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.

Comments

Tyler, if anything, the history of foreign aid to Africa suggests that you're wrong, perhaps very wrong. A huge foreign aid to Haiti will be good for some intelectuals (including academic economists), some Craxi-type politicians and their friends in developed countries, some bureaucrats at the UN and other international organizations, the new rulers of Haiti, and none else. Let me summarize the argument this way: for the same reasons that natural resources have been regarded as a curse for many poor countries, foreign aid has been a curse for these same countries.

Let us hope that Haitians will be able to migrate freely to any country of their choice.

From what I've read of the history of Haiti the largest influence on the per-capita GDP will be the lowering of the divisor while only having (probably) a positive change to the numerator due to foreign aid. However, for those who want to claim that the average Haitian's life has improved you are better off looking at percentile ranges and sizes to see how is actually driving/benefiting from the increase.

In the end land ownership, use and regulation is what will determine Haiti's course and the question is can the current Haitian government make "better" decisions regarding property rights. From a short-medium term economic standpoint the proper land-use policies are not likely to favorable to GDP and as mentioned above moralists look at not only magnitude but also "distribution" of DP.

Here's a chicken and egg question:

Which came first, the five or six wealthy families, or the corrupt government?

Now, factor in the stability of the wealthy families v. the instability of the governments.

Any guess?

Bill Harshaw,
Yes, some disasters trigger change, as to some extent has happened in NO and to a much larger extent in most European countries after the two WWs. But Port-Au-Prince is not in the US. It'd be quite different if Haitians were allowed to enter freely in the US and any other country of their choice.

@igloo: then add them to mississippi, texas, arkansas, and alabama where they will not change electoral calculus.

Rich families? Minus foreign aid the entire GDP barely beats some hedge fund manager salaries.

Do humans ever say "nice effort, but this place is doomed"?

http://en.wikipedia.org/wiki/Economy_of_Haiti

I know I'll stick with something until it works one time from sheer obstinence.

@igloo: then add them to mississippi, texas, arkansas, and alabama where they will not change electoral calculus.

Better yet, move them farmer's and Barandiaran's towns. Haiti's translocated population will not be an economically or educationally successful group in the United States. They will be stunningly successful in raising crime rates and making neighborhoods unlivable:

http://www.youtube.com/watch?v=qipxuj5W5A8

http://www.youtube.com/watch?v=qfrc3EfPxp4

In my own hometown (Cap-Haitien), I know many who have went bankrupt. Business is definitely not what it used to be.

That sounds right to me. The Colombians have been relying more heavily on the Mexican cartels in the past decade and less on the old Caribbean smugglers. (Mexico is proof that raising the GDP of Haiti isn't necessarily going to eliminate the drug smuggling or the corruption over time either.)

The Colombians have even been using primitive submarines--so-called "narco-subs"--in lieu of the Caribbean middlemen in order to avoid the Coast Guard. The Colombians are obviously not going to turn those subs over to foreigners when they can get very large shipments into U.S. coastal waters by themselves.

Perhaps a better option would be to slowly resettle more productive Haitians in Botswana. That won't solve Haiti's problems, the underclass will remain, but it will give the nation's more successful residents an opportunity to settle in a country with a fairly high GDP, low corruption, and lots of (non-arable) land. Those remaining behind in Haiti will be a little less overcrowded for a generation or two. I suspect the citizens of Botswana are wiser than many Americans, however, and they would decline to take in a bunch of Haitians.

@Tommy. Wow, you are so brilliant, using a few so-called proof to claim that all Haitian immigrants would come to United States to join gangs. Yeah, that video is proof alright, of what? So, 5% of all Haitian immigrants come to the US and join or create gangs. Sorry, but every immigrant groups who came to shore also had history of gang within their neighborhoods. How quick you are to forget about the Italians, Irish, Asians and even Russians. In fact, some of these groups still exist! What makes them better than Haitians? Moreover, most Haitians go to school and have career. My family is proof of that and so are the greater of the majority of Haitians that I know. Your nativism is quite virulent, my friend and quite false

"Haiti has imposed new controls on adoptions since the earthquake, which left thousands of children separated from their parents or orphaned. The government now requires Prime Minister Max Bellerive to personally authorize the departure of any child as a way to prevent child trafficking."

Yeah, that's a good sign.

http://news.yahoo.com/s/ap/cb_haiti_earthquake_americans_detained

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