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From the NY Daily News

Look, I’m not a big fan of Wall Street either. I think the money they make—and the bonuses they dole out—are way out of line with their true value to our nation’s economy. To turn a Street-speak expression on its head: Where’s the “value-added”? Here is what I wrote in December in my post “Solely to shuffle money around“:

When I briefly worked in investment banking, the same idea frequently popped in my head: What exactly is being produced here that is so valuable? I doubt it was our spreadsheets, however attractive in appearance they might have been (no gridlines!).

Nevertheless, I am dismayed at the SEC’s and media’s treatment of Goldman Sachs employee Fabrice Tourre. Did he commit fraud? I don’t know. Did he screw over a client? Yeah. But based on what we know, is he an “asshole“? No, I don’t think so; that’s just piling on.

Here’s Tourre’s famous email as referenced in the SEC civil lawsuit against Goldman Sachs:

The famous 'Fabulous Fab' email

Make sure to read the part highlighted in gray. Tourre looks really bad there. Who would call himself “Fabulous”?

Well, it turns out Tourre didn’t either. He was paraphrasing what some guy named Mitch called him. Here’s the real context of the email:

Darling you should take a lock at this article … Very insightful … More and more leverage in the system … only potential survivor … the fabulous Fab (as Mitch would kindly call me, even though there is nothing fabulous abt me, just kindness, altruism and deep love for some gorgeous and super-smart French girl in London, standing in the middle of all these complex, highly levered, exotic trades he created without necessarily understanding all the implications of those monstruosities !!! Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the US consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job ;) amazing how good I am in convincing myself” !!!

Sweetheart, I am now going to try to get away from ABX and other ethical questions, and immediately plunge into Freakonomics … I feel blessed to be with you, to be able to learn and share special things with you, I love when you advise me on books I should be reading, I feel like we share a lot of things in common, a lot of values, topics we are interested in and intrigued by … I just love you !!!

Your chtit Fab

Let me emphasize this line again: Tourre writes to his girlfriend: “…[t]he fabulous Fab, (as Mitch would kindly call me, though there is nothing fabulous abt me, just kindness, altruisim and deep love for some gorgeous and super-smart French girl in London!)…

The SEC selectively quoted Tourre to make him emerge in the worst light possible. Actually, it was worse than just “selectively quoting”: the SEC snipped parts of Tourre’s sentences in order to damage his character and make their case stronger. “Selectively quoting” is too kind for the SEC’s actions; a better phrase would be “deceitfully quoting.” This kind of referencing would never fly in an academic paper, for example. Why should it in court? Furthermore, there’s some irony in the SEC being deceptive in a fraud case. Fraud is a synonym of deceit, according to thesaurus.com

It seems to me that Tourre was just a French guy in love with a French girl in London when he sent these emails. Not that he didn’t commit fraud—again, I don’t know—but I don’t see what this email has to do with a fraud case. He comes across as especially likeable at the end of the second paragraph, when you see he’s having doubts about the broader purpose of his contributions as a banker to society “… amazing how good I am in convincing myself [of my job's utility],” Tourre writes.

In fact, he seems like a decent guy to me. Maybe we’d be friends. From a personal perspective, although I’m not particularly fond of the industry of investment banking, I am very fond of my investment-banking friends. In general, they are nice, interesting, and thoughtful people. I would vouch for their character. In this context, and based on the above email, I will give Fabrice Tourre’s ch~aracter the benefit of the doubt. Let’s see what happens in court before we assess him and his behavior.

The more important issue here for me is a structural and systemic one. Thousands and thousands of bright, driven, and kind students every year eschew careers in development, medicine, science, engineering, teaching, etc. to work on Wall Street. This is a bigger outrage than any email Fabrice Tourre has written. Why does our society create incentives for our best young men and women to enter a field that has little discernible impact on furthering society’s broader goals? First-year investment bankers may earn $150,000 in salary and bonuses. First year PhD students live on the poverty line. Medical doctors graduate from school with an average debt of $156,456, and that doesn’t even include the opportunity cost of foregoing four years of income potential. What’s wrong with this picture?

