Felix Salmon

Every so often I put a blog post up, start getting feedback on it, and realize I’ve got things horribly wrong. And then sometimes, very rarely, the opposite happens: I put up a post and discover that I was more right than I ever suspected. My post yesterday on Tim Cook’s sexuality is one of those times.

Which is not to say that it’s uncontroversial. I’ve had significant pushback on it, and on the video above, from both inside and outside Reuters. The negative responses fall into a few broad categories:

Haven’t we moved on?

This is rarely accompanied by an elucidation of exactly what it is we’re meant to have moved on from. If it’s the kind of world where people are scared to come out at work, then, first, I’m sorry, but we haven’t. There are, obviously, no reliable statistics on how many LGBT people are out at their work, partly because “out” isn’t the nice, binary concept that a lot of journalists would seem to like it to be. (More on that later.) But I can tell you that I’ve had a lot of private feedback from gay professionals thanking me for my post, saying that it’s still hard for them to come out in the workplace, and that more open discussion and open acceptance of executives’ homosexuality is something we’re only beginning to work towards.

It’s still not normal, in most workplaces, to have an open and accepting culture where all gay employees feel comfortable being open about who they are and who they love. Apple, by all accounts, is very good on that front, and Steve Jobs’s other billion-dollar startup, Pixar, is even better. But the very fact that neither Apple nor Tim Cook has ever said anything about this aspect of his identity is a clear indication that people are still worried about it. The closet is an institution designed to protect LGBT individuals from scorn and hatred; without that scorn and hatred, it would not exist. It exists. And, lest we forget, neither the federal government nor most states gives equal rights to gay couples; in most states, including California, it’s still entirely legal for a company to fire someone just for being gay.

More generally, it’s still the exception rather than the rule for successful gay people in the public eye to be out. Some gay people who achieve success feel a responsibility to serve as role models and advocate for equality and public acceptance. That’s great. But what we see very little of is the people who simply don’t hide who they are, and who don’t make a big deal of it — the non-political gays. And the reason we see so little of it is because it’s a very tricky act to pull off. Instead, we have the institution of the “glass closet”. Which is clearly just a stepping stone on the path to full acceptance. So I think it’s reasonable to say that we’re a very long way from having “moved on”.

Why should shareholders care?

The number of things that shareholders care about, with respect to any given company, is as varied as the number of shareholders itself. But certainly there’s no particular or obvious reason why Tim Cook’s homosexuality is relevant to Apple’s shareholders, qua shareholders. As journalists, however, the media has a responsibility to more than just a company’s shareholders: its responsibility lies to the public as a whole. Including millions of gay professionals, their friends, their families, and people who aspire to being gay professionals. For these people, seeing Tim Cook rise to a position of such prominence and power is something to celebrate. If the media keeps that news on the down low, we’re therefore doing a disservice to that large and important part of our readership. Meanwhile, if shareholders don’t care, that’s fine. Most news is of no interest to most people. But that doesn’t mean it shouldn’t be published.

What business is it of mine what Tim Cook does with his genitals?

This isn’t an issue of sex, it’s an issue of sexuality — a central part of who all of us are. It’s about attraction, and identity. Not genitals.

Now admittedly Tim Cook’s sexual identity isn’t any business of yours either. But it’s worth asking who exactly we’re protecting here. Tim Cook hasn’t complained about coverage of his sexuality, but a lot of straight people who don’t know him seem to be very upset about it. It seems a bit like the old attitude of “I don’t care what consenting adults do in private, just so long as they don’t stick it in my face.”

All too often, secrecy surrounding someone’s sexuality is imposed upon that person by the straight society surrounding them. It’s the “I don’t want to hear about it” attitude which reached its nadir in the Don’t Ask Don’t Tell policy. Many gay professionals — I’m tempted to say most gay professionals, at least outside the creative industries — act very much in line with an implicit policy of don’t-ask-don’t-tell; coming out to co-workers is done individually, on a case-by-case basis, and acts as a sign of deeper friendship and outside-of-work socialization. And it contrasts quite sharply with the overt displays of straight employees who happily plaster their cubicles with photos of their spouses and children or unselfconsciously talk about the attractiveness of members of the opposite sex.

This is irrelevant, so we should ignore it.

Not when ignoring it is the problem. As commenter Hamranhansenetc said on my original post, “what you mean by ‘ignoring Time Cook’s sexuality’ is ‘pretending he is straight.’” It’s rude to do that. And skirting the issue of Cook’s sexuality only encourages and exacerbates that problem. As Hamran continues (you should really read the whole comment, it’s great), “In the larger sense, it does not matter that Tim Cook is gay and not straight. However, it does matter when the media pretend Tim Cook is straight and not gay. And that is what we are talking about here.”

Another commenter, RaidV92C, reacted a rather different way, but just as accurately: “This is not newsworthy, it’s west coast, liberal media, hollywood forcing homosexuality as NORMAL on the general public.” Yes. Exactly. Homosexuality is normal. And people who object to stories which cover an executive’s homosexuality as being as unexceptional as another executive’s wife and children are exactly the people who are winning if no mention is made of Cook’s sexuality.

Do we report that executives are straight?

Yes, all the time, especially when we talk about their families. And more generally straight is the default option — people are assumed to be straight unless we’re told otherwise. No LGBT person likes it when they’re assumed to be straight, but it happens every day.

Isn’t this a salacious invasion of Tim Cook’s privacy?

There is nothing salacious about someone being straight, or being gay. Insofar as you think it’s salacious, that’s because you think that being gay is somehow naughty, or shameful. Is this an invasion of privacy? To a certain extent, yes. More people know more things about Tim Cook now than they did a few weeks ago. That’s what happens when you become the CEO of Apple.

In any public corporation, there’s a small number of people whose jobs are outward-facing, and at the top of the list is always the CEO. He’s the public face of the company; if you see a corporate profile on the cover of a glossy magazine, chances are it will be illustrated with a big picture of the CEO. If you don’t want your face splashed across the world’s media, then you shouldn’t be CEO of a massively valuable company which touches millions of people. Sometimes, as in the case of Mark Zuckerberg, entire movies — and not particularly accurate ones, either — are made about you and your personal life. Reporting that Tim Cook is gay is absolutely nothing, in the invasion-of-privacy stakes, compared to The Social Network. But CEOs, especially CEOs of public companies, are public figures. Their salaries are a matter of public knowledge. When you’re a public figure, you lose a certain amount of privacy. And the higher your profile rises, the more privacy you lose. Tim Cook knows that; he knows that it’s silly to expect to be the CEO of Apple without the world knowing that he’s gay. So let’s stop pretending that we’re not talking about this subject for his sake.

