Category Archives: Random

‘It is obvious that people here are poor. It is less obvious that someone made them that way.’

So I made a video with some thoughts I had during my recent work-trip to Uganda.

I have a knot in my stomach putting this kind of shit online. Another white guy, in another African country, broadcasting another set of un-earned conclusions. The whole point I’m trying to make in the video is that I have no idea what I’m talking about, but maybe that means I should have just not talked at all.

Anyway, now it’s out there, embarrassing but irrevocable, just like the rest of the internet. Next time, I’ll try making one of these I don’t feel the need to apologize for.

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Every Year, 13,000 People Die of AIDS in America. Fewer than 1,000 Die in Europe. What Gives?

Hopefully the title of this animation sounds familiar!

Yep, so I made a little explainer video based on that article I wrote for the New Republic last May. Apologies for, well, basically everything. The pipsqueak voiceover, the muddled visuals, the inconsistent 3D, they’re the best I could do.

I don’t know why I love making these so much. The process is so slow, the rewards so incremental, compared to writing. Presenting information visually is in some ways easier and in some ways harder than writing it, but I have so much less practice! I’ve been telling people stuff my whole life. Showing them, I’ve been at it less than a year.

There’s no physics inside a computer. Objects don’t have weight, they don’t know the others are there. An object can be in one place, then 1/24th of a second later (or 1/30th or 1/60th or 1/1000th, it’s up to me!) a completely different one, in a different color, with a different shape. When Hiccup rides Toothless in the How to Train Your Dragon Movies, they’re not really touching, not in any recognizable physical sense, the animators have just placed them, lit them, put effects on them, that trick us into thinking they are.

What I like about this is that it’s exactly the same as every other art form. George and Lennie in Of Mice and Men aren’t any realer than Hiccup and Toothless. Lennie can be tall and fat on one page, then, on the next, bright purple, female, with tentacles and the flu. Writing, painting, animating, whatever, they’re all equally unlimited. The hard part in animation is making objects look like they have weight, mass, purpose. The hard part in writing is the same: We have to care where these objects are placed, where they go, how they bump into each other.

I’m sounding grandiose now. I don’t mean to compare myself to real animators, real writers. Everything I’ve done has been riding on the dragon (sorry) of reality, a story that’s already happened, the relationships between the objects established, arranged to be retold. All I’m saying is, when you think of the sheer fucking blankness of a unwritten novel, an undrawn animation, it’s amazing people can make us feel anything bumping these silly little objects, characters, into each other.

Anyway, shut up, Mike, it’s just a stupid little animation. I hope people enjoy this! It’s an issue I became totally obsessed with when I was writing my story, and it deserves to have more, smarter people obsessed with it. I tried really hard to treat this video, these unbearable statistics, with the respect they deserve. There’s a tendency for these animations to appear cute and light, and I’m genuinely sorry if any of this comes off as inconsiderate.

I want to especially thank Forrest Gray, who let me use his beautiful song ‘Sunset’ for the music bed. He also Also Dan Deacon, who in addition to being broadly awesome, releases the stems of his songs on Soundcloud under Creative Commons so people like me can use them. Thanks guys!

And of course, a huge (re-)thanks to all the brilliant and kind epidemiologists who let me interview them for my story.

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I’m on a podcast!

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Slate’s The Gist interviewed me about my development article!

Here’s the link, I start at 13.40…

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Follow-up to my ‘development can’t work’ story: Two ideas to make it better

Here’s a little addendum to my story in The New Republic: Two development ideas I’m (cautiously) excited about.

The more I look at development, the more I think the age of the game-changer is over. Sixty percent of the world’s poor live in middle-income countries; only 14 percent of them are in fragile of conflict-prone ones. The countries still getting aid are getting less and less of it. Charles Kenny, who wrote an entire book about how much better the developing world is now than it used to be, points out that in the 1990s, 40 percent of aid-receiving countries relied on donations for more than one-tenth of their budgets. Now, that’s below 30 percent, and dropping.

Not that we should ignore the Afghanistans and Burundis of the world, but by 2030, up to 41 countries are going to move into the middle-income bracket. Increasingly, their challenge, as ours, will be the distribution of resources, not the creation of them. The development technologies of the future aren’t going to be boreholes and school buildings. They’re going to be labor inspectors, census bureaus, government administrators, state pensions: All the boring stuff that makes our own countries function.

