Can Haiti Really Become Resilient?

Stephen DeAngelis

January 22, 2010

The outpouring of concern for Haiti has been remarkable. The American Red Cross, for example, has been amazed at the amount of money that has been donated through mobile phone contributions (over $22 million was the last figure I heard). There is a nagging suspicion, however, that once the bodies are buried, the wounded attended to, the streets cleared of rubble, and the rebuilding process begins, that Haiti will return to its status as a failing and fragile state. New York Times‘ op-ed columnist Nicholas Kristof reports that some people have actually had the courage to state what many others are obviously thinking [“Some Frank Talk About Haiti,” 21 January 2010]. He writes:

“On my blog, a woman named Mona pointed to Haitian corruption and declared: ‘I won’t send money because I know what will happen to it.’ Another reader attributed Haiti’s poverty to ‘the low I.Q. of the 9 million people there,’ and added: ‘It is all very sad and cannot be fixed.’ ‘Giving money to Haiti and other third-world countries is like throwing money in the toilet,’ another commenter said. A fourth asserted: ‘Haiti is a money pit. Dumping billions of dollars into it has proven futile. … America is deeply in debt, and we can’t afford it.'”

Despite Haiti’s long-term prospects, the moral and ethical thing to do when people are suffering is to help relieve that suffering. The corrupt nature of Haitian politicians is not a legitimate excuse for withholding assistance from innocent sufferers. The outbreaks of violence and general lawlessness experienced in Port Au Prince reminds us that all recipients aren’t innocent; but even the violence doesn’t let us off the hook to help. Kristof, however, believes that Haiti is not a hopeless case. He continues:

“For those with doubts, let’s have a frank discussion of Haiti’s problems: Why is Haiti so poor? Is it because Haitians are dimwitted or incapable of getting their act together? Haiti isn’t impoverished because the devil got his due; it’s impoverished partly because of debts due. France imposed a huge debt that strangled Haiti. And when foreigners weren’t looting Haiti, its own rulers were. The greatest predation was the deforestation of Haiti, so that only 2 percent of the country is forested today. Some trees have been — and continue to be — cut by local peasants, but many were destroyed either by foreigners or to pay off debts to foreigners. Last year, I drove across the island of Hispaniola, and it was surreal: You traverse what in places is a Haitian moonscape until you reach the border with the Dominican Republic — and jungle. Without trees, Haiti lost its topsoil through erosion, crippling agriculture. To visit Haiti is to know that its problem isn’t its people. They are its treasure — smart, industrious and hospitable — and Haitians tend to be successful in the United States (and everywhere but in Haiti).”

I agree with Kristof that Haiti’s troubles have nothing to do with the intelligence of the people living there. It may, however, have more to do with the local culture than Kristof is willing to admit. See my post entitled The Challenge of Building or Re-building Impoverished Communities in which I comment on an article by David Brooks that discusses some of the reasons for Haiti’s poverty besides crushing debt and lack of trees. Kristof continues:

“Can our billions in aid to Haitians accomplish anything? After all, a Wall Street Journal column argues, ‘To help Haiti, end foreign aid.’ First, don’t exaggerate how much we give or they get. Haiti ranks 42nd among poor countries in worldwide aid received per person ($103 in 2008, more than one-quarter of which comes from the United States). David Roodman of the Center for Global Development calculates that in 2008, official American aid to Haiti amounted to 92 cents per American. The United States gives more to Haiti than any other country. But it ranks 11th in per capita giving. Canadians give five times as much per person as we do. As for whether aid promotes economic growth, that’s a bitter and unresolved argument. But even the leading critics of aid — William Easterly, a New York University economist, and Dambisa Moyo, a banker turned author — believe in assisting Haiti after the earthquake. ‘I think we have a moral imperative,’ Ms. Moyo told me. ‘I do believe the international community should act.’ Likewise, Professor Easterly said: ‘Of course, I am in favor of aid to Haiti earthquake victims!'”

