How Haiti could turn things around

I'm not suggesting that the future gains will, in moral terms, outweigh the massive loss of life and destruction, but still the future Haiti might have a higher growth rate and a higher level of gdp per capita.  Here's how.

In the previous Haitian political equilibrium, the major interest groups were five or six wealthy families and also the drug trade, plus of course the government officials themselves.  None had much to gain from market-oriented, competitive economic development.  The wealthy families would have lost their quasi-monopolies and the drug runners would have been pushed out or lost some rents.  The wealthy families are not that wealthy and their economic projects are relatively small, at least by the standards of the outside world.

Enter the rebuilding of Haiti.  Contract money will be everywhere.  From the World Bank, from the U.S., from the IADB, even from the DR.  That contract money will be significant, relative to the financial influence of either the main families or the drug trade.

There exists (ha!) a new equilibrium.  The government is still corrupt, but it is ruled by the desire to take a cut on the contracts.  Ten or twenty percent on all those contracts will be more money than either the families or the drug runners can muster.  The new government will want to bring in as many of these contracts as possible and it will (maybe) bypass the old interest groups.  Alternatively, the old interest groups will capture the rents on these contracts but will be bought off to allow further growth and openness.

Arguably the new regime in Haiti will operate much like the federal states in Mexico.  Corrupt and a mess, but oriented toward a certain kind of progress, if only to increase the returns from corruption.

You will see this in how the port of Port-Au-Prince is treated.  Previously the rate of corruption was so high that the port was hardly used.  If the port becomes a true open gateway into Haiti (if only to maximize contracts and returns from corruption), that means this scenario is coming true.

The surviving Haitians, in time, might be much better off.  Virginia Postrel lays out some theory.


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