24 March 2010

Where We Eat Like Kings


My eyes fluttered to attention when I heard “We’re here to help you”. Something had gone horribly awry. At the time, our small group of American college students studying abroad had been embedded in an exchange with one of the many slum communities of the city of Khon Kaen in northeastern Thailand. In a good-willed effort to make our exchange with the slum community a reciprocal one, and driven by her own sense of compassion, a member of our contingency told our hosts that part of the reason we were there was to help them. Upon hearing her words, the atmosphere immediately transitioned from that of an educational conference between two parties seeking to understand one another to a melee-like plea for help. And not just any help. Financial help. The floodgates opened and all hope was lost.

Our community desperately needs funding for education. We get nothing from the government. Are you doing anything to help us?

Well, I’m sure there are American non-profit organizations who would be interested in helping you. We can look into it.

Only the wealthiest Thais could afford to study abroad. How much did it cost you to study abroad in Thailand?

Err, well, even we Americans had to take out loans and obtain scholarships to afford the trip here. Not all Americans are rich.

How much does your tuition cost?

(Eyes dart across the room at one another, no one willing to state a numerical value.)

We’re not sure. It depends. A lot of it is covered by scholarships.

(No one had the heart to tell them that one year’s worth of tuition was greater in value than all 150 of their community’s houses combined.)

Chances are if you are reading this right now (my beloved target audience), you are rich. And not just rich: you are unbelievably wealthy. Most of us hate characterizing our assets this way, let alone recognize it to begin with. I haven’t thought of myself as absurdly rich by any means of the imagination. With my father still unemployed as a result of a floundering economy and our family quickly eating away at what limited savings we had to begin with, sometimes it seems my family is surrendering everything we’ve attained just to get by. This is a common story in the United States. Yet on an international scale, all of us—you and I—are the cream of the crop. We are the elites who have enjoyed unprecedented wealth and opportunities while over one billion people live on less than a dollar a day. I do not mean to come off as holier-than-thou and provoke defensiveness. I’m not trying to spurn you or make you roll your eyes. I’m not even trying to repeat what you may perceive to be obvious. Hopefully we can both simply agree that, relative to others on a global scale, we have enjoyed far more privileges in our lives. With this in mind, bear with me for just one more moment. Please, get comfortable. Grab a soda if you’d like.

So where does this disparity in wealth come from? Is it merely because we have so much money and they have so little? Although Thais generally make much less income than Americans do in relation to currency values (the U.S. dollar versus the Thai baht), Thais generally pay for a much lower cost of living than those in the United States. It would initially appear that wealth is relative and that everything balances out; Americans abroad often enjoy citing (albeit usually in desperation) that our enormous costs back home justify our superior incomes. Yet there is a fundamental reason why so many Americans are able to study abroad and so few Thais can afford to do the same. There is a reason why my iPod alone is worth roughly a third of the yearly income of a scavenger at the Khon Kaen landfill (about 48 thousand baht). That reason lies with the exchange rate.

Do you know what determines the currency exchange rate between countries? If you fully understand the reasons behind the exchange rate, I truly envy you. I have studied some of the numerous determining factors behind exchange rates and in conclusion I have only been able to grasp just enough information so as to further infuriate Thais when I desperately try to explain it to them. While currency exchange rates should be determined (at least from a naïve ethical standpoint) by purchasing power alone—e.g. hypothetically, if you can purchase a sack of rice in the United States for 5 dollars and that same sack of rice in Thailand costs 50 baht, then 1 dollar should equal 10 baht—this obviously is not the reality. Essentially, one of the most important determining factors is the international market demand for a given currency. The more demand there is for a country’s goods and services, the greater demand there is for that country’s currency, hence the value of that particular currency rises relative to other currencies.