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The Scottish Highlands, Junk Food and Structuralism

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Couple weekends ago I was in the Scottish Highlands.
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Scotland is known, at least among me, for its unexplainably high rates of obesity and alcoholism. One of the reasons I wanted to go there was to see if the liquids and solids environment was really so extreme.
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This is basically vacation as confirmation bias. In the last 10 years I’ve become a weirdly dogmatic structuralist.
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When I moved to Europe I weighed 1.5 times as much as I do now. I lost 60 pounds my first year here and never put it back on again.
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It’s not that I magically had the willpower to eat better and exercise more. It’s that a Mountain Dew in Denmark costs four dollars, a Big Mac Extra Value Meal costs fifteen, a monthly bus pass costs — well, I never even checked. More than biking.
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Not drinking pop, learning how to cook, cycling everywhere, they weren’t signs of some new Euro-fortitude. They were just my habits adjusting to my circumstances.
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I went to a lot of grocery stores when I was in Scotland. Here’s a mini-mart in a working-class (or at least working class-looking?) neighborhood of Inverness.
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It’s what you’d expect. Shelf after shelf of worryingly cheap alcohol and snacks.
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Flanking a meagre little corner with actual groceries.
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‘Does anyone ever buy the bananas?’ I asked the manager.
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‘Nah,’ she said. ‘We usually just throw them out.’
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It wasn’t just the prices in Denmark that made me change my habits. All of my friends cooked their meals most nights, ate out reluctantly, biked everywhere. And looked amazing. Being surrounded by beautiful skyscraper Teutons, it turns out, is powerful motivation to skip seconds.
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Sometimes I wonder if constantly looking for structural explanations means I don’t believe in personal responsibility. A skinny Dane isn’t more virtuous or hardworking or sophisticated than an overweight Scot, goes my brain. He’s just choosing among the options available.
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‘If you’re fat it’s because you eat too much,’ my Danish friends would say when I brought this up. ‘Just stop eating so much. It’s that simple.’
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And it is. And it also isn’t.
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Sometimes I feel like some sort of left-wing caricature for thinking this way: it’s not your fault you’re fat, it’s your country’s fault.
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And shit, I probably am, in more ways than just this.
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But there’s being right and there’s being nice. Sometimes choosing between the available options means paying attention to one, and completely ignoring the other.

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Apartheid: The Sci-Fi Dystopia That Actually Happened

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I have no idea how much Apartheid is taught these days, but American schoolkids need to know this shit:

Black townships in ‘white’ South Africa were kept as unattractive as possible. Few urban amenities were ever provided. Black businessmen were prevented by government restrictions from expanding their enterprises there. No African was allowed to carry on more than one business. Businesses were confined to providing ‘daily essential necessities’, like wood, coal, milk, and vegetables. No banks or clothing stores or supermarkets were permitted. Restrictions were even placed on dry-cleaners, garages, and petrol stations. Nor were Africans allowed to establish companies or partnerships in urban areas, or to construct their own buildings. These had to be leased from the local authority. Black housing was rudimentary, consisting of rows of identical ‘matchbox’ houses. Only a small proportion had electricity or adequate plumbing. Overcrowding was commonplace. In Soweto, the main black urban area serving Johannesburg, the average number of people living in each ‘matchbox’ house in 1970 was thirteen.

The disadvantages under which the African population laboured in the ‘white’ economy were legion. Africans were barred by law from skilled work, from forming registered unions, and from taking strike action. In industrial disputes, armed police were often called in by white employers to deal with the workforce. If Africans lost their job, they faced the possibility of deportation. A considerable proportion of the workforce received wages which fell short of providing the costs of family subsistence: An employers’ organisation, the Associated Chambers of Commerce, calculated in 1970 that the average industrial wage was 30 per cent below the minimum monthly budget needed for a Soweto family of five.

That’s a clip from Martin Meredith’s ‘The State of Africa: A History of the Continent Since Independence‘. And above that, a photo I took when I was in South Africa for work a few years ago.

I’m not sure why I’m so interested in South Africa, why I feel so strongly that this country’s history should be known and discussed more, why this shit gives me a double-gravity feeling in my stomach unlike anywhere else.

