Can public policies be racist? Can they disadvantage certain racial and ethnic groups while advantaging others? Yes, that is certainly what has happened in our country, for a very long time, argues Ibram X Kendi, in his book How to be an anti-racist.
Given the moment of time we are in, with police violence on Blacks getting a lot of attention, public institutions are finally waking up to the reality of racism in our everyday lives.
Two examples are quite clear, to point out how policies that were meant to be emancipatory for all Americans have turned out to be racist. Kendi points to the war on drugs as a racist set of policies that incarcerated Blacks and Latinos in higher degrees than Whites, for nonviolent drug-related crimes, even though research points out that all races in the U.S. consume drugs in almost equal quantities. He points out “White people are more likely than Black and Latinx people to sell drugs, and the races consume drugs at similar rates. Yet African Americans are far more likely than Whites to be jailed for drug offenses. Nonviolent Black drug offenders remain in prisons for about the same length of time (58.7 months) as violent White criminals (61.7 months) (p.26).” This move towards creating a more ‘law and order’ based system coincided with a decrease in welfare spending. Reagan cut the safety net of welfare programs and Medicaid in the same month that he announced the war on drugs, sending more low-income Blacks into poverty, he reminds us.
As a public administration scholar recently pointed out, the ‘public’ in administration is rather hard to get right. The ‘administration’ part can be easy. It is technical and can be planned easily, but the part that is tricky and often runs into issues is the public engagement piece that needs not just participation from the public, engagement, and a genuine commitment to the common good. All of these are hard to come by, in a politically charged environment where the ‘public’ finds it hard to agree on the common good.
Whether it is access to housing, education, or other areas that determine the quality of life, policies have been in place that keeps people of color out. While affirmative action policies and anti-discrimination legislation have helped, their implementation has been slow or non-existent in many cases. This makes equity a far-flung dream that has not been achieved and one that keeps eluding us.
As a Pew study recently pointed out, blacks who have at least a college education are more likely to say they’ve experienced racism than their less-educated counterparts. Why is this? As the study points out “So why is this? Other researchers suggest that college-educated blacks are more likely to work in predominately white environments, which may lead to greater exposure to race-related prejudices or stresses.” This is quite likely the case as a greater number of blacks and people of color are entering the education sector and places of work.
Immigration laws are another category of laws that have had a racist past, in the U.S. As Kendi points out “The loosening immigration laws of the 1960s through 1990s
were designed to undo a previous generation of immigration laws
that limited non-White immigration to the United States.” He further adds that this was after the 1882 Chinese Restriction Act, which included a larger “Asiatic Barred Zone,” in 1917. Kendi points to the “1921 Emergency Quota Act and the Immigration Act of 1924 severely restricted the immigration of people from Africa and Eastern and Southern Europe and practically banned the immigration of Asians until 1965. (p.61)”. While the consecutive decades have made things better for immigrants, the current administration under Trump has tried to roll back much of the progress, especially when it comes to addressing the issue of refugees or asylum seekers.
So, how does one become an anti-racist? Kendi offers an answer that begins to address this complex issue. He offers: “To be antiracist is to view national and transnational ethnic groups as equal in all their differences. To be antiracist is to challenge the racist policies that plague racialized ethnic groups across the world. To be antiracist is to view the inequities between all racialized ethnic groups as a problem of policy.” Perhaps this is advice valid for everyone, all of us, who are engaged in public deliberation of good and bad.
The COVID-19 pandemic has caused a massive disruption to the entire education system. As with any crisis, this difficult and tragic situation has also brought an opportunity for change. In international education this change is the acceleration of the trend toward virtual programs.
source: unomaha.edu
Is Virtual Study Abroad an Oxymoron?
Virtual study abroad sounds like an oxymoron. Most students and faculty scuff at the idea. After all, the whole point of study abroad is to get out of the country to experience another culture and see the world! But is it? It’s true that most students sign up to study abroad to go to an exotic foreign destination. It’s an Instagram-able, credit-barring adventure of a lifetime. But most students come back from a study abroad program, especially a structured, faculty-led program, having gained something more profound and impactful than what they could capture with their phones. A new perspective, even epiphany, about their privilege, consumption patterns, social, economic, and environmental impact, prior naivete about foreign policy, along with enlightened views about cultural relativism and a myriad of additional insight, is what makes study abroad truly a once-in-a-lifetime opportunity. And if this is the point of study abroad, then good news, it can be achieved through virtual programming.