Total wealth also plays a significant role. To use a widely cited example, let’s imagine that 1 U.S. dollar is equal to 1 Thai baht. Now let's say that the Americans own $100 and the Thais own 100 baht. If America buys $5 worth of product from Thailand, America would have $95 and Thailand would have 105 baht. Suddenly Thailand becomes wealthier. In theory Thailand is approximately 10% wealthier now. (100/95x105=10.52%) So suddenly $1 would be worth around 1 baht and 10 sarang (there are 100 sarang in 1 baht). This is the principle of how trade surpluses and deficits along with total wealth help determine the exchange rate. There are several other factors—including interest rates, inflation, political conditions and market psychology—that all factor in as well (many governments intentionally undervalue their currency to promote greater spending by foreign investors and tourists who get more bang for their buck, as described shortly). The foreign exchange market, considering all of the above, then arbitrarily produces a number which dictates everything. It tells us that the current currency exchange rate hovers around 33 baht to the U.S. dollar. The foreign exchange market allows me to purchase bottled water for less than 22 cents a bottle. The foreign exchange market allows me to buy a full meal of fried rice with chicken for only 46 cents. It allows me to purchase a fine button-down shirt for 3 dollars and 10 cents. To see an American-produced movie in the theatre on opening day for $3.71. To be treated to an hour long full-body Thai massage by a professional licensed masseuse for $6.19. To obtain a 6-month gym membership to a state-of-the-art gym for $21.66. To be vaccinated for Japanese encephalitis for $74.09 (as compared to $450 at some health clinics in the United States). The list goes on and on.

Do the reasons above adequately explain why the currency exchange rate is tilted immensely in favor of American consumers versus Thai consumers? Absolutely. Does it make it fair? Not even close. While it is far easier to explain ‘the system’ on the macroeconomic scale, it is far more difficult to explain it to those who are forced to scavenge in a landfill for the valuable recyclables I just threw out. Yet I am almost tired of sugar coating the issue. I am tired of dancing around questions concerning how much my airplane ticket cost for fear they would convert the price into baht and marvel in shock at my wealth. The system is there and we all live under it: why be afraid to tell them the perverted truth? Why consciously keep others ignorant? Perhaps it is because in telling the truth we are contradicting our own personal modesty and our own embarrassment towards our undeserved privileged. It does not make it any easier to explain to a Thai living in the slums that although they have put in more work and endured more suffering and hardship into making a living than I will ever know, I will always be richer. I will always be fatter. I will always enjoy a higher standard of living filled with luxuries and opportunities that they will never even know existed. The exchange rate may be very well founded, but it is still a moral travesty. It is a travesty which maintains that despite your feats, triumphs and hardships, despite all your labor, hard work, civility and perseverance, your cumulative yearly income will be but a fraction of what I spend on luxuries. And for that reason you are worth less than my golden rings.

Alex Binder
University of Colorado at Boulder

5 comments:

Claire said...

Alex, Alex, Alex,
I loved your blog post! Although I wasn’t there for the exchange with the villagers I heard a lot about how awkward the situation became. It’s funny (perhaps not the right word) that talking about money is taboo in the US whereas in Thailand it’s not. I can understand why money is a topic that is “scarey” to talk about when there is such disparity in the US. Yes, there is a large disconnect between wealthy and poor Thais, but a majority lie on the same income level so discussing finances is no big deal.
For me, talking about privilege—my family’s income, my college tuition and how much my flight from the East Coast to Bangkok cost to Thais living in a slum—makes me feel guilty. Why is it that privilege makes not only me, but also people in general feel guilty? Guilt makes me want to do something to change that feeling and ultimately results in volunteering with social justice organizations, or in this case, studying abroad with CIEE Thailand. So with that said, is feeling guilty necessarily a bad thing?

Althea said...

Asaween,
This is an incredible, bitingly honest piece that calls out our collective mindset as study abroad students really powerfully. I find it especially interesting that your research into exchange rates illuminates the positive feedback cycle of economic power: as a country's currency gets stronger and perceived as more stable, it attracts more global demand, which in turn wins it more strength.
As we attempt to establish reciprocal relationships with communities here, I find it fascinating that we seek to communicate (what we think are) hardships in our own lives as a way to relate. We want to find ways to say that we too have loans (for our prestigious education as opposed to our transportation or our next meal) and use that as a way to connect. In the end, this fear of the reactions we are met with if we translate our plane ticket costs or our incomes into Baht just leads us to stall or lie or remain silent. And this fear relies in itself on assumptions and generalizations that are for the most part uninvestigated. Our desire for reciprocity has then only spurred dishonesty and misrepresentation on our part, and a lack of real understanding of the people we are talking to.
During my first homestay, I told my family how much my plane ticket to Thailand cost (in dollars, since neither my Thai nor my Baht conversion were up to the task at that point). They understood, they were taken aback, and it was uncomfortable but it was not defining in the way that I think we fear it to be (or in the way it was during that exchange in the slum). I can't even claim to understand my own family's financial situation, let alone generalize about our student group or Americans in general, so honesty felt weird, but good. A few minutes later, everything was back to normal, if pet squirrels, Call of Duty, and repeated inquiries about whether one could drive to the USA can be labeled as such.