In college I got super into this political philosopher, John Rawls. Rawls’s big thing was that we should organize our societies as if we were doing so from scratch, like we couldn’t decide how or to whom we would be born into them. You might be the child of a poor Jamaican single mother or a hipster trust fund brat or an AIDS orphan. You might be tall or short or dumb or smart or have an alcoholic father or Down’s Syndrome or anger management problems. If you could enter a society with any of these challenges, goes his idea, you would design it so that they did not become your fate.

South Africa is the 20th century’s most extreme example of this principle applied in exactly the opposite way it was intended: If you were deliberately trying to disenfranchise an ethnic group, to make it impossible for them to achieve wealth or stability or well-being, how would you do it? You would start by denying them housing and medical care and political representation. You’d restrict their movement, keep them uneducated, erect un-jumpable hurdles to prosperity. You’d rig the rules so that no matter how hard they tried, they were breaking them.

By this point we’ve all read Ta-Nehisi Coates’ The Case for Reparations. It’s basically a biography of all the structures, from slavery to sharecropping to segregation, that prevented African-Americans from fully participating in America’s rise to become the world’s wealthiest country.

I’m not trying to be all ‘America practiced Apartheid too!’ The circumstances in both countries are unique, and arguments based on analogies, as Coates himself has pointed out, are usually meant to inflame, not to teach.

But why I think Apartheid should be regarded as a more important benchmark in the 20th century is that these structures, the ones facilitating prosperity or preventing it, exist in every society. It’s the deliberation with which they were established, as well as their outcome, that are extreme in the South African case, but every country’s state apparatus falls along the same spectrum, whether we admit it or not. I feel like Coates’s article, academic books like Why Nations Fail (with its talk of ‘extractive institutions’) and even problematic gen-pop shit like ‘check your privilege’ hashtags, represent a growing acknowledgement that this is the case.

One of the reasons we watch science fiction is to watch our societies exaggerated back at us. Sometimes we can do that without having to make anything up.

 

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I’m on NPR!

Today I’m on NPR’s ‘Snap Judgment’ talking about the time my co-worker died and what it did to our workplace afterwards.

I wrote about it for The Billfold last year, and someone at NPR saw it and they asked me if I could convert it into a monologue and I don’t really know what that means and so I read what I wrote into a microphone and now it’s on the radio. (And, um, no that’s not me in the photo.)

These are what I learned and think about this experience:

Recording takes ages. The 10 or so minutes you hear on the podcast took four and a half hours to record. I stood in a phone-booth-size room lined with padding and read my script into a microphone over and over and over. I did it sitting, standing, far from the microphone, close to it, loud, whispering, everything. Whenever my stomach gargled or I scratched myself or my shoelace-nub dragged along the floor, we had to redo the line because the mic picked it up.

Acting is hella hard, you guys. Every time I finished reading the script out loud, I got notes from the producer: ‘Do it again, but this time act like it’s really funny.’ ‘We need you to sound numb, but also in the moment.’ ‘Try it as Edward Norton in Fight Club.’

It’s super hard to keep all this in mind while still remembering to read at about 65 percent of your normal speaking speed, sticking word-for-word to your script and standing absolutely still so the microphone can’t hear any of your rustles.

So yeah, most of the reason it took so long was my rank amateurishness. ‘Can’t you guys fix this with Auto-Tune?’ I kept asking. And this was a script that I wrote. Describing something that actually happened to me. If I had this much trouble making it sound convincing, how are there people who can inhabit shit like ‘If I bleat when I speak, it’s because I’ve just been fleeced‘ or ‘They run as if the very whips of their masters are behind them‘?

I am not sure I should have done this. Writing is, by definition, at a distance from its subjects. Even in present tense, it’s still told by an omnipotent narrator, still filtered through one person’s voice and perspective.

Speaking something out loud is different: You have to decide how you’re going to sound when you describe something, not just the words you use. You have to give a voice, an actual voice, to all of your characters. They can sound like Alicia Silverstone in Clueless or they can be Condoleezza Rice, it’s up to you.

