The 2013 Stories That Never Were

From a U.S. attack on Syria to the collapse of the Eurozone, here's what didn't happen in foreign policy this year.

The year 2013 is coming to an end, so newspapers, magazines, and websites are filled with Top Ten lists. You know the drill: "The Ten Best Movies," "Ten Most Interesting Celebrities," or the "Top Ten Books/CDs/Box Sets, etc." of the past year. For foreign policy mavens, this ritual takes the form of the Top Ten Most Important/Surprising/Dramatic Foreign Policy Events of 2013.

That's all well and good. But what about all those Important Events that didn't take place? There are plenty of good things that might have happened this past year but didn't, and there are a bunch of bad things that could have occurred but fortunately did not. In that spirit, here's my Top Ten Non-Events of 2013, in the form of the Top Ten Headlines You Didn't Read Last Year.

1. "U.S. Airstrikes Pummel Syria (and/or Iran)." There were plenty of reasons for the United States to use force against Syria or Iran this past year -- not good reasons, mind you, but reasons -- yet the Obama administration resisted the temptation to make a bad situation worse. Syrian President Bashar al-Assad's thugocracy is a deserving target for some precision-guided "tough love," and Iran's clerical regime has plenty of warts, but military force wouldn't have solved our difficulties with either country, and another Middle East war is not what the world needs right now. Kudos to those who understood the value of diplomacy and the virtues of restraint.

2. "Hillary Rodham Clinton Endorses Interim Nuclear Deal with Iran." Amazing, isn't it? The former chief diplomat of the United States is supposedly an expert on foreign policy and may still harbor a desire to be leader of the free world. Yet she's been completely silent on the whole question of the negotiations with Iran, even though I'll bet the Obama administration would love to get her to endorse its efforts. Does she support it? Damned if I know. Does she think it's naïve, foolish, or not bold enough? Your guess is as good as mine. No doubt we will find out HRC's true convictions just as soon as her focus groups report in or her major donors tell her what to think.

3. "Europe Gives Up the Euro." Nope. Didn't happen. Not in 2012, and not this year either. No country left the Eurozone; in fact, a few countries still want to get in. Go figure. Of course, nobody offered up a credible long-term solution to the Eurozone's economic difficulties either, or explained how a bunch of sovereign states could share a common currency without a common tax system and fiscal policy, or much greater labor mobility. But let's be thankful for small favors: So far, the Band-Aids are sticking.

4. "Obama Announces End to Drone Strikes and Targeted Assassinations." By now, you'd think U.S. leaders would be a mite troubled by all the bad publicity they're getting from the country's drone policy, especially when innocent civilians keep getting killed by mistake. You might also think these same leaders would be worried about the precedent they were setting by using Special Forces and sophisticated technology to kill people in other countries merely because some intelligence information suggested that the targets might be planning to do something bad someday. After all, if the United States can kill people simply because it suspects them of contemplating wrongdoing, why can't other states kill Americans whom they have some reason to believe are also planning some heinous act? President Obama did say the United States was going to reduce its reliance on drones, but that decision would be cold comfort to the wedding party in Yemen that got hit in early December. If they were still alive, of course. Maybe ending this policy is on Obama's to-do list for next year -- right after he finally closes Gitmo.

5. "Nations Sign Global Accord to Address Climate Change." Here's what did happen last year: a record typhoon in the Philippines, disappearing glaciers, and a further decline in Arctic sea ice. What didn't happen was serious progress toward a global agreement on measures to slow or halt man-made climate change. Listen closely: The sound you hear is humankind fiddling while the Earth warms.

6. "Obama Pardons Edward Snowden." I don't doubt that Edward Snowden broke the law when he exposed the NSA's vast intrusion into civil liberties. I also don't doubt that his motives were laudable and U.S. citizens are better off knowing what their government is doing. Yes, Snowden's revelations have strained relations with allies and may have compromised "sources and methods," but the real culprits were an out-of-control intelligence bureaucracy that couldn't tell the truth consistently and appears to have assumed that its burgeoning data-gathering operation would remain secret forever. But instead of a presidential pardon (something Snowden deserves at least as much as some other recipients), Americans got more intense scrutiny on journalists and whistleblowers. Welcome to the Land of the Free, 2013 edition.

7. "Chinese and Japanese Navies Clash Near Disputed Islands." China and Japan remain at odds over the Diaoyu/Senkaku islands, and the two Asian powers seem likely to be intense rivals for many years to come. There's plenty of loose tinder and flammable material lying around here, but nobody struck a match in 2013. That's a good thing.

8. "U.S. Officials: All U.S. Troops Will Leave Afghanistan in 2014." After more than 10 years of war, the United States might have concluded that it didn't make much sense to spend billions of dollars each year trying to stabilize a country the entire GDP of which is a fraction of what the war was costing. So when Afghan leader Hamid Karzai started making lots of onerous demands in the negotiations over a long-term U.S. presence in this strategic backwater, U.S. officials should have grabbed their English-Pashto dictionaries and found the proper phrase for "Catch you later." But instead, the United States started begging the Afghans for permission to throw good money after bad. Sigh.

9. "Netanyahu and Abbas Sign Final Status Agreement." Repeat after me: "We all know what the final peace deal looks like." "There's no alternative to a two-state solution." "The United States is firmly committed to reaching a final deal." Yeah, I know: John Kerry parted the Red Sea and got the two sides talking again. But so what? They've been talking off and on since the early 1990s, with less-than-evenhanded U.S. "mediation," and the two-state solution that some still think is inevitable is further away than ever. Who wants to bet we'll see a headline like this in 2014?

