No safety in numbers: security in Haiti

Hello and welcome to The Intelligence from The Economist. I'm your host, Jason Palmer. Every weekday, we provide a fresh perspective on the events shaping your world. It's obvious that there's some unaccounted-for cash out there, in coat pockets and behind couch cushions. But there's so much more than you probably think. £50 billion worth in Britain alone. So why does no one seem to care about it? And for a good many years, if you were to write to Sherlock Holmes at his fictional address on Baker Street in London, you'd actually get a considered reply. We meet the man who unwittingly became Holmes' secretary. First up, though—

When they sensed the timing was right, they found a way to open the door that was closed and blocked, filed silently to the path that they have chosen to follow, and quickly left the place that they were held, despite the fact that numerous guards were close by.

A dozen missionaries from an American church are free this week, the last of a group that was kidnapped by Haitian gangs in October.

With God's help, protection, and leading, they quickly made their way through the night. They walked for possibly as much as 10 miles, traveling through woods and thickets, working through thorns and briars.

Their freedom is a rare bit of good news from Haiti. The country has been plagued by political turmoil, poverty, and natural disasters for years, but troubles have piled up in 2021.

All right, we've got some breaking news to report. The AP reporting that Haitian President Jovenel Moïse is dead.

In July, President Jovenel Moïse was assassinated. His killers still haven't been found. Barely a month later, a powerful earthquake left more than 2,000 dead. A power vacuum in a disaster-stricken country has made room for even more of the crime and gang violence that were already on the rise. Many Haitians would love to leave, but even for those who can, a better life isn't assured. In September, tens of thousands arrived at a squalid and miserable migrant camp at Del Rio in Texas. Photos revealed what appeared to be brutal treatment at the hands of American border officials. This week, a group of Haitian asylum seekers filed a lawsuit against the Biden administration, alleging abuse and denial of due process. When the camp was cleared, a few thousand Haitians were allowed into America. Many more agreed to go back to Mexico voluntarily. And the rest? Well, 17 planes took them to Haiti, right back where they started.

So I met with Jerome Louis. That's his alias, not his real name for security purposes.

Jessica Obert writes for 1843.

We met in the neighborhood where he's living with his sister.

They are home.

They won't let Madame there.

We met outside of a barbershop that he tends to go to along the main road. He's around 27 years old. He was wearing a Chicago Bulls basketball jersey, which is actually the region where he was supposed to be going to when he made it into the United States, because his wife has a cousin living near there.

You say where he was supposed to be going when he made it to America. What happened?

So he grew up actually in Martissant. He was witness to a lot of daily violence, so neighbors thieves being killed as he was on his way to school. So that was just kind of the nature of the environment in which he grew up. As he got older, he liked to go out and party, as any young person likes to do. And his mother actually was very concerned and worried about his personal safety. She didn't want him to be a victim of violence. And so her main priority was for him to leave the country in his early 20s. And so she and his father raised funds and sent him to Santiago.

Okay, so he's made it as far as Chile. What happened there?

The main reason that he was sent to Chile was to go to university. But when he arrived, it was more expensive than he had imagined. And so he was spending most of the money that his father sent him on rent. And he wasn't able to afford to go to school, so he started working as a carpenter. He met his wife there. She was actually not able to work, so it was himself who was supporting her and their 2-year-old daughter. [SPEAKING SPANISH] And they made the decision to leave Chile and head to America. And his dream was really to live in Illinois, work during the day, and go to night school so that he could get a better job and provide better for his family. And really, the way that he explained it to me was that they were merely surviving in Chile. Like, it was the money that he was making and bringing home from his job, it fed them, sure, it housed them, sure, but really, like, It was a struggle day in and day out.

So the dream of living in America is still alive here. How does the next leg of the journey go?

So when he decided to leave Chile with his wife and their 2-year-old daughter, they left with a group of other Haitian neighbors, colleagues, friends. The most difficult part of that journey for him was the Darién Gap. It's quite harrowing. It's going up mountains, crossing rivers. There's a lot of unknowns. A lot of people are either robbed or murdered along the way or die from different circumstances. When they made it out of the Darién Gap into Panama, they made their way up to Nicaragua and Honduras where they were held back due to money reasons. They waited for his wife's cousin to come up from Chile to meet them, and they headed to the border. When they made it to Del Rio, they had to cross the Rio Grande River from the Mexico side to the American side. And he described upon first arriving there being a few hundred. The next day there were thousands. Del Rio became quite infamous for the thousands camped out under the bridge. There were nearly 14,000 Haitians waiting there to apply for asylum. The conditions weren't great on the American side under the bridge. He said that they were just given bread, so they would have to cross the river daily back to the Mexican side to buy food to bring back over. They camped out beneath the bridge, and because of the dust that was picking up, he and his daughter got sick.