Fabrice Tourre is one of the best and brighest as well. He graduated with a degree in mathematics from École Centrale, a famous French university, and later earned an M.S. from Stanford. Think of the potential of this guy to make valued contributions in, say, energy research or environmental policy or development work! Instead, he made millions creating exotic financial products that are “pure intellectual masterbation.” Now that seems like the real crime to me.

Jeremy crossing a bridge near hot springs in Yanque

La Casa Hacienda Shismay

This past weekend, Nora and I took a trip to Huánuco, which is the name of both a city and departamento (like a U.S. state) in central Peru. At the recommendation of our friend Roger, we visited a rural area called Shismay and stayed at a spectacular hacienda-turned-hotel, the Casa Hacienda Shismay.

The pueblo of Shismay is about a 45-minute dusty, bumpy taxi ride from the city of Huánuco. Shismay is a small Andean village consisting of about two hundred families who mostly devote themselves to farming small plots of land called chacras. These small farms fill the Esperanza Valley with varying hues of green and gold like a patchwork quilt. (Although, I must concede, this metaphor puzzled the Peruvians we spoke with; apparently, quilts don’t exist in Peru.)

Chacras in Shismay

As you can see from my photos, these farms are cultivated from the river basin thousands of feet upward on the sides of the huge cerros, or mountains. It was interesting to note that farms in Shismay are not terraced as I’d observed in other places in Peru. (See, for example, the striking balcones, or terraces, in Arequipa.) Moreover, some of the fields I saw in Shismay were steeper than I’d imagined was possible for a farm, creating perhaps as much as a 40° angle with respect to the horizontal. Somehow, these crafty Peruvians seem to have defeated erosion.

Huánuco is not a tourist mecca like Cuzco. The Lonely Planet offers only a few sparse pages on this area in contrast to perhaps 75 pages for Cuzco and its environs. The hotel we stayed at isn’t even in the Lonely Planet—partly I presume because it’s relatively new (2006), but also because Huánuco just isn’t an area that attracts lots of Gringos or even domestic tourists.

Nora and I took an 8:45 p.m. bus from Lima and arrived in the city of Huánuco at approximately 7:30 a.m. I have now had several misadventures on Latin American buses, and I say without hesitation that this experience was one of the worst. We had been led to believe that the bus would be direct, meaning that it would leave Lima, traverse the Carretera Central up the mountains without stopping, and drop its happy customers off in the Andean town of Huánuco.

Unfortunately, we paid $10 for an eight-hour bus ride, and we got what we paid for. The bus stopped continually during the trip in order to pick up passengers on the road and fill its empty seats. (“¡Este bus va recogiendo, va recogiendo, va recogiendo!” as one exasperated fellow passenger told me. This bus picks people up, picks people up, picks people up!) Whether such practice is corruption on the part of the bus drivers or a pre-mediated, profit-maximizing strategy perpetuated by the empresa (tour company), I do not know. But I do know that the practice is dangerous as it entails picking up random people on the road and allowing them on a bus next to sleeping (i.e., vulnerable) passengers. Further, it slows down the trip for all traveler (turning an eight-hour trip into over ten hours of misery) and allows the cold Andean breeze to swirl in the bus cabin.

Naturally, I forget my jacket, and, in a moment of either weakness or genius (or both), I slept all night with my arms tucked into the legs of a pair of Lucky Brand jeans, turning my turning my extra pair of pants into a makeshift jean jacket. And I’m not even complaining about the bumpy road or the constant switchback turns that made it impossible to fall asleep! Transportes Junin, it’s on!

* * *

Tiny flowers in the countryside

In Huánuco on Saturday morning, Nora and I stopped for a delicious and cost-effective breakfast at a local market. For about two dollars—no exaggeration—we bought two delicious juices, Pachamaca-flavored yucca and potatoes, a bag of fresh bread, and a sizeable chunk of cheese. Two dollars! (I love telling people how cheap it is to travel in Peru, until they remind me that I had to pay $600 to fly there—twice.)