I’ll discuss the Wall Street Journal article mentioned by Kristof at the end of this post. At this point, I think Kristof is confusing humanitarian assistance with developmental aid. Only the most calloused soul would opt to withhold humanitarian assistance to a suffering nation. Humanitarian assistance, however, is in intended to relieve suffering not foster development. Even though Kristof claims that the debate about whether foreign aid fosters development remains “a bitter and unresolved argument,” most people in the development community understand that foreign direct investment is much more important than aid in helping a country grow its economy. That is not to say that foreign aid doesn’t play a role. Kristof continues:

“So, is Haiti hopeless? Is Bill O’Reilly right? He said: ‘Once again, we will do more than anyone else on the planet, and one year from today Haiti will be just as bad as it is right now.’ No, he’s not right. And this is the most pernicious myth of all. In fact, Haiti in recent years has been much better managed under President René Préval and has shown signs of being on the mend. Far more than most other impoverished countries — particularly those in Africa — Haiti could plausibly turn itself around. It has an excellent geographic location, there are no regional wars, and it could boom if it could just export to the American market. A report for the United Nations by a prominent British economist, Paul Collier, outlined the best strategy for Haiti: building garment factories. That idea (sweatshops!) may sound horrific to Americans. But it’s a strategy that has worked for other countries, such as Bangladesh, and Haitians in the slums would tell you that their most fervent wish is for jobs. A few dozen major shirt factories could be transformational for Haiti.”

Kristof is correct in stating that most Haitians wish fervently for jobs. Unemployment in Haiti, before the earthquake, hovered around 70 percent. “A few dozen major shirt factories” would be nice, but they wouldn’t come anywhere near providing the over two million jobs that are needed in Haiti. For more on Haiti’s pre-earthquake economy, see my post entitled The Conundrum of Haiti. Kristof concludes:

“So in the coming months as we help Haitians rebuild, let’s dispatch not only aid workers, but also business investors. Haiti desperately needs new schools and hospitals, but also new factories. And let’s challenge the myth that because Haiti has been poor, it always will be. That kind of self-fulfilling fatalism may be the biggest threat of all to Haiti, the real pact with the devil.”

In the end, Kristof admits that it will be investment more than aid that will help Haiti pull itself out of poverty; and, that’s really the point of the Wall Street Journal article mentioned above [“To Help Haiti, End Foreign Aid,” by Bret Stephens, 19 January 2010]. Stephens writes:

“In the days ahead, Haitians will undergo another trauma as rescue efforts struggle, and often fail, to keep pace with unfolding emergencies. After that—and most disastrously of all—will be the arrival of the soldiers of do-goodness, each with his brilliant plan to save Haitians from themselves. ‘Haiti needs a new version of the Marshall Plan—now,’ writes Andres Oppenheimer in the Miami Herald, by way of complaining that the hundreds of millions currently being pledged are miserly. Economist Jeffrey Sachs proposes to spend between $10 and $15 billion dollars on a five-year development program. ‘The obvious way for Washington to cover this new funding,’ he writes, ‘is by introducing special taxes on Wall Street bonuses.’ In a New York Times op-ed, former presidents Bill Clinton and George W. Bush profess to want to help Haiti ‘become its best.’ Some job they did of that when they were actually in office. All this works to salve the consciences of people whose dimly benign intention is to ‘do something.’ It’s a potential bonanza for the misery professionals of aid agencies and NGOs, never mind that their livelihoods depend on the very poverty whose end they claim to seek. And it allows the Jeff Sachses of the world to preen as latter-day saints.”

Stephens may be going over the top taking personal potshots at former presidents and respected professors. It’s clear from the remainder of his article, however, that he is frustrated with the status quo and needs to vent. He continues with his polemic:

“For actual Haitians, however, just about every conceivable aid scheme beyond immediate humanitarian relief will lead to more poverty, more corruption and less institutional capacity. It will benefit the well-connected at the expense of the truly needy, divert resources from where they are needed most, and crowd out local enterprise. And it will foster the very culture of dependence the country so desperately needs to break. How do I know this? It helps to read a 2006 report from the National Academy of Public Administration, usefully titled ‘Why Foreign Aid to Haiti Failed.’ The report summarizes a mass of documents from various aid agencies describing their lengthy records of non-accomplishment in the country. Here, for example, is the World Bank—now about to throw another $100 million at Haiti—on what it achieved in the country between 1986 and 2002: ‘The outcome of World Bank assistance programs is rated unsatisfactory (if not highly so), the institutional development impact, negligible, and the sustainability of the few benefits that have accrued, unlikely.’ Why was that? The Bank noted that ‘Haiti has dysfunctional budgetary, financial or procurement systems, making financial and aid management impossible.’ It observed that ‘the government did not exhibit ownership by taking the initiative for formulating and implementing [its] assistance program.’ Tellingly, it also acknowledged the ‘total mismatch between levels of foreign aid and government capacity to absorb it,’ another way of saying that the more foreign donors spent on Haiti, the more the funds went astray.”