CIEE Thailand said...

Wow Alex, this is an amazing post. I am honestly blown away. It reminds me of something I once read by Vandana Shiva, an Ecofeminist from India. She connects development issues to gender. She explains that the domination of South by the north, women by men and nature by humankind is rooted in the world-view that was created by western men so he could suppress and exclude the rest of humanity. It is a system that we are all a part of and feeling guilty is not supposed to be part of that system, but it is. It makes me wonder whether it is part of human nature to want to dominate.
The more developed a southern country becomes, the more developed a northern country becomes, thus it is impossible to be equal mostly because of power. Just as men hold the power over women, the developed world has the power over the underdeveloped world. Just as the goal of the woman’s movement should not be to strive to become equal to men, developing countries cannot strive to become equal with developed countries. There needs to be a complete restructure of the system because without the restructure of the system, the people/ nations in power can always stay in power. That is the essence of power. This point makes me feel extremely hopeless because how do you restructure not only an entire society, but the entire world? My point is, the development of a country goes far beyond economics, it involves power. Then that brings me to the question of what does power mean? Today, power is money. How do we change this? I believe that change comes from the ground up and awareness is the first step to changing these systems.

-Charlotte

Bijal said...

alex,

I used to insist to my parents that my life goal was to move to India and live in a hut. They would get frustrated and roll their eyes at my naivety. It was probably somewhat insulting to them. My dad worked his ass off for 30 years so I didn’t have to grow up in a village, and here I am denouncing my comfortable suburban life and my over-priced tuition costs. Your powerful words remind me yet again of how lucky I am in life.
My biggest challenge in life has been trying to sort through the infinite choices and figure out what I want to do when I graduate. What a joke! My biggest problem to happiness isn’t food, or health, or water, or worrying about having a place to live. My worries and “problems” are so insignificant because of a simple act of fate that I was born an American. I don’t know what I did to deserve it. As you so accurately describe, I am “undeservingly privileged.” Being on this program and seeing girls my age, I wonder what my life would be like if my dad never left Bhayavader, India when he was a teenager. I would be living in a village and maybe if I were lucky some CIEE students would come stay at my house and have an exchange with me. But my reality is not this. I am a privileged, consuming American, I live in an excessive house, buy excessive things, don’t know the meaning of hard labor, and I have all the opportunities of the world before me.
The reality you so masterfully capture evokes guilt, frustration, and sadness. However, I think the truths you state and recognizing these truths are also inspiring. I am born privileged and so many people are not, which is all the more reason to live my life to the absolute fullest and truly take advantage of my blessings. We should live the best life possible and do the things we want to do, and love every moment because so many people around the world don’t have this luxury. I can’t change this system, or the way we determine currency rates, or feed all of the billions of starving people. I will never make human suffering go away. But I can use my privilege for good to the best of my ability. I can make small dents in suffering and spread positivity, and utilize my privilege in the best way possible. I thank you again for reminding me that it is a miracle that I am able to live the life I do. That considering all the suffering that exists in this world, the odds of having health, family, and the opportunity to explore ideas and diverse experiences is a true blessing.

CIEE Thailand said...

Alex-
Having been apart of this exchange, I am happy that someone was able to capture that experience in a very real way (even if you weren't actually there haha). This experience was one of the most memorable for me in Thailand, and also one of the times when I felt completely at a loss for words as to how I was feeling. I wasn't mad at these villagers for asking us for money or help, how could I be? Instead I was mad at our group for misrepresenting our intentions in our relationship with this community, and I was mad at our program for giving this community the idea that we were some kind of charity group. But ultimately it is not the program that created these circumstances where one group seemed to hold the power and one group seemed to want just a taste of it. When they started hinting towards asking our group for money I know we couldn't say yes, but I was ultimately so disappointed in myself for that reaction. Of course, I believe in the age old phrase "give a man a fish and he'll eat for a day, teach a man to fish and he'll eat for .... (not sure how long but I know its supposed to be a really long time)". I do agree with that phrase in the sense that communities need empowerment and resources rather than money or charity. But sometimes I feel like this focus on community empowerment is really just a way for people to literally, not put their money where there mouth is. If an ipod could really build a new community center, why shouldn't we just give the money? I guess thats where I see the shortcomings of community organizing if it is not accompanied by a true change in economic policy and structure. -Sam