Finally, one critical note I got went so far as to say that “I would think people who are gay don’t care” that Cook is gay. Which is almost hilariously, completely wrong. All the feedback I’ve got indicates, unsurprisingly, that LGBT people really care about this — they care about it a lot, and they want to see it celebrated as widely as possible. It’s perfectly natural to feel pride and joy when a member of your community rises to a position of great success and prominence.

I’ve been incredibly heartened by the thanks I’ve got from gay friends, gay acquaintances, and gay people I’ve never run across before, all saying that they wish there were many more people pushing this line of argument. And I was also heartened, when I talked to John Abell about this yesterday for the video above, that he thinks the same way: not only should the media cover Cook’s sexuality in a more matter-of-fact way, but that they will, as well. Cook himself need do nothing.

At the same time, though, I agree with Nicholas Jackson that it would be great if Cook was more open about his sexuality. The glass closet is not an unpleasant place to be. The more transparent the glass, the less likely you are to have people making you uncomfortable by assuming that you’re straight. And at the same time, by never “officially” coming out, you get to avoid having to talk about your sexuality in public — something very few people like to do.

It’s sad and rather silly that gays have to make some kind of formal and official statement about these matters; certainly straights don’t. But without such a statement, as we’ve seen, the media gets cold feet talking about sexuality, and perpetuates the stigma associated with homosexuality. A very common response to my piece from journalists was to question my sourcing: how did I know that Cook is gay? Do I have first-hand knowledge? (No, and if I did, I would never have written my post.) Do I have reliable sources? (No, I’m simply passing on information which is in the public realm, just as I do with dozens of other pieces of information every day.) And isn’t it unethical to talk about something unless you know for sure that it’s true?

What’s unethical, I think, is perpetuating the false idea that Tim Cook is straight — an idea which, it turns out, many people had. One person said it was “disappointing” that I disabused her of that notion. Why she should be disappointed to learn this news I can only guess, I haven’t asked. But honest journalism has to be honest. If I allow you to continue to believe a falsehood, that’s a form of dishonesty. And I, for one, am not comfortable with that.

Here’s a fairly great, cranky interview Der Spiegel recently did with Gorbachev.

Dan Gillmor argues in the Guardian that ghostwritten Op-Eds have no places in newspapers. I’d love to hear Jack Shafer’s thoughts on this, but unfortunately Slate.com just laid him off. Here’s an exit interview with AdWeek, where he says he plans to become an alcoholic, “Because one of the things I’ve always prided myself in, in these first 59 years of my life, is being a controlled drinker. I think now is the time to throw off the training wheels, and see if maybe in the last decade and a half of my life, I can be an accomplished, functional alcoholic. And that’s starting tonight.” Oof.

In the tech world, the major internet service providers have agreed to further crack down on illegal downloading by only giving six (!) warnings. Meanwhile, AOL, with its cheap share price luring circling private equity firms, has hired Wachtell, Lipton and Allen and Co. CEO Tim Armstrong says, “There is no deal on the table, no proposed deal.” That’s not exactly a resounding denial, Tim.

Apparently some large hurricane might be hitting the East Coast soon. You can follow our live coverage here.

And here’s a terrifying photo illustration of Philadelphia Eagles quarterback Michael Vick as a white guy. It’s accompanied by a provocative article on race, of course.

Tim Cook is now the most powerful gay man in the world. This is newsworthy, no? But you won’t find it reported in any legacy/mainstream outlet. And when the FT‘s Tim Bradshaw did no more than broach the subject in a single tweet, he instantly found himself fielding a barrage of responses criticizing him from so much as mentioning the subject. Similarly, when Gawker first reported Cook’s sexuality in January, MacDailyNews called their actions “petty, vindictive, and just plain sad.”

But surely this is something we can and should be celebrating, if only in the name of diversity — that a company which by some measures the largest and most important in the world is now being run by a gay man. Certainly when it comes to gay role models, Cook is great: he’s the boring systems-and-processes guy, not the flashy design guru, and as such he cuts sharply against stereotype. He’s like Barney Frank in that sense: a super-smart, powerful and non-effeminate man who shows that being gay is no obstacle to any career you might want.

One of the issues here is that most news outlets cover Cook as part of their Apple story, and Cook’s sexuality is irrelevant to his role at Apple. And so the other story — the fact that the ranks of big-company CEOs have just become significantly more diverse — is being overlooked and ignored. And that’s bad for the gay and lesbian community more broadly.

The institution of the closet is one of fear — one where people would rather be ignored than noticed, because they fear the negative repercussions of being known to be gay. It’s an institution which Cook, like any gay man born in 1960, knows at first hand. But now the risk of being ignored is bigger in the other direction: if the world can’t see gay men and women in all their true diversity, if the only homosexuals they know of are the flamboyant ones on TV, then that only serves to perpetuate stereotypes.

As the Apple story moves away from being about Steve Jobs and becomes much more about Tim Cook, we’re going to see a lot of coverage of Cook, the man. He is, after all, not just one of the most powerful gay men in the world; he’s one of the most powerful people in the world, period. The first instinct of many journalists writing about Cook will be to ignore the issue of his sexuality. It’s not germane to his job, they’re only writing about him because of the job he holds, and therefore they shouldn’t write about it.

On top of that, Cook is not exactly open about his sexuality, and Apple has never said anything about it. Cook’s formative years, professionally speaking, were the 12 years he spent at IBM between 1982 and 1994 — and at that company, in those days, coming out was contraindicated from a career-development perspective. Mike Fuller, a gay VP at IBM, told the Advocate in 2001 that he knew “IBM employees who worked for the company in the 1980s who told me they left IBM because they weren’t comfortable coming out at work”; this comes as little surprise. After all, the years that Cook spent at straight-laced IBM coincided with the height of the AIDS panic, when people were worried about sharing toilet seats with homosexuals. It would be hard to come out at any company in that kind of atmosphere.

But thankfully we’ve moved a very long way from those days. Homosexuality is no longer something shameful, to be coy or secretive about — especially not when you’ve risen to the very top of your profession. In fact, it’s incumbent upon a public-company CEO not to be in the closet.

Four years ago — a long time itself, in the history of gay rights and public acceptance thereof — John Browne resigned as CEO of BP under a shameful cloud. The reason for his downfall was not that he was gay, but rather that he was in the closet. As I explained at the time, in trying desperately to remain comfortably in the closet, he ended up lying repeatedly to the UK High Court – and that is why he had to resign.