Epiphanies during faculty-led study abroad most often occur as a result of interaction with locals who share their perspective and culture. These conversations can have almost the same impact over a zoom call. While a screen will never compare to travel, a virtual reality viewer at least starts to bridge the gap. A virtual internship can be just as valuable as an in-person internship abroad, and, in fact, might better prepare a student for their future career, which will likely involve remote work. No, I don’t think virtual study abroad will or should replace in-person travel programs, but I do believe that if the objective is to internationalize the curriculum and students’ views, virtual programs can be effective.
Advantages of Virtual Study Abroad
Virtual international education also has unique advantages to travel-based faculty-led programs that should not be overlooked. First and foremost, it is more affordable, meaning it is more accessible to a broader segment of the student population. Only a small fraction of students currently study abroad, and this group is far from representative of the diversity of the student population. Without the cost of travel, accommodation, restaurants, and adventure activities, virtual study abroad costs a fraction of the cost of a travel program. Increasing access, participation, and diversity in study abroad has been repeatedly cited by research as a top concern for colleges and universities. The international education community should promote these programs not only as an alternative when travel is not possible, as is the case now, but as an alternative when travel is possible.
Virtual programs are also environmentally friendly compared to the carbon intensive travel programs. A single long-haul flight is as harmful to our climate as a year’s worth of driving. This is why Learn from Travel offsets its entire carbon footprint. Virtual programs also eliminate the carbon of hotel accommodation, eating in restaurants, and other activities. They also prevent the possibility of littering, which is a particularly big concern for programs that involve ecotourism activities.
Virtual programs are much easier logistically, without the need for planning travel, complicated activity scheduling, and limiting the program to an intensive week-long or two-week-long itinerary, in the case of a faculty-led study abroad. The activities can be spread out over the course of the semester and students can engage with people and places geographically far apart, something that is not possible when traveling.
Virtual Faculty Led Study Abroad Example
After conducting some market research on the topic of virtual study abroad over the last several months, my team came to realize that many faculty simply can’t imagine what a virtual faculty-led program could look like. At best they think of international zoom calls, and, yes, that is a part of it, but it’s just the beginning. Take for example a faculty-led program in Oaxaca on the topic of migration and remittances:
Students can join a local guide using her cell phone to walk through an Oaxacan market, meet different merchants, learn about the produce, and buy groceries for making mole. Later in the day the students can make the mole sauce together with a chef in Oaxaca to enjoy with their families at home that night.
Using Zoom they can meet the director of a local migration support nonprofit to hear about the complexity of the issue for Mexican authorities and the efforts to help the desperate families, from all over the world, seeking safety and security. As a class, the students can participate in a service learning project to support the migration center with data entry and analysis, database updates, and social media posts. Going further, students can intern with a variety of nonprofit, public and private organizations that make up the ecosystem of migrant support services. They can engage in a multi-week virtual internship, coming together weekly to share insights.
Students can also work with their Oaxacan peers to conduct research on migration on both sides of the border, receiving lectures from faculty in the US and in Oaxaca. Using a $15 VR viewer, they can even experience Monte Alban, one of the most important archeological sites in the Valley of Oaxaca, in an immersive 3D virtual space composed of 360° photos and videos layered with additional text and links to online content. Beyond being a fun and engaging experience, the virtual reality visit can help students place the topic of migration and settlement in the historical context.
Conclusion
So is virtual international education worth it? I’m biased, but yes. It is absolutely worth it if the alternative is a lack of international content in a course curriculum. Despite a recent rise in nationalism, the world is becoming more interdependent and interconnected by the day. The pandemic will not change that. Preparing students for work and life in this world is vitally important for higher Ed institutions and the opportunity for integrating virtual international education should not be missed.
To learn more about virtual study abroad modules and programs, please visit Learn from Travel.
Roman Yavich is the founder of Learn from Travel, a social enterprise international educational provider specializing in custom faculty-led and virtual study abroad programs for higher ed.
One of the hallmarks of our age is that we are in an age of attention. Our global economy is based on attention and there are billions of dollars at stake at grabbing your attention. Yes, yours! Whether you use it, to make your life holistic, meaningful or you fritter it away on responding to emails and checking out those cute cat videos is up to you. That is the message from the book Deep Work, by Cal Newport – which I accidentally came upon while browsing the internet.
