War on Iran threatens global economy, but worse, rattles 'just world' ethic in places such as Malawi

Malawi, east of Lilongwe, looking toward Lake Malawi
RJ Peltz-Steele CC BY-NC-SA 4.0

Americans are suffering an affordability crisis wrought in large part by the Middle East war. But the impact of the conflict is global. And the lasting message to the world's poorest places might be less about economic setback, and more about the unreliability of western capitalism.

Driven especially if not exclusively by the Iran war, record fuel prices in the United States make local and national news every day and are sending ripples through the economy, worsening the affordability crisis that the White House alternatively grapples with and declares "fake."

It's easy to be self-absorbed in this crisis. I've lately lamented the $65 tab to fill my gas tank. Traveling to join family for an upcoming weekend wedding will cost my wife, daughter, and me more than $3,000. 

We're blessed; for now, we can absorb these costs. But as we consider our retirement plan with airfare inflation topping 23%, I worry about an impending need to decide what family we want to be close to in the States, presumably a parent or child, and to move there, understanding that we will rarely see other family again. 

It's like going back in time to when Americans moved west knowing they might never see their loved ones again. Shouldn't that be a forgotten era with modern transportation technologies? Both political parties purport to support the American family, but neither takes responsibility for our geographic fragmentation in the national labor market. We have no long-distance, high-speed trains, and we treat air travel like a free-market luxury.

Many Americans are in that bind already, tethered to work, if they can find it, and isolated from family. As Americans talk on the news about increasingly having to choose between fuel and food, it can be hard to remember how much better off we are than people elsewhere in the world. 

In May this year, I visited Malawi, a small country in southern Africa. The Iran war was then only a couple months on, but it reverberated worldwide already. I traveled overland from the Zambian border to Lake Malawi and back with Colby Mughogho, an entrepreneur, developer, and tourism operator. 

Drivers await a fuel delivery at a station outside Lilongwe.
RJ Peltz-Steele CC BY-NC-SA 4.0

Open fuel stations were hard to find. A station might get one delivery per day, then dispense fuel until the tanks went dry. At any station, a glut of trucks and motorcycles waited for hours in anticipation of a delivery. Petrol usually was delivered a few times per week; some areas were deserts for diesel, which we needed.

Colby worked the phone to call ahead to friends, sometimes to nail down the delivery time for a fuel station, or if we were lucky, to enlist someone to set aside a couple of liters for us. Police patrolled the main streets and watched fuel stations closely, enforcing a purchase limit of 15 liters (3.96 gallons) per customer.

With that limit, a fill-up would not get us the whole way. A pickup on Malawi's rough roads might at best get 9.3 km/L (22 mpg), so 140 km (87 miles) on a legal-limit fill-up. The distance from Lilongwe to our destination, Chembe, on Lake Malawi, was 216 km (134 miles), each way.

Motorcyclists queue for petrol at a fuel station outside Lilongwe.
RJ Peltz-Steele CC BY-NC-SA 4.0

At a fuel station, petrol cost about MK7,000 (Malawian kwacha) per liter (US$4.04/L). That's US$15.29 per gallon. Before the war, the fixed price had been about MK5,000/L (US$2.89/L), or US$10.92 per gallon.

If we were unlucky, we could leave the main road in search of scant and risky supplies of black-market fuel, sold curbside by men looking over their shoulders while they juggled ragtag containers. Black-market sellers commanded MK12,000/L, or US$26.20 per gallon.

The government blames black-market sellers, fairly, for amplifying scarcity and driving up prices. The quality of fuel also is suspect, possibly diluted, and tainted fuel can damage engines, a further drain on a fragile economy.

At the same time, black-market sellers disperse supply so that small-capacity users such as motorcycle taxis can continue to operate without losing productive hours in lines. A great deal of downstream commerce that depends on transportation is thereby protected, as well as beneficial noncommercial needs, such as health care, family connections, and schooling.

A billboard in Lilongwe touts the "Malawi 2063 National Vision."
RJ Peltz-Steele CC BY-NC-SA 4.0

For me, our fuel search was a "#FirstWorldProblem," a matter of convenience. I could have hitched a ride to the airport if I'd needed to. I was more worried about Colby making his way back to his wife and kids.

And I was more worried still about the impact of the shortage on people whose livelihoods depended on the fuel supply. No fuel meant no work for many, and no work meant nothing to eat. The food supply itself, for everyone, would be in jeopardy when fisherman and farmers could no longer fill the tanks of boats and tractors.