10. "Iraq Enjoys New-Found Stability." It would have been really nice to read a headline like this in 2013, because Iraq suffered for years under Saddam Hussein and, after the United States ousted him, was then convulsed by a brutal internal conflict. Alas, 2013 was the deadliest year since 2008, with more than 7,000 civilians killed by violence. Americans were transfixed by the Boston bombing, but events like that tragedy were weekly occurrences in Iraq. Adjusted for population size, the death toll in Iraq would be equivalent to some 70,000 Americans dying in sectarian warfare last year.

* * * 

That's my list, but of course there are plenty of other "non-events" one could name. The United States didn't enact meaningful gun control legislation, and so remains a total outlier among advanced industrial democracies. Excessive U.S. defense spending wasn't really reined in either; indeed, the latest budget deal lets the Pentagon off the hook. No country gave up nuclear weapons or reduced its existing arsenals significantly last year, although Syria is in the process of giving up its chemical weapons. And while it was a bad year for certain relatives of North Korean dictator Kim Jong Un, at least Pyongyang didn't shell any disputed islands or try to sink any South Korean ships. Senators John McCain and Ted Cruz had a year to say something nuanced and sensible about U.S. foreign policy. If either of them did, I must have missed it.

But there's always next year.



Curb Your Social Entrepreneurial Enthusiasm

Why the market for the global poor isn’t as big as you might think.

Is there really a fortune at the bottom of the pyramid? C. K. Prahalad's famous text suggested lots of money could be made by serving the world's poor, and a new book by Paul Polak and Mal Warwick makes similar claims. But this opportunity isn't for everyone.

Polak is a legend in social entrepreneurship circles, a former psychiatrist who started designing products for poor communities and has since sold millions of units. I've used his writings and speeches in my course at New York University on the role of the private sector in poverty alleviation. His latest book, The Business Solution to Poverty, says that the 2.8 billion people who live on $2 a day or less constitute a multi-trillion-dollar market. But it's not that simple.

According to the World Bank's database, there were indeed a maximum of roughly 2.8 billion people living on under $2 a day between 2000 and 2010. Multiply those numbers by 365 days, and they could indeed have spent about $2 trillion a year. It could have been more -- some countries did not report any poverty figures -- but it also could have been less, as the minimum numbers from the same period cover about 2.2 billion people.

However big the group was, the $2 figure was the maximum daily income to be a member. Many of these billions had lower incomes, but using $2 now allows for some income growth in the intervening years. The problem is that this $2 in purchasing power in a poor country is not the same as $2 in sales for a foreign company. In truth, the $2 figure is a measure of local purchasing power compared to prices in the United States in 2005; a person "living on $2 a day" is actually living on the amount of local currency needed to buy the same goods and services that $2 would have bought in the United States in 2005. Converted to greenbacks, that local cash might be worth far less than $2, since prices tend to be lower in poor countries.

This difference may not matter to local businesses, but it does to foreign firms. And Polak and Warwick's book, which is priced by the publisher at $27.95, is clearly aimed at wealthy countries, or at least wealthy English speakers. To this audience, the cash equivalent of $2 in local purchasing power in a poor country would almost certainly yield well below $2 in repatriated revenue. Adjusting for both the currency difference and the potential overstatement of the poor population cuts the size of the market in half. For an American company, the actual opportunity might be to get a piece of a market worth a little over $1 trillion.

That's still not too shabby. If all the poor lived in one country, it would have an economy roughly the size of Spain's. Moreover, unlike the Spanish, this country's population would be spending almost all of its annual earnings. That's not great for families, but it does make the market bigger for companies.

At such low incomes, most families are saving very little. Very few at all have savings accounts, since access to banking is scant at best. Payment of taxes is also minimal, except indirectly. Many poor people work and shop outside the formal economy; in the poorest countries, half the economy may operate in the shadows. Where tax systems are more developed, the low incomes of the poor may still be exempt.

In this respect, the global poor's buying power is real. Yet outsiders might have a hard time entering some parts of their market. For example, it might be difficult to convince a poor family to buy housing or pay for religious ceremonies and festivals -- often two major items in the annual budget -- from new sellers. And for other products, from local delicacies to haircuts, families might prefer established local purveyors.

Even if the bulk of poor households' buying power were still available to new entrants, there would be other possible limits to their consumption. Just how many different goods and services would the households really buy? In rural areas, a local shop might stock 100 different items. In cities, that number might rise. Still, there's a tradeoff: the more variety a family has in its spending patterns, the less often it will buy any one item.

For a given product -- say, toothpaste -- the revenue available from poor households worldwide might be on the order of $10 billion, or one hundredth of the total market. In a given country, though, the amount could be much smaller.

Polak's market spreads across many countries but is concentrated in just a few. More than half of the 2.8 billion people cited by Polak and Warwick lived in India and China. Indonesia had about 5 percent, and only nine other countries had more than 1 percent of the total. In any of the other 100-plus countries where close to one-fifth of the poor lived, the market might offer less than $100 million in revenue for a given industry. In about half of them, it would be less than $10 million.

At this point, the numbers begin to look perilously small. Products sold to poor people usually have low prices, so the margins are low, too. As Polak himself is fond of saying, "If you can't sell at least a million of them, don't bother." But how many companies could sell a million units in a market worth only $10 million, especially if it were costly to enter?

This is the fundamental issue in serving the base of the pyramid. There are low-hanging fruit in some countries and industries, but there are also hundreds of millions of people living in areas where the potential economies of scale are much smaller. The world can make a lot of progress against poverty by picking the low-hanging fruit, but it will need other strategies to reach the higher branches of the tree.

SEAN GALLUP / Getty Images News / Getty Images