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Evening Must-Read: Steve Randy Waldmann: Depression Is a Choice

Oversharing About Money: An International Financial Wire Transfer from Lafayette, California, USA to Ahero, Nyando District, Nyanza Province, Kenya: The Honest Broker for the Week of July 12, 2014

Writers with Drinks: An Evening of Oversharing About Money: 7:30 p.m. July 12 :: Make-Out Room :: 3225 22nd St. San Francisco, CA :: Price: $5-$20 "If time is money, then consider this evening with Charlie Jane Anders, J. Bradford DeLong, Frances Lefkowitz, Farhad Manjoo, and Carol Queen to be a good investment..."

Oversharing About Money: An International Financial Wire Transfer from Lafayette, California, USA to Ahero, Nyando District, Nyanza Province, Kenya

J. Bradford DeLong

A few short years ago we lived, for the school district, in Lafayette. Lafayette is close to here in space and time, but distant in attitude. Lafayette is a place an unkind observer based in and comfortable in San Francisco might describe as an unholy mix of the worst parts of northern and southern California. There we had a neighbor, Bie Bostrom. She had been the oldest Peace Corps volunteer in East Africa. She kept in touch with what had been her town: Ahero, population 10K, in Nyando District, Nyanza Province, Kenya. And there she funds and runs a one-elderly-woman one-town NGO with zero administrative overhead: Grandmothers Raising Grandchildren. That's godzilla-rath of Khan (with an r)-godzilla-alien-hitchhiker-empire strikes back-rath of Khan-omen-dot-omen-rath of Khan-godzilla. No, I'm not going to hit you up--you've been hit up already coming here, at the door.

But when we think about HIV and AIDS here in San Franciso, we tend to think locally. We should think globally as well. HIV and AIDS continues to be the grim reaper of Africa. It cuts a large swath. It used to cut a larger swath. And so it cuts an enormous generational swath. Ahero, total population 10K, has roughly 150 orphans who have not been adopted by aunts and uncles--if indeed there are any aunts and uncles left alive. They are, rather, left to be raised by their grandmothers and great-grandmothers. These AIDS-orphans being raised by their elderly invariably-widowed grand and great-grand mothers form the target population of Bie Bostrom's one-elderly-woman one-town zero-overhead NGO: about 1.5% of Ahero's total population, about 5% of Ahero's children

  • The grandmothers weave baskets.
  • Bie carries the baskets back to San Francisco Bay and sells them for $40 each.
  • Bie carries the money back to Ahero, Kenya.
  • Bie hires Moses to oversee what is going on on site.

Moses distributes rice and beans to the grandmothers; disburses school and scholarship money; buys very cute goats--alas! meat goats, for this is not a lactose-tolerant population--and gives them to the families; takes the billy goat--who must think that he has lucked into a very good life indeed--around on a rope from house to house so that there can be more goats; finds proxy cutouts to buy the goats because by now the local goat-dealers rub their hands with glee whenever they see Moses coming. You get the picture. Total monthly expenditure? The very low four figures.

We agree to sponsor a 24-hour basket sale on my website, and to match whatever money is raised. There are at most 50 baskets on hand, after all. But what if websurfing people want to give in addition to the cost of the basket? What if they wish to give without buying a basket? What if weblog commenters begin writing: "This is our opportunity to bankrupt Brad DeLong!!" We, remember, promise to match not basket sales but money raised.

24 hours later we do not--as I thought we would--face a commitment in the low four figures. Rather, we face a commitment in the low five figures. Taking what we had promised and the spike produced by the websurfers, Bie has an extra year's worth of money, or more, to spend in Ahero to support the grandmothers trying to raise their AIDS-orphaned grandchildren and great-grandchildren.

The thing I discover about myself that I do not like: I find myself writing a check in the low five rather than in the low four figures with a surprisingly bad heart. Given the amount of money that flows through the household, this is really not a big deal at all--less than one-quarter's college for one child, less than a 1% impact on our current net worth, less than an 0.5% downward move in the Berkeley housing market. Yeshua bar Yusuf would definitely raise an eyebrow, for we are well into "giving of our surplus, not our substance" territory here.

Moreover, the money has the potential to do a lot of good: it is a big deal for Ahero. We are perhaps eight times as well-off as the American median; grandmothers raising AIDS-orphaned grandchildren are less than one-half as well-off as the Kenyan median; the United States is perhaps 100 times as well-off as Kenya; and by the time you multiply those numbers together you conclude that $10K in grassroots contributions plus a $10K match has a relative salience for those to whom it is going in Kenya that is the same as $5M would have for us. And if I cannot set that in motion with a genuinely good heart, what does that say about me?

There remains the question: What to do with the extra money? Bie decides to build a well--and to build a well not out in the fields where it would be useful for irrigating the rice but near the houses. Bie's view: the girls of Ahero need to go to school--and if you spend up to three hours a day carrying water back to the house, your school attendance is going to be spotty. The local powerbrokers have a different view. Their view: Ahero runs on rice. If there is enough water to grow the rice (and beans), then lots of things are possible. Then everyone can be fed. Then there will be enough labor to grow and process coffee and oilseeds. Then there will be money for teachers. Then there will be time for students to attend school. If there is not enough water...

In the end we play the heavies: the weirdos from Greater San Francisco who believe in education and quality-of-life for girls, rather than investment in productive and badly needed agricultural infrastructure. Is this the right thing to do with the money? We have no idea. Bie strongly thinks it is, but her values are not necessarily their values. And who are the "they" whose values should count anyway?