Newport does a good job of explaining why we need to prioritize if we want to be productive. And there is enough logic there to convince many people, including me. I found the book very helpful and insightful. For instance, the fact that it takes me a while to get into ‘flow,’ a state where you are losing track of time and are actually learning or doing work of high quality. This is hard to achieve if one is constantly distracted, checking emails, or responding to people. It is critical to be singularly focused on the tasks at hand unless one’s work involves interacting with people. Sales, marketing, PR, and related jobs are perhaps exempt from this idea of deep work, but I would argue that most other jobs need this sort of focus.
All high-quality work does need deep focus and deep work, there is no doubt about that. You can’t be distracted and produce high-quality writing, or editing, or even software code. Forget about software code, you can’t even produce a high-quality breakfast if you are distracted in the kitchen.
As an academic, I appreciate this advice and despite my own bad habits of being on the phone more than I need to be – and responding to emails all day long, I am trying to be more mindful. Perhaps cutting down emails to two blocks of time during the day is a good idea? We’ll see if that works.
This book reminds me of another book by Mihalyi Csizkentmihalyi. He is one of the most well know psychologists who has carried out pioneering work on productivity and work. His argument is similar – that one needs to enter the state of ‘flow,’ a state of focus so intense that everything else fades out of your mind and you are focused on just that task. This is the path to salvation, he seems to be suggesting. Or at least, the path to great quality work. Check out his TED talk here.
How to pick a solution that satisfies everyone? This problem has faced (and continues to face) all of us.
Should we all wear a mask or not? Should this be enforced? Go on vacation during a pandemic – or not? There seems to be a struggle among Americans to answer such basic questions. While a section of us is ok with many of the restrictions in public life, many others are aghast and invoke such ideals as ‘freedom,’ ‘liberty’ etc. to be able to do what they want. Is this irresponsible? Perhaps so. But the question still remains: How does one find a solution that helps aggregate all the preferences of a group of people.
The answer, I am afraid, seems to be that it is impossible.
As Plato Stanford University points out “Arrow’s theorem says there are no such procedures whatsoever—none, anyway, that satisfy certain apparently quite reasonable assumptions concerning the autonomy of the people and the rationality of their preferences. The technical framework in which Arrow gave the question of social orderings a precise sense and its rigorous answer is now widely used for studying problems in welfare economics.”
By this logic, is democracy impossible? It seems so if one is to follow this logic.
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Amartya Sen has written a book on this topic and he writes in a short paper that these ideas of individual choice informing public decisions have been with us since the Enlightenment era.
Kwame Appaiah, Professor of Philosophy poses a question that should be relevant to all of us, cat owners or not: Should you let your (bullying) cat wander? Is his freedom more important than the rights of other cats, to live in peace? This is a question that seems to have become relevant as we discuss a host of issues, including the one about wearing masks.
There are two broad ways of thinking about this issue: the rights-based approach and the utilitarian approach. Speaking of the first one, Appaiah points out “One approach is a rights-based line of reasoning; it would urge you to ensure that you’re not denying the cats of the neighborhood the basic conditions of a good life to which they’re entitled.” This assumes that animals have rights, like humans.
On the other hand, if we take the position that animals have no rights and hence this argument above does not hold, we can take a ‘utilitarian’ approach, whereby “if animals don’t have rights, you might adopt another approach, in which you simply weigh the pleasure that Jasper takes and gives in his outings against the suffering of the cats he bullies,” as Appaiah reminds us.
But cats are not humans and how we decide on whether we let the cat to go out or not depends on how we think of our neighbors. And our obligations as neighbors to them (and their cats). No simple answer there.
However, on the issue of masks, the argument is rather simple. If one to take either of the approaches, whether rights-based or utilitarian, the answer seems to be one of wearing one. One can argue all one wants about one’s freedom to NOT wear a mask – as a lot of people (ill-informed, selfish) are doing, however this impedes with the rights of others to go about their daily business free of fear (of contracting covid-19). Even from a utilitarian perspective, our societies benefit when everyone masks up and is careful in their outings.
The state of CA and others have mandated masks, in public, yet again. Health experts have continued to remind us of the value of wearing masks. So, in any case, please mask up and stop being selfish!
