Is America’s standing in the world getting better with President Biden at the helm? Initial data seems to suggest that this hasn’t yet happened. However, not all is lost. One of the ways that this can be accelerated is through vaccine diplomacy.
As a recent media report pointed out, the commitment by the US to give away about 500 million vaccines is a significant commitment towards a humanitarian crisis. It ought to be recognized for what it is – a gesture of goodwill and a commitment to addressing the largest humanitarian crisis that we as a human race have faced in our lifetimes.
source: flickr.com/photos
While the US is still a hegemon of sorts, it is facing stiff competition from China and other global powers, as they jockey to dominate the globe with their money and resources. One of the resources that has emerged as a strong contender in COVID times is the humble vaccine.
India is still working through its second wave, which has killed hundreds of thousands – some estimate millions – of citizens. I have personally witnessed a few deaths in my own family and extended friends’ networks. This has to be the most devastating tragedy that Indians have faced collectively, perhaps since the partition of the country in 1947, when an estimated one million people were killed in the rioting that ensued.
Other parts of the world, including Latin America and Africa, are also still reeling from the effects of COVID-19 and the lack of vaccines and basic health infrastructure that are plaguing these societies. In addition to these circumstances, misinformation is rampant in many of these societies (including in the US), stopping people from getting vaccinated.
So, while “America is back” may be a good political slogan, translating that into implementable actions will be harder than one imagines.
The alternative – one in which the US sits on the sidelines and does nothing – is not an option. That was certainly the action taken by Mr. Trump, causing devastation not just within the US, with hundreds of thousands of preventable deaths, but also massive chaos and suffering around the world.
Delivering those millions of vaccines to countries that have dilapidated healthcare systems and steep nepotism and corruption, along with ensuring that millions get vaccinated is going to be a long and hard battle for all parties involved.
The latest issue of Administrative Theory and Praxis has an interesting article titled “Street-level bureaucrats under COVID-19: Police Officers responses in constrained settings,” by Rafael Alcadipani, Sandra Cabral, Alan Fernandes, and Gabriela Lotta. They point out, based on inductive qualitative analysis that in a major Brazilian metropolitan area, conflicts concerning political, occupational culture, and material dimensions can “negatively impact police officers’ response in financially and institutionally constrained settings.”
Their paper is an interesting one in that they suggest something that is known among those who work on the front-lines: organizational values shape how people respond to crises. In the case of COVID-19, the paper elegantly shows how Brazilian policemen – much like others around the world – value machismo and bravery – and define their roles through this lens. When actions or values go against these two clashes, they are quick to fall back into what they know best: defending their machismo and perceived sense of “bravery.”
This is precisely what makes them reject masks and social distancing. Consider that for a cop, being seen as “tough” and “manly” is crucial. In a culture where wearing a mask is seen as being afraid of a virus and caring for one’s colleagues is seen as being effeminate, then such behaviors are punished by one’s peers, rather than supported. This is precisely what is going on in parts of the country.
source: stanford.edu
And the authors point out that it doesn’t help when the President of Brazildoes not encourage mask-wearing and has criticized social distancing (similar to former President Trump). The conflicting messaging at the federal/ central levels and local levels can create tensions that manifest in how local authorities perceive the message, the authors point out.
They point out that “COVID-19 has produced dual outcomes: on the one hand, police forces crime control values align with the political and occupational values. On the other, it can create a conflict,” (p.395) – especially on the three dimensions: political, occupational culture and material conditions.
Their suggestion is that discretion at the street level among these bureaucrats can be both a blessing and a curse. But of material resources, such as a shortage of PPE can lead to greater conflicts of vision and values within an organization. They call for greater coordination and alignment among all values in an organization and suggest that leaders have a big role to play in this process., to increase creativity and decrease divergence.
The COVID-19 pandemic response has upended the very essence of humanity by constraining social interaction, mandating indoor seclusion, and making us flinch at the thought of outdoor bustle.
Even the elegance of the lingering waft of perfume and cologne has been supplanted by the shock of quickly-dissipating rubbing alcohol and sanitizers.
Every connection has become a long-distance relationship.
Gone are the days of bear hugs and high fives. Our need for social contact has been abbreviated into a momentary fist bump. Today, the essence of closeness and community is measured in 6-foot increments. The closeness that breaks the mandated “bubble” is frowned upon as a lack of civility.
How long will we tolerate to live this way?
Straitjacketed by social distancing, we are free but confined. We are shackled to a mark on the floor until safe to move to the next comfortable X. The mask suffocates at inhalation. At exhalation, the facial cloak inhibits the utterance of frustration.
