Economics

Phone Power to the People

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There are, roughly speaking, three broad approaches to Third World development. There are those who would preserve poverty by keeping development itself at a minimum. There are those who would modernize poverty by imposing coercive, centralized systems on indigenous societies. And there are those who want to make more tools available to Third World people themselves, to accept or reject as they see fit, to discover their own uses for the technologies, to adapt them to their own evolving ways of life.

One potential tool for autonomy, resting at the intersection between high tech and the human scale, is the cell phone. Sara Crobett writes in The New York Times:

Something that's mostly a convenience booster for those of us with a full complement of technology at our disposal—land-lines, Internet connections, TVs, cars—can be a life-saver to someone with fewer ways to access information. A "just in time" moment afforded by a cellphone looks a lot different to a mother in Uganda who needs to carry a child with malaria three hours to visit the nearest doctor but who would like to know first whether that doctor is even in town. It looks different, too, to the rural Ugandan doctor who, faced with an emergency, is able to request information via text message from a hospital in Kampala.

[Anthropologist] Jan Chipchase and his user-research colleagues at Nokia can rattle off example upon example of the cellphone's ability to increase people's productivity and well-being, mostly because of the simple fact that they can be reached. There's the live-in housekeeper in China who was more or less an indentured servant until she got a cellphone so that new customers could call and book her services. Or the porter who spent his days hanging around outside of department stores and construction sites hoping to be hired to carry other people's loads but now, with a cellphone, can go only where the jobs are. Having a call-back number, Chipchase likes to say, is having a fixed identity point, which, inside of populations that are constantly on the move—displaced by war, floods, drought or faltering economies—can be immensely valuable both as a means of keeping in touch with home communities and as a business tool. Over several years, his research team has spoken to rickshaw drivers, prostitutes, shopkeepers, day laborers and farmers, and all of them say more or less the same thing: their income gets a big boost when they have access to a cellphone.

It may sound like corporate jingoism, but this sort of economic promise has also caught the eye of development specialists and business scholars around the world. Robert Jensen, an economics professor at Harvard University, tracked fishermen off the coast of Kerala in southern India, finding that when they invested in cellphones and started using them to call around to prospective buyers before they'd even got their catch to shore, their profits went up by an average of 8 percent while consumer prices in the local marketplace went down by 4 percent. A 2005 London Business School study extrapolated the effect even further, concluding that for every additional 10 mobile phones per 100 people, a country's G.D.P. rises 0.5 percent.

One unexpected outcome: a burgeoning alternative banking system.

It's also the precursor to a potentially widespread formalized system of mobile banking. Already companies like Wizzit, in South Africa, and GCash, in the Philippines, have started programs that allow customers to use their phones to store cash credits transferred from another phone or purchased through a post office, phone-kiosk operator or other licensed operator. With their phones, they can then make purchases and payments or withdraw cash as needed. [Al] Hammond of the World Resources Institute predicts that mobile banking will bring huge numbers of previously excluded people into the formal economy quickly, simply because the latent demand for such services is so great, especially among the rural poor.

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  1. Teh Amish have cellies:
    http://www.wired.com/wired/archive/7.01/amish.html

    And solar PV apparantly.

  2. This is why allowing Cubans to have cell phones is such good news… Now if they can only get together the money to buy one. Still it’s a step foward.

  3. It is rare to see a praise of cell phones like this. Usually writings about them are rants about car dangers, the decline of politeness, cell phones as bomb detonators, etc.

  4. This means that we should tax everyone in developing countries and make cell phones free! Right? *looks around* Right?

  5. RtP,

    I can tell you are an imposter Progressive because you did not tie the tax into a US only carbon tax to be given to the developing countries.

    Details are important in spoofing!

  6. This isn’t the first time I have seen pieces like this praising cell phones and all that they do for people in third world countries (or even in oppressive countries — where they help get around the censors etc).

    I’ve seen the cell phone praise lots of times before. IS there any other recent technology that offers this kind of promise to people ? Or is this unique to cell phones right now?

  7. There is also GrameenPhone. Sounds like a good idea, especially that it is independent of any government agencies and foreign aid.

  8. What is interesting to me is that the developing countries can skip right over the very expensive land line infrastructure and go directly to cell technology.

  9. What is interesting to me is that the developing countries can skip right over the very expensive land line infrastructure and go directly to cell technology.

    You think it’s cool now? Wait until WiFi is as widespread as cell coverage.

    (Technically, with Verizon, it is, but it’s really fucking expensive from what I hear.)

  10. Suppose the money was denominated in dollars and kept (theoretically) in u.s. banks. Now the government can’t steal citizens money through inflation or expropriation. It loses complete control of monetary policy. Awesome.

  11. Suppose the money was denominated in dollars and kept (theoretically) in u.s. banks. Now the government can’t steal citizens money through inflation or expropriation. It loses complete control of monetary policy. Awesome.

    Wasn’t this idea the origins of PayPal ? (Before Ebay bought them). I believe they had a vision like this…until the feds and the regulators started sueing the shit out of them and tying them up in court.

  12. GM –
    I am so a real progressive, and I will prove it by showing that I have no sense of humor. I can’t believe you wouldn’t take your own suggestion about tying the tax to a US-only carbon tax seriously! Do you not want poor people in Uganda to get health care? Oh that’s right, you’re a libertarian! You only care about yourself, and I can say that in all seriousness because I’m $200,000 in debt in obtaining my graduate degree so i can work at a nonprofit in DC!

  13. What is interesting to me is that the developing countries can skip right over the very expensive land line infrastructure and go directly to cell technology.

