neighborhoods where the U.S. coalition announces that it will be conducting raids. During Operation Together Freedom violence has surged in Diwaniya, for example.
But we have been down this road before. Here’s a description from the June, 2006 Christian Science Monitor of how the wealthy Amariya neighborhood first turned deadly:

“…insurgents began arriving in Amariyah after the deadly US assault on Fallujah in April 2004. The first jihadis sought haven with relatives, many of them former senior officers in Saddam Hussein’s Army. …

Not content with having found a haven, the militants set about transforming the demographics and social mores of the area. ‘At first it was just the outsiders, but some of the young men - surrounded by these people telling stories about what the Americans did in Fallujah and these preachers telling them it was their duty to fight - joined up,’ says Aqeel, a former resident of Amariyah who fled in February.

Soon, graffiti praising Al Qaeda in Iraq leader Abu Musab al-Zarqawi and promising death to traitors proliferated; new prayer leaders took over mosques, issuing strident demands for jihad over their loudspeakers every Friday; leaflets were distributed warning women not to work and to cover their hair, men not to trim their beards or wear shorts; then bodies started to appear on street corners.

Amariyah, a wealthy Baghdad … neighborhood of shaded gardens … has become synonymous with gruesome, anonymous death, as have other Sunni neighborhoods like Dora and Adhamiya. They are all examples of the ongoing battle occurring throughout Iraq to loosen the grip of the insurgency - and the tough fight facing the Iraqi Army and US forces to dislodge them.“

In June, Colonel Burleson said that he believed the violence in Amariya was “past its crest.” In June, Iraqi soldiers were more measured in their assessment of Amariya, saying that, “We’ve shut off most of the branch streets and are funneling the traffic through our checkpoints, so we’ve got a lot more control, but if we don’t maintain this type of control, what happens then?” The answer came in July.

Perhaps the administration should listen to those on the ground. A few days ago, a minibus driver who lives in one of the neighborhoods being targeted by Operation Forward Together said:

“As long as the Americans are here it is fine,” he said. “If they leave it to the Iraqi police the killing will just return.”

So Operation Whac-A-Mole is in place, and the results are dramatic… for now.

Paternalism and the Mirage

Professor Karnani’s primary critique of Prahalad’s The Fortune at the Bottom of the Pyramid, is that it focuses multinationals on the extreme poor as consumers. Instead Karnani offers that “…we should emphasize buying from the poor. By far the best way to alleviate poverty is to raise the income of the poor.”

This is not a new idea, nor is it at odds with the idea of marketing innovative products toward the poor. Karnani’s arguments against the poor as consumers often boil down to naked paternalism:

“Holding the poor consumer’s income constant, the only way he can purchase the newly available product is to divert expenditure from some other product. If he is a ‘rational’ consumer, this will increase his welfare. However, as a practical matter, this is unlikely to result in a significant change in his poverty situation. Additionally, if for some reason, the poor consumer is irrational in his resource allocation choice, the BOP initiative might even result in reducing his welfare.”

“The poor surely have a right to buy televisions; the issue is whether it is in their self interest to buy televisions.”

So if there is a risk that poor consumers might make irrational buying decisions, who should help guide them? The United Nations? The dictator of that poor country? A local tribal leader? Religious clerics? In an ideal market, consumer choice is best left to… the consumer.

Professor Karnani emphasizes that the government should be focused on consumer protection. But we have to remember that consumer protection laws in the West have taken a century to build. Should developing nations that can’t even deliver basic sanitation, infrastructure and public health shift their focus to developing consumer protection laws? Consumer protection is a worthy goal, but it is ultimately citizens who must hold their own governments accountable when the forces in the free market are perceived as harmful to their society or environment.

Karnanai also takes issue with Prahalad’s example of a skin whitening cream that was marketed to women in India by international giant Unilever. Karnani blames it for it entrenching women’s disempowerment, writing that:

“The BOP proposition is not satisfied with just giving the company the right to sell skin lightening cream. It goes further and commends the company for empowering women and helping eradicate poverty. This is an intellectually and morally problematic position.”

He also notes that Unilver’s marketing campaign was failure:

“The All India Democratic Women’s Association campaigned against this and another advertisement as being racist, discriminatory, and an affront to women’s dignity.

“Ravi Shankar Prasad, minister of Information and Broadcasting, said ‘Fair & Lovely cannot be supported because the advertising is demeaning to women and women’s movement’. Unilever has since discontinued these two advertisements in India.”