And this is the point, I guess, where, where Del Rio really hits the international news. How did they get out of there?

Him and his wife and their daughter were taken to a processing detention center. He described it as being very cold. They were given a plastic sheet for warmth. They weren't given a lot of food. There was a lot of confusion as to what was going on. They thought that they were going to be able to apply for asylum. He was told by officials that he would be transferred to Las Vegas. In fact, he was put on a deportation flight back to Haiti and not Las Vegas. [SPEAKING CREOLE] And they were passing through Texas up to San Antonio to get on the plane that would take them back to Haiti. And he remarked upon seeing much of the United States passing him by on that highway, and it was difficult for him because he had made it so far and was so close to what he had hoped for, but essentially it would prove to be futile and he would be deported back to Haiti.

So he's put in a detention camp, told he's being sent to Las Vegas, and in the end is sent back to Haiti where, where he is now. What, what's life like for him? Is he, is he going to, to try again?

Right. So he has not been able to find work since being back in Haiti. The security situation is extremely volatile at the moment. People are afraid right now to even go outside of their house because You know, now Haiti has the title of highest rate of kidnapping per capita. And so being a young person today in Haiti is, it's really a matter of survival and it's your possibilities of building something are quite difficult. And so the years of trying to build something, sending money back to his family to support them really ended up with him back in Haiti Square zero, having to start over and being put back into a state of insecurity.

Jessica, thank you very much for your time.

Thank you so much.

All of the segments in today's show come from 1843, our sister magazine dedicated to Stories of an Extraordinary World. Access to those stories is part of a subscription to The Economist, which I still heartily recommend. Head to economist.com/intelligenceoffer or click the link in the show notes to find a great introductory deal. I don't know about you, but since this whole pandemic thing, I haven't needed to get near as much cash Cash. Paper money has been on the way out for a while, but with all that online ordering and all those venues switching to contactless, there's even less call for it. But there's still plenty of it in circulation. And what's shocking is how much of it is unaccounted for.

We know from the Bank of England that there's about 85 billion sterling banknotes out there somewhere, 3 times more than there was 2 decades ago.

Oliver Bulow writes for 1843.

That's a pattern that we see repeated pretty much all across the developed world. The value of US dollars in circulation passed $2 trillion, that's trillion with a T, dollars in 2020. It's a really huge quantity of money in banknotes. And the main point is that for the majority of these banknotes, we have absolutely no idea where they are.

Well, especially in an era when fewer and fewer people seem to be using cash. I mean, what's the hypothesis here?

This has been called the paradox of banknotes by Andrew Bailey, who's now head of the Bank of England. He started looking into this just over a decade ago. It's a very difficult thing to measure because of the nature of banknotes. We know how many are being used in everyday transactions, you know, buying coffee or paying for parking or whatever, because those kind of transactions are measured. But that really only accounts for a relatively small fraction of the banknotes that are being used. And the rest are referred to by central bankers as a store of value, by which they mean they're not being used in day-to-day transactions, but essentially as a kind of physical bank account. And that is where the problems start, because we really don't know who is storing them and why.

But surely someone is interested in knowing where all that value is being stored and by whom.

You certainly would have thought someone would be interested in knowing where all these banknotes are. And just to put that into perspective, there are $200 bills for every single person on Earth. In order to try and find out where they are, we need to start thinking about who's using them. And in order to find out who's using them, a good person to ask is Kenneth Ridgock.

Remember that until they stopped making the €500 notes, 90% of them ended up in the hands of organized crime in Spain.

Back in the 1980s, he was a top-level money launderer for the Miami mob. He used to take plane loads full of banknotes, fly them out of Miami into small islands in the Caribbean where they would be invested in banks belonging to local bigwigs. He got busted in the late '80s and convicted for money laundering. So these days he's an advisor to other people to tell them what money launderers do rather than a money launderer himself. What Kenneth Richart will tell you is that the more compliance is imposed on the formal financial system, by the authorities, and more and more compliance is imposed every year, the more money launderers revert to the old-school method of money laundering.