On Monday, June 22, the Cal Lutheran School of Management hosted Dr. Rafiq Dossani from the RAND Corporation, Santa Monica on challenges and impacts on healthcare and economy, and lessons learned from COVID-19 in Asia.
Some key highlights from Dr. Dossani’s talk :
Regime type doesn’t matter, as much as the level of trust. The legitimacy lies in their ability to control COVID-19. In countries such as India, Pakistan, etc the level of trust in govt is low and the government reciprocates. The crisis with internal migration and lockdowns shows how this lack of trust has caused massive chaos
In Korea, national elections were held in the middle of a pandemic and people showed up; this was possible due to the trust
The government did a wise thing in the U.S by opening the taps on liquidity and there was sustainability to the economy. That has continued as payments through the PPE program are ongoing. It would be succeeded in preventing a big crash. If the US government can bring down the virus, then we have a game-changer. If the breakouts continue, then the economy may be in for a tumble
Sri Lanka, a small country in South Asia has managed to effectively manage the crisis. They haven’t made public their work, the public healthcare worker system is in place. The contact tracing mechanism is in place in that country, which seems to have worked well. In India, there is a similar system.
If you wish to read a few essays from the Center for Public Policy and Research based in Cochin, India, click here
With the ongoing protests surrounding equality for Black and colored people, around the world; the question of monuments (including statutes) has come up, rather forcefully. Should we continue celebrating Christopher Columbus, who treated the Native Americans cruelly? Should we celebrate his ‘discovery’ of the Americas as a great event or something that took away much more than freedoms from the Natives? These questions and related ones have become relevant. Whether it is King Leopold II of Belgium, Cecil Rhodes, or Christopher Columbus, several historical figures have come under the scanner for their role in perpetuating racism, genocide, and other crimes against humanity. It is time for the memory of the dead to be reimagined, for our present to be altered, to prevent a whitewashing of their sins.
How should contemporary policymakers deal with this question? I will try to deal with this tricky question, in this short post.
As a Newsweek article pointed out “Cities in the U.S. and elsewhere started celebrating Indigenous Peoples’ Day instead of Columbus Day during the late 1980s. Many have, and continue to, denounce Columbus as a colonizer who enslaved, killed and forced assimilation of indigenous populations.” The gap between how the state sees such historical figures and how civil society views them can create profound tensions. Alternate conceptions of the role of such historical figures and a reading of their actions in the context of current debates can throw up some uncomfortable truths that are hard to deal with, unless policy makers and those in power take a hard, critical look at the needs of the current generation.
The same Newsweek article pointed out that in the U.K., protestors “tore down a statue of slave trader Edward Colston, while others in Belgium vandalized statues of 19th century colonizer King Leopold II, responsible for the deaths of millions in what is now the Democratic Republic of Congo.” Such events of taking down statues are not only cathartic for people who are at the receiving end of the rhetoric of racism and discrimination, but also reflect a change in societal norms around what is celebrated and what is accepted.
Exploring the policy angle of memorializing: Philadelphia as an example
As Elizabeth J Burling writes in her Master’s thesis, several cities do not have a policy in place for which monuments were to be erected and on what basis.
This problem has persisted in the U.S. for a long time now. She adds “Indeed, Philadelphia’s relationship with memory has often been contentious – according to Gary Nash, author of First City: Philadelphia and the Forging of Historical Memory, no comprehensive history of the city was written prior to the 150th anniversary of the city’s founding,” (p.2). Her reminder that there is no distinction between works of historical significance and those used as an aesthetic expression is quite. This seems to be the case in Richmond, VA as well. Burling points out that this lack of a coordinated policy creates problems when new memorials are placed in traditional locations. She points to the distinction between a memorial and monument as one where “monuments are built to help us remember, memorials are about helping us never to forget.” Few cities such as Washington D.C. have a “24 step guide to memorialization in the Nation’s Capital,” an elaborate step by step process that helps the National Park Service decide how to go about the process of memorialization.
The history of Philadelphia’s regulations on public art is interesting. In 1959, the Aesthetic Ornamentation ordinance was initiated which set the level of public art for every construction project at one percent. Burling points to the work of De Monchaux and Schuster to articulate the five elements that should be included in any policy strategy for preserving heritage: a.Ownership and operation b.regulation c. incentives d. establishments, allocation, and enforcement of property rights and e. Information. Their argument is for governments to intervene to preserve the heritage and this task cannot be left to the private sector. Despite these five elements each city faces the question of what to memorialize. And this is precisely the question that comes to the fore when one considers history.
