In any event, the highlight of the session was when an audience member said that he has heard the phrase cash is kind quite frequently lately, and was wondering which currency to hold. I have often wondered this myself, and while the speaker didn’t really have much of a direct answer (not the dollar, not he Euro, and by implication not the dinar) he did raise the possibility of all currencies going back to the gold standard. This was a popular theme about a year-ago, when the dollar was dropping to multi-year lows and Ron Paul was out lambasting the Fed. I haven’t heard this thesis all that much lately, and admittedly I need to do a little research to understand the implications. However, it seems like it would be a disaster. I just have a hard time believing that the huge amount of liquidity still sloshing around the financial system (central banks are pumping it in, even if no one apart from distressed banks are taking it on) could have any meaningful peg to gold.

In theory, each dollar can currently be exchanged for about 1/750th ounce of gold just simply buying gold at current market prices. However, if the currency were explicitly backed by gold the exchange rate would invariably be higher due the tremendous demand pressures from central banks seeking to back their currencies. Only after a period of significant deflation does this scenario make sense and then at that point, anyone who invested in gold at or near current levels would likely be wiped out. Of course, this is just the opinion of one dilettante. If only I had taken that class on monetary theory then I would be able to model this in all sorts of esoteric math that would tell me…nothing.

Addendum: It seems that recent events have caused a renewed interest in the gold standard, which from a contrarian point of view does not bode well from the presenter’s thesis. However, a quick glance of the headlines on the right hand side of the screen shot suggests some operator error in using google trends effectively.

Top 5 Things I Dislike About Jordan

1.   Not being able to communicate sufficiently in the local language

2.   4 am prayer calls from the Mosque next door

3.   Regulated Bandwidth on a Broadband connection (Just like my connection, I’m a little slow as it took me a week to realize it was because they just don’t have the infrastructure in place to support unlimited downloads.  Thankfully, the bandwidth embargo saved me from waking up at 4 am during the week to watch my beloved brewers bomb in the playoffs)

4.   Difficulty in interacting with Jordanian people outside of work (#1 is probably the primary culprit)

5.   Roundabouts (why does any city planner think these are a good idea?  I see more accidents on these ridiculous circles than anywhere else)

1.    Being able to drive how I’ve always wanted to, but couldn’t in the US because of pesky things like traffic laws (although its definitely not as crazy as what happens in our neighbor to the south)
2.    Scurrying up the cliffs of Wadi Rum
3.    Living in a politically charged environment, where everyone has an opinion they want to expresses
4.    Cups of cardamom spiked coffee and the odd cigarette on the roof of my apartment
5.    Being able to afford my own apartment AND have a cleaning lady (I realize I sound like a terrible person, but here is the take of a very smart development economist)
6.    Having to wear a suit to work everyday
7.    Fridays at the Souk downtown
8.    Trying to learn Arabic

“The Palestinian kids get toy guns, while the Israeli kid’s guns are real”

Sadly for our merry group of four people, the process was anything but.  We had to go to three separate police stations a total of four times.  Two police stations refused to fingerprint us, even though the ink pads were sitting in plain sight.  All of this despite a little white lie that was supposed to speed us through, in which we said we were students studying arabic, rather than workers.  In retrospect, it probably wasn’t the best idea to lie to the police, particularly since between the four of us, we could probably say 5 words.  The icing on the cake was when another policeman came in and started fingerprinting a group of Egyptians not two minutes after we had finally gotten our passports stamped.    

When I relayed my experience to my coworkers, who indicated that this is just how things are in Jordan with a bemused grin.  Which made me wonder, at what point in a country’s development do the population just decide that an inefficient bureaucracy is no longer acceptable.  Is there some magic level of GDP per capita that needs to be attained?

While the World Bank does measure statistics on hours wasted at police stations, they do track the number of days needed to open up a business, which I used as a proxy.  The results were quite surprising.    

dayscsv1

Jordan actually has one of the shortest times to start up a business, ranking well ahead of its GDP/capita ranking.    This trend extends to many other Middle Eastern countries, where the difference between the GDP/capita ranking and the days to start a business ranking is well above the overall average.  While this outcome measure might not be the best proxy for what I experienced, the stands in marked contrast to Europe for example, where despite the high income levels, starting a new business seems to be an arduous process.  I actually can’t think of any reason why a country would want to make it difficult to open up a business.  Perhaps rich countries want to protect those firms already in business, sacrificing long-term growth for stability.  In contrast, developing countries are more interested in the economic growth that new business can provide.  However, a simple regression seems to repudiate this hypothesis.  The elasticity of the days to open a business measure is 20% with respect to GDP/capita, meaning doubling income would lead to a 20% decline in the time it takes to open a business (making an unreasonable assumption of causality).  While I thought this figure would be higher, it does indicate a non-trivial correlation between income and bureaucracy.  So a few questions remain.  If its so easy to start a business, why does Amman seem so under retailed?  The ratio of commercial space to residential space is far below any I’ve ever experienced.  Also, what are the drivers of gains in bureaucratic efficiency?  

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In any event, my (least) favorite Ramadan, occurred shortly after I arrived.  Amman was experiencing some unusually warm weather, with temperatures reaching 100 degrees plus during the day, creating ideal conditions for walking around the city to hunt for an apartment.  After a particularly frustrating afternoon, in which I climbed three small mountains to look at two apartments that were just blah enough to not rent, yet not dumpy enough to turn down, my throat felt like sandpaper. Although its haram, or forbidden, to fast if you put yourself in danger of dehydration, I don’t think the people around me on the street would have truly appreciated the severity of my thirst were I to start chugging. So I popped into a deli, bought a water, plopped it into one of the ubiquitous plastic bags, and wrapped my sinful package in a newspaper. I quickly exited in search of a dark corner, knowing the delights that awaited me in my hand. Two blocks later, I was huddled at the end of an alley, furtively checking behind me as I took long pulls off Ghadeer brand, pure, natural mineral water. Hopefully, it is the closest I will ever come to feeling like a crackhead.

Click here, for a warmer and fuzzier take on the expat ramadan experience.