Back then, there were no public-company CEOs on Out magazine’s gay power list; this year, Cook topped the list even before he became CEO of Apple. Keeping his sexuality a secret is no longer an option. And so the press shouldn’t treat it as though it’s something to be avoided at all costs. There’s no ethical dilemma when it comes to reporting on Cook’s sexuality: rather, the ethical dilemma comes in not reporting it, thereby perpetuating the idea that there’s some kind of stigma associated with being gay. Yes, the stigma does still exist in much of society. But it’s not the job of the press to perpetuate it. Quite the opposite.

Update: For a better and more heartfelt version of this post, read Joe Clark from back in February: “When you tell us it’s wrong to report on gay public figures,” he writes, “you are telling gays not to come out of the closet and journalists not to report the truth.”

If you haven’t read Sharon Begley’s wonderful Newsweek cover story on how less healthcare can mean better health, I’d urge you to do so now — it’s one of those articles where I just want to quote pretty much the entire thing. All manner of medicine, it turns out, from CT and MRI scans to antidepressants, have a habit of making people not better but worse.

The good news is that Big Medicine seems to be getting the message, and that’s having a real effect on Medicare cost inflation. Here’s Peter Orszag:

Partners HealthCare has used its health IT to be more selective about which patients should have diagnostic imaging tests, such as MRIs and CT scans. The cost to Medicare for imaging tests nationwide roughly doubled from 2001 to 2009. And such tests are not only expensive but potentially dangerous. Frequently imaged patients face an increased risk of cancer because of exposure to excessive radiation.

Doctors at Partners now order imaging scans through the computer system and are automatically queried about the patients’ characteristics. For each case, the software then provides an “appropriateness” score, reflecting evidence- based protocols for the image requested.

In a follow-up column, Orszag looks at another hospital, Mt Sinai, where he recently joined the board — a focus on reducing readmissions rates there has helped reduce its Medicare billing inflation to 2% — vastly lower than the 12% annualized inflation rate in Medicare costs that we’ve seen on average over the past 40 years or so.

The big question here, raised most promiently by Maggie Mahar, is why we’re seeing this unusual slowdown in Medicare costs right now. Mahar and Orszag say that a lot of the reason is the Affordable Care Act: a rare instance of a piece of legislation actually having its intended consequences. The act is designed to pay more for outputs and less for inputs — that is, to encourage the use of medical procedures only if they improve health outcomes, and to discourage them if they don’t.

I buy that. And if the healthcare industry broadly takes to heart the lessons of Begley’s article, then it’s easy to imagine a world where we can have our cake and eat it — lower healthcare costs (or, at least, lower healthcare-cost inflation) along with improved health outcomes.

The problem here is the incentives. From a public-policy perspective, there’s no doubt that getting doctors to order fewer harmful drugs and procedures is a really good idea. But from the point of view of the doctors and hospitals, they’re going to be leaving money on the table. Recent legislation includes some financial carrots and sticks, in a pretty well-designed manner.

Under the first stage of the HITECH Act, doctors who adopt electronic health records can receive incentive payments of as much as $44,000 from Medicare or $63,750 from Medicaid; hospitals can qualify for payments of $2 million or more. As of early August, Medicare providers had received $400 million in incentive payments for health IT, and much more is in the pipeline. Surveys suggest that while the first-stage incentives are available, at least two-thirds of American hospitals will adopt new systems.

Starting in 2015, the Medicare subsidies for adopting health IT systems are to be replaced by penalties for not doing so.

But it seems to me that the jury’s still out on whether these incentives are going to bend the famous cost curve over the medium to long run. Medical cost inflation is volatile and unpredictable, and downticks often just result in mean-reversion upticks the following year. The way to make sure these effects last is to get Begley’s message out to the population as a whole — and then to give them some amount of skin in the game when it comes to the cost of the procedures they do undergo. When people pay even a tiny amount of their direct healthcare costs, they become much more conscious of what those costs are. And the one thing this country really needs is much more cost-consciousness when it comes to healthcare.

Behold the power of Buffett! With a $5 billion investment which will pay him $300 million per year in perpetuity, Warren Buffett has managed to boost the share value of Berkshire Hathaway by something north of $12 billion. Oh, and Buffett also gets a massive free option on BofA stock — the right to buy 700 million shares at $7.14 apiece, at any point over the next decade. If exercised, that would give him 7% of the company.

This is very reminiscent of the time when Buffett did something similar with Goldman Sachs, in the immediate aftermath of the collapse of Lehman Brothers. That too boosted the stock in the short term (although not as much as this), and the investment turned out to be an excellent one for Buffett, even though Goldman’s common shares are still trading below that September 2008 level.

There are basically two aspects to these deals. One is the capital raise itself, and the other is the magical Buffett fairy dust. The capital raise, in this case, is extremely expensive: Buffett drives a hard bargain. But the deal is worth it, for BofA, because of the magical Buffett fairy dust aspect. If BofA had simply brought this deal to market, offering $5 billion in preferred stock with generous attached warrants, I can guarantee you that the market would have come down harshly on the bank. It’s not enough money to move the needle when it comes to BofA’s capital; it’s extremely expensive; it’s potentially enormously dilutive to shareholders.

But the fact is that Bank of America isn’t playing a financial game, it’s playing a perceptions game. As John Hempton says, the standard analysis of BAC stock right now is a game where analysts “are fitting their analysis around the stock price”. I plead guilty to that: like many people, I think that Bank of America needs to raise capital largely because the stock price is screaming, loudly, that Bank of America needs to raise capital. This is not an unreasonable stance to take: especially when it comes to leveraged financial institutions, the stock price can be, and often is, a self-fulflling prophecy.

But Hempton’s point is well taken: by the same token, the stock price is not a particularly good guide to the value of a bank. And that means that when a bank’s shares are severely depressed, as BofA’s were yesterday, there’s a lot of room for Warren Buffett to come along and give them a nudge up to the next eigenstate.

The big question now, then, is what happens next. Does this investment singlehandedly turn BofA around and set its stock path on a lovely upward trajectory? In order for that to happen, BofA will need a steady stream of good news to ratify today’s stock boost. A settlement with the US attorneys general, for starters, would be wonderful. So I hope that BofA Brian Moynihan is being strategic here, rather than just tactical. If he has a medium-term plan for getting the market’s respect, and just wants to start it off with a bang, then this is a great way of getting there. But if he thinks this is a magic bullet, I think he’s going to be very disappointed.