Karanani advocates that we preemptively limit consumer choice because the poor might make economic decisions that seem irrational from a Western perspective.  But it was by giving consumers a choice in India that they considered the role of women in Indian society, and market forces ultimately drove Unilever to pull the ads. Would Karnani consider poor customers to have been rational economic actors in that case?
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Paternalism Meets Micro-Credit

Karnani also finds harm in Prahalad’s example of Casas Bahia. This Brazilian superstore facilitates the purchase of high-quality appliances by offering credit to poor consumers who have unpredictable income streams.

Karnani argues that:

“The BOP proposition again falls prey to a fallacy: providing credit does not change the affordability of a product. The finance term for Casas Bahia ranges from four months to one year, with an average of six months. All that the financing scheme does is provide instant gratification at a price. For the privilege of this instant gratification, he pays an interest rate of over 4% per month. People with ‘low and unpredictable income’ would be well advised to save and pay in cash; this will enable them to do a better job of comparison shopping too. It is not surprising that many of Casas Bahia’s customers do not understand well how to unbundle the purchase price and the interest cost and instead focus on the monthly installment payment.”

Using credit in a developing nation is rarely about instant gratification. Village groups in West Africa without access to micro-credit schemes organized themselves and made small loans to group members for the monthly interest rate of about 10%. These loans helped fund medicine for sick children or seeds for cash crops. Poverty tends to produce desperately pragmatic people. Would Mr. Karnani advocate saving money throughout the rainy season only to buy seeds for a cash crop to be planted the next year? Doesn’t it depend on the rate of return? And who is best able to judge when to extend credit?

If a poor Brazilian consumer buys an appliance on credit, isn’t it possible that this person might become more productive as a result? Washing machines liberate people from having to spend the day washing by hand. Gas stoves are more efficient that searching for firewood.

You don’t have to question whether someone will make the right rational economic choices just because they are poor. I agree that government regulation is needed, but we should not discourage the private sector from extending credit just because poor consumers might buy something they don’t need. If someone defaults on the loan at Casas Bahia, I’m guessing they won’t be issued more credit.
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Corruption - Total instances found: 0

Unfortunately this heading applies to a search for the word “corruption” in the PDF of Professor Karnani’s paper, not to the situation the facing the world’s poor. Transparency International recognizes that this is one of the gravest problems facing the poor. Corruption hurts the poor both as consumers (by distorting prices) and producers (by discouraging investment). Neither Karnani and Prahalad offer much insight into how to remedy this.

In fact, Karnani hardly even acknowledges the difficulty hurdle that corruption presents in establishing well-functioning institutions needed to turn the poor into producers. In attacking Prahalad, he seems to lose sight of the fact that billions of the world’s poor live in countries with failed governments.

“By emphatically focusing on the private sector, the BOP proposition detracts from the imperative to correct the failure of the government to fulfill its traditional and accepted functions such as public safety, basic education, public health, and infra-structure.”

Karnani and BOP advocates both want to see improvements in governance. Both want to improve the conditions facing the poor. It’s only a question of how to reach that noble goal. Making a market at the BOP gives multinationals a stake in the improvement. Surely sophisticated market analysts at the world’s corporations would recognize that a well-educated, healthy population of consumers purchases more goods?

We could, of course, step back and try to figure out what is going wrong in the failed states of the world. We just need to fix the infrastructure, education, eliminate AIDS, and end epidemic corruption. This is not a novel idea. The World Bank, UN and countless other academics, advisors and NGOs have been trying to achieve this for decades. As soon as we have that all figured out, will Karanani let companies sell approved goods to the poor?

Karnani concludes that:

Private companies should try to pursue marketing to the poor. However, the profit opportunities are modest at best and we suggest a cautious approach. Large companies that require scale economies should be even more hesitant.

Why ward off large companies? Free market innovation is an invaluable tool. Companies should try to earn a profit in developing nations. Many will fail as thousands of companies before have failed in rich nations. Just don’t wave off the LifeStraws and PlayPumps of the world while we wait for developing nations to create consumer protection laws up to our standard.

Karnani is correct to focus on establishing institutions that will help the poor earn more income. But while we wait, why not try the BOP approach?