When I wrote this, I thought it was a story about how much of an asshole I am (everything I write is at least 60 percent that). How I tried to make my coworker’s death about me, how I failed to form any connection with my colleagues afterwards, how I let a chance for personal connection go by.

Reading it out loud, speaking about and as the people who were there, I’m afraid it becomes a story about how I’m less of an asshole than they were. That is unfair. And listening to it now, I fear I am not a good enough writer or speaker to have made it not that.

Ironic detachment is easy. I genuinely struggle with this. I don’t mean as a writer, but like as a colleague and a friend and a person. It’s easy to be numb, remote, to hide behind sarcasm, to deadpan the details. It’s harder to try. To make people real. To assume the best of them. To refrain from comparing my insides to their outsides.

I don’t know, I’ve been reading a lot of Gabe Delahaye lately. He has this post from a few weeks ago about the New York Times article where they interviewed people who spotted Philip Seymour Hoffman in the days before his death. Not friends or family, just random people who saw him at a restaurant or Starbucks or whatever. The whole story is just quotes from these people about how haggard and tired he looked.

OH DID IT? DID A HEROIN ADDICT’S SKIN LOOK BAD IN THE DAYS BEFORE HE OVERDOSED ON HEROIN?

[…]

If I have a point—and I am not sure that I do—it is that we do not have to give a quote to the New York Times just because they asked us for a quote. We do not have to write a Tweet just because we are waiting in line for the bathroom. We can spend entire days in silence if we so choose. You can keep your mouth shut. It is possible.

Standing still, reading your own words over and over again into a microphone, it makes you think about how you’re saying them. Once it’s finished,  once you’ve decided, you’re left with the question of why.

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The Story You Should Read Before You Donate to International Development

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On September 24, 2010, Mark Zuckerberg announced on Oprah that he was donating $100 million to the Newark Public School system. Zuckerberg wasn’t from Newark, he had no particular connection to the city. But he had become convinced—by the city’s great need, as well as its charismatic mayor—that his donation could have real impact there.

Schooled’, Dale Russakoff’s brilliant New Yorker story, describes what happened next:

More than twenty million dollars of Zuckerberg’s gift and matching donations went to consulting firms with various specialties: public relations, human resources, communications, data analysis, teacher evaluation. Many of the consultants had worked for Joel Klein, Teach for America, and other programs in the tight-knit reform movement, and a number of them had contracts with several school systems financed by Race to the Top grants and venture philanthropy. The going rate for individual consultants in Newark was a thousand dollars a day.

I’ve been working in international development for eight years now. It took me at least the first two to realize that money is not enough. Newark had a huge donation, passionate leaders, engaged parents, principals begging for more autonomy, teachers willing to compromise, a whole nation of expertise to draw from. And yet the reform effort stalled.

Improbably, a district with a billion dollars in revenue and two hundred million dollars in philanthropy was going broke. Anderson [the district superintendent] announced a fifty-seven-million-dollar budget gap in March, 2013, attributing it mostly to the charter exodus. She cut more than eighteen million dollars from school budgets and laid off more than two hundred attendance counsellors, clerical workers, and janitors, most of them Newark residents with few comparable job prospects. “We’re raising the poverty level in Newark in the name of school reform,” she lamented to a group of funders. “It’s a hard thing to wrestle with.”

School employees’ unions, community leaders, and parents decried the budget cuts, the layoffs, and the announcement of more school closings. Anderson’s management style didn’t help. At the annual budget hearing, when the school advisory board pressed for details about which positions and services were being eliminated in schools, her representatives said the information wasn’t available. Anderson’s budget underestimated the cost of the redundant teachers by half.

The board voted down her budget and soon afterward gave a vote of no confidence—unanimously, in both cases, but without effect, given their advisory status.

You can read this as a story of city leaders trying to circumvent basic principles of democracy and public participation to implement their own technocratic regime. Or you can read it as a story of entrenched interests protecting their own jobs and salaries and ideologies at the expense of educating children. Either way, it should make all of us careful about these sort of one-big-push reforms, the idea that all it takes to fix a broken system is a big fat stimulus and the political will for a reboot.

It’s not fair to blame Anderson or Zuckerberg or Cory Booker or Chris Christie. Laughing at their failure is understandable, our first instinct, but it’s only useful if it’s our first step toward learning from it. It sounds as if everyone involved—the teachers, the principals, the parents, the money—was genuinely dedicated to fixing the schools. It is depressing that all that, still, wasn’t enough.