It turns out that Facebook’s “Places” application won’t be killing Foursquare after all.

After 42 years of confusion, we finally have an answer for how to spell Gaddafi’s surname in the Latin alphabet. Hint: it’s not Gaddafi.

Groupon is like a shark: it needs to keep moving (growing) to survive. Jeff Bercovici at Forbes outlines some of its problems.

The price of gold fell on Wednesday by a virtually unprecedented amount. Gold skeptics were not shy about expressing their pleasure. If they really wanted to mess with the Gold Bugs, they’d learn these easy steps to counterfeit gold bars.

And it turns out that writing a cinematic flop has a lot in common with working on a losing election campaign.

It’s a sad day: only this morning I was reminiscing about my days exploring the Apple Macintosh in Palo Alto in 1984. Like much of the world right now, I’m reliving Steve Jobs’s greatest hits on YouTube, I’ve got a bit of a tear in my eye, and yet I can’t imagine how Jobs could possibly go out on a higher note than this.

Jobs took Xerox PARC’s ideas about what the personal computer could be and made them reality; he brought back Apple Computer from the brink of death to being the most valuable company in the world; he created a whole new class of electronic device, with the iPad; he even reinvented the telephone. And, of course, he’s still around, at least for the time being — he’ll stay on as Apple chairman (and, in one of the most touching parts of his resignation letter, as “Apple employee”).

So thank you, Steve, for everything you’ve done. You’ve relieved me of more money than I care to mention in public, and I don’t begrudge you a cent of it. In fact, even with the massive run-up in Apple’s share price over these past years, I’ve always been convinced that the best use of $1,000 or so has always been to buy an Apple computer, rather than Apple stock. The extra productivity conferred by the machine, I’m convinced, will give you a much better return on your money than any equity.

Here at Reuters, I made sure that I could work on a Mac before I accepted this job, and even though we’re standardized on PCs, you see Apples all over the company, up to and including the CEO’s office. None of that is going to change with Jobs’s departure as CEO. Does Apple still have an outsize personality who can slice away extraneous features on hardware, say no to the demands of the marketplace, and give us not what we think we want but what we never knew we wanted? I think it does: Jony Ive fits the bill quite nicely. And Apple’s amazing relations with its suppliers — the way that it can get chips and hardware into its devices that the rest of the world can’t get its hands on for any amount of money — is now baked in to the organization, rather than being reliant on a single man.

The formula, then, is clear. And with or without Jobs, Apple is, for the foreseeable future, going to coin simply astonishing amounts of money. It made $7.3 billion of profit just in the last quarter, on revenues of an almost unimaginable $28.6 billion. That makes Apple one of the most profitable companies the world has ever seen — and makes its stock look almost cheap, even at a market cap of $350 billion.

No one man can be responsible for all or even most of that kind of performance. Jobs has always been the exception who proves the rule as far as the cult of the CEO is concerned — he’s one of very, very few CEOs who really did make an enormous difference to their company. But even so, he’s just one guy, and he’s built around him a super-talented team who know exactly what’s expected of them. We’re not going to see Tim Cook coming out and talking about “one more thing” at a WWDC keynote presentation, but we don’t need to. Apple is a dominant company now, and is more than big enough to be able to withstand a leadership change at the top.

Today’s news, and tomorrow’s, will rightly be all about Jobs. But in a few years’ time, I look forward to the seeing the case studies showing how Apple, seeing an entirely predictable event coming down the road, set up an elegant and model handover from Jobs to Cook. Jobs knows that he will be judged on this — and I’m quietly confident that he’s done it perfectly.

Dalberg, the self-styled “Global Development Advisors”, are unhappy at the way they were portrayed in Janet Reitman’s Rolling Stone article on what’s happened to Haiti — and vast amounts of development aid — since the earthquake. They’ve just put out a press release on the subject, three weeks after the article appeared; they also sent me a document written by Dalberg’s Dan Altman and sent to Rolling Stone, in which they ask for corrections to the article. (Both are in PDF form, sorry.)

Dalberg’s main argument — they have lots of silly little ones — is that when they were looking at the cost of resettling people to a given site, they had no mandate to stop and wonder whether that site was actually habitable — whether, for instance, it was situated next to an open-mined pit, a 100-foot vertical cliff, and ravines. Their job, they say, was just to “compare the costs and amounts of time needed” to settle people at that site compared to some other site. They even “reiterated the need for additional assessments”! So you can’t really blame them for simply making cost comparisons, rather than saying that most of the sites they were looking at were non-starters.

This is telling enough in and of itself. But it’s another response, from Altman’s letter, which really jumps out at me. Responding to a quotation in the article from Glenn Smucker, Altman says that “in fact, Smucker is a competing consultant and has a clear conflict of interest when commenting on Dalberg’s work”.

This I think encapsulates exactly what Reitman is talking about in her article: a culture where Haiti is overrun by consultants, all of whom are competing with each other for juicy million-dollar mandates. Dalberg even goes out of its way, in its press release, to say that when it got interns to work on the Haiti project, their work “was provided free of charge in excess of Dalberg’s contractual obligations”, as though Dalberg’s first duty is to their contractual obligations, as opposed to, well, the people of Haiti.

Dalberg then inserts this dig at Reitman:

Since the Rolling Stone article’s publication, questions have arisen about the credibility of its sources and its use of reported material. For those seeking a more accurate account of the current situation in Haiti, Dalberg recommends the book Haiti After the Earthquake by Paul Farmer of Partners in Health and the article “Eighteen Months After the Earthquake: A Return to Haiti” by David Weiss of CHF International on The Huffington Post.

The “questions have arisen” formulation is mealy-mouthed and unhelpful: I asked Dalberg’s PR person, Lucy Mele, what exactly it meant, but I can’t tell you what her response was, because she made sure to tell me it was off the record.

And what about Dalberg’s preferred sources? Well, one of them is David Weiss of CHF, described in Reitman’s article thusly:

Although CHF has been meeting on the project since June 2010, the rebuilding progress in Ravine Pintade has been painstakingly slow. Lee admits that the organization, a vast NGO with relief operations in 25 countries around the world, has never done “micro-urban planning,” as she calls it — nor have the half dozen or so other NGOs planning similar projects in Port-au-Prince. “It’s a complete learning experience for all of us,” she says. All that’s needed to make the project a reality, she adds, are more funds.

