November 28, 2008

Bank Regs & Somalis

This story caught my eye, in that it's an illustration of the way the world works and I'm not sure how it could've played out otherwise:

Terrorists inflict carnage on a level not previously imagined (9/11). Regulations added to require money-transfer services to track where the money is going. (Good idea.) Banks drop money transfer services as too expensive as a result of regulation. (Understandable reaction to regulation.) Somalis can no longer send money back home. (Unintended tragic consequence.)

I think it illustrates a couple things. One is how crucial it is for economies like Somalia's to develop so that it doesn't have to rely on outside money. (Mexico is in a similar position.) But that requires a lack of corruption, an entrepreneurial spirit and the rule of law.

Second, since the great majority of Somalis are Muslims, you might think this would provoke a greater sense of urgency against their jihadist Muslim brethern. But it will likely work in the opposite manner: outrage against the U.S. for taking away money-service lending services!

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