Money is a symbol. The symbols were once held by clients of Fidelity Investor Services: claims to direct resources in the future that the clients committed to FIS in the hope that FIS could make them grow. The symbols have been transferred to us because FIS wanted to induce me to inform them of my view of likely future Federal Reserve policy, in the hope that I can add to their knowledge and help them do good for their clients. We now wave these symbols in the air to control the direction and purpose of goods and services.

We now offer to use these symbols to benefit people in Ahero, if they first do what we say, and transfer them over so that the people of Ahero can then control those symbols so that internationally-traded goods and services that would otherwise flow around Ahero--as if it were not there--flow into Ahero, and settle there for utilization.

This is not economic democracy--the people of Ahero, Kenya do not decide collectively what to invest in. This is not even local autonomous oligarchy--the power brokers who have successfuly obtained or maintained status in Ahero do not decide what to do. This is neo-neo-colonalism: it is (or some of it is) our money, and we decide how it is to be spent.

Once the money is earmarked and sitting in the bank account, how do you get a well dug in western Kenya? We investigate well-digging machines. Ahero is ten miles outside of Kisumu, population 500K, on the road to Nairobi. Ahero is 100 miles from Nairobi, population 3.5M. How costly can it be to get a well-digging machine from Kisumu--or Nairobi--to Ahero along the road and use it to dig the well?

Too costly.

When Bie costs it out, it turns out that we could dig two wells by hand for the cost of hiring one better-funded and larger NGO to dig the well by machine. We can send purchasing power halfway around the globe in less than a second. Once you pack your commodities--durable, non-spoilable--in the container, you can ship them halfway around the world for less than $1/cubic foot. But actually exercising control and getting value-for-money 8K miles away is much more difficult.

I am a neoclassical economist--in fact, I am a card-carrying neoliberal. In my lectures at Berkeley I stress what a marvelous, miraculous, and effective mechanism for coordinating our societal division of labor is our property, contract, exchange, and money-based market economy. I point out that in the 20th century we ran a gigantic natural experiment in which those peoples trapped by politics and the result of war behind the Iron Curtain experimented with eliminating the market economy of self-adjusting equilibrating prices via supply and demand. The consequence was that the really-existing socialist economies threw away 80% of their potential economic productivity by banning the market economy. Even they, however, relied heavily on money and the promise of differential rewards and promotions to positions that offered more money as major incentivizing devices. Those who tried to go beyond Lenin in the direction of "Full Communism"--say, Che Guevara in Cuba and his Ten Million Ton Sugar Harvest campaign and his attempt to divide societies into a vanguard of new men motivated by moral incentives, a mass who were to be educated into being motivated by moral incentives, and los gusanos to be motivated not by carrots but by sticks--either quickly abandoned their dreams or found themselves abandoned by their comrades.


Waving money in people's faces to try to get them to do what you want is a very narrow-bandwidth communications channel. Even to implement our desire to get goats to the grandmothers, we would be largely out of luck--we would be taken to the cleaners by the local goat-dealers--if we did not have Moses, and if Moses did not have the ability to hire local proxy cutouts to buy the goats for him, and if Moses were not committed enough to the mission to actually care about getting good value for the grandmothers from Bie's money. If Moses sought, say, to boost his local standing by overpaying people who he thought it would be useful to him to have them owing him favors in the future, we would be in big trouble.

If the well is going to be useful we think we need much more bandwidth and, thus, control over what will actually happen on the ground. This is not uncommon: I remember a conversation I had once with one person active in African development. He told me that he would never in a thousand years have thought that he would find himself spending his time writing policies to prohibit the transport of smoked monkey meat in backseats occupied by visiting foreign dignitaries--no matter how high a price smoked monkey would bring.

But we have Moses on the scene. Thus it turns out to be much more cost-effective to dig the well by hand. Moses hires men with shovels. We find that it is the case that here--or, rather, not here but there--and now, in the twenty-first century, we find that the best way to deploy our intercontinental social power to make this happen is to induce young men with testosterone-fueled muscles and iron shovels--technologies that hit the shores of Lake Victoria 3000 years ago--to dig the well by hand.

In my lectures at Berkeley I talk about how the iron-and-steam technologies of the Industrial Revolution 200 years ago meant that humans could and would no longer add much value by using their large muscles to move heavy things. William Gibson's famous line is: "the future is here--it is just not evenly distributed". But he does not say that the present is not evenly distributed here. And even what we regard here as the past of centuries ago is not evenly distributed enough to have made it to rural East Africa, at least not when we try to figure out how to get the best well dug at the lowest cost.

Now when we look at the totals on our quarterly index-fund statements, there is perhaps a difference in the third significant figure. Now if you were to go to Ahero, Nyando District, Nyanza Province, Kenya, you would find an extra well--one located not near the rice fields but in among the houses, with an elderly woman charging pennies for you to fill a bucket. And perhaps you would find a substantial number of additional girls sitting in school rooms rather than walking extra miles with buckets on their heads. And perhaps a substantial number of men and their relatives are grateful to Moses for getting them some money by giving them the opportunity to work on the well.

So a feel-good story, no? But telling it again reminds me of three things:

  • Telling it again reminds me that I ought to set this process in motion with a better heart.

  • Telling it again reminds me that we ought not to live in a world in which $20K distributed among AIDS-survivors in Ahero, Kenya has the same salience that $5M has for people like me in Greater San Francisco.

  • And telling it again reminds me that we ought not to live in a world in which we lack the organizational competence to use productive modern rather than less-productive 3000-year-old technologies to dig wells near the shores of Lake Victoria.