Critics regard such claims with amusement: CHF, which works out of two spacious mansions in Port-au-Prince and maintains a fleet of brand-new vehicles, is generally considered one of the most ostentatious NGOs in Haiti. It is also one of the largest USAID contractors in Haiti and enjoys a cozy relationship with Washington: Its president and CEO, David Weiss, is a former State Department official and lobbyist. “There is a shocking lack of transparency and accountability in aid, and it’s crystallized in this relief effort,” says Schwartz, the anthropologist. “For an NGO in Haiti, the criteria for success is raising money, filling out paperwork and making sure the money is ‘accounted for’ — meaning they can show donors that they spent the money. But nobody goes out there and judges the project, or even verifies that the project exists. In the majority of the cases, nobody even talks to the community.”

The other source recommended by Dalberg is the universally-admired Paul Farmer. But his view of Haiti is, I think, closer to Reitman’s than it is to the professional-aid-consultant nexus of Dalberg and CHF. Farmer recently told NPR that “if you look at Haiti, many billions of dollars have gone into development aid there that have not been effective”.

And what about his book? Well, I happen to have it on my desk right now. Open it up to the introduction, and he starts talking about the reconstruction effort: “the relevant knowledge needed to be historically deep,” he writes, “because the damage caused by the quake and the responses to it were rooted in Haitian history”; he continues by saying that the recovery commission in Haiti, “good intentions aside, has become another obstacle to Haiti’s recovery”.

Later on in the book — and I’ve only given it a very brief scan — Farmer talks about how “there was little evidence to suggest that the tsunami of goodwill that crashed over Haiti after the quake could effectively address” its layered afflictions:

Whether one looked at job creation, health, education, potable water, or safe and affordable housing, similar conclusions could be drawn. First, great weakness in the public sector made it difficult to deliver even basic services at a significant scale; second, not enough of the pledged earthquake relief reached those in need through mechanisms that might address this central weakness. In other words, existing development and reconstruction machinery did little to mitigate Haiti’s acute-on-chronic problems in spite of many good intentions and extraordinary generosity.

Elsewhere, Farmer echoes Reitman (or maybe it’s more correct to say it’s the other way around) when he says that Sean Penn “had better ideas and more commitment to implementing them than did many of the self-described experts”. One can’t help but suspect that he’s thinking of the likes of CHF and Dalberg here. While Penn gets three mentions in the book, Dalberg and CHF get none.

While Dalberg and CHF are good at getting US government money and spending it, then, I’m inclined to trust people like Reitman and Farmer when it comes to the realities of Haitian reconstruction or the lack thereof. And Dalberg’s response to Reitman hasn’t changed my mind on that in the slightest.

Bloomberg has got its hands on new data from the Fed, and it’s looking a bit desperate in its attempt to squeeze news out of that data. Its latest scoop, under the headline “Fed Made State Street Profitable as Middleman”, starts like this:

State Street Corp. (STT) and JPMorgan Chase & Co. (JPM) profited during the financial crisis by borrowing $200 billion almost risk-free from the Federal Reserve under a program intended to rescue money-market mutual funds.

What on earth does it mean to borrow money “almost risk-free”? There’s risk involved in lending money, of course. But I have no idea what risk-free borrowing might be. On top of that, the profits here seem incredibly modest. The Fed lent State Street $89 billion; State Street then took that money and bought various securities from money-market funds. It held those securities to maturity, and ended up making a profit of $75.6 million.

That’s a return of 0.08%.

It’s hard to get too worked up about this: the Fed needed to do something about money-market funds; it was legally incapable of conducting this operation itself; and therefore it got State Street and JP Morgan to help set up the program, paying them a modest 8bp fee for doing so. Bloomberg tries to find an expert of some description to get outraged about this, but the best they can do is to find a finance professor who thinks the fee was “appropriate”:

“The program was enacted without any bidding process and awarded on the basis of whoever was there at the moment,” said Joseph R. Mason, a finance professor at Louisiana State University in Baton Rouge. While the banks’ return may have been appropriate, the lack of competitive bids is troubling, Mason said. He noted that for State Street, JPMorgan and other participants, “there was virtually no risk.”

That’s true — but you can be sure that if there was risk involved, State Street and JP Morgan would have charged much more than 0.08%. It’s also worth noting that the Fed itself made much greater profits on the program than the banks did: some $543 million in total.

State Street didn’t get its $75 million for nothing. For one thing, it helped to design and set up the program. And it also took the risk that it could end up buying debt which wasn’t indemnified by the Fed and which might end up defaulting. There’s operational risk in all of these schemes, especially when they’re set up in a hurry and have to get implemented in the middle of a financial crisis.

And the Bloomberg headline is I think a bit misleading: the way I read it, at least, it’s saying that the Fed program was responsible for making State Street profitable. That’s not true. In fact, it’s just saying that State Street’s role as a middleman was profitable. Which is true, but hardly news: if a bank can’t make money by acting as a middleman, then it won’t act as a middleman.

The big picture, here, is not that the State Street program made money, but that the program to rescue money-market funds worked. Many of these funds faced enormous redemption requests in the days after the Reserve fund broke the buck; thanks to this program, all of them managed to meet those requests. Ultimately what happened was that hundreds of millions of dollars which would normally have gone to depositors in money market funds went instead to the Fed, with State Street and a few other banks taking a small slice. The funds were saved, the Fed made a handy profit, and the system didn’t collapse. Sounds like a big success to me, rather than any kind of scandal.

If you don’t have the time or inclination to read Steve Brill’s book on education reform, then his bombastic op-ed on the subject is a pretty good alternative. And similarly, if you didn’t read Diane Ravitch’s 4,400-word review of “Waiting for Superman” in the NYRB, then her 1,000-word response to Brill captures the heart of her argument. Reading them side by side, the conclusion I come to is that Brill protests far too much.

Brill’s running theme is that there are discoverable facts about education, and that when a crack reporter (Brill himself, natch) spends lots of time poring through arbitration-hearing testimony and union contracts and the like, those facts will become clear and can be reported in a straightforward manner. It’s the “trust me, I’m a reporter” approach.

Meanwhile, Ravitch stays out of the weeds, reporting instead the result of large-scale empirical studies which show that charter schools don’t in fact outperform unionized public schools, and that US educational underperformance is much more attributable to child poverty than it is to bad or unionized teachers.

Brill says that Ravitch “cherry-picks all kinds of data,” but the fact is that his own data is invariably bottom-up and anecdotal, based largely on what he himself has reported. And then comes the point at which I pretty much decided that he’s full of hot air:

I have now worked my way through a fog of claims that give new meaning to the notion that if you repeat something that is plainly untrue enough times it starts to seem true, or at least becomes part of the debate. For example, there’s the refrain from the deniers, including Ravitch, that charter schools skim only the best students in a community. Some may, but not the best ones like those in the KIPP or Success Academies networks, where students are admitted by lottery and which teach the same ratio of learning disabled students as the traditional public schools. Those are facts.