You have placement, where you smuggle the money into a tax haven. Then you have layering, where you transfer it around amongst the different tax havens so that it loses its original criminal taint. And then you have integration, where you're bringing it back into Western Europe or North America. It's so cleverly disguised that Nobody would have a clue that it was once cocaine profits from the streets of New York, which went through a Caribbean tax haven, went through Panama, ended up in Taiwan, and then through the Middle East, ended up in the City in London.

So if the guess here is that it's all being used for nefarious means, and meanwhile, the sort of the more pedestrian users of the stuff are all using debit cards anyway, why keep printing the cash?

This is the $2 trillion question. Essentially, the reason why central banks keep printing cash is that it's very profitable for them to do so, and no one is asking them to stop. The concept of central banks is they provide cash to anyone who wants it. Any bank that comes to them and says they want cash money will be provided with it, and the central bank will make a very big profit from doing so. And this is a function of governments that goes back a surprisingly long time. In fact, it's such an old concept that we talk about it in Old French as seigneurage, the prerogative of the feudal lord. If you think about what a banknote is, all it is is a piece of paper with some numbers written on it, and the amount of money it's worth is whatever that number happens to be. Producing a $100 bill costs approximately 14 cents, which means that the profits to the Federal Reserve every time that it produces one is $99.86. Essentially, if you think about what a banknote is, it's just a piece of paper that's only worth $100 or $50 or €500 because that's what's written on it. If you're being given that kind of money by someone just for printing paper, you're probably not going to ask too many questions yourself.

So the suggestion here then is that this seigniorage idea is why the central bankers and others who could track this stuff down aren't too bothered about doing so?

Seigniorage is an extremely old concept, but it's very much not cutting edge now. And central bankers or economists prefer to talk about new concepts. And so seigniorage is the kind of thing that they don't really think is cool for them to talk about. One guy, however, who does think it's cool to talk about seigniorage— in fact, he talks about seigniorage all the time— is another Kenneth, Kenneth Rogoff, who is an economist at Harvard and author of The Curse of Cash.

I think the central banks are very invested in the status quo, and economists tend to think, well, it's not Keynesian macro, so it doesn't matter for anything. And of course, that's stupefyingly naive.

Kenneth Rogoff thinks that the existence of cash money can be blamed for really many, if not most, of the ills afflicting the modern economy, whether that's tax evasion, or mafia activities, and so on. He thinks that particularly the existence of big bills, $100 bills, €500 bills, do no good for ordinary people and really only exist to benefit mafiosi, tax dodgers, and other criminals. We need to accept that we need cash. There are a lot of people who do not have access to the banking system. In America, it's about 5% of people, but they don't need big bills. If you're the kind of person who can't afford to use a bank account, then you're probably also the kind of person who doesn't have very many $100 bills.

Well, about the idea of simply pulling the currency out of the economy, I, I know that India tried such a thing. We've talked about the ill effects of that on the show a lot of times. Is that even an answer?

It's an answer. Obviously, a lot depends on how you do it. I think the India example is an unfortunate one, but if you look at how much it would inconvenience money launderers to get rid of big bills, it's pretty much a no-brainer. I mean, if you're trying to move, say, £2 million £20 in the most common British banknotes, which are the £20 notes and occasional £50 notes, you're talking about using about 5 suitcases, which is the sort of thing that really catches the attention of a border guard if you're crossing a border. If you're doing it in €500 bills, it's just a briefcase. I think we can say everyone recognizes big bills are a problem and the world would be better off without them. But the problem is, how do you get rid of them? Because let's say the US Federal Reserve got rid of the $100 bills tomorrow, and the largest banknote was a $20 bill, then all the criminals would just switch to use euros instead, which means all of the seigniorage profits would accrue to the European Central Bank instead of the Fed. So essentially, you have a situation whereby whoever's the last central bank standing would make an absolute fortune from issuing the banknotes used by criminals, and everyone else would lose out. The odd situation is that although central banks do make very large profits from seigniorage, if you look at society as a whole or even government as a whole, The damage that the crime enabled by large banknotes does vastly outweighs those profits. And seigniorage, if looked at across government as a whole, is hugely negative. Economies would be much better off without big bills. It's just quite difficult to persuade central banks of that reality because they're the ones making the profits.