At any given moment, we can find information either to support vaccination or to contradict the opposition. The ubiquity of conflicting information can confuse the finest of us. Perpetual analysis based on an unhealthy dose of doubt can lead to an endless cycle of posturing, blaming, and story-crafting.
If not careful, an intense but partial study can lead to the wrong rationalization. Groups can become comfortably befuddled by the mantra of their echo chambers.
Our Family’s Experience.
As a child, I grew up in a developing country where the disease was rampant. I was fortunate to get on the public health immunization schedule. The vaccines spared me from the devastation of diseases such as polio and tuberculosis that affected some of my neighbors.
As a soldier in the US Army, I was immunized to preserve my health while working in austere environments. The US military, as a matter of force preservation, requires its personnel to stay current on all vaccinations. As a condition for being stationed overseas, my wife and children were also vaccinated. With vaccination, my wife who is a nurse can continue the work that she loves with less apprehension.
Since the late 1800s, the US has required medical examinations of immigrants, and much later added vaccination as a condition for entry. Applicants who are found to be carriers of diseases of public health significance are excluded from entry.
When done in combination – the vaccination of the majority and the exclusion of a few – the measures have protected this country from debilitating and life-altering diseases.
Because of the effectiveness of the control measures at entry points, we are oblivious to the screening process that silently protects us. Because we are generally healthy, we fail to appreciate the long-term positive results of inoculation.
The benefits of induced immunity have allowed this country to maintain its economic momentum, and in turn, we are able to keep our hopes and dreams on schedule.
How We Handle the Fear.
My wife and I worry about the virus as well as the effects of the COVID-19 vaccine. We are also concerned about the long-term health of our college-age sons.
Although we instituted a few financial security measures, untimely death or disability during the pandemic will be a difficult ordeal.
To quell the fears, we discussed options and established contingency plans.
Our Tiered Approach.
We will live courageously with a bias towards positivity. We will not allow this virus to keep us at bay. To minimize the impact, my family will get vaccinated in stages.
As a front-line worker, my wife will be vaccinated first. If she experiences a negative reaction, I will wait so I can take care of her until her condition improves. Our sons will be vaccinated last.
We envision our family thriving, socializing, and traveling (again) as the result of the COVID-19 vaccine program.
From my point of view, I am not taking a plunge into the unknown. Instead, vaccination is the forward lunge that will dislodge the consuming grip of the pandemic.
How about you? How do you plan to live the best parts of your life?
The Atlantic published an interesting article recently about the secret for Germany’s success in tackling the COVID-19 crisis: A scientist at the helm of political affairs, Chancellor Angela Merkle. This is an interesting argument to ponder. Why have countries/ regions that have scientists/technocrats as leaders done well, while those run by run-of-the-mill politicians done badly? Controversial much? I think there is some merit in this argument.
Let’s focus on Germany. As Miller points out “For weeks now, Germany’s leader has deployed her characteristic rationality, coupled with an uncharacteristic sentimentality, to guide the country through what has thus far been a relatively successful battle against COVID-19,” going on to add that her calm demeanor, scientific rationality, and wisdom is paying off, both politically and scientifically.
The reason for her success, Miller points out, is the trust of German people in bureaucracy and order – and scientific thinking. The charismatic leadership of the style that Hitler practiced is seen with suspicion.
On the other hand, in many parts of the world, we are witnessing the ravages of such a style of leadership, with leaders blustering, lying, and misinforming people. The facts speak for themselves, though the amount of misinformation is so high that the average person with little critical thinking skills is confused and falls for propaganda – either from the state or from special interest groups.
We may also be witnessing a clear winner emerging, in terms of style of leadership, with bureaucratic leadership emerging a winner, over charismatic leadership. There is of course a long history of debate over whether we need more bureaucracy in our societies or more democracy. In countries such as the U.S., where freedom is valued above all else, this sort of clamping down of freedoms by the state is seen with great suspicion. The recent protests over closures in the U.S. across many states are part of this process.
Clearly, people want freedoms to do what they want and get back to their normal lives. When one’s livelihood is threatened, scientific rationality goes out the window. However, this is not the time to be impulsive and risk the gains made. In many parts of the world, there is evidence that the shutdowns are working and there is indeed a flattening of the curve. It is the leader’s responsibility to emphasize this and to ensure that people get support, financial and otherwise, during this pandemic. California, for instance, seems to be flattening the curve. However, more needs to be done and the shutdowns need to be in place for a longer period of time.
One of the key tasks of any leader- political or otherwise – is to ‘call it like it is,’ when it comes to critical issues pertaining to public health or safety. This responsibility is more so if that leader is an expert in science or technology and has specific information that is not available to others, as Sean O’Keefe, the former NASA administrator pointed out, during a web conference.
