Hail, Hail Fredonia

Ecuador’s having one of those globalization moments: its President tried to replace his country’s local currency with the U.S. dollar last month. That set in motion both a military coup and a debate over the virtues of adopting the dollar in daily use outside the United States. Is it really time for Ecuadorans to pass the buck?

Anyone who’s gone shopping in Third World tourist havens, or reads about Russian gangsters who like hundred dollar bills so much they print their own, knows that the dollar is welcome all around the world. But developing countries like having their own currencies. After all, when a government prints money, it makes money: you slap a few numbers and the picture of a national hero on a piece of paper, and suddenly it’s worth something. Not a bad deal.

That is, until people lose faith in it. If the world lacks faith in your currency, no one’s going to accept it to pay for goods or repay loans, and suddenly you can't do either. So places such as Ecuador — and Hong Kong and Argentina and now perhaps East Timor — are deciding either to tie their currency to the dollar permanently or simply use dollars instead of local paper. No more speculative attacks on their currency, no more printshop money shenanigans. In essence, Ecuador’s making the world a promise — either we’ll stay as productive as the U.S., or we’ll tighten our belts until you can’t tell the difference. Good luck to them.

But this goes beyond money: it tells us something about Ecuador’s place in today’s world. I mean no offense — Ecuador’s a dandy little country. But countries have two purposes — to provide an acceptable standard of living, and to reflect shared ethnic or cultural premises. And as it loses its ability to shape its economy, Ecuador is quickly becoming no more than a cultural emblem of what Ecuadorans share.

And that’s the issue. As global economic integration unavoidably leads countries to become part of currency blocs and free trade areas, countries will find it harder to define their purpose. Belgium, for example, once had its own currency and its own economic policies. As those functions rapidly shift towards the European Union, Belgium will become less a country than a bunch of Flemings and Walloons who don’t like each other. Spain, with its unhappy Catalans and Basques, is also a candidate for dissolution. And if these disaffected areas don’t print their own money, don’t restrict trade, and don’t run Soviet-style border checkpoints, who’s really going to care?

And so, Ecuador's dollar policy leads to a paradox: global economic integration, with its common money and shared rules, will leave us with a world of more countries, not fewer, ethnic ministates that subscribe to basic global economic etiquette and can then go about doing the important business of dancing their national dance and taking their national hero's birthday off.

Hail, hail Fredonia, land of the brave and free.

A Thousand Years of Economic History in Three Minutes

The millennium ends today. Let’s review it.

A thousand years ago, life was nasty, brutish, and short. People could neither read nor write and never traveled further than they could walk unless the Pope told them to take Jerusalem from the infidels, which they couldn't. Best invention of the 1200s — the flue, which made indoor heating possible. Try living without it.

The invention of movable type in the 1400's, originally conceived to expand the production of Bibles, paradoxically allows the Reformation and breaks the monopoly in the religion industry without intervention by the Justice Department. This, in turn, allows broader perspectives on the world, and alternative centers of power, to emerge. Meanwhile, mercantile Venice invents banking and becomes the Silicon Valley of the 1500s and before you know it, improved navigation and the discovery of pitch from pine trees — which stops boats from leaking when they cross oceans — allow an age of discovery, trade, and colonization to emerge.

Credit, trade, markets, more widespread literacy, arithmetic, and rationality, and newly-plundered natural resources from faraway places all raise the European standard of living to something other than dire poverty. Unfortunately, Europe's trees are cut down to make pitch and to heat indoor spaces using the flue, which leads to the use of coal, which leads to water seeping into coal mines, which leads James Watt to invent the steam engine so you could pump the water out. And, in 1793, a bunch of businessmen sitting under a buttonwood tree form the New York Stock Exchange. So the world now has investors and something to invest in.

In 1800, people lived in an agrarian society and communication traveled at the speed of horse. By 1900, people lived in an industrializing society with rail transportation, communication by telegraph and soon telephone, mass production and as a result mass marketing, electric lights, widespread literacy, and plenty of broke farmers looking for work.

