From Haiti, With Love

January 24, 2010

The pictures of the collapsed Presidential Palace in Port-au-Prince, some of the first and most striking images of the damage this month’s earthquake created, are a nice visual summary of what’s happened to the already exceptionally fragile Haitian government. Namely, it has partially collapsed. One indicator of just how much of Haiti’s governing is being done from Washington and UN headquarters is that the US government announced on Monday that they would expedite adoptions of Haitian orphans to US families who had been pre-approved for adoptions.

From an international relations standpoint this is of course peculiar. A high school friend and her husband have been waiting to adopt a Haitian toddler almost since his birth, and their file was, until the recent earthquake, stuck in a seemingly endless and excruciatingly slow loop of Haitian bureaucracy, where they were seeking approval for the completion of the adoption by the Haitian government. Now, thankfully for them and for their adoptive son Stanley, the US government’s decision to “parole” orphans whose adoption files were already significantly in process means that my friend is (very anxiously) waiting for good news in Ft Lauderdale while her husband is set-up in one of Port-au-Prince’s “tent cities” helping the orphanage staff and advocating for the children at the US Embassy. They are hoping to have an interview at the Embassy tomorrow, and to bring their little one home to Maryland soon.

The striking thing about this is that the only party who seems to be opposed to Washington’s decision is not the Haitian government (whose voice on the matter has not been reported, but whose position on the issue is impossible to make easy predictions about), but instead UNICEF, who is concerned about the possibility for trafficking of children in the wake of the earthquake. They issued a statement cautiously supporting the government’s decision, but only for children whose files had been previously approved. Their overarching policy is to provide safety for Haitian children in Haiti, in part because there is still reunification work to be done between children, their parents and extended families.

I’m hoping that little Stanley is soon with his American parents, at a safe distance from the chaos of Port-au-Prince (I type this while nervously checking my friend’s Facebook status, to see whether there is any news to report).  I also hope that in the longer run the government of Haiti is capable of recovering, functioning, and taking on the tasks of providing public goods so that future generations of children like Stanley never find themselves in a similar situation.

Mommy Capital

November 4, 2009

In the recent weeks, I’ve been discussing with my students the political and economic conditions that help democracies to emerge, and make them stick. One of the most abstract ideas  to get your head around is that having “democratic values” and a “civic culture” helps you become a democracy and stay that way (abstract because how do you get these things if you are not a democracy?). This includes things like having high levels of citizen participation in social and political organisations, believing in the benefits of democracy, etc.

An extremely interesting article (accessible to everyone, not just LSE master’s students) was written in the mid-1990s by the political scientist Robert Putnam. It is titled “bowling alone.” Putnam is an expert on social capital because he studied the impact that having it had on the quality of policy and governance in various Italian regions for about twenty years. Basically, he found that if you had more social capital, you were more likely to have good governance, and good policy. Bowling alone takes these insights and applies them to the US. Putnam documents the decline of civic participation in the United States: Americans between 1950 and 1990 went from being highly engaged in social and political activities in their communities to being apathetic and uninvolved. Indeed, where they once bowled in organised leagues, they now go bowling alone.

All of this got me to thinking about the fact that one of the reasons M. and I decided to buy a flat in the same neighbourhood of London we currently live in is that we wanted not maintain the social capital we had already built up living here for 2 years. This social capital comes in the form of a couple of key forms, most of which are related to our role as parents. First, we have learned about activities during the day for our son: playgroups, library story and song hours, etc (if all of this seems like Greek to you because you are not a parent, the quick story is that babies these days don’t just sit at home and watch their mothers cook while teething on a rattle, they go to music and dance lessons, organised play hours with other children, swimming lessons and all sorts of other things). Second we know about schools and nurseries in this area. And third (and only partially related to being parents), we have gotten to know other couples in this area, and their children, which makes us feel more connected to the community.