That was then. Now the war drags on and is expanding in Yemen and Saudi Arabia.

The New York Times reported last week that rising fuel prices have touched off furious protests around the world, "from Indonesia to Guatemala to Syria." The Times reported on work stoppages with insufficient fuel for boats, tractors, and factory machinery, and people responding angrily with marches, horns, and burning tires.

Malawi managed to cut fuel prices later in the summer. With fixed government pricing, petrol has held steady at US$3.24/L, or $12.26 per gallon, and diesel has closed in toward that number, about 12% higher. That's still an increase for petrol of 122% over the price a year ago. And I know that the official price says nothing about availability on the ground. Authorities say demand is being met, though in "good times" in 2024, an NGO reported Malawi fuel retailers operating at only 30% of capacity.

Boys play football beside their school in Chembe.
RJ Peltz-Steele CC BY-NC-SA 4.0

The Iran war is not the only reason that fuel shortages hit hard in Malawi, where fuel already was expensive and in short supply. Part of the problem is simply geology and geography. Malawi has no oil reserves and no domestic fossil fuel production. The landlocked country depends on imported oil products, though finds some relief by blending in domestic ethanol.

Other key factors in Malawi's fuel pain, predating the war, are economic: a foreign currency deficit and stubborn price fixing (e.g., BBC). People I talked to in Malawi were quick to blame their government, observing that surrounding countries were better managing the latest crisis. 

There's truth to that. In the long term, Malawian politicians have been unwilling to make unpopular choices to get a grip on the economy. But in fairness to Malawi, its economic woes are less a result of misfeasance than of the seemingly insurmountable poverty cycle that plagues developing countries in the contemporary global economy. 

With reinvested revenues, hard-won grants, and a great deal of grit and hard labor, Colby and his brilliant better half, Violet, have been developing tourism infrastructure in Malawi, especially in the north, around Mzuzu, the capital of the northern region and the country's third-largest city. Mzuzu is superbly located as a base for Malawi tourism, because it affords ready access to the small country's stunning range of landscapes, from iconic Lake Malawi to wildlife safariing, and to trekking through plains, forests, and mountain ranges. Colby and Violet have built camps and miles of trails and employed hundreds of Malawians in the process. 

Near Lilongwe: Some modes of transportation require no petrol.
RJ Peltz-Steele CC BY-NC-SA 4.0

The problem now is getting people there. Besides fuel prices, the Iran war is tanking tourism in Africa. Airline routes have been reduced, and demand for travel services has fallen off. The retreat of U.S. (and others') foreign aid from Africa is destabilizing governments, spilling red ink across the continent on the travel advisory map, spooking travelers. Malawi and its neighbor Mozambique are hanging on to their "level 2" status (travel with caution), though neighboring Tanzania, home to Kilimanjaro, has slipped to "level 3" ("reconsider travel"). (Neighboring Zambia boasts a remarkable "level 1" ("normal precautions"), though the rating system seems suspiciously aligned with a U.S. appetite for African resources; read more.)

I had not intended to come home from Malawi to write about fuel woes and war effects; rather, I wanted to write about the Mughoghos' investments in "community tourism" through homegrown enterprise, admirably independent of the foreign quid pro quo that haunts so much of the African economy. The latter is still an important story. Tourism is the bellwether of foreign investment that will be essential to bolster the Malawian economy and give the people a fighting chance at socioeconomic mobility and a healthy, middle-class standard of living.

Right now, though, it's hard to see the road to that prosperity. Like many countries and many peoples in the developing world, Malawians are captive to an emerging geopolitical catastrophe that they had no hand in making. What for Americans is a crisis of affordability means, for people elsewhere in the world, development paralysis, and worse: a betrayal of the western economic promise, that hard work pays off. The "just world hypothesis" holds that good people will reap rewards. It's sometimes called the "just world fallacy." But it is a motivating ideal that keeps the peace in much of the world, and it's an ideal worth striving to make real.

Sign at a Lilongwe bus stop along a Chinese-financed highway
touts foreign aid.
RJ Peltz-Steele CC BY-NC-SA 4.0

If you are inclined go to Malawi, please do. It is safe and open for business. Flights are available; Ethiopian Airlines hedges against economic downturn with a diversified fuel supply. Please consider planning your time in Malawi with Adventures with Colby; Colby and Violet reinvest proceeds in communities. They'll store fuel if they know you're coming. (Nothing received for this endorsement.)

Western dollars and a little bit of faith are needed to help Malawi, "the warm heart of Africa," to weather this storm, and to get back on its feet.