I’m sorry, Steve, but it is not “plainly untrue” that charter schools generally have more of the brighter, richer kids in any given community, and fewer of the poorest ones who generally drag down test scores. Indeed, it’s an empirical fact. There’s a famous story in statistics about the guy who fires an arrow at a barn door, and then claims he hit a bullseye by painting a target around it. Brill seems to be doing the same thing here: he’s the one cherry-picking the best-performing charter schools, and then claiming that they’re somehow representative of charter schools as a whole, and that the “facts” of what happens at KIPP somehow disprove the broader data being cited by Ravitch.

Later on in his piece, Brill concedes, of charter schools, that “probably not more than half are performing significantly better, if at all, than traditional public schools.” Which is his way of saying that Ravitch is right; he doesn’t mention the Stanford CREDO study, the best impartial judge of this matter, which concluded that 17% of charters were better than a matched public school; 37% were worse; and 46% were the same. I suppose “not more than half” is one way of saying “17%.” But somehow Brill has convinced himself that the lessons of that 17% are scalable, even when — as he himself admits — what he’s looking at here is “a few thousand successful charter schools mostly run and taught by a relatively small corps of highly-motivated, best-and-brightest types, many of whom soon approach burnout,” rather than anything which has ever been successfully implemented on a universal scale.

The point here is that Brill never really makes the case that granular reporting on union contracts and the like is the best way to diagnose problems with a nation’s educational system, or to propose solutions. It’s pretty much impossible to find a union which isn’t unhelpful at times, and at the margin it’s probably fair to say that the interests of teachers are not always fully aligned with those of the children they’re educating. As a result, it’s hardly surprising that Brill manages to find ways in which teachers’ unions can impede rather than enhance the quality of education in specific instances.

But Brill’s obsession with unions seems to have blinded him to everything else which determines educational outcomes. And when he says that Ravitch wants “to rebut the simple and obvious argument that effective teaching is what counts the most in the classroom”, he’s straying so far from his beloved facts that he comes across mostly as a la-la-la-la-I-can’t-hear-you zealot. As a general rule, anybody who thinks that anything about education reform is “simple and obvious” is wrong, and in fact Brill’s “argument” is no argument at all: insofar as it’s even true, it’s only true tautologically.

All of this is a pity, because we desperately need some grown-up discussion about the way that America’s kids are educated, rather than the all-heat-and-no-light fights that we normally get.

My feeling is that by far the most important factor has nothing to do with unions, and everything to do with the fact that schools are locally funded: that’s a great way of pouring the greatest amount of resources into precisely the schools which need them least.

Way back in 1984, I went to a US public middle school which had so many brand-new Apple Macintosh computers that there were always a few free. I’m sure the educational outcomes of my class there were pretty stratospheric. But they probably would have been just as high even without all the money and resources lavished on us by the local community in Palo Alto. Meanwhile, just across the freeway in East Palo Alto, local schools, starving for resources, were underperforming. There’s nothing fair about that. And until we fix the system whereby schools are funded by property taxes, schools in poor areas are always likely to have serious problems.

If you go to the Finovate conference in New York next month, or any similar event, you’ll be surrounded by exciting and aggressive young payments companies. They have names like Dwolla and Jwaala and Modo and Square, and most of them are going to fail. That’s as it should be: it’s the Silicon Valley way. There are lots of bright ideas floating around, and eventually one or two of them will really gain traction; at that point they’ll be bought or otherwise co-opted by the broader banking industry and will make their way into the mainstream. Meanwhile, the big banks and card companies are slowly rolling out their own products, and of course PayPal continues to do extremely well, with revenues of more than $1 billion per quarter on payment volume of more than $3,500 per second.

Aaron Greenspan is unlikely to be one of the winners in this space: his payments startup, FaceCash, has yet to get off the ground. But his attempts have at least yielded this very interesting paper, which details the rather crazy network of regulations that any payments company needs to navigate. If your idea of fun is navigating a Kafkaesque bureaucratic maze while spending hundreds of thousands of dollars, then I’d highly recommend setting up a payments company. Here’s some of the wonderful facts about payments regulation that Greenspan has turned up:

• You’ll need to file e-reports with the Financial Crimes Enforcement Network. In order to do this, you’ll need a Windows computer (not a Mac), running Windows 2000 or XP, and Internet Explorer (not any other browser). Plus various unwieldy plug-ins. Secure!
• In order to check whether a given Social Security number belongs to a dead person — a basic security check — the US Department of Commerce will charge you rates starting at $995 per lookup, and rapidly rising to as much as $14,500.
• When companies ask for a driver’s license, they currently have no way of checking online to see whether that license is valid.
• Of the 50 states, not one yet has a web-based license application process.
• None of the major online payments companies has yet managed to get is licensed in Wisconsin.
• None of the major phone companies has got licensed in any state, despite the fact that they all want to move into the space in one way or another.
• Universities’ money-transmission programs, like Harvard’s Crimson Cash and Stanford’s Cardinal Dollars, are also unlicensed. “Consequently,” writes Greenspan, “the presidents, provosts and trustees of every private university in the nation with such programs (which are exceedingly common) are unknowingly committing federal crimes, and could be incarcerated.”
• Maryland’s license fee is $4,000.00 in even-numbered years, but $2,000.00 in odd-numbered years.

Greenspan concludes, sensibly enough:

It is clear that the federal government needs to spearhead an effort to bring money transmission regulation, or non-bank regulation more generally, under one (and only one) roof. Whether that roof is the Department of the Treasury’s or the Consumer Financial Protection Bureau’s remains to be seen.

That roof should be the Consumer Financial Protection Bureau, since payments are at the heart of consumer finance — but also because the CFPB is housed at the Fed. And where I part ways with Greenspan is that I don’t think that the CFPB should necessarily be letting a thousand flowers bloom, here.

Greenspan has a compelling and impassioned case that change and competition is needed, not least because the current system of interchange fees is much more expensive than it should be. Instead, the CFPB, working closely with Treasury and the Fed, should aggressively encourage payment at par. And in turn, that means it’s going to be very difficult for startups to enter this space: if payments all clear at par, the way that cash and checks and even clearXchange do, then there’s no revenue stream for the intermediary.