A good part of this “connectedness” has been facilitated by my becoming a member of a group of mothers in the area. When I found out about this group about a year ago, it was just getting started in a formal way, in fact, they were in the process of building a website. Now, it’s a major “organisation” in our area with a blog, regular meet-ups for mothers and babies, social events (this past weekend, a Halloween party), a Facebook group and special discounts organised for moms at local businesses. They also provide information on schools, nurseries, doctors and political initiatives in the area. There are about 200 moms in this area who are members on the network which, if you assume on average that each mother represents a household of 3 people (a second parent and a child – a conservative estimate as many mothers have more than one child), that’s somewhere between 5-10% of the population of the area (depending on how tightly you define the neighborhood and whether you use 2001 census data or other sources).  Not a huge percent, but certainly a significant one.

You might guess what this made me consider next: does this unique form of social capital (“mommy capital”) in our neighbourhood have any tangible benefits along the lines that Putnam’s research suggests? I didn’t really  investigate this in any depth, or do any real statistics (certainly not any that would satisfy my quantitatively-minded MSc students), but I did look quickly to see how the area’s crime statistics compared to bordering neighbourhoods with similar or higher income levels, and to see whether there were any trends over time.

And here’s what I found. First, in the year that this network has been expanding and formalising, crime in the neighbourhood dropped, despite the obvious deterioration in economic indicators for London as a whole, and the neighbourhood’s demographic.   Unfortunately, there are only two years of statistics available, which makes seeing a longer term trend or a sudden drop impossible. Second, when you break down crime stats by type, there are fewer offences in quite a few categories in this neighbourhood vs. at least one adjacent and comparable (or more wealthy) area. In fact, crime rates in our neighbourhood are one of the lowest in Westminster. Drawing a causation between this rough data and “mommy capital” is of course silly, but it’s not silly to think that belonging to this group encourages people to become more involved in their community, which in turn improves the quality of living in the area on a number of metrics, including, potentially, crime.

I’m collecting oddities and ironies from the financial crisis, and yesterday I came across another great one.  Citibank is in trouble in Mexico.  Not because Mexico has been taken down by the financial crisis – Citibank’s operations in Mexico are in fact generating 15% of the bank’s global profits – but because the Mexican Supreme Court is likely to rule that Citibank’s ownership of Banamex  is illegal. Why, you might ask? Because Citibank is partially owned by the US government, and the Mexican constitution does not allow foreign governments to own Mexican banks.

The history of Mexican financial institutions in the 20th century swung back and forth between government and private ownership, landing firmly on the side of private ownership by the 1990s as Mexico prepared for further integration with the US and Canadian economies via NAFTA. Banamex, Mexico’s largest bank, has been at the centre of debates about money and politics in Mexico since the Revolution, when Pancho Villa took it over to prevent it acting as the Central Bank to dictator Porfirio Diaz. It was privatised, nationalised, privatised again and then recapitalised by the government in the wake of the 1995 Tequilla Crisis. In 2001, Citibank purchased it. Now, less than a decade later, Banamex has been renationalised by the back door by the big neighbours to the north. The same neighbours which advocated for privatisation so vociferously in the 1990s? The ones whose economic model the Mexicans were imitating when they re-established private financial companies? Yes, those same ones.

scary reassuring

It’s well known that the US / Western spending splurge that proceeded the current financial meltdown was largely financed by China, along with other Asian and developing economies.  By investing in US debt, the Chinese financed a period of low interest rates and high credit, while at the same time plunking their massive trade surplus and foreign exchange reserves into what seemed to be a safe asset.  Now the fragile edifice has collapsed, but the Chinese are still holding more than two trillion dollars of, well, dollars.  Which means the US is indebted to China (for a humorous take on this, see this link which I discussed in my last post).

All of this spending and borrowing has generated the first signs that the future monetary order might be dominated by the Chinese instead of the Americans.  Chinese officials have on several occasions (including at the recent G8 meeting in Italy) said that they are interested in a future monetary system where the dollar plays a less dominant role, and have agreed with Brazil to denominate trade between the two nations in their own respective national currencies.  All of this has caused people that study the things that I study to wonder if the transition has already started towards a future in which China plays an equal, if not larger, role in the international political economy of money than they do now.

