A group of us were talking about the negative effects of quat on this country. There are many, a stunning amount of money is spent on it every day, it uses an amazing percentage of this country’s water supply (upwards of 40%), and it has a slew of health complications. A lot of people say that it also wastes a lot of productive time, but I think that’s just an excuse for being lazy, there’s no reason why you couldn’t chew and work at the same time… Henry piped up and said that there are some positive attributes to quat as well. “Well, they aren’t drinking…” That’s true enough, if they turned to other, more dangerous drugs like alcohol, this place would be terrifying. It’s only the fear of going to hell that is preventing this place from totally disintegrating into an alcohol induced anarchy… So yeah, it could be worse but I think it’s a stretch to call that a positive. Then he added, “And at least it keeps the money in the country.”
There’s some appeal to that view, but all you have to do is look a little closer to see how misguided it is. OK, so the money stays in the country, so what? First of all, if the money did go someplace else, that would mean that they either imported something or they invested the money someplace. If they import something, the odds are that they’d get something more useful than quat, so that’s a benefit right there, the money won’t be “wasted” on a drug. If they invest it, they would presumably get some sort of return on the investment, and that’s always good. Most people are worried about imports, so let’s look at that.
If the people of Yemen import something from Djibouti, Yemenis get some sort of product and someone in Djibouti gets some Yemeni Riyals. So the Yemenis have something that they use, probably food if it’s from Djibouti, so that’s a good thing. What are people going to do with Yemeni Riyals in Djibouti? Nothing, you can’t do anything with Yemeni Riyals in any place other than Yemen. So, the Djiboutis send the riyals back to Yemen in exchange for something.
So now the Djiboutis are faced with the same options as the Yemenis had when it came to spending money abroad, but they are forced to do business with Yemen, it’s the only place that will accept the money. The most common uses of money gotten through exports are either direct purchase of products, hiring of labor, investment in that country, or buying of that government’s debt. None of those things are bad, and they are all a direct result of Yemenis importing some product.
From the importing countries’ perspective, it’s all positive (as it is from the exporter’s view, but they have more at risk potentially). Even if the exporting country burned all of the money it got, preventing it from going back to the nation that imported it, it would still be good. If they burned the money, it would mean that the importing country got goods/services in exchange for little pieces of paper. Now that’s a deal! The government can always print more money…
So it isn’t obvious what the benefit is of “Keeping the money in the country.” This is a really contentious issue in the US. There is some worry about all of the money we send to China (although no one seems to worry about all of the money we send to Canada). The Chinese have been getting a lot of our money, and they’re using all of it. They are importing some goods made in the US, but they are mostly investing in capital here (buying equipment, property, etc.) or buying our debt. In an ideal world, we wouldn’t have any debt to sell, forcing them to either invest more or buy more of our products. Reality being what it is, our government has been deficit spending like crazy, so the Chinese have had lots to buy. Imports are a good thing for both sides, don’t be afraid of them. If you want them to buy more “stuff” from us, reduce the debt that we create…