Whose history are we memorializing? The winners of the Civil War or that of the losers (Confederates). Given that there is still a sense of injustice and victimhood among Southerners, when it comes to the Civil War, these are raw wounds. Some groups/ nations are open to reevaluating the role of monuments and memorials in contemporary society. Others are not.
France for example, has decided that it will keep all statutes, even those that commemorate controversial figures in history. As Emmanuel Macron, the French President pointed out, this was his interpretation of acknowledging all of history. This is, at the end of the day, a policy choice, shaped by his political situation and what may be acceptable with the French people, at this point in time.
Aspects of the past have intruded our consciousness today and will continue to haunt us into the future. There is no way of getting around it, but rather only through it. How we answer the question of who we celebrate and why determines what kind of a nation we become. For nations are nothing but ‘imagined communities,’ as Benedict Anderson has quite elegantly shown. How each nation decides to remember its history is crucial to what sort of a nation it becomes.
With the recent protests against the killing of George Floyd, the focus is back on a segment of the population that is at the heart of this issue: the public servant. The police force is part of the machinery that has been, is, and will be a part of our daily lives, whether we like it or not. How they behave and treat the public will determine the future we will for ourselves. So, can we ensure that they are better ‘servants,’ to the public? If so, how?
My own training in public administration was at the Maxwell School of Syracuse University, the nation’s oldest and most prestigious school of public affairs. The school has shaped the study of public administration and one of the founding credos of the school is that administration is not value-neutral. Dwight Waldo, one of the most influential PA scholars to have lived in this century taught at the Maxwell School and pushed forth the idea that bureaucrats come to work with a value framework and they are not ‘neutral’ executors of policy. Using this insight, we may well face the world as it is, rather than how we want it to be. How these bureaucrats manage these values in their public dealings may well determine what kind of society we live in.
If we look at many of the problems that we face: environmental issues, housing, employment; there is usually an issue involving power & the use of discretion in how one uses it. The notion of how ‘street-level bureaucrats’ exercise this power has been studied quite a bit in PA. The concept of administrative discretion originated with Michael Lipsky and has remained a robust one. As many scholars have argued, offering bureaucrats some discretion allows them to make better decisions, based on client needs.
If one looks around, there are instances when abuse of power is often a result of this discretion. Whether a cop pulls a gun on someone or restrains himself/herself, whether an arrest is made or a warning issued, these are instances when the bureaucrat at the street level is making conscious choices – either to escalate a situation or to de-escalate. This is also the case when the work-load on pubic employees is quite high. As Lipsky points out “Employees must use their personal discretion to become ‘inventive strategists’ by developing ways of working to resolve excessive workload, complex cases, and ambiguous performance targets.” One can suggest that this exercise of administrative discretion can also help address issues of discrimination and in equal treatment that many minorities receive when it comes to public health or other related issues. There are definite health disparities between African Americans and other minorities. As the Center for Diseases Control points out “African Americans aged 18-49 are two times as likely to die from heart disease than whites,” and also “African Americans aged 35-64 are 50% more likely to have a high blood pressure than whites.” This is due to a combination of factors, including lack of access to insurance, policies that do not let African Americans access health services, and sometimes, outright discrimination in the system, that keeps them out of reach of healthcare providers.
Some of the recommendations of the CDC are to: encourage healthcare providers to eliminate cultural barriers to care, to connect patients to community resources to help them take medications on time, and to do follow-up visits. With COVID-19 exposing the cracks in healthcare delivery in the U.S., there is an urgent need to address access to healthcare, access to insurance, and also empowering states to offer services to those who are marginalized. One of the steps could be to empower the street-level bureaucrats to do more, to address the inequities that exist. This may mean offering more resources to teachers, doctors, and other frontline workers, who are often in the best position to address inequities. It also means educating and enlightening them to do what is right.