Given all of this context, and the fact that M. and I are actively looking to buy a house in London, this morning’s news that the Bank of China (the world’s third largest bank) is planning on offering mortgages to UK home buyers really caught my attention. Just think, I could be personally indebted to China, rather than just generically indebted to China through my government’s (and my adopted home government’s) borrowing habits!

In fact, the article mentioned that Bank of China mortgages would have two advantages vis-a-vis those offered by more traditional UK outfits: they would be more conservative, and therefore less risky (for the bank and for the borrower); and they would be cheaper.  Sounds like a great combination.

I was so taken with the idea of personally contributing to the up and coming dominance of Chinese finance (being the Sinophile that I am), that I suggested to M. that we check it out.   He agreed, and  I’ve requested an appointment with our local Bank of China – located where else but in London’s Chinatown! – to discuss mortgages.   If the Bank of China manages to woo us away from our current bank, HSBC  – otherwise known as the Hong Kong Shanghai Banking Corporation, established by the British colonisers in the 19th century to finance Chinese / European trade – it will be a transition from one monetary hegemon to another in more ways than one.  And whether banking with (and therefore on) the new hegemon is scary or reassuring, well… that sort of depends on your point of view.

For people who live in the US and aren’t frequent makers of international phone calls, you might not know that all countries have an international dialing code.  And you might not know that the US international dialing code is 1,  as in, “we’re number 1.”  France’s is 33.  Germany’s is 49.  Brazil’s is 55.  The fact that the US is 1 has always struck me as a particularly blatant claim to  super-power status.  Why would we be 33 if we could be 1?

Yesterday I picked up the phone to call a Canadian colleague from my office in the UK.  Without thinking, I dialed 1 plus the area code.  It rang through.  Only today did it strike me as tremendously odd that I did not use an international dialing code to call Canada, or to put it another way, that I used the US international dialing code to call Canada.  Though I do occasionally enjoy a joke at Canada’s expense (an unappealing American habit of mine), assuming that Canada was essentially a telecom extension of the US was a sub-conscious, rather than conscious action.

It turns out that Canada, alone amongst major nations, does share an international dialing code with the US.  Poor Canada: could we not have spared them that indignity?   And noticing this made me realise that there is a definate relationship between a country’s dialing code and its power and status in the international political economy.  Only two countries have one digit calling codes: the US (1) and Russia (7).  These codes were in place during the Cold War (the USSR was 7 as well);  I don’t beleive that it’s coincidental that the only two super-powers possessed the only 1 digit calling codes.

On the second tier, what might be called great powers and regional powers, it’s 2 digit codes all around.  All of the major nations of Europe have two digit codes: as noted above France and Germany are 33 and 49, the UK is 44 and Italy is 39. Large Latin American, African and Asian countries also have two digit codes: Brazil, 55; Mexico, 52; China 86; India 91; Egypt 20; South Africa 27.  All G20 countries, with the exception of Saudi Arabia, the US and Russia, have two digit codes.

But alas, non-powers are relegated to the ignominy of three digit codes.  Nicaragua? 505.  Laos? 856.  Burkina Faso? 266.  Even less powerful European countries, though wealthy in global terms, are not spared:  Finland, with its 358 or Estonia with 372.

Indeed, the trend appeared to be so strong on first glance that I wanted to run some regressions to see how predictive international dialing codes were of some metric of power (e.g. GDP or military size).  However, I ran into two problems.  With a smaller data set (the G20, for example) the fact that the starting number is determined by the region (3 and 4 for Europe, 2 for Africa, 8 and 9 for Asia) means that you obscure the power element because you restrict yourself to two digit codes.  And secondly, though I was interested in the phenomenon, I wasn’t interested enough to spend several hours coding hundreds of countries, so you’ll have to just deal with anecdotal, rather than hard statistical, empirics.

All of this made me think: as international power begins to shift away from Western economies and towards large emerging countries, and especially Asian economies who are stuck with country codes beginning with 8s and 9s, will those countries want “better” dialing codes, just like they want more representation in the IMF?   All I can say is that if  China launches a campaign to change its international dialing code from 86 to 2, you’ll know that you heard it predicted here first.

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