Yesterday I wrote about the shortcomings of Prahalad’s book, The Fortune at the Bottom of the Pyramid. We left with the question of whether there was even a market to discuss. Several factors make it difficult to estimate disposable income at the bottom of the pyramid (BOP). Even if it is not a fortune, there is likely much more than a nickel a day of disposable income amongst the world’s 4 billion poor.

Most people in extreme poverty live in rural areas and derive much of their diet from subsistence farming. This means that relatively little of their income is spent of food. In family or tribe-oriented societies, there is also an income smoothing effect. Kinship networks, for example, mean that if one person in a family has a high-paying position in the government, many in the family will benefit. In addition, income such as flows from non-governmental aid, international transfers from foreign nationals living abroad, and the grey economy may be under-reported in GNP figures.

In response to Karnani’s paper, the WRI’s NextBillion.net noted that:

BOP households collectively spend money, lots of it, on a wide variety of goods and services, and are clearly willing to pay for services such as connectivity, clean water, financial services, energy, health care, and education for their children, as well as food, housing, and consumer goods. The BOP is already an economic actor, not just a passive, dependent group, and its collective actions define a market.

So there let’s assume that there is indeed a market of billions at the bottom of the pyramid. Should companies try to reach it? Karnani cautions that viewing the BOP as a vast market of micro-consumers is “potentially a dangerous delusion.” Let’s look more closely at his argument.
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Distribution and Economies of Scale

Concerned about the apparent gullibility of multinational corporations (MNCs), Karnani warns that:

“Not only is the BOP market quite small, it is unlikely to be very profitable, especially for a large company. The costs of serving the markets at the bottom of the pyramid are very high…. This increases distribution and marketing costs and makes it difficult to exploit economies of scale. Weak infrastructure (transportation, communication, media, and legal) further increases cost of doing business.”

Two words: Coke and Guinness. Both have very deep penetration in West Africa. Granted these are not going to improve the health and well-being of the BOP (though Guinness bottles do read, “Guinness is Good for You“). Somehow these MNCs have overcome the challenge of distributing and marketing their products across a large geographic area.

Regardless of infrastructure and marketing costs, the market will help align buyers and sellers if the price is right for each.
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Reducing Prices at the Bottom of the Pyramid

Prahalad’s thesis hinges on the idea that attracting more competition to the BOP will drive down product prices, thus freeing up their disposable income for other purchases. This is basically how Wal-Mart has made low-income Americans feel richer even as real income has stagnated over the last decade. But Karnani takes issue with Prahalad’s assertion that the private sector can deliver high quality goods to the world’s desperately poor at competitive prices:

“There are only three ways to reduce prices: 1) reduce profits, 2) reduce costs without reducing quality, and 3) reduce costs by reducing quality…. the only realistic way to reduce price is to reduce cost. The BOP proposition is adamant that we should not reduce quality in this process.

“Unless all the current producers are grossly inefficient, the only way to reduce cost… without reducing quality will always require a significant improvement in technology. Good examples of this are found in the areas of computers, telecommunications and various electronic products. It is difficult to find examples of such dramatic cost reduction in other product categories. It is not surprising that the BOP proposition repeatedly uses these same examples. We should also note that the ultimate impact on the real income of the poor due to these major price reductions is quite low because the poor spend only a small part of their income on such electronic products. The poor spend over 80% of their income on food, clothing and fuel – products that have not benefited from such dramatic technological changes in a long time.”

Let’s evaluate that last statement and have a look at how technology might help deliver improved food, clothing, fuel, and public health.

Food: There are constant improvements in pest-resistant crops, hybrid seeds, or high volume animal husbandry. Many famers in Africa still till individual family farms by hand. Certainly technology could help them improve efficiency which would lead to lower prices.

And technology improvements in computers and telecommunications do not exist in a vacuum. There are numerous positive spillover effects that affect the BOP as producers. The Washington Post recently reported that cell phones in Congo have enabled farmers and fishermen to “…use text messaging to check market prices, eliminating middlemen and increasing profits — and preventing long trips to the market on days it is canceled.” So a technology unrelated to agriculture has helped farmers saved on input prices (transport to the market on days when it’s canceled) and output prices.

Clothes: Apparel prices have tumbled over the past decade. Much of this is due to reduced quotas on Chinese apparel imports in the U.S. and Europe. Thus, the assertion that “the only way to reduce cost… without reducing quality will always require a significant improvement in technology” is inaccurate. Clothing prices have dropped as a result of trade policy, not an improvement in technology. This does have a trickle-down effect for the world’s poor.