Let's hope that the current strategy in U.S. foreign relations has not completely undermined the just-world hypothesis in places such as Malawi. Because if it has, there are other nations with less benevolent intentions waiting in the wings to export a very different worldview.

(This post was updated on Sept. 25 to restore the sentences about the "just world hypothesis," which disappeared inexplicably after the original posting, in the paragraph beginning "Right now ....")
 

Do I have to choose between Trump and communism?

Re-creation, RJ Peltz-Steele with Google Gemini CC0 1.0

A sign on my commute distracts me every time, and I find myself thinking about it way too much:

"TRUMP OR COMMUNISM."

So we're clear, that's not actually a choice anyone is being asked to make. 

For Slate, Alexander Sammon wrote today about the rhetoric of a new Red Scare:

"On the occasion of America’s 250th anniversary, President Donald Trump took time away from the birthday revelry to warn of a grave and imposing adversary. 

"'Communism is a mortal threat to American liberty. It is the greatest threat to our country, including World War I, World War II, Pearl Harbor, or even 9/11,' he said on July Fourth weekend this year, in South Dakota...."

And in Georgia a few days earlier, "according to the Atlantic, Trump mentioned communism or communist 15 times ... 'starting less than a minute into his hour-plus speech.'"

My family, on one side, escaped communism in Ukraine. I have seen the aftermath of communism in central and eastern Europe since the wall fell. If "communism" is that communism, then I'll take the democratically elected leader every time, regardless of our policy agreements and disagreements.

But as I wrote about Vietnam last year, "communism" today looks more like capitalism run amuck; it's hard to tell from the street which side won that war. Even historically, behind the iron curtain, the authoritarian bureaucracy of red Russia hardly lived up to any Marxian ideal.

So if "communism" means making filthy profits from global cartels and bathing in the social largesse of murderous oligarchy— well, then, I'm not sure how the sign's two choices are different. 

If "communism" means a living wage for one's work, and healthcare for one's hefty taxes; breaking up anti-competitive trusts and leveling the field for a free marketplace; and access to education for those who are willing to put in the work— 

Well, then, I guess I have to think about it some more.

Law students Costa, Osuagwu talk first 100 days

Costa & Osuagwu (WGBH)

Thrilled to see two of my star 1Ls/rising 2Ls, Cameron Costa and BJ Osuagwu, just finishing Torts II, representing and holding their own in this political dialog on WGBH (below from YouTube).

From GBH News: "The Trump administration hit 100 days of its second term marked by economic volatility, aggressive immigration enforcement and tariff talk.  Is the country headed in the right direction? We asked two people who support Trump and two people who don't on Politics IRL."

Costa is an educator and a student of legislative advocacy. Osuagwu is executive director of Healthy Waltham.

It's education and healthcare, stupid

CC0 Pixabay via picryl

Experts are puzzled over American discontent while economic indicators ride high. Yet they consistently fail to recognize what seems to me an obvious factor: the exorbitant cost of education and healthcare.

My feeds have been awash in stories and analyses of the disconnect between economic indicators of a prosperous America and people's simultaneous sourness on their economic prospects. The Atlantic tackles the problem perennially (e.g., Apr. 2022, Oct. 2023, Nov. 2023, Dec. 2023, Jan. 2024). Yesterday I caught up on my podcast backlog with Paddy Hirsch and Darian Woods enumerating five explanations for The Indicator earlier this month.

To be fair, the explanations are multiple, complicated, and interrelated. Almost every writer fairly points to inflation as a capstone problem. As Hirsch put it, Americans care less about mathematical formulae than about strain on the wallet at the gas pump and the grocery checkout. 

Moreover, The Indicator helpfully told me, data show that even if wages are keeping up with inflation on average across the economy, that's not the experience of many, if not most, Americans. Wages in volatile markets, especially for young people who have the economic flexibility to change jobs more readily, are outpacing inflation times over. But wages in career tracks, for middle-aged and older Americans tied to mortgages and other responsibilities, are failing to keep pace with inflation. So yes, we're rightly frustrated when a smiling employer gleefully announces a wage hike, yet we somehow have less money in our pockets at month's end.

At the same time, I have been frustrated repeatedly by writers' and analysts' failure to recognize an elephant in the room: the exorbitant cost of education and healthcare in America. The problem is amplified by inflation, but it's not a byproduct of inflation, and it won't be remedied by any number of interest-rate hikes.