With close to $500 billion of remittances flowing around the world, the phenomenon of remittances as a force for community development and individual empowerment cannot be ignored. Remittances impact the lives of almost a billion people, worldwide. While the flow of money during the best of times is constrained by various policy initiatives and the high cost of sending money, during the COVID-19 crisis, this problem has become acute. This policy brief is a call to action on how to ease the bottlenecks and help sustain this important lifeblood, for millions around the world. Remittances in the volume are three times as much as international aid, given by developing countries, to poorer nations and have a transformative impact on receiving communities, existing research has shown.
source: imf.org
Background
The United States remains the largest contributor to remittances worldwide, recording $68 billion USD in remittance outflows. The rise in remittances could be attributed to a fairly stable economy, strong job prospects for migrants among other reasons. The growth in remittances to South Asia and southeast Asia was 12 percent in 2019, according to The World Bank. To further emphasize the number of monies recorded that flow from the U.S.A., the next highest contributors are the United Arab Emirates and Saudi Arabia, at $44 billion USD and $36 billion USD, respectively. With the shutdown of local economies in the U.S. and concomitant restrictions on travel, the phenomenon of remittances is likely to see a shift, as well. Analysts are already pointing out that there could be at least a 7 percent drop in remittances this year, due to COVID-19 related closures.
With COVID-19 and a dramatic change in the landscape of work and travel, the landscape of remittances is likely to shift, dramatically. If one were to consider the US-Mexico corridor, which sees about $65 billion flows per year, this is likely to be impacted negatively, thus hurting millions of recipients in Mexico. Due to a lack of insurance and costs of healthcare in the U.S., many of the migrant workers are likely to self-medicate rather than approach the formal healthcare system, which may have other implications for their health.
Who sends remittances and why?
Remittances are usually sent by well-meaning family members and friends to their relatives, to help. This money could be used for consumption – paying school fees, medical expenses, or expenses such as weddings, purchasing or constructing a house, etc. These are gifts or repayments of loans that these migrants have taken, to support their journey to the U.S.
As Dilip Ratha, head of Remittances research at The World Bank points out, there are over 270 million migrants around the world, and most of whom live in cities. The remittances they send have a huge poverty reduction impact and are a lifeline for almost a billion people, around the world.
Some programs have evolved to encourage migrants to invest in infrastructure development in the country of their origin. Tres por Uno, a program initiated by the Mexican government is one such example. Several other countries such as the Philippines and India encourage their diaspora to invest in education, healthcare, and other sectors through NGOs and other organized entities that raise money in the U.S.
While migrants from around the world live and work in the U.S., the majority of remittances outflows are to China, India, and Mexico. It is estimated that 5.7% of U.S. households send money abroad & 2.4% send money on a monthly basis and the average remittance is in the range of $200-$300 per month, according to The World Bank. Researchers have pointed out that migrants of all income groups send money ‘back home’, however, there is empirical proof that those in the lower-income categories tend to remit more, as a proportion of their income than middle to high-income earners.
Remittances are sent via various channels, both formal and informal. For instance, there are reports of individuals collecting cash on behalf of their friends/relatives and handing this over to the recipients across the border. This is done either as a favor or in some cases, for a small fee. Such informal flows of money are obviously not recorded. Besides, there is also the traditional, centuries-old system called ‘hawala,’ which operates in the Middle East and Asia (and also parts of Africa) which evolved out of a need for conducting business and the need for cash liquidity over long-distances. As much as a third of Somalia’s GDP comes from remittances and several countries that are in the middle of a conflict or recovering from a war (Yemen, Syria, Congo, Afghanistan) receive a big portion of their GDP via remittances. This flow of money from high-income countries to developing or low-income countries is possible because of strong family ties, opportunities for migrants to earn more money in the U.S. than they could, in their home countries.
Policy implications
Remittances remain one of the most significant flows of foreign currency reserves to most developing countries. Besides providing support to families, remittances also have the potential to help with local community development, spur entrepreneurship, and sustain traditions and culture. Remittances also have a positive net impact on the American economy, if seen from a macro perspective.
As some American politicians have argued, remittances can be leveraged to further American foreign policy objectives. This has been tried in the past and can be further explored in the future, as the sheer amount of remittances makes it a significant tool and lever for both the countries, to base their relations. Facilitating the flow of remittances can demonstrate not only goodwill but also can be a smart policy decision, as it helps both countries and is a mutually beneficial transaction. As some scholars such as Kristin Johnson have pointed out, remittances benefit the U.S. as well. Some of the ways that this is true are
Remittances help receiving countries spend more in U.S. dollars, thus facilitating trade and boosting the volume. This is particularly true in the case of Mexico-U.S., with a shared border and very strong trading ties, going back to centuries.
