Tuesday, March 22, 2011

Haiti - Neoliberal Paradise

Haiti is one of the poorest nations in the world and also one where neoliberal programs have been in full swing for a long time. This is something that some want to deny, but I don't know how it can be denied.

In December of 1990 the top two candidates for President in Haiti were a former World Bank official, Marc Bazin, and Jean Bertrand-Aristide. Bazin was the US favored candidate because the World Bank and IMF are the primary implementers of neoliberal policies, the implementation of which is frequently referred to by the term Washington Consensus. Bazin's plans are simple. Cut import restrictions beyond their already non-existent level, reduce tariff's, and variously do all the other things favored by business. These supposedly will be a tremendous benefit for the poor.

Aristide is basically a progressive. He wants to do the very opposite. Rebuild Haiti's industries to where they can be self sufficient again. This means tariffs, taxes, and government that provides services to the poor. Make companies pay social security taxes. Increase minimum wage. There is some info on his policies here.

The assumption was that Bazin would win. He had all the money and all the power. But Haiti shocked the world. Aristide earned 67% of the vote and Bazin got 14%.

But that didn't matter. Haiti's first ever excursion into democracy would be brief. Aristide was immediately overthrown in a coup and Bazin was appointed acting Prime Minister. The US, while verbally objecting, did what it took to give the coup regime legitimacy and sustain it.

In 1994 Clinton allowed Aristide to return, but on conditions. He had to accept the harsh neoliberal regime of the defeated Bazin. Aristide had no choice but to comply, and did so.

The results were predictable. What happened was not unlike what happened to Haitian pig farmers when USAID mandated that they destroy all of their pigs and replace them with Iowa pigs in the early 80's. Haitian rice farmers were pretty efficient and the industry is important to the peasants, just as the Haitian pig industry was a backbone of the economy for many of the nation's poor. But how can they compete with American rice? Haitian rice production languishes as it has been doing for a while. A condition of IMF loans in the 80's was reduction in tariffs on rice and other agricultural products. US subsidized rice imports continue to rise. Peasants are driven off their land and into sweatshops near the slums. This makes sense because they are pursuing their comparative advantage. They need to be in the factories, not producing rice. That's more efficient.

The same is true of poultry. Tyson chicken floods the market with dark meat, which is not wanted by US consumers. Most other countries have functional governments that block that garbage. So Tyson first tried to dump it in Mexico and Canada, but since they have functional governments they were able to prevent it. Not Haiti, with it's non-existent governmental agencies. This destroyed the native Haitian chicken production. It's interesting that even Clinton, who comes out of Arkansas, which is where Tyson headquarters is, has admitted the destructive nature of these policies on Haiti. He doesn't mention Tyson, but only "Arkansas farmers."

All kinds of additional cause and effect relationships related to neoliberal policies within Haiti are discussed here. Ultimately Aristide was removed from power again in 2004 because he did not implement the neoliberal policies fast enough. Today his political party is banned from participating in the elections.

The results are of course a catastrophe. People on the very edge of subsistence. And the poverty exacerbates all the other problems. When an earthquake hits Cuba or Chile there may be a few deaths. When it happens in Haiti it's hundreds of thousands dead. As food prices rise the first riots are in Haiti. Just as the many millions killed in China due to Mao were not necessarily killed because Mao intended it but because he enacted policies that lead to their deaths, so Haitians die due to economic policies imposed on them by force by people, like Clinton, that for some reason don't recognize the destructive nature of these policies until it is too late.

This is neoliberalism. Good for short term profits which benefit the already wealthy. Good even for Americans that can buy really cheap clothes at Wal-Mart. Really bad and really cruel towards the millions of peasants in Haiti that have been denied self determination.


MKR said...

Thanks for putting this information together. So I take it that you do not subscribe to the Pat Robertson theory of Haitian history, according to which the reason why Haiti is so badly off, even in comparison with the Dominican Republic on the other side of the same island, is that their forebears swore a pact with the devil?

HispanicPundit said...

And of course, Haiti was doing so much better before these supposed neoliberal policies, right?

Poverty has a multitude of causes. Showing that Haiti was poor after supposed neoliberal reforms proves nothing. You have to show a rich country then explain why it become rich. Poverty itself is the norm. Wealth is the exception.

Also, nobody believes - not even the most right wing economist - that neoliberal policies are SUFFICIENT for wealth. They argue that they are NECESSARY, though not sufficient. It's a subtle difference that few people internalize.