Let me interject that there is an overarching problem as well that analysts often fail to recognize, which is simply that economic indicators are not interchangeable with human happiness. American culture habituates us to equate, mistakenly, economic prosperity with personal joy. Yet ample social science data gathered around the world show that wealth, whether societal or personal, does not necessarily correlate with happiness; much less is it causal. And see Matthew 6:19-24. A productive society by economic measures is not necessarily a society that produces art, that affords opportunity for recreation and leisure, or that values freedom for individual and interpersonal fulfillment.

Even by economic measures, though, healthcare and education are anomalous sectors. As a matter of morality, healthcare cannot be left to the free market—and I say this as an economic conservative—because the essentiality of healthcare for survival makes any bargain inherently unfair, any playing field invariably unlevel.

Similarly, education, at least in part, also must operate extrinsically to the free market for goods and services. Education does not guarantee upward economic mobility. But upward economic mobility is profoundly unlikely without education. And a market has no incentives to provide educational opportunity as long as labor is abundant.

Consider: A society based on slave labor might look marvelous by economic measures: full "employment," efficient resource distribution, pyramid-building productive capacity. Yet there is zero potential for laborers' upward social or economic mobility. In America, we purport to abhor servitude and to prize socioeconomic potential as "the American dream."

Both healthcare and education are therefore imperative in our society; their absence, or unattainability, is hard felt. But the free market will provide neither in adequate supply. Healthcare will be unattainable for those unable to pay the going price. Education is a byproduct of a healthy economy only insofar as it is necessary to ongoing productivity. The economy won't provide for retraining as long as labor is abundant, and upward mobility is not even on the board.

This isn't an abstract problem. This is what Americans feel on the ground.

I went to the ER in the fall.  I was in the hospital for maybe seven hours, out-patient.  I am lucky to have insurance that covered most of the roughly $15,000 cost.  I am blessed with employment that allows me to cover without much strain the roughly 10% of the cost allotted to me. 

But for many Americans, in many instances, medical treatment is unaffordable or entails bankrupting medical debt. People choose to live with pain—not economic pain, but real pain, sometimes a toothache, sometimes terminal illness—because they can't afford healthcare. 

Why would we expect that people suffering with pain and ailments, unable to see doctors, would ever report feeling good about the economy?

My wife and I make decent money (for now). By some measures, our U.S. household ranks as high as the 93rd percentile by income. By tightening our belts for a few years, we mostly managed to put our one child, after public K12, through a bachelor's program. Still, she had to borrow about $50,000, much of it at 6.5%, to close the gap for four-year university. And we co-signed on those loans even while we were still, in our 40s, paying off our own higher-education debt. Neither our education debt nor the mortgage on our modest home discounted our income on the FAFSA that blithely informed us of our ample capacity to pay for college. And again, we're lucky and blessed. We could make it work.

For too many Americans, the cost of higher education is crippling or prohibitive. To my point, the economy doesn't care about education other than an efficient means to an end. The only relevant question is whether the hamster wheel is still turning. There's no need for people to better themselves, their lot. 

Why would we expect that people without hope for a better life for themselves or their children would ever report feeling good about the economy?

Education costs and debts work an enormous strain, financially and emotionally, on Americans. Healthcare costs, sometimes risks, sometimes debts, work an enormous strain, financially, emotionally, and physically, wearing us down, day after day.

And here's what really gets my goat: Things don't have to be this way. My cousins in Canada and Europe don't suffer under these strains. They have affordable healthcare and education. They are free to move about their lives.

My cousins pay more in overall tax burden—but not much more, and maybe less if I factor in my lifetime healthcare and education costs, as well as property taxes. And don't get into it with me over quality. As to education, I teach in Europe, and my students there are, to be frank and on average, better equipped as liberal arts undergrads than my American 1Ls, not for lack of work ethic. As to healthcare, I haven't met my primary care doctor since three primary care doctors ago. The reason I went in the fall to the ER, where I waited for five hours to be seen, was that neither my primary care network nor any area urgent care had a single opening. My "best healthcare plan anywhere in the world" must have been mislaid with my jetpack.

Can you imagine an America in which a university degree or a hospital admission would not have to be followed by years or decades of monthly payments? in which people could retrain for better jobs without incurring crippling debt? in which people could change jobs without sweating the burden of massive debts or the risk of losing access to life-saving medicine for themselves or their families?

That would be a free market. A level playing field. 

That's not what American corporations want. So that's not what Congress wants.

It's ludicrous (ludacris?) to expect that people—consumers—would radiate joy about a rosy economy as long as they're shackled, compelled to run the hamster wheels of a market that's not really free.