At the market, as we were throughout the weekend, Nora and I were struck by how shy yet curious were the huanuqueños (as people from Huánuco are called). One señora (older lady) in the market tapped Nora on the arm and, with a huge grin, told her, “We don’t get a lot of visitors here!” I overheard another woman telling her young child, “¡Mira las gringos!” (Look at the Gringos!) Later, when asking for directions in Shismay, the villagers would look away when answering our questions.

Nora and I are accustomed to the occasional Gringo bomb or “Vere are you frum?” comment directed to us by Peruvians: I’m perhaps the tallest human being in the entire country, and Nora’s long blonde hair makes her quite the novelty in a country brimming with brunettes. But this weekend was something different—less invasive, more curious.

Why the difference in attitude? My guess is that the region has simply had a dearth of foreigners. Although it is a regional capital, Huánuco is a sleepy city whose economy, like many other Peruvian cities in the sierra, is driven by serving as a market clearinghouse for local crops. Moreover, Huánuco experienced bastante terrorismo (quite a bit of terrorism) during the 1980s and early 1990s as an internal war waged throughout Peru. For all intents and purposes, the city was inaccessible for tourists for well over a decade. Now, although the violence has subsided, Huánuco lacks a Machu Picchu or Lake Titicaca to lure tourists.

After eating our economical yet delectable breakfast, Nora and I went searching for a taxi to take us the 17 kilometers to our lodging in the outskirts of Huánuco. We first looked for colectivos, which are taxis that carry groups of passengers and regularly run between two places. Were there any colectivos in Shismay? We asked no fewer than ten people and received discrepant answers each time.

Eventually, we gave up and decided to just take a taxi. “20 soles,” one taxi driver barked to us. “20?” I confirmed with him as we entered his station wagon. He nodded, and we were off. Forty-five dusty, bumpy minutes later, after winding through the river valley, we arrived in Shismay.

I handed the driver a 20-sol note. He looked at me quizzically. “No, no, no, 30, amigo,” he said to me. “No, nos dijiste veinte,” I replied sharply, “No, you told us 20!” He looked at me pleadingly, “Pero, es lejos!” But it’s far!

Well, he was right. It was pretty far for only 20 soles, so Nora gave him 5 soles more in various denominations of pocket change, and we were off.

* * *

The Esperanza Valley. Nearly 9000 acres belonged to the Hacienda.

Our hotel, the Casa Hacienda Shismay, is a beautifully renovated 19th century working hacienda. We were greeted at the entrance by Maria Elena and Andrés. Andrés is the current administrador (manager) of the place, and Maria Elena, well, her role will take more time to describe. We were the only guest this particular weekend (there are only four guest rooms available). For the rest of the morning and through mid-afternoon, Nora and I rested, ate lunch, and took a tour of the hacienda with Maria Elena.

Maria Elena is the daughter of Don Javier Rolando Tello, who owned the house and nearly 9,000 acres of accompanying farmland in the Esperanza valley until 1979. On September 9th of that year, ownership of the estate was forcibly transferred to the hacienda’s workers and their families as part of the Peruvian Reforma Agraria (agrarian reform) carried out under the military government of General Francisco Morales Bermúdez.

Maria Elena told us she was 18 years old at the time. By law, her family was not allowed to take any items from the house or estate as they left. Hacienda workers, previously laboring under a feudalism-like system, took the name of “San Sebastian of Shismay” in honor of the patron saint.

At the time of the seizure and redistribution of their land, the Tello family still owned a large house and property in the city of Huánuco. Nevertheless, they were forced into difficult times as the family’s economic base was stripped from them. Maria Elena later moved to Lima to attend university.

The members of the Shismay community looked after the hacienda for many years, but, due to the deepening economic and security troubles, the house was left to ruin. As a result of internal violence, Maria Elena told us she hadn’t returned to Shismay until 2004, an absence of more than 20 years. When I asked her what it was like to see her childhood home in ruins, she paused and answered simply, “Difícil.” (Difficult.)

In March 2004, the community of Shismay received a generous private grant for the restoration of the hacienda and conversion of the hacienda warehouses into guest rooms. I’m guessing Maria Elena and her family were behind this change in one way or another; they wanted to restore an element of their own past and also help a struggling community with whom they had such deep roots. (The hacienda is still property of the community and is run by community members.)

