Felix Salmon Is Not Stupid
Of course he’s not. He is, in fact, clearly a very smart man. So how do you explain his cluelessly dismissive reaction to this very smart op-ed proposing a global tax credit for investments in qualified developing countries?
The NYT on Saturday gave valuable op-ed space to hedge fund manager Justin Muzinich to roll out his big idea: cut direct US foreign aid, and use the money instead to give tax breaks to hedge funds and others who invest in developing countries.
So it seems Salmon is attacking Muzinich for working in an innovative sector of the economy, and indeed he’s basically suggesting that Muzinich is a shill for the financial sector.
Exactly how this is meant to help Madagascans living on less than $2 a day is far from obvious: the wealth generated by a big factory is not very likely to trickle down that far. But in any case the money wouldn’t go to places like Madagascar, it would go to places like India and Brazil, which have more than enough FDI already.
Salmon, it seems, fails to understand that Brazil is not a likely candidate for status as a qualified developing country, and that there would be an application process, clearly referenced in the op-ed. One assumes that labor-intensive factories or technology transfers that create multiplier effects and other metrics of development-friendliness would be taken into account. So yes, certain kinds of capital investment won’t “trickle down that far.” But of course other kinds of capital investment would trickle down far farther than most government-to-government transfers. And of course the magnitude of the investment, as Muzinich and Werker argue with some care, would be greater through the use of such an incentive.
Salmon’s faith in the efficacy of aid dollars is charming. It also suggests a depth of ignorance that can’t be easily corrected. Mind you, I’m confident that Salmon has read or at least skimmed Jeffrey Sachs. Perhaps he took a seminar on development at the University of Glasgow. I can’t say. Somehow I suspect that Muzinich and Werker know rather more about the subject. Call me crazy.
But of course Salmon’s objective is to generate ad sales revenue for his employer by generating a high volume of posts. The quality of individual posts is immaterial. The broad sense that Salmon is a quirky, entertaining thinker with a populist streak is more important. This populism evidently means that it is acceptable to earn six figures while serving the interests of the billionaire owner of Advance Publications, but making that much or more at a hedge fund is morally suspect.
I’d find this highly amusing, except for the fact that Muzinich and Werker, an academic who I have to assume was shilling for the cause of tertiary education, have been baldly mischaracterized by a source I was foolish enough to take seriously.
It seems a gift for reading comprehension is rare even in the hallowed halls of Portfolio.
If this sounds mean-spirited, I hope it at least sounds uncharacteristically mean-spirited. This insipid post by Salmon really got my goat. Let me add that the post is emblematic of a broader problem: rather than engage the argument seriously, and indeed rather than read the op-ed carefully, Salmon decided to snark, and to unfairly malign a young man who intended to make a constructive contribution to public debate. Would Muzinich be more trustworthy if his quantitative skills had somehow dwindled to a level that roughly matches that of Salmon, possibly by means of blunt force trauma to the skull?
Reihan — Just saw this, sorry about not replying earlier. A few points:
-I would never attack a hedge-fund manager for being a hedge-fund manager. As the saying goes, some of my best friends are hedge fund managers. (Well, not my best friends, perhaps, but friends, in any case.) But one does have to assume that people do tend to talk their own books.
-Is Brazil really not a candidate for qualification? There’s nothing in the op-ed to suggest that it wouldn’t be. In fact, there are no criteria for qualification in the op-ed at all.
-What kinds of capital investment would trickle down far farther than most government-to-government transfers? Really: give examples, I’d love to know.
-If you’ve been reading my blog entries on development for the past year or so, you’ll know that I don’t have any kind of blind “faith in the efficacy of aid dollars”. In the Sachs vs Easterly debate, I come down on the side of, shall we say, Paul Collier. But I think it’s fair to say that I have MORE faith that aid dollars will do what they’re meant to do (reduce poverty, say) than FDI dollars will do what they’re NOT meant to do (reduce poverty, say). Or, to put it another way, I can’t really think of any instances where FDI had a strong poverty-reduction impact. Consider the experiences of East Asia vs Latin America over the past 50 years. East Asia had very little FDI and lots of poverty reduction; Latin America had loads of FDI and very little poverty reduction.
-OK. You’re crazy.
-There’s nothing “morally suspect” about working at a hedge fund. But more to the point, what’s the going rate for a blogger these days? I fear I’m being underpaid!
-I DID read the op-ed carefully, and responded reasonably well, I think, especially considering I did so in just 135 words. Meanwhile, the vast majority of your rejoinder is REALLY ad hominem. If you would like to have a more in-depth debate about the relative efficacy of bilateral aid vs FDI, send me an email and I’ll be happy to do so.
— Felix Salmon · Nov 4, 05:43 AM · #