A handful of guys in garages with tools no better than your Craftsman set change the world: Edison, Bell, Ford, the Wrights, Marconi, that sleepy Swiss patent clerk what's-his-name, and so on. Radio gets better, telephony smoother, and engines more powerful, culminating in a man landing on the moon, which used a computer less powerful than your kid's videogame. Meanwhile, Noyce and Kilby invent the integrated circuit at Bell Labs and Eckert and Mauchley the computer at Sperry Univac, all using tools much better than your Craftsman set, some guys at Xerox invent the mouse and icon-driven computing but don't realize what it's worth, but Steve Jobs does, and so the guys in garages become great commercializers instead of inventors. Thanks to them, the more complex computers get, the easier they are to use, unlike my VCR. McLuhan was almost right — the world didn't become a Global Village by watching itself on TV, but by talking to itself on the Internet, and by using those computers to trade the stuff invented long ago by the Venetians and the guys under the buttonwood tree.

And so, the awards. May I have the envelope, please. Best social transformation of the millennium: the Reformation. Most unrelenting force for progress: technology. And best invention: indoor plumbing. Try living without it.

A Thousand Years of Economic History in Three Minutes

A thousand years ago, life was nasty, brutish, and short. People could neither read nor write and never traveled further than they could walk unless the Pope told them to take Jerusalem from the infidels, which they couldn't. Best invention of the 1200s — the flue, which made indoor heating possible. Try living without it.

The invention of movable type in the 1400's, originally conceived to expand the production of Bibles, paradoxically allows the Reformation and breaks the monopoly in the religion industry without intervention by the Justice Department. This, in turn, allows broader perspectives on the world, and alternative centers of power, to emerge. Meanwhile, mercantile Venice invents banking and becomes the Silicon Valley of the 1500s and before you know it, improved navigation and the discovery of pitch from pine trees — which stops boats from leaking when they cross oceans — allow an age of discovery, trade, and colonization to emerge.

Credit, trade, markets, more widespread literacy, arithmetic, and rationality, and newly-plundered natural resources from faraway places all raise the European standard of living to something other than dire poverty. Fortunately, Europe's trees are cut down to make pitch and to heat indoor spaces, which leads to the use of coal, which leads to water seeping into coal mines, which leads James Watt to invent the steam engine so you could pump the water out. And, in 1793, a bunch of businessmen sitting under a buttonwood tree form the New York Stock Exchange. So the world now has investors and something to invest in.

In 1800, people lived in an agrarian society and communication traveled at the speed of horse. By 1900, people lived in an industrializing society with rail transportation, communication by telegraph and soon telephone, mass production and as a result mass marketing, electric lights, widespread literacy, and plenty of broke farmers looking for work.

A handful of guys in garages with tools no better than your Craftsman set change the world: Edison, Bell, Ford, the Wrights, Marconi, that sleepy Swiss patent clerk what's-his-name, and so on. Radio gets better, telephony smoother, and engines more powerful, culminating in a man landing on the moon, which used a computer less powerful than your kid's videogame. Meanwhile, Noyce and Kilby invent the integrated circuit at Bell Labs and Eckert and Mauchley the computer at Sperry Univac, all using tools much better than your Craftsman set, some guys at Xerox invent the mouse and icon-driven computing but don't realize what it's worth, but Steve Jobs does, and so the guys in garages become great commercializers instead of inventors. Thanks to them, the more complex computers get, the easier they are to use, unlike my VCR. McLuhan was almost right — the world didn't become a Global Village by watching itself on TV, but by talking to itself on the Internet, and by using those computers to trade the stuff invented long ago by the Venetians and the guys under the buttonwood tree.

And so, the awards. May I have the envelope, please. Best social transformation of the millennium: the Reformation. Most unrelenting force for progress: technology. And best invention: indoor plumbing. Try living without it.