Interestingly, Maria Elena told us that she observed much more economic deprivation and related problems—malnutrition, for example—than had existed when her family owned the land. (“What do they eat here?” as Maria Elena answered to one of our queries. “Papa con papa, nomás.” Potatoes with potatoes, that’s about it.) She argued that her father’s extensive farming experience, his knowledge of local markets, and his leadership allowed the land to be much more productive under a single owner than it has been partitioned into more than 100 different plots. “The idea now is to unify land,” she told us.

Was Maria Elena romanticizing the past? Were community members really better off in a scenario that resembled the feudal system? I cannot say for certain. My own socialist tendencies tell me that dividing up haciendas is a good thing, that laborers deserve land, dignity, and economic freedom. But I understand my own bias here, and I’ve heard from more people than just Maria Elena that the Peruvian agrarian reform caused more harm than it did good.

In reflecting on these questions, I can appreciate the numerous complexities at work in Shismay: the balance between European (hacienda owners) and Andean (villagers), between paternalism and liberation, between economic protection and economic freedom, and, perhaps most pertinent, between bottom-up and top-down ideologies of community development.

To us, it was clear that Maria Elena viewed her work as a way to give back to the community of Shismay. However, I don’t think she considered it her community. Maria Elena has attended university in Lima, is a working professional, and now lives in one of the most exclusive neighborhoods in all of Peru. Although her family may have owned a hacienda in Shismay, her experience is not in the same constellation of facts as that of peasant farmers who labored on the hacienda. As Nora pointed out, Maria Elena used a lot of “us’s” and “them’s” in describing her relationship with the community.

Allow me to paraphrase one of Nora’s question. We always think that bottom-up, grassroots community organizing is the best model. But what if communities don’t organize on their own? As a practical matter for Shismay: if a paternalistic, top-down approach achieves results, what’s so wrong with that? For all my love of a theoretical liberation of the poor, I’m not sure if I can denounce energies that make tangible differences yet are delivered as external charity.

I could not broach these themes without referencing the antecedents of the internal war in Peru that began in 1980. This conflict, which killed nearly 70,000 Peruvians, was fueled by the Shining Path’s belief that society is so tilted against the poor that society needed to be destroyed before it could be remade. As a corollary, the Maoist organization believed that community-development organizations and charities maintained the very social infrastructure that inhibited the poor’s rise. As one famous Sendero communiqué threatened to NGOs, “You give crumbs to the people to entertain them and fail to realize that the correct path is that of the people’s war.”

In defense of Maria Elena, she also told us about her efforts to catalyze the Shismay governing council, to secure better legal recognition for the community under local law, to diversify economic activities aside from farming, to send the community’s top students to elite schools in Lima and abroad, and to protect the community against nefarious outsiders aiming to exploit its resources (particularly its abundance of water). I didn’t love the way Maria Elena spoke about the people she ostensibly serves, but she sure seems to have gotten things done. What have you and I done lately?

* * *

Lake Mancapozo

On Saturday afternoon, Nora and I went on a pleasant walk around Shismay. We had a hairy moment or two with a pack of stray dogs (note: yelling at dogs only makes them madder), but we survived. Flourished, even.

On Sunday, we woke up relatively early and went on spectacular three-hour hike to Lake Mancapozo, which lies perched up in the mountains above Shismay. For 15 soles, our guide Orial direct us through the countryside. Nora and I had a nice conversation with Orial in Spanish—we in our English accent, he in his Quechua accent.

Nora and Orial, specks in this photo, climb to Lake Mancapozo

Much of our discussion was centered on Orial giving us exciting lessons on the medicinal properties of various plants. He also painstakingly identified 20 different plants that can be used to make tea. (I didn’t have the heart to tell him I hated tea.) He also introduced us to one of his friends who sells fresh honey. “Puro, no es adulterado,” Orial told us more than once. It’s pure, nothing is added! He was right. We bought four gooey containers. After the tour, Orial handed us several husks of cancha, or dried corn, from which you can make the best, freshest popcorn. (We had told him previously that we were adictos, or addicts.)

On Sunday night, Nora and I braved another bus ride and headed back to Lima.