Oliver, thanks very much for joining us.

Thank you very much for having me.

Post came in from all over the world addressed to Sherlock Holmes, and somebody had to answer it. During the time that I was there, probably 5,000 to 6,000 passed across my desk.

In 1975, 27-year-old Chris Bazlington applied for a public relations role at a London bank. The interview went well, well, and he was offered the job. But at the last minute, the general manager asked him one more thing: whether he'd be willing to reply to fan mail addressed to Sherlock Holmes as the great detective himself.

The peculiar position of Sherlock Holmes's secretary was created in the 1930s when Abbey National, a building society, moved into Abbey House, which for the first time created the address of 221 Baker Street. The fictional home of Sherlock Holmes.

Christopher Scott writes for 1843, The Economist's sister magazine.

They were inundated with letters from all around the world to Sherlock Holmes and decided it wouldn't be a bad piece of PR to hire a secretary to answer those letters. I wanted to meet one of those secretaries and found the 7th secretary, Chris Bazlington, who held the job until 1982.

And so what kind of letters did Mr. Bazlington receive?

So a lot of the letters were from people from all around the world talking about how much they enjoyed the stories. There were questions about different problems in the stories or inconsistencies in the stories, but some letters that he received were from people who believed Sherlock Holmes was real and wanted Sherlock Holmes's help or advice in solving a case for them.

This is one of my favorites. It comes from a girl who was probably about 10 or 11 in Maryland in the States. Dear Mr. Holmes, you sure are a good detective. I know a man who is a detective in my town. He doesn't do all the neat stuff you do, and he dresses in regular everyday clothes. He's nice though. I read all of your books. I get one or two out every time we go to the public library. My mom says you're not really a person, but that Mr. Doyle made you up. I told her that Mr. D is your friend, and he writes your books because you're too busy. Say hi to Mr. Watson for me. I hope you get Professor Moriarty. Wrote back Lynn Smith.

Chris told me that 50% of the letters were local problems, so missing cats, missing dogs, missing people sometimes actually. But 50% of the letters that he received were cases like Watergate or the Bermuda Triangle or who killed JFK. Grand problems that people really thought that Sherlock Holmes could help with. And some of the letters were about musicians that had died young, so Jim Morrison and his death. And I actually found one while we were rummaging through all of these letters about John Lennon.

I have in my possession a set of pictures taken of Mr. Lennon at the time of the shooting. To the authorities, they are worthless, but as I have inspected them thoroughly, I've concluded that they indeed show more than first meets the eye. One picture depicts an unidentified tall male who is seen in the background carrying a pistol hidden under his frock coat. The next picture quite clearly depicts a spark from his gun shooting out towards Lennon. He vanished afterwards. I thought nothing of this until later, when in another picture surreptitiously taken from former Beatle Paul McCartney, the same man was seen talking with McCartney. I have the strongest reasons to suspect attempts to be made on other Beatle members, Ringo Starr and George Harrison, with McCartney being the antagonist and perpetrator of these devious crimes. I have more evidence to convince you of this if you'll only accept this case. I beg you not to lose an instant, as each day the curtain drops for the other members of this unsuspecting group.

So why do you think so many people believed that writing to Sherlock Holmes could fix the world's problems?

Sir Arthur Conan Doyle created characters when they were written that felt like fully formed characters. They didn't feel like ink on a page. They felt like flesh and blood. I think if you look at Holmes and the stuff he was doing in terms of studying footprints and cigar ash before his real-life counterparts, basically the grandfather of forensic science before there was forensic science. These characters were set in a real world. It doesn't take a large amount of imagination to believe that these characters actually existed. You know, we're not talking about some fantasy land. This person of this great mind makes you think that maybe I could be like that. People want to believe in a man or a person who can solve these problems and break them down very scientifically. I think it gives us comfort to think that there's someone like Holmes out there that can make sense of the world, which is quite nonsensical at times.

Christopher, thanks very much for your time.

Thank you very much.

That's all for this episode of The Intelligence. We'll be taking a breather tomorrow, so it's happy holidays from all of us: the show's editors Kim Gittleson and Chris Impey, our senior producers Stevie Hertz, Sam Colbert, Sam Westrin, and Jatt Gill, our producers William Warren and Alizée Jean-Baptiste, our assistant producer Abisoye Oshendairo, and our sound engineers Will Roe and his elfin helper, Soul Rivers.