Fuel: Fuel has indeed become more expensive. Women have to scavenge farther for firewood. Oil prices lead Nigerians into the deadly practice of siphoning off crude oil from pipelines running through their villages. But technology can improve access to energy sources. Military applications such as SkyBuilt mobile solar power could find a market at the BOP helping medical centers or providing a short term power source for harvesting and processing crops.

Public Health: As patents expire on novel drugs, cheaper generic drugs will enter these markets. Playpump is an innovative approach to water delivery. LifeStraw promises to exploit economies of scale in order to drive down prices for its personal water filtration device.

Technology: Last week, the Wall Street Journal ran a front-page story about an American entrepreneur, Greg Wyler, who was building an Internet infrastructure in Rwanda. The focus of Terracom is to first focus on market access, then profits. Mr. Wyler might disagree with Karanani’s ideas about providing a quality product at reasonable prices for the poor. He is quoted as saying, “We’re on a mission here to see what happens when we drive prices down and quality up.”

And lest you think that Rwanda is an obvious market for an outside investor, have a look at the graph at the right.

As WRI writes in response to Karnani’s critique:

The pertinent development question is whether the BOP is well served by the present (often informal) markets, and whether there are unmet needs that could be better served by more competitive markets and broader participation by the legitimate private sector.

I believe that private sector innovation help can drive prices lower, maintain or increase quality, and help deliver goods that result in better livelihoods for those at the bottom of the pyramid. But what if multinationals start marketing products that the poor don’t need? Are BOP consumers rational economic actors? Or is Karnani correct when he says that, “The problem is that the poor often make choices that are not in their own self interest.”

More on that soon…

In 2004, C.K. Prahalad, a professor at University of Michigan’s Ross School of Business published the groundbreaking book “The Fortune at the Bottom of the Pyramid.” The basic thesis is that multinational corporations (MNCs) have concentrated their sales and marketing efforts on the richest citizens of the world while ignoring the 4 billion consumers who live on less than $2 per day at the Bottom of the Pyramid (BOP).

He asserts that introducing market choice to the poor will free villagers from local monopolists, creating a virtuous cycle of consumer access and improved product quality. MNCs that sell products in this enormous, underserved market stand to make hefty profit. And, as more and more companies turn their attention to the BOP, competition will drive private sector innovations that address the needs of the poor. By giving MNCs an economic stake in this market, they in turn will draw the attention to problems of governance.

Although the work is primarily empirical and draws too heavily from examples in India, the BOP argument is an intriguing one. It eschews the notion that concentrating on the poor should be relegated to a secondary “corporate social responsibility” initiative and takes an integrative approach to the private sector achieving what non-governmental institutions and multi-lateral lenders such as the World Bank have not: pulling billions out of poverty.

We should applaud the BOP adherents for their novel approach, an approach that too closely resembles the idealism typical of a first-year Peace Corps volunteer. It is only after the corruption, complacency, intestinal ailments, and constant economic opacity have wrung out the initial naiveté that the discussion becomes interesting.

And a dose of cynicism is exactly what Professor Aneel Karnani - also of the Michigan School of Business - introduces in a recently-released working paper, “Fortune at the Bottom of the Pyramid: A Mirage.” He asserts that:

“Rather than focusing on the poor as consumers, we need to view the poor as producers. The only way to alleviate poverty is to raise the real income of the poor.”

Professor Karnani’s basic thesis is that BOP de-emphasizes the role of government in providing basic services and that we must focus on building the capacity of the world’s poor by focusing on government failures in education, health, and infrastructure.

Unfortunately, non-governmental organizations have been focusing on failures of government for decades. Billions of dollars have been spent flying experts around the world to bolster child immunization rates, build water delivery systems, and advise on bankruptcy reform. As you can see from the map above, the last 27 years have been lean ones for many in the bottom of the pyramid. This is not to diminish individuals’ efforts or passion. It is only to acknowledge that it is a very difficult goal and multi-lateral institutions do not have a recipe, much less a consensus, of how to foster economic growth.

One of the positive side effects of the BOP argument is that it makes MNCs stakeholders in a new and underserved market. To be sure, there are fatal flaws in the logic and research initiated by Prahalad. But MBAs are new to development and we should embrace that wide-eyed optimism even as we critique shakey methodology.