A man waiting on Saturday morning in Canta

Robin Kirk is a human rights activist and Latin American scholar. She reported from Peru during the guerra interna during the 1980s. Later, in 1997, she published a personal narrative of her time in Peru, The Monkey’s Paw: New Chronicles from Peru. The following passage comes from that book.

* * *

It takes a stubbornness, perhaps arrogance, and a certain faith in the face of long odds to write about someone else’s country. Nothing binds me to Peru, no family or history. Yet that is not the same as saying that writing is impossible. Perhaps it takes an outsider to discover in details invisible to natives a window onto a national soul…

I have not aspired to be a Peru expert. In my mind, the fact that I have lived for a time there and seen certain things, talked to some people and traveled a fair amount qualifies me only as adventurous Peru is a place I’ve been, but not always. It has occupied my thoughts, but not without respite. The stories I heard, some told in these pages, conclude with no prescriptions for Peru’s many ills. In a decade, what will Peru be? Besides poor, I can’t say…

Peru is my lens, a country where the challenge to lead a moral life is perhaps greater or more present than in my own. It is not a country founded on morality, but rather the exploitation of natural wealth: gold, jewels, people, cotton, guano, rubber, coca. Yet is also a place where morality has been taken to a lethal extreme, most recently in the war between the government and the Shining Path… [Y]oung Peruvians set out to destroy the world they new in order to build something that was barely a waking dream…

To say I have no physical connection to Peru does not mean I lack an emotional or intellectual one … I have a history, albeit brief, in the scheme of things, and a place to stand.

Despite all, and in Peru facing stifling odds, I met people for whom moral questions were not simply to be considered, but forces that shaped their lives, their axis and molten center. They believed and acted on those beliefs. In part, my aim in writing this book is to recognize them and put them in a context, to explore what a hard and astonishing thing it is to carve this path out of that wilderness. And I measure myself there, and wonder: where do I stand?

It is one of the basic questions, to ask what, if circumstances were different, would become of me. What is my essential self and what, if my comforts vanished, would I become? What if my child died? What if my electricity stopped and my faucets ran dry? … What if I were taken into the glare of the headlights on the rocky road, with the fleeing hares and the prick of the puna wind, and made to kneel? What if I forced the kneeling?

Perhaps it is the conceit of a writer to believe that the questions I find absorbing are more poignant now than they ever were. But I also wonder whether what all the modern world has given me—my soft chair, my tight roof, my full belly, my peacefully sleeping daughter, my cash machine and my safety belt and my hope and my vacation time and my birth control pills and my assumption that I will never be completely without a choice—makes me and those like me almost a different species from most of the rest of humanity and certainly most Peruvians, whose lives revolve around finding a meal, a night’s sleep, a bit of money, a place to rest. To Peru, the centuries have brought not progress but a place on a precipice. Any of the winds that periodically blow can crack away a tenuous purchase, won at high cost and never, ever sure.

Can I bridge the gap? Is my quest doomed? Is there, in all of this, a place to stand? And then?

Annotated map of Peru

Let me also make a quick note about the geography here. Peru is a fairly large country—about twice the size of the state of Texas. Peruvians think of their country as having three very distinct regions: the arid costa (coast) on the west; the mountainous sierra in the center; and the Amazonian selva (rainforest) on the east. You also sometimes hear about the eastern slopes of the Andes where the mountains turn to tropical rainforest; this is called ceja de selva, or “eyebrow of the jungle.”

These regions really stand out in the map above, which has been constructed using local satellite images and is thus representative of the true nature of the terrain. The coast is a desert—dry, sandy, and largely barren of plants except for the approximately 40 river valleys that cut through from the mountains. The mountains are habitable but rugged. The jungle is impressively green.

The Incas largely lived in the mountains, but after centuries of migration, most Peruvians now live along the coast. The jungle—although representing nearly 50% of the land area of the country—is home to a relatively few number of Peruvians, approximately a million, or less than 5%.