So yes, let’s have a massive consolidation of payments licensing laws — they’re a mess right now, and they do precious little good for anybody. But at the same time, let’s think seriously about the public-policy aspect of payments regulation: what’s really in the public’s best interest here? The answer isn’t a balkanization of the payments space into dozens of competitors all chasing scale and fee income. Instead, it’s simple and universally-accepted mechanisms for one person or merchant to pay another person or merchant directly, with neither of them paying on a per-transaction basis for the privilege. That’s far from impossible: in fact, it already exists in most countries around the world. It’s time that it existed here, too.

Every so often, I get puzzled looks from FT types when I complain about their paywall, and say that it’s not only user-unfriendly for non-subscribers, it’s particularly user-unfriendly for subscribers, too.

Here’s what greeted me this morning when I followed a link to an FT story:

What happened was that the page started loading — it got as far as the headline. Then it greyed out, and the paywall box appeared. (And then — this is my favorite bit — a video flash ad started playing on top of the paywall box; it went away before I could get a screengrab.)

You can see, in the greyed out bit, that I’m logged in to the site: it says “Welcome felix” right there. Yet the paywall is asking me to login again.

When I did that, I ended up at the FT.com homepage, rather than the article I wanted to read. So I went back to the link which sent me to the FT and clicked it again. This time, I got this:

This is not much of an improvement. I’m still logged in, but now it thinks I’m a registered reader who’s used up his quota for free articles and who isn’t a subscriber. Not true! I’m a paid subscriber.

If I click on the big button saying “Click here to continue”, however, it treats me as though I have no subscription:

But if I make my way to the “Your account” link, the site still tells me that I have “Unlimited FT.com access”. Ha.

Now I have a theory for what might be going on here. This is the link I was following; if you look at the URL, it’s a bit of a mess, seems to include the address twice, and has the string “Authorised=false” in the middle. Here it is:

http://www.ft.com/cms/s/2f5b6c70-ccd5-11e0-88fe-00144feabdc0,Authorised=false.html?_i_location=http://www.ft.com/cms/s/0/2f5b6c70-ccd5-11e0-88fe-00144feabdc0.html&_i_referer=

I have no idea what might be going on here, but I seem to run into this problem quite a lot when I follow FT links which other people have shared using various social media tools. When a link to the FT escapes into the wild, it seems, the FT tends to treat it with extreme prejudice, and errs on the side of shutting it down. The FT’s OK with people sharing links using its own internal sharing tools, but good old-fashioned linking is not something it’s very cool with.

This is why I say that the FT and NYT paywalls are very different beasts. If someone’s doing the NYT a favor by linking to its stories, the NYT will welcome all those visitors. The FT, by contrast, sends them away, even if they’re FT subscribers.

The FT site works fine for subscribers who read it the old-fashioned way, starting at the homepage and then clicking around. As does the web app on the iPad. But for those of us who get our news from feeds, following links from email or Twitter or Facebook or an RSS reader, the FT paywall is a disaster. And it generates a large amount of ill will from people like me who pay hundreds of dollars a year for “unlimited access” to the site.

Among television news outfits, the UK’s Sky News and its correspondent Alex Crawford absolutely owned the arrival of Libyan rebels in Tripoli over the weekend. Here’s how they did it. Speaking of a scramble in Libya, oil companies from nearly every major country are about to start fighting for a share of Libya’s new oil production deals.

Can Venture Capitalists time the market?

Canadian opposition leader Jack Layton has died of cancer, only a few months after leading his New Democratic Party out of the minor party political wilderness and into second place.

Malcolm Gladwell writes about the NBA lockout. I agree with him that former Red Sox owner Tom Yawkey was a racist, and that the NBA owners are not generally a sympathetic lot. I disagree with almost every other word in his piece.

American craft beers like Brooklyn Brewery and Goose Island are the hot new trend in the British beverage industry, the Guardian reports.

Behold, the Meta-Pizza, a pizza made of pizza-flavored snacks.

Ever since the news broke last week that Hugo Chávez wanted to transport 211 tons of physical gold from Europe to Caracas, I’ve been wondering how on earth he possibly intends to do such a thing.

There are 99 tons already being held at the Bank of England; according to the FT, the plan is to transfer other gold to the Bank of England from custodians such as Barclays, HSBC, and Standard Chartered; then, once it’s all in one place, um, well, nobody has a clue what might happen. Here’s the best guess from the FT:

Venezuela would need to transport the gold in several trips, traders said, since the high value of gold means it would be impossible to insure a single aircraft carrying 211 tonnes. It could take about 40 shipments to move the gold back to Caracas, traders estimated.

“It’s going to be quite a task. Logistically, I’m not sure if the central bank realises the magnitude of the task ahead of them,” said one senior gold banker.

I put the ever-resourceful Nick Rizzo on the task, but he came up with little more: the market in physical gold is tiny, and largely comprised of nutcases. The last (and only) known case of this kind of quantity of gold being transported across state lines took place almost exactly 75 years ago, in 1936, when the government of Spain removed 560 tons of gold from Madrid to Moscow as the armies of Francisco Franco approached. Most of the gold was exchanged for Russian weaponry, with the Soviet Union keeping 2.1% of the funds in the form of commissions and brokerage, and an additional 1.2% in the form of transport, deposit, melting, and refining expenses.

It’s not much of a precedent, but it’s the only precedent we’ve got; my gut feeling is that Venezuela would be do well to get away with paying 3.3% of the total value of the gold in total expenses. Given that the gold is worth some $12.3 billion, the cost of Chávez’s gesture politics might reasonably be put at $400 million or so.

It seems to me that Chávez has four main choices here. He can go the FT’s route, and just fly the gold to Caracas while insuring each shipment for its market value. He can go the Spanish route, and try to transport the gold himself, perhaps making use of the Venezuelan navy. He could attempt the mother of all repo transactions. Or he could get clever.

In the first instance, the main cost would be paid by Venezuela to a big insurance company. I have no idea how many insurers there are in the world who would be willing to take on this job, but it can’t be very many, and it might well be zero. If Venezuela wanted just one five-ton shipment flown to Caracas in conditions of great secrecy, that would be one thing. But Chávez’s intentions have been well telegraphed at this point, making secrecy all but impossible. And even if the insurer got the first shipment through intact, there would be another, and another, and another — each one surely the target of criminally-inclined elements both inside and outside the Venezuelan government. Gold is the perfect heist: anonymous, untraceable, hugely valuable. Successfully intercepting just one of the shipments would yield a haul of more than $300 million, making it one of the greatest robberies of all time. And you’d have 39 chances to repeat the feat.