Is there a Market at the Bottom of the Pyramid?

Karnani points out one inexcusable fallacy in Prahalad’s work: market definition.

Prahalad used the World Bank’s estimates for the number of people living on an income of $2 a day or less (poverty), and $1 a day or less (extreme poverty). Both poverty measures are at purchasing power parity (PPP).

Why is PPP important? Because no matter where in the world you spend $1 PPP it buys the exact same goods, regardless of local price. So that $1 PPP that the extreme poor earn in a day will buy you one loaf of bread in the U.S. Actual prices are much lower in developing countries, so that same loaf of bread might only cost $.10. The market at the bottom of the pyramid will not pay MNCs in PPP dollars; it will pay them in local currency, as Karnani explains:

“[Prahalad] claims that the BOP potential market is $13 trillion at PPP. This grossly over-estimates the BOP market size. The average consumption of poor people is $1.25 per day and assuming there are 2.7 billion poor people, which implies a BOP market size of $1.2 trillion, at PPP in 2002.

“From the perspective of a multi-national company from a rich country, profits will be repatriated at the financial exchange rates, not at PPP rates. In that case, the global BOP market is less than $0.3 trillion, compared to $11 trillion economy in the US alone – making the BOP a difficult place to look or a fortune.”

Another problem is that the poor spend about 80% of their income on food, clothing and fuel. Suddenly the $300 billion market at the bottom of the pyramid shrinks to $60 billion of disposable income at current exchange rates. Spread amongst 2.7 billion people, that’s about a nickel a day for disposable income.

Karnani also takes issue with the number of poor:

“Prahalad states that there are more than 4 billion people with per capita income below $2 per day at purchasing power parity (PPP) rates…. Most researchers argue that the World Bank already over-estimates the number of poor people, with some researchers estimating the poor at 600 million (The Economist, 2004).”

There’s no shortage of poor, I’m afraid. Sanjay Reddy and Thomas Pogge of Columbia University have written a persuasive paper that critiques World Bank calculation of the number of poor in the world. While they give no new estimate, it’s likely that the world’s poor have been undercounted:

“There is some reason to think that the distortion is in the direction of understating the extent of income poverty.”

So the bottom of the pyramid is left with billions of poor who have no money. Does this invalidate Prahalad’s entire thesis? More on that tomorrow.

Throughout history, walls have been built primarily for the purpose of defense (The Great Wall of China), politics (Berlin), religious separation (Northern Ireland), ethnic divide (Cyprus), or some nasty combination of all four (Israel). But rarely are walls built purely to rebuff wage invaders.

Illegal immigration is an economic issue, thus the rules of supply and demand apply. If the demand for illegal workers is cut, wages for illegals will fall, and the supply of immigrants will fall as well. Right now it is a challenge for employers to verify the legal status of some workers (although, our policy of turning a blind eye doesn’t help).

The immigration bill currently in Congress addresses this by adding $1.6 billion for a computerized system to verify the eligibility of applicants for lawful employment. Once this is in place, fines could be increased for employers caught employing illegal immigrants. Voila, demand for illegal immigrants falls and so would the number tempted to cross an open border.

But the immigration bill directs twice as much money to the Department of Homeland Security. DHS is being authorized to spend $3.3 billion on border defense that consists of 370 miles of fencing and 500 miles of vehicle barriers that will only cover 47% of our border with Mexico. Construction of one foot of the fencing alone will cost $568.

Israel has spent billions of dollars on walls, trenches, even a proposed sunken highway. Meanwhile, smugglers between the Sinai Peninsula and Gaza spent just $76 per foot to tunnel underneath. We should count ourselves lucky to only have impoverished day workers trying to cross our border (I discount the terrorism threat - terrorists could more easily cross our 5,500 mile border to the north).

By employing a historically military tactic to a primarily economic issue, we will spend ourselves into a hole.  At least there will plenty of illegal immigrants to help us dig it.

Sources: Sunken road: Cornell University, The Current; U.S. Mexico Border Fence: Congressional Budget Office estimate; Isareai Wall of Separation: Palestinian Environmental NGOs Network; Fourth generation of Berlin Wall: Berlin Wall Online; Smuggling Tunnels: Defense Update; Vinyl Picket Fence: Hoover Fence, Co.