Lima is home to approximately one-third of all Peruvians. But remember that Lima is situated on the costa. As you can glean, it’s a desert. Nature never “intended” more than 10 million humans to call the relatively slender Rimac River Valley home. The Incas knew better, and they built their capital and largest cities in the mountains where rain is abundant and crops can be grown with relatively little coaxing. Conversely, almost nothing in Lima is naturally green. Who was the genius who chose to build a capital city in the middle of a desert? Francisco Pizarro, of course.

Americans are famous for overestimating our international aid. One study found that the average American estimates that a quarter of the budget — more than Social Security, or Defense — goes to aid abroad. This is why, when asked about cutting the deficit, an outsized number always suggests that we should immediately start slashing foreign aid to save money. Of course, this would be a bit like wiping your brow with a kerchief to fight a fever. Aid is less than one percent of our total budget, but three-fourths of Americans in the Zogby poll think it’s at least six times higher.

Please choose the answer that you believe comes closest to the percentage each represents of the current federal budget.

U.S. Adults Estimates Of Federal Budget Expenditures

I don’t know the aid sector very well, but these findings jive with my personal experience — that Americans in general think we’re much more generous than we are. The fact is that when you consider that per capita foreign giving in the U.S., or aid as a percentage of yearly wealth accrued, we don’t come out all that impressive.

Net official development assistance in 2008 as percent of gross national income

The metric used above, official development assistance (ODA), includes contributions of donor government agencies to developing countries. Private flows are not included, but there is no evidence they make us look less stingy. As Steven Radelet reported in Foreign Affairs in 2005:

“America Is the Most Generous Country in the World if You Include Private Donations to Charities.”

No … Combining public and private donations puts total U.S. development assistance in the range of $35 billion per year, or about 0.32 percent of U.S. income. In other words, for every $3 of income, the United States provides about one cent in development assistance. Even with this broader measure (and using the larger estimate of U.S. private assistance without making a similar adjustment for other countries), the United States ranks, at best, 15th among the top donors.

Moreover, much of our official development assistance goes to prop up our military allies in troubled areas. William Easterly and Laura Freschi produced the graph below on the militarization of United States foreign aid. They also write:

…[E]nervated development loses to pumped-up defense, and not just in Afghanistan and Iraq. The trend goes two ways: USAID is compelled to spend more and more of its budget on states that are strategically and militarily important (The 2011 foreign aid budget allocates 20 percent of State and USAID money for “securing frontline states.”) A development priority like India (with a huge chunk of the world’s poor) loses out. At the same time, a growing proportion of what the US calls Official Development Assistance flows through the Pentagon rather than USAID.

All U.S. aid by recipient, 2004-2008, O.E.C.D. data

In fairness, Americans come out better when generosity is measured on other metrics. As Daniel W. Drezner writes:

This does not mean that the United States is particularly stingy on other dimensions of helping the poor. The Ranking the Rich exercise included aid as only one of seven components — the others are trade, investment, migration, environment, technology, and security. When you aggregate the different components, the U.S. comes in at 7th out of the 21 countries (intriguingly, among the G-7, the Anglosphere countries — Great Britain, Canada, and the U.S. — come in at 1-2-3). It turns out that the U.S. is comparatively more generous on other dimensions

My personal take on all this is that I wish we (as Americans) were a little more honest and informed about our own generosity. So many issues in reality are battles between divergent camps on the issue of redistribution. Health care, for example, is “less a pure macroeconomic issue than an exercise in the political economy of sharing.” (See my older post here to see what I mean.) But how can we have a real discourse if we aren’t critical about our own sharing?

Historical mansions in the Barranco district.

Bottles of pisco (from El Comercio)

If you really want to get a Peruvian riled up, just mention that el pisco es chileno (“pisco is Chilean”). Caveat: if you’re among a group of Peruvians in the process of consuming pisco, you probably shouldn’t say it. Really, for your own safety.

* * *

Pisco is a liquor distilled from grapes. As such, it is technically a type of brandy. The story goes that, in the 16th century, Spanish settlers along the Peruvian coast began to plant and harvest grapes for wine production. The best grapes were harvested for export, while lower quality grapes that weren’t exported were distilled and fermented to produce a liquor. Pisco was born.