    When the technology was being developed and initially marketed, did anyone forsee what a boon this would be for underdeveloped nations? It’s obvious now (20/20 hindsight) but I would like to give credit to someone who predicted it c. 1988.

    Anybody got a link?

  14. Why does PC dogma dictate we call them “developing countries”?

    Most of them arent “developing” anything, Third World is the term to use.

  15. Mrs TWC thinks that if you must have foreign aid, that we should skip the trillion dollar war and the cash payments to the ME and simply buy every single resident of the third world a cell phone and an Ipod.

  16. TWC,

    iPhone. Two birds with one gizmo.

  17. Wasn’t this idea the origins of PayPal ? (Before Ebay bought them). I believe they had a vision like this…until the feds and the regulators started sueing the shit out of them and tying them up in court.

    When PayPal first came out, I had envisioned people walking around with hand-held debit scanners. I was wondering what happened to my laissez-faire utopia 😉

  18. Now that there is growing awareness that ‘moderate’ lefties are ‘progressives’ can we start taking back the ‘liberal’ label?

  19. The Hexayurt project is a Libertarian-run sustainable development charitable project that focusses on housing and distributed infrastructure.

    http://hexayurt.com is the main site.

    http://files.howtolivewiki.com/TIDES_PACKET/TIDES_BOARDS_V2_low_resolution.pdf has a bunch of our work on “distributed” (i.e. hyper local) infrastructure solutions for the developing world (written for a military audience.) The emphasis is on how individually owned infrastructure resources (i.e. micropower, microwater) cut down on bureaucratic problems in the field.

    and

    http://guptaoption.com/2.long_peace.php

    Looks at approaches to turning this kind of technology (and open source) based development strategy into a coherent foreign policy for dealing with the problems of global poverty with a basically non-interventionist framework.

    I hope you’ll find these interesting.

  20. Thanks for the laugh, Neil.

  21. RtP,

    I am so a real progressive, and I will prove it by showing that I have no sense of humor. I can’t believe you wouldn’t take your own suggestion about tying the tax to a US-only carbon tax seriously! Do you not want poor people in Uganda to get health care? Oh that’s right, you’re a libertarian! You only care about yourself, and I can say that in all seriousness because I’m $200,000 in debt in obtaining my graduate degree so i can work at a nonprofit in DC!

    If you were really serious you would be in the Montag Cooperative Carbon Credit Program (M-CCCP).

    Neil,

    Quit being so PC, they are called backward countries.

  22. Why does PC dogma dictate we call them “developing countries”?

    Most of them arent “developing” anything, Third World is the term to use.

    Except that there is no Second World any longer. “Undeveloped” would probably be more accurate, with “underdeveloped” being a bit more PC.

    Then, too, there’s Groucho’s solution:

    “We took some pictures of the native girls but they haven’t developed yet….
    But we’re going back in a couple of weeks.”

  23. Quit being so PC, they are called backward countries.

    Well, maybe by you metro nancies. In these parts, we call ’em barbarians.

  24. Whatever you say, Montag! < 3

  25. DAR,

    I suspect that “Third World” got too closely associated with “backward”, so the PC cops changed the phrase. As soon as people catch on, the Ivory Towered Liberal Arts slackers will change it again.

    Backward is still quite descriptive and proper.

  26. RCD,

    Backward barbarians works too.

  27. How about heathen savages? I always liked that term.

  28. They are “developing countries” because to call them Third World just keeps them down. The ones that aren’t developing are the ones that your sacred corporations (all hail the mighty corporation) open sweatshops in with no environmental or labor standards. They have actually made these struggling economies more “Third World.”

  29. Neil,

    Economically, do you think Dubai is part of the “Third World”?

  30. IS there any other recent technology that offers this kind of promise to people ?

    Deodorant.

  31. Yes Ali because Dubai produces nothing it just got rich beacuse it happened to be on top of a lot of oil (oil taken out of the ground almost entirely by western technology, BTW).

    Without the west taking the oil out of the ground for them theyd still be in tents hearding camels.

  32. Neil,

    Doesn’t commerce and the science (and art) of commerce? Regardless of how or who found it, it remains a fact that today they own it and use it to benefit themselves, their people, and in fact the peoples of many other nations as well. I am not sure if you have been following the news (Fox “News” does not count) but they are moving towards becoming one of the centers of finance, commerce, air travel, and shipping of the world.

    Plus, how do you know that if the West hadn’t discovered oil and its uses (which was accidental by the way), they wouldn’t have discovered it and used it themselves without anyone’s aid?

  33. First sentence should read: “Don’t commerce and the science (and art) of commerce count?”

  34. Neil obviously knows nothing about Dubai’s economy. When I’m completely ignorant of a subject, I find it best to be silent and listen (read). Try it sometime Neil. You’ll appear less of a fool.

  35. Technically, with Verizon, it is, but it’s really fucking expensive from what I hear.

    Not that bad, really — $60/month for unlimited and I just saw a $40/month plan with a 50M limit. If I didn’t use my cable modem service for work, I’d probably have only the wireless. It’s fast enough and having net access everywhere is great. I even have a little wifi router that you can plug the wireless broadband modem into to make your own little mobile hotspot.

  36. Don’t believe this story.

    I saw it in a science-fiction movie once.

  37. ….they wouldn’t have discovered it and used it themselves without anyone’s aid?

    Well, because they didn’t?

  38. Slocum, I looked at ATT’s offering and thought it was decent enough. Also 60.00 per mth but there is a 5 gig limit on bandwidth, which I can’t relate to reality.

    Wondering what happens if you have 3-4 computers logged onto your little wi-fi hot spot. Does the speed drop?

    I’m serious, because we have crappy service out here in the tules. Faster than satelite, but not terribly reliable.

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