Notes: According to Berlin Wall Online a 3.957 foot wide segment of the Berlin Wall cost 359 East German Marks in 1975. Because this was not a freely traded currency, historical exchange rates are hard to come by. However, as a note of comparison, Berlin Wall Online mentions that a loaf of bread cost 1.04 East German Marks at the time. Thus the store of value in a segment of the wall is equivalent to 345 loaves of bread. In 2006 in the price of a loaf of bread in the U.S. averaged $1.30, so each 4 foot segment of the Berlin Wall was valued at $448.75. It’s not perfect, but you get the idea.

It looks like a duck, it walks like a duck, and it really sounds like a duck.

Yesterday’s Washington Post editorial, “What Next?” gave a grim assessment of how a civil war in Iraq could explode into a regional conflict in the Middle East. Iraq has all of the necessary ingredients of a civil war: a growing tendency to identify with religious and ethnic groups rather than the Iraqi nation-state, valuable resources spread unevenly throughout the country, a growing perception that democracy does not reflect regional interests, and daily news of increasing civilian casualties.

A broader civil war would likely produce Iraqi refugees who could export the Iraqi conflict to neighboring countries. As we have seen in the recent Lebanon-Israel conflict, these neighboring states are willing to fund proxies such as Hezbollah, if not to intervene directly. The authors note that the foundation for a regional war could already be in place:

U.S. military and Iraqi sources think there are several thousand Iranian agents of all kinds already in Iraq…. Iran has set up an extensive network of safe houses, arms caches, communications channels and proxy fighters, and will be well-positioned to pursue its interests in a full-blown civil war.

Although Bush administration officials acknowledge privately that things are not going according to plan, Bush said publicly today that Americans “have to understand the consequences of leaving Iraq before the job is done.”

We’ve done a heck of a job so far. Insecurity has left the Iraqi economy in shambles making it easier for insurgents to find new recruits. One-fifth of the population is in poverty. Oil production is still 11% below pre-war production levels. Unemployment is as high as 40% in some regions, and inflation is rampant.

Iraq also has a serious brain drain that leaves little human capital with which to rebuild. According to a report by the Brookings Institution, 2,000 doctors have been murdered, and another 12,000 have fled the country. Internal displacement is also a growing problem: 200,000 Sunni Arabs have been displaced from western Iraq and up to 100,000 Shiites have fled cities to take refuge in the south.

Civilian deaths increased by nine percent from June to July, and have almost doubled since January, 2006. One of the more disturbing trends is that as violence has increased in Iraq, it has also become increasingly brutal.

When do we recognize this as a civil war? In the editorial “What Next?” Laura Stanton of the Washington Post produced a graphic that applied the percentage of deaths and displaced persons from recent civil wars to the current population of Iraq. Statastic used this data to gain further insight into the average number of deaths per month during these civil wars.

So how severe are the 3,438 civilian deaths reported in July, 2006? On a per capita basis, this is nearly 50% more deaths per month than averaged during the Croatian civil war. If violence in Iraq were to increase at the same rate that it increased between January and July of 2006, there would be more than 450 deaths per day in Iraq by July, 2007. This is about the same rate as the Kosovo war, but with one critical difference: Iraq’s population is 14 times larger. We would need as much as four times the current financial and military resources to quell a civil war, requiring as many as 450,000 soldiers. And that says nothing of how we would stop a regional conflict.

If a civil war does erupt into a regional war, Daniel L. Byman and Kenneth M. Pollack note that history is not on our side:

No country in recent history has successfully managed the spillovers from a full-blown civil war; in fact, most attempts have failed miserably.

Much as Americans may want to believe that the United States can just walk away from Iraq should it slide into all-out civil war, the threat of spillover from such a conflict throughout the Middle East means it can’t.

It’s time to acknowledge the Iraqi insurgency for what it is: a civil war. Quack.

Sources: Washington Post (primary sources cited include Amnesty International, Center for Study of Civil War, CIA World Factbook, Richard Holbrooke’s “To End a War”, World Bank); PBS Frontline map.

Notes: *The estimate for July, 2007 applies the rate of doubling in civilian deaths that occurred during the 6 months between January and July, 2006.

The average monthly deaths were calculated by applying the death rate per capita in each country’s civil war to the population of Iraq. This was then divided by the length of the each civil war. The monthly average was calculated using whole years for these conflicts. In other words if a civil was started in December of 2000 and ended in January 2001, its duration would counted as two years, not two months.