Fast forward to the present day. Pisco has become one of the most important symbols of Peru. The “pisco sour” — a cocktail made from pisco, limes, sugar syrup, egg whites, and bitters — is an international sensation. I must concede that they are fantastic drinks; as one review majestically describes, a pisco sour is “like a climb in the Andes: drink it too fast and you’ll need oxygen.”

The famous Pisco Sour cocktail (photo from El Comercio)

Economically, the pisco industry as a whole has boomed in Peru: There are more than 380 Pisco producers in the country, 580 different brands, and current aggregate production of approximately 7.5 million liters of pisco per year. Exports to the United States have increased about two and a half fold over the previous five years.

But where money, nationalism, and cultural pride intertwine have lead to a fierce dispute between the countries of Chile and Peru over the formal rights to produce, promote, and sell pisco. As in Peru, the production of pisco in Chile also has a long and important history going back to at least 1830. Although not as illustrious as the history of Peruvian pisco production, nearly 200 years of tradition is nothing to scoff at. Moreover, although trade patterns are changing, Chilean pisco in general is more widely produced, exported and consumed than Peruvian pisco.

* * *

On one level, the pisco dispute between Peru and Chile centers on a trademark disagreement over the rightful use of the “pisco” denomination. On this matter, there is overwhelming evidence that pisco was developed and initially produced in Peru. Historical documents place the inception of the use of the “pisco” nomenclature as a drink to sometime in the 1600s. The word pisco itself is derived from the town of Pisco, located on the Peruvian coast about 150 miles south of Lima, where the spirit was first produced. The name of the town of Pisco originally comes from a Quechua (an indigenous language) word meaning “bird.”

The dispute over the use of the “pisco” denomination has become a complex international legal battle involving hundreds of national and international actions. I won’t pretend to comprehend all the details. My general understanding is that Peru frames the pisco debate using the Champagne metaphor: Peruvians say pisco is to Peru as Champagne is to France and Port is to Portugal. The Chileans say that when Pisco was first made, both Peru and Chile were part of the same Spanish colony. There was even a time in the mid-1960s where the trademark battle became so fierce that imports of Peruvian pisco were banned in Chile, and vice versa.

Now, the Chileans are mostly urging the Peruvians to join them in a partnership to expand the distribution of both types of pisco throughout the world. The Peruvians seem to want the “pisco” moniker all to themselves.

* * *

It should also be noted that there are considerable differences in the manner of production between Peruvian and Chilean pisco in regards to the type of grape, aging process, and water dilution. These production differences lead to deviations in taste, aroma, and color.

Differences also exist from a macroeconomic perspective. In Chile, there are many producers gathered under an umbrella of a few labels; in fact, in the National Pisco Association of Chile, there are about ten members. In Peru, on the other hand, there are hundreds of small producers –- most of them artisanal –- each with its own philosophy and label. This diversity makes the repertoire much richer: Peruvian pisco is hundreds of piscos at the same time. As a result of its more hands-on production approach, Peruvian pisco sells for approximately twice the price of Chilean pisco in the U.S.

Buying pisco in bulk in Ica. (Photo from Brian)

On another level, as one of my Peruvian friends has told me, the dispute is “less about Pisco and more about Peru and Chile.” Peruvian-Chilean relations is an academic field unto itself and, in truth, a very sensitive subject for Peruvians. The formative event in the history of the two countries’ relations was the 1879 War of the Pacific. The conflict resulted in a Chilean invasion of Peru, the destruction of various Peruvian buildings and cities, and a two-year Chilean occupation of the capital city of Lima.

The war left a deep scar on both societies involved and forms the basis for modern controversies over trade activity (such as pisco), the economy, territorial disputes, maritime scuffles, and, most recently, military build-ups within both countries. In Peru, I’ve formed the hypothesis that much of the current animosity toward Chile stems from (1) the war and (2) the fact that the countries have such similar cultures and histories, yet Chile has managed to accrue much more wealth. The Peruvian economy has grown rapidly the past several years, but Chile’s real GDP per capita is roughly 65% higher than Peru’s.