Depressinger still is that this is a story that takes place in a developed country, with a functioning government, with the background already painted onto the canvas. If we can’t fix our own failing schools, what chance do we have of fixing them in countries without all that?

I haven’t spent enough time in developing countries to know them like I know my own, but what I’ve seen so far is that every society, rich and poor, contains intolerable failures, has already marshaled its own forces to fix and defend them. I do not know what it is that they need to solve their problems, but I fear it may be more than what we can offer.

One idea—microfinance, child sponsorship, LifeStraw, GiveDirectly—is not going to solve the problems of Zimbabwe or Peru or Papua New Guinea or any more than $100 million is going to solve the problems of the Newark public school system. I don’t want to say that international development doesn’t need your money, because it does. But more than that, it needs your patience.

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Why I Show Drafts to My Sources

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I majored in journalism. I worked at the student newspaper at my community college and then my real one, then did internships at two daily newspapers. Then I gave it up, I moved to Europe, I went to grad school and I ended up working at NGOs for the next eight years.

Since 2012 I’ve been sort of doing journalism again. Nothing serious, just little essays about stupid shit I did as a teenager or a friend of mine who was briefly a prostitute. Lately I’ve been getting slightly more ambitious, writing about foreign countries I visit for work and, this one time, how HIV is way worse in the US than in Europe.

If it’s not already obvious that I’m an amateur from my essays, it certainly is from the methods by which I produce them. I interview people too long, ask them stupid questions, forget to call them ‘doctor’, bug them with too many follow-ups. And I also, the biggest sin of all, send them drafts of my essays for comments before they’re published.

This is highly un-standard operating procedure. In journalism school the rule was, you could check direct quotesi.e. the stuff in quote marks, not paraphraseswith your sources, and you could fact-check your numbers with them, but giving them actual excerpts from your story would compromise the independent, objective role of journalism.

The reasons behind this rule are obvious. Can you imagine an investigative reporter writing an exposé of a corrupt governor and checking it with him beforehand? Journalism is supposed to, like the old saying says, comfort the afflicted and afflict the comfortable. Giving a source advance warning of your story, a chance to revoke their quotes or edit your conclusions before it’s published, profoundly undermines that role.

So I get why the rule exists. But not all journalism is political analysis or corruption investigations or public-figure profiles. In the last few years, the rise of ‘explainers’ (Ezra Klein, Nate Silver) and the general trend toward narrative-izing academic findings  (Malcolm Gladwell, David Brooks, TED Talks) have demonstrated the utilityand the demandfor works of journalism that see their sources as collaborators rather than antagonists.

Me, I’m paralyzed-scared of getting anything factually wrong in my essays. As I mentioned the other day, for my HIV piece I read probably 150 documents and interviewed like 18 people. Many of these people and documents didn’t agree with each other, or emphasized different historical or demographic factors as the key to explaining the higher rates of HIV deaths in the United States (‘It’s the health care system!’ one of them would say. ‘The health care system doesn’t matter!’ says another ).

Weighing that up, then cinching it into a few thousand words, then trying to make it readable for people who are less obsessed with this topic than I am, there’s no way to do that without leaving some conclusions and explanations on the side of the road. The only way to make sure I got my conclusions right was to share them with the people who provided the basis on which I made them.

So I sent my essay to six of my sources. Everyone got back to me. All of them had comments and corrections, all of them were reasonable, and all of their changes got included in the essay before it ran.

Most of the corrections were related to terminology. ‘Your story says there were 15,500 people diagnosed with HIV in 2010,’ one of my sources wrote. ‘What you mean is infections, not diagnoses.’ That’s actually a pretty important distinction, and the kind that traditional magazine fact-checkers might not notice.

I also let them alter their direct quotes. I was a bit nervous about this, since In journalism school they taught us that anything in quote marks is sacrosanct.  ‘I have you on tape with this exact wording,’ is what they told us to say when sources backtracked on their interviews. ‘You knew you were talking to a journalist.’