Remittances help build financial infrastructure, which can help people be part of the financial system. This ‘inclusion’ makes them potential customers and part of mainstream society.
Problem areas & Opportunities
There are three broad areas of concern when it comes to flow of remittances : cost of remittances, regulation of remittances (including Know your Customers (KYC) laws) and the emergence of new forms of technologies that can facilitate the flow of money. These existed before covid-19, but with the new emergency, these areas are further cause for concern.
Given the volume of remittances, there has been a lot of government interest in the phenomenon of remittances. As a Congressional Research Service report points out, P.L. 111-203 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, has provided federal consumer protections on remittance transactions. It further points out that remittances are also subject to federal regulation to prevent money laundering and terrorist financing. The banking regulations around KYC are crucial to address, as they are seen as one of the major reasons for the high cost of remittances as well as delays in sending money, abroad.
The discussion and debate around KYC and related efforts includes identity check and ensuring that the recipient and sender are traceable and they are indeed who they claim to be. There are also limits on how much money can be sent as well as documenting the relationship between the sender and receiver.
With the rise of technology and the use of crypto remittances and other newer technologies, analysts have pointed out that through the use of automated identification, real-time transaction scanning, data analytics, and artificial intelligence, the issue of compliance can be dealt with. Biometrics has also been proposed as a potential solution. The use of fingerprint IDs stored on phones can help authenticate parties involved.
Oklahoma is the only state in the U.S, that levies a tax on remittances. This proposal of taxing remittances has been put forth at the federal level as well, most recently by Donald Trump but has been widely seen as a bad idea. The motive behind this move is to raise revenues for the U.S. government, but analysts have argued this is not helpful and ultimately counterproductive.
Several thinkers and scholars such as Peter Singer, have made the argument that taxing remittances is normatively not a moral argument. Given that wealthy nations have not helped the poorer nations as much as they could have, it is not morally right to tax these self-help initiatives such as remittances (Peter Singer, Famine, Affluence, and Morality, 1971).
Regulation and government involvement in this space has created layers of regulation, bureaucracy and unwanted delays in a phenomenon which is driven by individual initiative and creativity.
Many of these problems arise because many of the recipients (and senders in some cases) are unbanked. Lack of literacy and access to financial institutions can cause many of the issues related to tracking them and ensuring that the purpose of sending this money is legitimate. However, at the same time, many observers and practitioners in this space argue that the amount of money sent is so small – often a few hundred dollars – that over-compliance and over-regulating this space does not make sense.
Solutions
The following steps may be taken as a measure to prevent the drop-in remittances volumes due to COVID-19
There has been some debate around whether everyone in the U.S., whether documented or undocumented should be able to send (or receive) remittances. There are a few restrictions around sending remittances, such as the need for identification, etc. this has been criticized by those who care for a freer regime of remittances flow. Easing the requirements for ID can be a first step in facilitating the transfer of remittances. Given that the average remittances are in the range of $200-$300, the risk for this money ending up in the wrong hands is minimal.
While compliance of regulations is one of the main factors leading to a rise in the cost of remittances, there can be mechanisms to reduce this and hence, bring down the cost of sending money. As researchers have pointed out, there is a need to urgently bring down the cost of sending remittances, especially in conflict and post-conflict zones, to nonprofits and other social sector organizations, that cannot afford to spend huge amounts of money on just sending remittances, which often pay for salaries, etc.
Create special provisions for nonprofits and social service sector organizations and individuals sending money to these types of organizations: Existing rules do not facilitate the flow of money for nonprofits and treat them equivalent to other for-profit and government organizations. This means that individuals making donations to nonprofits and similar organizations (and those receiving them) face the same amount of scrutiny as regular for-profit organizations. As a Charity & Securities Collaborative report pointed out, 37% of nonprofits that operate globally face delays in wire transfers.
Leverage technology for the flow of money: Emerging technologies including blockchain promise very low – or no costs – to transfer remittances. Crypto remittances may not be fully operational in all parts of the world but are being experimented with. This may open a new frontier, which is very unregulated but seemingly safe, for those who know how to use it. Governments must move into this space, albeit as partners rather than the cop in town to make use of these emerging technologies to facilitate an exchange for its citizens. Biometrics, data analytics, and Artificial Intelligence can be used to track and monitor transactions for compliance.