In an ideal world, rationality would prevail and would inform the best decisions. However, we live in a world where politics gets in the way and often, the best decisions are not taken, rather we may, as a society make decisions that are politically ideal. This is the bane of our societies, which are democratic. If we end up electing demagogues, then we will be served with propaganda and falsehoods.
Trust in a leader is important to tackle such a crisis as covid-19. And we are seeing across the board that this trust can be either used for tackling the crisis or for furthering the political agenda. As an example, Merkel has used this trust to reinforce the need for social solidarity and the need to follow directives and scientific advice. And for the most part, Germans seem to be heeding her. As Miller points out “Her rational assurances and her emotional appeal was crucial at a time of rising panic. While the mood isn’t quite so dark here anymore—thanks to a variety of factors, Germany appears to have dealt with the outbreak better than many other countries—Germans largely continue to heed the chancellor’s detailed directives.” Merkel has been a trusted scientific and political figure and continues to lead calmly and is likely to lead her country out of this crisis, with minimal damage.
Maybe the bigger lesson from this crisis is that more scientific leaders should enter the political realm. Maybe the answer to our troubles is more scientific leadership and less political leadership. And perhaps that starts with the electorate. A more informed and educated citizenry is needed to elect leaders who act rationally. So, in some ways, the leaders we are seeing in the public sphere reflect who we are, as a people. Don’t like what you see out there? Then, better change what goes into making those people win. That, I think is the biggest lesson for us all.
During the COVID-19 crisis, Mexico and the Dominican Republic have been experiencing an unexpected increase in the remittance transactions. However, most of the countries in Latin America and the Caribbean saw a sharp decline in their remittance receipts in April, before they began to rebound in June of this year. The remittance flow to Cuba has been decreasing this year, and it is still expected to continue to drop.
The number of remittances to Cuba have been affected due to the COVID-19 impact on the countries of reception’s economy. Florida is home to the largest Cuban community of emigrants living abroad. As unemployment has increased in Florida, it has directly affected the Cuban community living there. Additionally, the number of remittances to Cuba have also been affected for two other reasons. First, the current Donald Trump administration has imposed restrictions on remittances setting a limitation of $1,000 per calendar quarter to an immediate family member in Cuba. Second, the lower remittance flow is also aggravated by travel restrictions imposed by the Trump administration, as well as the limitation of international flights to Cuba by the Cuban government as a measure to control the spread of the pandemic on the island. A significant part of remittances —be it money or products— enters Cuba through informal channels or the so-called mulas —people who bring money and goods to the island. Travel limitations decrease the number of remittances that enter Cuba through these channels.
During the quarantine, however, Cubans are exploring new ways to send remittances. A source highlights that it has become trendy among Cubans living abroad to send cryptocurrencies to a trusted contact in Cuba. The contact in Cuba delivers the equivalent in the local currency, either in cash or through bank transfers to the recipient’s Cuban bank account. This method favors not only families that receive remittances, but also entrepreneurs and enthusiasts of the cryptocurrency community in Cuba who access cryptocurrencies regularly.
In Latin America and the Caribbean, the impact of digital remittances is relevant, as the digital payment system is becoming popular among the entire immigrant population in the U.S. Digital remittances are now frequently used to pay bills for services such as electricity, water, gas, the home phone line, the monthly rent. Therefore, by sending digital remittances, family members living abroad from their home countries directly contribute to the payment of essential services necessary for their families. But the development of digital technology must go hand in hand with training in digital and financial education. Having a well-developed digital platform to send remittances to Cuba would help Cubans living abroad to keep supporting their families during this challenging time and fund businesses that foment development.
About the Author
Denisse Delgado is a Ph.D. student in the Public Policy at the University of Massachusetts, Boston. Her research focus has been on Cuban migration, remittances, and development. She is an active member of the International Organization for Remittances and Migration (IOREM) and a principal collaborator for Cuban Horizon at Columbia Law School. Denisse has been a visiting scholar at various universities, including the David Rockefeller Center for Latin American Studies at Harvard University and the Cuban Research Institute, Florida International University, where she was a visiting fellow last summer. This summer, Denisse was an intern in the Migration, Remittances, and Development Program at the Inter-American Dialogue, a think tank located in Washington DC. Before that, she was a researcher affiliated with the Havana think tank CIPS (the Research Center on Psychology and Sociology). Denisse earned a BA in Sociology from Universidad de la Habana and an MA in Social Development from Universidad Católica de Murcia. Delgado is currently exploring the impacts of COVID-19 on remittance flows to Cuba, exploring the significant contributions of digital remittances. She also studies Cuba’s diaspora economic and political participation in the process of change on the island.
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.
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 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.