But what’s the point? Like the others, the changes in quotes they suggested were grammar and terminology and clarification, not self-preservation. One of my sources told me that when you’re on Medicaid it’s difficult to move ‘from one place to another’. She wanted me to change it to ‘from one state to another’.  Should I have stood on principle on not changing the quote? Her suggestion is more accurate than what I had originally anyway.

Knowing I was going to send a draft of my article to my sources made me write it differently, made me work harder to fairly summarize what they said. It’s possible to get all your facts and your quotes correct and your conclusions wrong; having expert eyes on the full content, the tone and the structure and the corny jokes, made me think harder about what I was actually saying, not just the numbers I was using to say it.

There’s also the issue of courtesy. Academics, authors, people who work at AIDS clinics, they’re busy; the ones I spoke to spent unbelievable amounts of time, one-on-one, walking me through the basics of the field in which they are experts, my own little Socratic seminar. They sent me their academic work and their data and their annual reports, knowing that I was going to quote and paraphrase them without a chaperone. I paid them nothing for this, not even the guarantee of being name-checked in my article. The least I can doas a person, if not as a journalist—is to show them in advance how I will represent them, give them a chance to correct what I got wrong or over-condensed.

I’m not arguing that every single piece of journalism should be checked with the subject of it. I was talking with a magazine editor the other day about this, and he said ‘whenever you write a profile of someone, they end up hating you. That’s how it works.’ No one wants to read a piece of propaganda, or be fed conclusions that have been vetted and authorized by the people they are concluding about. Fair enough.

But the ethical prohibition on sharing drafts of stories with sources comes from the assumed un-alignment of interests between the journalist and subject. The subject of a profile or a political story or business news has an interest in putting out a particular version of themselvesthe hero, the victim, the striver, the successful startup, whatever. The journalist has an interest in telling the truth, or at least in finding the angle that’s going to get their story read and shared and talked about.

But in the case of explainers and science journalism and (some types of) feature stories, the interests of the journalist and the subject are aligned. Both want to bring the truth to a complex subject. Both want to bring attention to a field or a finding that was previously unknown. Both want to frame the narrative in a way that will get the general public interested. The bestselling Freakonomics was written through collaboration between a journalist and an academic. The documentary Food, Inc was created with the oversight of two of the subjects (Michael Pollan and Eric Schlosser) interviewed in it. I think that adds to the credibility of the finished works, rather than diminishing them.

I didn’t share my HIV story with all of my sources. The CDC, who graciously provided me with Excel after Excel of estimates and back-calculations, and was generally lovely to work with, all they got was the figures from the story and an outline of my general points. Even I’m savvy enough to know that they have interests beyond the accuracy of the story.

Sometimes I think about this old Yogi Berra quote, about his relationship to the press: ‘You shouldn’t have printed what I said. You should have printed what I meant.’  (See, this is why you shouldn’t use direct quotes from memory. I can’t find it on Google. It might not have been Berra, and was probably phrased differently. Anyway!)

I remember reading it on a 365 Dumb Quotes calendar we kept on the kitchen table as a kid. These days, it doesn’t seem so dumb.

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Zimbabwe Dollarized. How Does the U.S. Feel About That?

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The rainbow of 20s you get from the ATM in Harare

Here’s a section that got cut from my New Republic story about the use of the US dollar in Zimbabwe

Wait, so a country can just adopt the United States’s currency without our permission?

“The U.S. government has never taken any overt position on dollarization, formal or informal.” This is Benjamin Cohen, a political economy processor at the University of California Santa Barbara, former Fed employee and the author of some articles I’ve been reading to try to understand how one country just gets up one morning and starts using another country’s money.

Ninety percent of the world’s $100 bills, Dr. Cohen says, are in circulation outside of the United States. Dozens of countries are considered  to be “highly dollarized,” meaning more than 30 percent of their money supply is in dollars.

Unlike Zimbabwe, which has formally adopted the dollar, most countries use the U.S. dollar informally, in parallel with the local currency. A few years ago I was in Cambodia for work, and found that the local currency, the riel, was only used for small stuff like meals, transport and entertainment. Anything major—a TV, a plane ticket, an iPhone—prices were quoted and paid in U.S. dollars.

It’s not just Cambodia. These sorts of arrangements are commonplace throughout the Middle East, Latin America and Southeast Asia. People use the local currency, but keep U.S. dollars as a hedge against inflation, like Tea Partiers hoarding gold.