The World Bank is projecting the largest decline in remittances in history, due to COVID-19. On April 23, 2020, The World Bank hosted a webinar with Dr. Dilip Ratha, Chief Economist Remittances unit at the bank on how we could keep remittances flowing. Here is an abridged version of the webinar.
Q: Can you give a broad overview of what’s going on?
Dilip: Globally $554 bn were sent last year, in remittances and we are expected this to drop to $445 bn – reduction by 20—30%. Rupture to poor countries. The human aspect is not to be underestimated. FDI, companies are sending it. The amounts sent are $100-$200 being sent in remittances. Perhaps a billion people are being impacted.
The main impetus for decline comes from the COVID crisis. Lockdown and social distancing. The main impact is coming when people don’t get jobs. Their incomes will fall and the inability to send money is impacted. There are other spillover effects that come from the fact that as economic activity comes down, there are ripple effects.
Q: Why is this decline so significant?
Dilip: There are about 270 million migrants around the world and most of them are in cities. In some cities, they maybe 40% of the population – NY, London, Paris, etc. These people sending these billions, are sending it to their families. This is used for consumption – food, education, healthcare, etc. The migrants who are sending money are poor, migrants. It has a huge poverty reduction impact. Nepal, South Sudan, Haiti, etc. sometimes remittances are 40%-50% of the income of the country and they are the lifeline for many people.
Given the shortage of food etc. that is being felt the impact could be severe, for food security as well.
Q: How’s pandemic impacting migration and labor?
Dilip: I don’t think migration has shifted significantly. There are travel bans, new migration is going to fall, but those who are here will stay. The stock of international migrants wont change much. In terms of internal migration, they are not able to go home, perhaps they’ll walk home – like in India. Villages have barricaded people.
There will be an impact over 6 months to a year.
Q: How are certain sectors going to be hit?
Dilip: In different countries, it may play out differently. There are two kinds of migrants. We see just one kind and not the other. The ones who are visible are doctors, white-collared professionals. NHS has a lot of doctors etc. The health sector is doing a little better. The agriculture sector is also in the news as there is a shortage of farm workers. That has huge implications for food security as agriculture season can be disrupted. Food prices are going up. What we don’t notice is the hospitality, retail sector, etc. they have been impacted as well.
Directly related to us is the money transfer industry. This is not considered an essential sector and we forget is that most of the people in the world don’t have access to digital services to send money. Most of the money sent it cash-to-cash (80%). Informal migrants send money through a store. Both the sending and receiving side of the stores are closed. This is a big impact on them.
Q: What’s the regional impact?
Dilip: The impact is global and declines in remittances may be historic, since the 1980s. In 2009, there was a drop of remittances of 5% and flow was above the pre-crisis.
The 2008 recession impacted just parts of the world. This crisis is impacting everyone, even in remote villages. That’s the context in which everything is impacted. Some will be impacted more than others.
Also, oil prices have fallen. Gulf and Russia are key for remittances. South Asia and North Africa receive a lot of remittances. The oil price issue is true in Russia. Rouble, the currency in Russia is also weakening in comparison to the US dollar. We are expecting the largest decline and global by about 20%.
Q: The bank is making $160 bn available over the next 15 months. What are some of the solutions?
Dilip: The policy response can be to think that alarge number of migrants are human beings and are concentrated in urban economic centers. Like humans, they need to be included in part of our healthcare, social transfer responses. Also, the most urgent. Also, remittance is a lifeline, and making them ‘essential services’ is key. Finally, we know that the only way for us to send money is digital, and yet, we know that poor people who work in the informal sector, are unbanked. Having access to a bank account is critical to use digital means to send money. Yet, there is an urgent need to bring them to the banking sector so they can use digital means. Some barriers include regulation: Know your customer, ID checks. And some suspicion that small amounts are money laundering etc. We need to decriminalize this.
Q: What about stranded migrants?
Dilip: Some of the migrants are in labor camps, etc. and there are refugee camps. They don’t receive the attention they deserve. Migrants are ignored or discriminated against. Countries of origin can play a big role in bringing them back to their home communities. When they are in different places, they need cash transfer programs.
Q: How can we help migrants who may be facing discrimination?
Dilip: Migrants are also being seen as vectors. We need to reduce discrimination against migrants too. Some education program is also key.
How do you reach out to folks without IDs is the problem. There needs to be a mindset that we need to help people.