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Back to pisco. I’ve never been to Chile, but I can attest that the devotion to pisco edges on fanaticism here in Peru. The Wikipedia article “Pisco del Perú” checks in at a cool 11,600 words and contains no fewer than 61 citations. To give you a rough comparison, the Wikipedia article for the entire country of Peru contains fewer words and certainly less erudite factoids. My personal favorite quotation from the pisco article is the following gem, which essentially serves as a one-paragraph primer on anaerobic metabolism:

In the tanks, the chemical process of alcoholic fermentation occurs where glucose from the natural sugar of the grape is converted into pyruvic acid, forming an ester. Typical of yeast, the latter molecule loses the functional carboxyl group of pyruvic acid and expels carbon dioxide. The ethanol formed subsequently accepts two protons from NADH and released them at the initial stage of glycolysis, becoming ethanol alcohol for human consumption.

Was that necessary? This is not supposed to be a scientific article; it’s an encyclopedia entry on a type of drink!

You get the idea: Pisco is important; no detail should be left out — even molecules.

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I’m reminded of a story a friend told me about her time working in the city of Pisco. One morning, she arrived to the central plaza in Pisco and observed two separate ongoing rallies, each rally located in a separate corner of the plaza. One rally was to protest the Peruvian government’s lackadaisical response to the August 2007, 8.0 Richter scale earthquake in the city of Pisco that killed 510 people, injured many more, and left much of the city’s economy and infrastructure in shambles to this day.

The other rally was a “pisco is Peruvian” rally to affirm the true origins of the spirit. As my friend reported, the earthquake rally was a quiet and sparsely attended affair, but the pisco rally attracted a large, vociferous crowd that chanted, ¡El pisco es peruano! ¡El pisco es peruano! ¡El pisco es peruano!

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Pisco displaces the Chilean brandy in the United States

On a similar vein, my favorite newspaper article I’ve read during my time in Peru is headlined “Pisco displaces the Chilean brandy in the United States” (El pisco desplazó al aguardiente chileno en Estados Unidos). The article was published in El Comercio, which is probably the most reputable Peruvian newspaper, and it was written in the leadup to National Pisco Sour Day. The article goes on to detail how the export value of Peruvian pisco now exceeds Chilean pisco in the U.S. for the first time ever.

What’s so delicious about the article is not the content so much — although that’s interesting, too — but rather the hilarious yet subtle dig at Chilean pisco interwoven through the article. “Pisco displaces the Chilean brandy,” it says, but what it really means is that “Peruvian pisco displaces Chilean Pisco.” The phrase “Chilean brandy” is actually a dig at Chile, an intentional circumlocution. For everyone in the world but Peruvians, “Chilean brandy” is pisco too! And the thing is, this article isn’t from a random blog; it’s from the country’s most prestigious newspaper!

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Día del Pisco Sour in Surco (From Visor Perú on Flickr)

It’s as if the driving force for the country’s current trajectory is less Catholicism, Andeanism, or imperialism and more, well, piscoism. I say this a bit tongue-in-cheek; certainly, the power of the Catholic Church outweighs the power of pisco. But, I think, pisco does represent something very important here — the fierce undercurrent of pride Peruvians feel for their country, a desperate desire for international validation of a distinctly Peruvian symbol, and, perhaps, a metaphor for Peru’s economic and cultural rise onto the world stage.

After a few pisco sours, even the Chileans, I’m betting, might agree.

Hi there. I’m going to borrow language from my friend Angi here. If you’re looking to help in the wake of the earthquake in Haiti, The Center for International Disaster Information makes it clear that monetary contributions to established relief agencies are the most useful response to disasters like this one. Financial contributions allow professional relief organizations to purchase exactly what is most urgently needed by disaster victims and to pay for the transportation necessary to distribute those supplies. The following organizations that have well-established modes of access and intervention to Haiti, and/or have physical bases in Haiti:

1. The Red Cross
2. Partners In Health
3. CARE
4. Doctors Without Borders

InterAction has a listing of many other organizations in need of donations, so please feel free to do your own research.

I currently work for the Peruvian branch of Partners In Health (PIH). Their projects are not based in Port-au-Prince and thus have, thankfully, not been severely affected. With approximately 100 physicians and 600+ nurses, PIH is now probably the biggest healthcare provider in Haiti. My family and I personally chose to donate to PIH.