Why the lack of precision? Because using the monthly average of deaths during a civil war is an imperfect measure to begin with. Civil conflicts often hinge on a single event that may not have many civilian deaths (such as the February 22, 2006 bombing of a sacred Shiite shrine in Samarra), or a monthly average may understate the brutality of a shorter campaign (such as the 800,000 who were murdered in Rwanda over the course of 100 days).

This measure is only meant to lend an international comparison to the debate about what constitutes a civil war.

State fairs are in full swing, and presidential hopefuls are getting acquainted with Iowans. As the first state to hold a caucus in the 2008 presidential primary, politicians take advantage of the state fair’s 1 million visitors to test the political waters.

It’s an odd setting for DC politics. The Iowa State Fair is a demonstration of how agriculture has helped shape a quirky Midwestern culture. Today’s events, for example, include a Mom Calling Contest, hot beef sundaes, rubber stamp art techniques, “Focus on Ostrich,” by the Iowa Ostrich Association, at least two goat milking competitions, and a titillating program entitled “How’s My Wienerschnitzel?” Ambivalent fairgoers can escape to the Iowa Wine and Cheese Garden starting at 11 am.

For anyone born and raised in Iowa, the real highlight is the butter cow. Lines typically snake around the Agriculture Building as eager Iowans wait for look at the cow crafted from 500-600 pounds of butter. While the Butter Cow Lady, Norma “Duffy” Lyon, has sculpted a new butter cow annually for the last 45 years, this year she gave up the reigns to her 29 year-old apprentice, Sarah Pratt. Over the years, Norma has also sculpted butter objects to keep the cow company in her refrigerated showcase. These butter creatures hold a funhouse mirror to Iowa culture: Grant Wood’s “American Gothic,” Elvis Presley, Leonardo da Vinci’s “The Last Supper,” John Wayne, The Peanuts Gang, Tiger Woods holding a tiger (really), and this year, Superman.

The Iowa State Fair also has another proud tradition: politicians eating fair food. Former Speaker of the House Newt Gingrich visited the fair last week and ate a pork chop on a stick. Delaware Senator Joseph Biden, who first visited the fair 20 years ago during his bid for president, was reportedly devouring a hoagie in one hand and an ice cream cone in the other.

Other politicians couldn’t help but compare the Iowa State Fair to home. Indiana Senator Evan Bayh commented that “I see you serve beer at your fair and we don’t” in Indiana. (Wait until he finds out what time the wine garden opens.) George Pataki observed that, “We have a great state fair in New York but… we don’t have pork on a stick.” Republican Senator Sam Brownback was at the Iowa State Fair yesterday and Senators John McCain and Bill Frist are expected today or tomorrow. Iowa Governor, Tom Vilsack, has also visited several times - no word on what he’s been eating, but as a native Iowan it’s unlikely to make much news.

So are the state fair visits paying off? According to WHO-TV’s informal “Cast Your Kernel” poll taken on August 16th, not really. Of the Republicans, Senator John McCain came out on top with 24 percent, followed by Rudy Giuliani and Condoleezza Rice each with 20 percent. Neither of the leading Democrats has yet paid a visit to the butter cow. John Edwards and Senator Hillary Clinton were tied at 33 percent, while Iowa’s own governor Tom Vilsack came in third with 13 percent.

It seems that the 500 pounds of butter in the butter cow are enough to sustain the hopes of at least eight politicians. It is a copious amount - about 2000 sticks in all. That’s enough buttersticks to nickname 2,000 baby pandas, or draw butter for 2,000 lobsters. Or, you could butter 4,000 tubs of popcorn, or 16,000 pieces of toast.

And if you get addicted to shaving with butter like Kramer, you can get 16,000 close shaves out of this year’s butter cow. Those 500 pounds of butter would also fuel a very successful bake sale: 20,000 pieces of fudge, 35,000 of my mother’s famous brownies, 60,000 Toll House cookies, or 64,000 Rice Krispies Treats. Of course, if you’re in Iowa, you would most likely use 500 pounds of butter on 32,000 ears of sweet corn.

In a letter about his trip to Iowa, Newt Gingrich closed with this:

“…the process of electing the President of the most powerful country on earth passes through a state fair in rural America where more than one million people come with their families to eat nearly anything that comes on a stick, compete in numerous agricultural competitions and contests, ride the rides, enjoy the shows and see the ‘butter cow,’ but that is how we do it in America, where a free people get to put their candidates to the test face to face.”