According to Cohen, the United States has no reason to prevent these arrangements. Not only does the U.S. dollar provide a quarry of monetary calm for citizens of inflating nations, the U.S. actually makes money every time our money leaves our borders. “Seniorage,” as the economists call it, is the profit the U.S. earns every time a foreigner ‘buys’ a dollar for a dollar (It costs 6 cents to print a $1 bill. If you print one, then use it to buy something that costs a dollar, you’ve just earned 94 cents profit. That’s seniorage.).

This sounds like it shouldn’t be a real thing, but the US earns $20 billion per year from all those $100 bills held internationally. Not a huge proportion of GDP, but hey, free money, right?

The other upsides are obvious. Every time another country uses our currency, it reinforces the U.S. dollar as world’s preferred international currency, just like every time someone drinks a Coke or eats a Big Mac it reinforces the status of those brands.

Foreign countries using our currency even gives us diplomatic power. Panama, one of the first countries to formally adopt the U.S. dollar, froze in its tracks when the U.S. cut off access to hard currency in the late 1980s to put pressure on Noriega.

The only real downside of foreign countries dollarizing, for the U.S. at least, is that it creates a headache for the Fed. The more countries dollarize, the more the Fed has to take them into account when making monetary policy. A million calculations go into the decision to raise or lower interest rates, and the last thing the Fed needs is to add the interests of Cambodian iPod salesmen into the mix.

One of the more significant downsides is if a dollarized country suddenly reintroduced their domestic currency, it might flood the market with millions of now-unneeded U.S. dollars, reducing the value of all of them. It doesn’t even have to be a whole country. If the dollar was used widely enough, huge purchases of dollars by foreigners could significantly affect its value.

This is why, Cohen says, the U.S. takes a policy of “benign neglect” toward foreign countries that want to formally or informally dollarize. You want to buy a bunch of dollars and give them to your citizens in exchange for your old currency? Fine. You want to encourage your banks to offer accounts denominated in U.S. dollars? Have a blast. The U.S. isn’t going to be particularly helpful in helping you set this up, but they’re not going to stop you either.

Ten countries (East Timor, Ecuador, El Salvador, Panama and a bunch of small island nations) are formally dollarized, meaning the U.S. dollar is their official currency (most of them have their own coins though).

Zimbabwe is formally dollarized in that all government spending is in U.S. dollars, but it also recognizes the euro, the British pound, the Botswanan pula and the South African rand (why the Mozambican metical got left out, I have no idea). Stores accept payment in whatever currency you have handy, and sometimes give you change in a different currency than you paid.

One of the things that always surprised me about Zimbabwe was how it just switched to U.S. dollars one day, without any relationship to the U.S. Federal Reserve. It was even under sanctions at the time. Can it just do that?

“It’s totally normal to switch to the U.S. dollar without any relationship to the Fed,” Cohen says. “It doesn’t require an application. Anyone can buy paper money, and anyone can get a dollar bank account. Their own country may restrict those things, but the U.S. doesn’t.”

When Ecuador officially adopted the U.S. dollar in 2000, it carried out a mass currency conversion. The central bank sold their U.S. treasury bonds to the U.S. for cash, brought the cash back to Ecuador and gave Ecuadoreans a window in which to exchange their sucres for U.S. dollars. The U.S. didn’t orchestrate, nor condemn, this process.

Like an introduced species, the U.S. dollar tends to take over an increasingly large percentage of the economy. The only country Cohen knows of that has de-dollarized is Israel, which introduced the U.S. dollar in the late 1970s as a parallel currency, and only managed to get rid of it after a series of economic reforms reinstated confidence in the shekel. Lots of informally dollarized countries, like Argentina, go through waves of increasing, then decreasing dollarization in line with citizens’ confidence in the local currency.

I have no idea what any of this means for Zimbabwe. As I say in the New Republic story, bringing back the Zimbabwe dollar is seen by economists (including the head of the Reserve Bank of Zimbabwe) as a bad idea, but that doesn’t mean it won’t happen.

Dr. Cohen’s written a bunch of interesting, easy to read articles on dollarization from the US perspective

 Thanks for the interview!

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