Stephens’ arguments against aid actually help strengthen arguments for aid (at least for aid of the right type and amount). Even Stephens can’t reasonable argue that a country is better off without a functioning government. Somalia is a great example of how anarchy creates chaos, poverty, and death. But businesses are not going to invest in improving governments. Only governments, NGOs, and international organizations are going to do that. Companies interested in investing in a country are encouraged to do so when they know they are dealing with a competent and honest government, but helping improve the government generally doesn’t help improve their bottom line. Aid can help build capacities of which investments can take advantage. Stephens continues:

“But this still fails to get at the real problem of aid to Haiti, which has less to do with Haiti than it does with the effects of aid itself. ‘The countries that have collected the most development aid are also the ones that are in the worst shape,’ James Shikwati, a Kenyan economist, told Der Spiegel in 2005. ‘For God’s sake, please just stop.’ Take something as seemingly straightforward as food aid. ‘At some point,’ Mr. Shikwati explains, ‘this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unscrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the U.N.’s World Food Program.’ Mr. Sachs has blasted these arguments as ‘shockingly misguided.’ Then again, Mr. Shikwati and others like Kenya’s John Githongo and Zambia’s Dambisa Moyo have had the benefit of seeing first hand how the aid industry wrecked their countries. That the industry typically does so in connivance with the same local governments that have led their people to ruin only serves to help keep those elites in power, perpetuating the toxic circle of dependence and misrule that’s been the bane of countries like Haiti for generations.”

To learn more about arguments along this line, read my post entitled Will Money Solve Africa’s Problems? I concluded that post by writing: “Development does take money, but it also takes courage, creative thinking, and solid principles upon which to act.” Those “solid principles” are what Stephens discusses next:

“A better approach recognizes the real humanity of Haitians by treating them—once the immediate and essential tasks of rescue are over—as people capable of making responsible choices. Haiti has some of the weakest property protections in the world, as well as some of the most burdensome business regulations. In 2007, it received 10 times as much in aid ($701 million) as it did in foreign investment. Reversing those figures is a task for Haitians alone, which the outside world can help by desisting from trying to kill them with kindness. Anything short of that and the hell that has now been visited on this sad country will come to seem like merely its first circle.”

In the end, Brooks, Kristof, and Stephens really come to the same conclusion: Haiti will only break poverty’s grasp when it starts attracting foreign direct investment. Unfortunately for Haiti, the earthquake and its aftershocks happened amidst one of history’s biggest economic downturns. Companies are shedding jobs, not creating them. I noted above that development takes money and creative thinking. Some of that creative thinking has to come from Haiti’s politicians. They need to clean up the business environment and foster a climate conducive to entrepreneurism. People and organizations that want to follow up humanitarian assistance with developmental aid should bypass the government and find entrepreneurs with the ideas, skills, and ambitions necessary to succeed. Entrepreneurs create jobs and jobs create futures. Author Mark Danner, who has written extensively about Haiti, provides his own prescription for the country’s future [“To Heal Haiti, Look to History, Not Nature,” New York Times, 22 January 2010]. He writes:

“America could start by throwing open its markets to Haitian agricultural produce and manufactured goods, broadening and making permanent the provisions of a promising trade bill negotiated in 2008. Such a step would not be glamorous; it would not ‘remake Haiti.’ But it would require a lasting commitment by American farmers and manufacturers and, as the country heals, it would actually bring permanent jobs, investment and income to Haiti. Second, the United States and other donors could make a formal undertaking to ensure that the vast amounts that will soon pour into the country for reconstruction go not to foreigners but to Haitians — and not only to Haitian contractors and builders but to Haitian workers, at reasonable wages. This would put real money in the hands of many Haitians, not just a few, and begin to shift power away from both the rapacious government and the well-meaning and too often ineffectual charities that seek to circumvent it. The world’s greatest gift would be to make it possible, and necessary, for Haitians — all Haitians — to rebuild Haiti. Putting money in people’s hands will not make Haiti’s predatory state disappear. But in time, with rising incomes and a concomitant decentralization of power, it might evolve. In coming days much grander ambitions are sure to be declared, just as more scenes of disaster and disorder will transfix us, more stunning and colorful images of irresistible calamity. We will see if the present catastrophe, on a scale that dwarfs all that have come before, can do anything truly to alter the reality of Haiti.”

Haiti will have to rebuild; but it shouldn’t rebuild with the rubble of its past. Its buildings can be made more resilient and so can its economy — Kristof and Danner are correct about that. But Stephens and Brooks are also correct that the people of Haiti bear a large burden concerning their own future as well. If they take advantage of the current situation by pulling together and demonstrating a national character epitomized by hard work and a willingness to change, they will begin to see the dim rays of a brighter future.