Unintended consequences: After watching all the damage caused by development aid, Kenyan economist says “please just stop.”

James Shikwati is the Director of Inter Region Economic Network. He is an economist from Kenya.

In 2005, he gave an interview to Spiegel, which was titled “For God’s Sake, Please Stop the Aid!”

A bit of research revealed this long list of articles he has written.  There is far more detail in those articles than in the one interview. I will summarize a few of the ideas in the interview. Over time, I’ll try to read more of the articles he has written and comment on them.

Development aid damages the local economy

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Jim Ulvog

Check out my newest blog, Freedom Is Moral

On January 1st I launched a new blog, Freedom Is Moral.

What’s the focus?

The focus on that blog will be the concept that when you consider all the options, freedom is the moral choice.

Whether you want to discuss economics, political systems, or religious worship, the moral option is the one that involves freedom.

Why a new blog?

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Jim Ulvog

5 warnings on how technology can trap you

There is danger in letting any vendor have too much control over your life. That warning applies doubly so to software and double again for social media.

I have five different ways to tell this story. 

A simple change in rules or pricing can devastate you.

That big ol’ company can dump a software that doesn’t have enough customers for them to bother with but is mission critical to your operations. 

If some of those little things happen, you will suffer.

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Jim Ulvog

Don’t let your social media platform control you

There is danger in letting any vendor have too much control over your life. That warning applies doubly so to software and re-doubled for social media.

Don’t let your marketing be controlled by Facebook or MySpace or anyone else that can wipe you out with a rule change or by fading away.

Many businesses build their entire marketing campaign on Facebook. I even made that suggestion. Nonprofits can do the same.

One rule change can wipe out years of marketing.

Mark Schaefer explains the risk in his post, A cautionary tale: Putting your business in the hands of Facebook.

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Jim Ulvog

For a deeper education, try sketching out the relationships mentioned in the article about World Help’s GIK

One technique used by auditors when trying to understand a complex situation is to get a piece of paper and draw all the components, cash flows, and relationships. Sometimes there is just too much going on to understand the words and you need a picture.

Try doing that with the Chronicle of Philanthropy’s article, A Consultant’s Revenue-Generating Tactics Draw Scrutiny.  I think you’ll get a superb education on the GIK issues in the NPO community.

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Jim Ulvog

Reminder for that required comment on year-end giving statements

Check out the post:  Church Official Statements of Annual Giving at MinistryCPA.

Corey Pfaffe has a good reminder about the wording you must put on year-end statements you send to church donors. Without the correct wording, there is a high risk the members of your congregation could lose their deduction in the event of an audit.

Jim Ulvog

HSBC is too big to indict for flagrant money laundering, so they get a heavy speeding ticket

HSBC has agreed to pay a fine of $1.9B (yes, billion) for their systemic violations of U.S. money laundering laws.

Tim Fernholz at Quartz calculates that “HSBC’s record $1.9 billion money-laundering fine is the bank equivalent of a stiff speeding ticket”.

The $1.9B is about 2% of their net income last year. He calculates that for an average New Yorker, that would be about $1,105. In N.Y., that’s the fine if you were going more than 31 mph above the speed limit on a third-time offense with previous points on your record.

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Jim Ulvog

Revised 2009 revenue for World Help and graph of revenue for last 4 years

Shortly after World Help posted revised financial statements for 2011 and 2010, it posted revised revenue numbers for 2009. After going over the revised numbers, I’ll show a graph tracing their total revenue over the last four years.

The revised 2009 information is visible in the audited financial statements for 2010/2009. You can find the page with World Help’s financial reports here. You can click directly to the 2010/2009 audited financial statements here.

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Jim Ulvog

Major article on World Help and their GIK fundraiser

I just saw the article.

If you’ve been following the challenges World Help has been going through regarding their GIK revenue, you will definitively want to check out a major article from The Chronicle of Philanthropy:  A Consultant’s Revenue-Generating Tactics Draw Scrutiny.

You might want to get a fresh cup of coffee before you start.  Don’t know the word count, but on my computer the article is 13 screens long.

I’ll need to read this a few more times to absorb the details. In the meantime, a few initial observations:

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Jim Ulvog

“A bad quarter” versus “I could go to jail” – Is it time to indict a few bankers for money laundering?

Reuters reports “Exclusive: HSBC might pay $1.8 billion money laundering fine – sources”.  That’s up from the $1.5B they previously announced as a reserve.

The article reports of leaks that a settlement could include a deferred prosecution agreement with the huge fine.  It then discusses the difficulty prosecutors are having in deciding whether to pursue the fine, which may or may not change behavior, or to actually prosecute a few individual bankers.

Update:  WSJ reports 12-10-12 an imminent settlement could be for $1.95B, including a deferred prosecution agreement and admission of violating the bank secrecy act.

The pattern in recent years has been to negotiate a fine and impose a deferred prosecution agreement. Yet there seems to be repeat behavior. 

As an aside, DealBook has sources that say Standard Chartered to Pay $330 Million to Settle Iran Money Transfer Claims.  That would be to the feds and is in addition to the $340M they already agreed to pay New York State. If correct, that would be $670M for laundering $250B of Iranian money.

Is there an option other than indicting the bank, which would likely be a death sentence?

Is it time for individual prosecutions?

After the explosions of big financial scandals at the turn-of-the-century, I very clearly noticed the change in how such cases are prosecuted.

Previously, the low-level people in a criminal scheme or financial scandal could trade testimony against their bosses in return for walking away without prosecution. Those have been the rules for decades.

Not anymore.

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Jim Ulvog

“Deck the Halls with Macro Follies” – Economists sing your favorite holiday carols

Remember the rapping economists we saw here and here?  They’re back!

Just in time for Christmas, EconStories imagines their fantasy Christmas album featuring the classic hits from Keynes, Hayek, and other renown singers you know and love.

Enjoy the greatest collection of economic hits ever aggregated.

[youtube=http://www.youtube.com/watch?feature=player_profilepage&v=7uKnd6IEiO0#t=41s]

 Remember, the only one who has the power to create presents out of thin air is Santa himself.

If you want a few 20 second explanations of how to slow or increase the economy, check out the new interpretations of your favorite songs of the season.

Link, if you need it: http://www.youtube.com/watch?feature=player_profilepage&v=7uKnd6IEiO0#t=41s

hat tip Cafe Hayek

Jim Ulvog

Commission on Accountability and Policy releases their first report

It is available on their website here.

I just downloaded the report now, so haven’t had a chance to look at any of it.

Suzanne Perry provides a first look at the document in her article Religious Leaders Tell Congress No New Laws Are Needed to Curb Abuse at Chronicle of Philanthropy.

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Jim Ulvog