Fair enough.

Notes: According to the new butter cow lady, Sarah Pratt, this year’s butter cow is a Jersey and requires about 500 pounds of butter.

Assumptions: One ear of Iowa sweet corn only requires half a tablespoon of butter. Popcorn needs 1/4 cup per tub. Lobsters apparently require 1/2 a cup. Statastic does not advocate sautéing pandas, no matter how delicious that might be. Butterstick was blogosphere’s attempt to name Tai Shan, the baby Panda at the National Zoo.

Some bloggers like to pat themselves on the back for being ahead of the mainstream media. But how serious is the blogosphere compared to the print media? I though today’s sensational story about JonBenet Ramsey would provide a pretty good test of how serious the bloggers are.

According to Technorati, English language blogs with “a lot of authority” mentioned JonBenet 180 times so far today and Hezbollah about 550 times. This actually was a pleasant surprise to Statastico (who does not have a lot of authority). So I went out to see how the newspapers were covering the same two stories.

For lack of a better idea, I measured the size of the columns that referred to each of the two stories. Unfortunately, the newspaper sample reflects where I bought the newspapers - about 2 blocks from the Capitol Building - so I’m a little light on samples from anywhere but the East Coast.

For the most part the Israel-Lebanon conflict dominated space on the front page relative to JonBenet. The New York Times and the Wall Street Journal were the only two papers to carry the JonBenet story entirely below the fold. The average newspaper dedicated 3.4 times more column space to Hezbollah than to JonBenet. Serious bloggers wrote 3.05 posts referring to Hezbollah to every post referring to the JonBenet story. Imperfect measures to be sure, but somewhat encouraging.

As to which form of media is setting the conversational agenda, I would still vote for the broadsheets. Especially now that we bloggers are ever-so-aware of the fact that we can get free advertising by showing up in the Washington Post’s Who’s Blogging link to Technorati. I’ll see you there.

Source: Statastic research

Notes: Washington Times measure includes a story about the media and the Lebanon-Israel conflict.

Either Pluto got a demotion or Xena got a promotion. Thank goodness the scientists at the International Astronomical Union (IAU) were sensitive to poor Pluto’s feelings. Owen Gingerich of Harvard University, who chaired the IAU panel said that:

“We might be demoting it from the list of eight classical planets, but we’re promoting it by making it the head of its own special class”

Pluto, Xena (aka 2003 UB 313) Charon and Ceres are tiny, distant rocks with wacky orbits. So the IAU decided that these not-quite-planets at the edge of the solar system (where a year lasts 200 or more earth years) will be called plutons. No word yet on whether this new category will rhyme “crouton” or “button,” though we expect President Bush to weigh in on it shortly.

So why all the fuss? Well, because Pluto is far smaller than any of the classic eight planets. Several moons in our solar system - including Earth’s - are larger than Pluto. In fact all of Pluto’s 16.7 million square kilometers of surface area would fit inside Russia. If IAU’s plan is approved, the four additional plutons will be classified as planets increasing our solar systems total to twelve.

Statastico got to wondering, what if the planets were shrunk down to the size of countries on Earth? If we scale all of the planets down to about 1/3600th of their total surface area, we can find a comparably-sized country for all of the planets and plutons.

The results? Jupiter would be revoking democracy in Russia, Saturn would be curling in Canada, Uranus would be trying to figure out how to speak Kalaallisut, Neptune would be desperately looking for water in Saudi Arabia, and Earth would be in Tajikistan searching in vain for Borat.

While the big planets get countries with huge tracts of land, you’re probably more likely to vacation on a Pluton. Zena would be playing World Cup soccer in Trinidad and Tobago while Pluto takes in the sweet sounds of Cesaria Evora in Cape Verde. Meanwhile, Charon would be doing some sunbathing in Martinique, and tiny Ceres would be snorkeling in the Dutch Antilles.

Sources: Statastic research; mean planet radius: Wikipedia; mean pluton radius: USGS

Notes: Surface area was calculated from the mean radius for each planet and assumes (incorrectly, I know) that the planets are all perfect spheres.

Planet images on the map are not to scale, not even close. However, the actual scale of 1:3592 does holds up surprisingly well. If you’re really interested click here for the percentage that each country over or under-represents each planet on the 1:3592 this scale.