Can Things Get Any Worse In Haiti?

By Francis Menton March 15, 2024 @ Manhattan Contrarian

For those interested in why some countries become wealthy while others remain in extreme poverty, Haiti is one of the most important case studies. Despite being only a few hundred miles from the U.S. mainland, and even closer to Puerto Rico, with investment capital readily available and unlimited opportunities for trade, Haiti has essentially no economic development and is one of the poorest countries in the world. And instead of improving, conditions in Haiti only get worse. The past few weeks have seen yet a new extreme low point, with the Prime Minister locked out of the territory and the country taken over by armed gangs.

At this blog I have returned repeatedly to the subject of Haiti over the years, in the attempt to understand how things could have gone, and continue to go, so terribly wrong. The launch of this blog in 2012 came just over two years after the big 2010 earthquake in Haiti had brought forth an outpouring of foreign aid and private humanitarian assistance on a scale, relative to the size of the country, unprecedented in human history. Hillary Clinton was then Secretary of State, and became the face of U.S. efforts to assist Haiti in its recovery. At the same time, the Clinton Foundation was at its peak of renown, and got deeply involved in the Haiti assistance efforts. Surely, with this level of funding and star power, Haiti would shortly be on the path to wealth.

Yet in July 2014 I wrote a post titled “Why Is Haiti So Poor?,” noting that despite the attention of world elites and the outpouring of government and charitable funds, nothing had changed. Here is an excerpt from that post:

Haiti is perhaps the all-time champ of foreign aid.  If foreign aid worked to raise a country up out of poverty, then Haiti would be a rich country.  The Center for Global Development (no enemies of foreign aid) here has a history of foreign aid in Haiti. . . "[B]y 1991, Haiti received $380 million from abroad."  . . . [T]he aid thing really exploded after the big earthquake in January 2010.  A compilation here has the total of gifts and pledges to Haiti in the aftermath of the earthquake at $9,337.8 million.  That's about the equivalent of a full year's GDP for Haiti!  But the title of this report from Foreign Policy In Focus in January says it all:  Haiti: billions in Aid, Pennies in Progress since Earthquake.  You really need to read the whole thing to see how one government-imposed obstacle after another has kept Haiti from moving forward.

Hillary’s signature initiative through both the State Department and the Clinton Foundation was an industrial park in northern Haiti called Caracol, supposedly to bring some 60,000 jobs to the island country and jumpstart the economy. In this post from July 2015 I had a picture of Hillary leading a photo op tour at the Caracol facility (the picture is from 2012): 

But the Caracol project was controlled by the Haitian government, and funded largely by international development agencies rather than private investors. And thus it took forever to build and has never reached anything like its full potential. Here is an update from the Haiti Times in 2022. Excerpt:

Construction began on the 608-acre industrial park in 2011, attracting over $234 million in initial investment from IDB, Korean apparel-maker Sae-A Co. Ltd, as well as both the United States and Haitian governments. In November 2021, the IDB approved an additional $65 million investment. . . . The IDB, an international institution that finances development projects, said the investments should bring total employment to 22,000 people, up from about 14,000 today. 

So, more than a decade after beginning construction, they were not even up to a quarter of the original projected job total, and were struggling to get to maybe a third by 2026. Then, in early 2023, the only significant employer at the Caracol park, Sae-A, announced a round of lay-offs. That article from the Miami Herald doesn’t give any reasons for the action, but you can be certain that the bad business climate in Haiti had a lot to do with it. “Bad business climate” can include anything from violence in the neighborhood to demands for bribes to inability to get anything done with the local bureaucracies.

Meanwhile, Haiti, a country of some 11+ million people, has a reported unemployment rate of about 15%, meaning close to a million unemployed people. There are hundreds of thousands of young men with not enough to occupy their time. What better to do than go out and join an armed gang and fight for control of the country?

No significant private investor will make any meaningful investment in Haiti. Until that changes, Haiti will remain poor.

So what is the idea of our current President and Secretary of State for what to do now? As usual, they have only one idea, which is to send more money. This is from a piece in Foreign Policy today:

U.S. Secretary of State Antony Blinken traveled to Jamaica on Monday to meet with Caribbean leaders on the issue, and he pledged an additional $100 million in U.S. funds to finance the deployment of a multinational force to help stabilize the country. The Biden administration is urging Congress to unlock even more funds.

What they will never do is advocate for moving toward an economy of private property and free enterprise like we have in the United States. They won’t do that because they don’t understand how our economy works, or why it is successful; and at some deep level they are ashamed of our success.