Would any insurer voluntarily hang a “come get me” sign around its neck like that? They’d have to be very well paid to do so. So maybe Chávez intends to take matters into his own hands, and just sail the booty back to Venezuela on one of his own naval ships. Again, the theft risk is obvious — seamen can be greedy too — and this time there would be no insurance. Chávez is pretty crazy, but I don’t think he’d risk $12 billion that way.

Which leaves one final alternative. Gold is fungible, and people are actually willing to pay a premium to buy gold which is sitting in the Bank of England’s ultra-secure vaults. So why bother transporting that gold at all? Venezuela could enter into an intercontinental repo transaction, where it sells its gold in the Bank of England to some counterparty, and then promises to buy it all back at a modest discount, on condition that it’s physically delivered to the Venezuelan central bank in Caracas. It would then be up to the counterparty to work out how to get 211 tons of gold to Caracas by a certain date. That gold could be sourced anywhere in the world, and transported in any conceivable manner — being much less predictable and transparent, those shipments would also be much harder to hijack.

How much of a discount would a counterparty require to enter into this kind of transaction? Much more than 3.3%, is my guess. And again, it’s not entirely clear who would even be willing to entertain the idea. Glencore, perhaps?

But here’s one last idea: why doesn’t Chávez crowdsource the problem? He could simply open a gold window at the Banco Central de Venezuela, where anybody at all could deliver standard gold bars. In return, the central bank would transfer to that person an equal number of gold bars in the custody of the Bank of England, plus a modest bounty of say 2% — that’s over $15,000 per 400-ounce bar, at current rates.

It would take a little while, but eventually the gold would start trickling in: if you’re willing to pay a constant premium of 2% over the market price for a good, you can be sure that the good in question will ultimately find its way to your door. And the 2% cost of acquiring all that gold would surely be much lower than the cost of insuring and shipping it from England. It would be an elegant market-based solution to an artificial and ideologically-driven problem; I daresay Chávez might even chuckle at the irony of it. He’d just need to watch out for a rise in Andean banditry, as thieves tried to steal the bars on their disparate journeys into Venezuela.

What happens when you drop billions of dollars onto a country like Haiti? Immediately after the earthquake happened, in January 2010, I said that “one of the lessons we’ve learned from trying to rebuild failed states elsewhere in the world is that throwing money at the issue is very likely to backfire”. But that’s exactly what we did — with predictable results.

I’d urge you to read Janet Reitman’s full 12,000-word Rolling Stone article on what an enormous amount of foreign aid has done for Haiti; it’s a wonderful piece of journalism, albeit a very depressing one.

The first thing to note is that most of the money given to Haiti hasn’t even started to be spent yet: a whopping $11 billion was pledged by donor countries and financial institutions in the wake of the earthquake, but if you take the US as a good example, it’s so far managed to spend just $184 million of the $1.14 billion allocated to the country. Even the Red Cross is barely halfway into its $479 million fund — all of which has been earmarked for Haiti, and none of which can be spent elsewhere, no matter how much better it might be put to use in some other context.

But even the amount of money that has been spent has been harmful in its own way. Haiti has been known as “the Republic of NGOs” for well over a decade now, but the earthquake just turbocharged their presence while devastating everything else, leaving foreign aid the only game in town:

“I’ve had two ministers come up to me this week, personally, and ask what’s in it for them,” says a frustrated IHRC official. “Since money grows on trees in this disaster, the attitude among Haitian officials is: Just call up your buddies in Washington, and they’ll send another check.”

Meanwhile, given that it’s difficult to effectively spend money in Haiti, millions of dollars are making their way to people like our old friends at Dalberg:

There was significant grumbling in aid circles, for example, when the department awarded a $1.5 million contract to a New York-based consulting firm called Dalberg Global Development Advisors. Glenn Smucker, an anthropologist who specializes in Haiti, was asked to brief the Dalberg team, which included several summer associates from Harvard Business School. “They were nice people, but they struck me as naive about Haiti,” he says. “They asked the appropriate questions and were eager to learn, but from what I gathered, they had never lived overseas, didn’t have any disaster experience or any background in urban planning, and they’d never carried out any program activities on the ground. Only one of them spoke any French. They were being asked to do extremely important things that they had no background to do.”

One of Dalberg’s assignments was to do an assessment of a broad, bow-tie-shaped swath of land near the Corail camp, where thousands of Haitians had moved earlier that spring. Even as refugees were streaming onto the land and establishing squatter camps, the State Department hoped to create new communities in the area as part of an attempt to depopulate Port-au-Prince. It was the second time in three months that consultants had assessed the area, and after Dalberg was finished, a team of experts from USAID was brought in to reassess the assessments. “One of the sites they said was habitable was actually a small mountain,” says Bill Vastine, one of the experts on the USAID team. “It had an open-mined pit on one side of it, a severe 100-foot vertical cliff, and ravines.” After looking at the photos in Dalberg’s report, he said, “it became clear that these people may not even have gotten out of their SUVs.” The process of assessments and reassessments dragged on for months. In the end, only one of the six sites approved by Dalberg was deemed viable for relocation.

I’m pretty sure that when individuals and politicians committed billions of dollars to Haiti, they weren’t intending for it to be spent on callow HBS types who generate headlines like “With Andrew Stern’s Help, US Executes Holistic Rebuilding Approach in Haiti”.

Meanwhile, Haiti’s suffering if anything is getting worse. Not only are new shantytowns springing up in places like Corail, but disease is now spreading disastrously: cholera hadn’t been seen in Haiti for more than 60 years, before the earthquake; it has now infected more than 250,000 Haitians, with no sign that it’s remotely under control.

It’s worth remembering, too, that there was reason for optimism regarding the rebuilding of Haiti. There was lots of money, and the country’s right on America’s doorstep, which also helps. On top of that, it had the best conceivable international ambassador in Bill Clinton, backed up with the full support of the US government in the form of his wife’s oft-stated commitment to getting Haiti back on its feet.

Development is a tricky game, easy to get wrong; as a rule, it only works when the people providing the aid are working at the margin, helping to strengthen existing projects, industries, and institutions, rather than trying to build them all from scratch. Let’s target it where it can be most effective, rather than where there happens to have been a newsworthy natural disaster. Of course Haiti needed help after the earthquake, but $11 billion was far too much for the fragile and damaged economy to bear. It’s a lesson worth remembering, the next time a natural disaster triggers another wave of appeals for financial aid.