Lastly, how do you know Haiti is neoliberal? What do you base this on? I can point to the Index Of Economic Freedom, and it shows Haiti to be really low on the neoliberal list (see here). Or I could look at the Fraser Institute, which also shows it to be anything but neoliberal (see here). But you won't like those. They are not objective enough. Okay, then I could look at the "Ease Of Doing Business Index" created by the world bank that shows roughly the same thing (see here). Don't like that either? How about I use the "Global Competitive Report" made by the World Economic Forum, which, again, shows the same thing (see here - doesn't even make the top list)?

But of course you won't accept any of that. It's all one big conspiracy. They are all in it together, with the rich and powerful of the world, to pull one over on the common man. Them, and of course the United States economic profession at all the Universities, because we don't see them make claims that these indexes are false (they are probably in cahoots with Biologists to deny creationism as well, no?). So instead of believing these sources, Jon asks us to trust a linguist (Chomsky) and his favorite movies on Netflix (though Santa Clause movies interestingly were excluded) in making the argument that Haiti is a 'neoliberal paradise'.

Sorry Jon, I just dont buy it. But maybe I am part of the conspiracy too??? :-)

Jon said...

MKR, I'm surprised Robertson was even informed enough to know about French involvement in Haiti.

It's kind of like a cave man unable to understand lightning so just assuming God did it. Understanding the causes takes a little bit of work in our day. I can cut a cave man some slack since he didn't have the tools we have. It's very easy to just say "Ahh, the trade towers were hit because we abort so many babies." Right there you've absolved yourself of any need to do any work to learn.

I suppose also avoiding the real causes is more comfortable because the answers are not pleasant.

Jon said...

HP, there's a reason I wrote this post on neoliberalism generally prior to this one on Haiti. I think the point you raise is a good one and one that I can largely agree with. Neoliberalism is not freedom. Neoliberalism is selectively applied freedom. It's freedom after a certain level of state intervention that creates conditions where neoliberalism suits investors and harms residents.

It's not like I like tariffs and regulations. It's not like I think it should be difficult to start a business or that doing business should be hard. It's not even that I think we should have onerous taxes.

What I believe is that nations should be permitted self determination. There are no free markets. There's very little in Haiti that is free market. Butchering all their pigs is not free market. Imposing dictators on them is not free market.

Having been devastated by the French, and subsequently by the US, what does Haiti need NOW. Low tariffs and low taxes could work. IF they can be permitted to do certain things that allow them to compete in a more valuable sphere.

Right now maybe pursuing their competitive advantage means sewing baseballs together and packaging toys for Disney. Give them maybe 30 cents an hour. In terms of overall efficiency that's what's presently profitable. In the short term educating people is costly. But if they don't want to be stuck sewing baseballs from generation to generation it's necessary to do some things that the books say are inefficient in the short term. World Bank officials as Prime Ministers don't see the value in that. The implement the Washington Consensus (see my link to that for a description of what neoliberalism is).

Adam Smith's advice to the American colonies was a lot like the present advice to Haiti. The British have a great industrial base, so to pursue your competitive advantage America should focus on what they do well. Trap and fish. Ship fur to Britain. They'll get industrial products in exchange. More efficient.

Having gained independence from England though there was no compulstion to follow that advice. So it was entirely ignored. Huge protective barriers against British textiles, and later steel. Economic growth exploded. Massive state intervention made things massively profitable (exterminating the indigenous people, shipping in slaves to pick cotton). Brutal, yes. But great for economic growth, entirely ignoring the neoliberal advice of the day.

The difference between the prosperous and poor is pretty simple. The prosperous had self determination, so they could ignore the benevolent advice of outsiders. The poor weren't strong enough. We used to call it colonialism. Today it's neoliberalism. Same thing. Deprive them of self determination. They'll stay poor, and enhance the short term gain of the powerful.

HispanicPundit said...

I am actually not against industrial policy - when it works. But thats the rub. It often doesnt.

The economic argument against industrial policy, AFAIK, is that while you could point to a country that used industrial policy to their favor (though economists would dispute that it was actually in their favor - they could have grown more in the absence), you could point to several more where it worked against them. Since there is no way to tell which way a country will go a priori, its best to err on the side of no industrial policy.

Industrial policy requires alot from a government. It requires the government to have some form of independence from lobbyists, limited corruption, and most of all, it requires the government to pick the winners independent of unfair lobbyists interest and market forces to assist in the decision. And even when all of this is done correctly, it requires that that their pet industrial policy actually survive when opened up to full market forces (a huge requirement in its own).

But then this pushes the question one step backwards: if the government is qualified to do all of this, then you probably really dont need industrial policy at all. The government structures are already in place for neoliberalism to thrive.

MKR said...

"MKR, I'm surprised Robertson was even informed enough to know about French involvement in Haiti." --The belief in the Haitian pact with the devil has been circulated by the right-wing evangelical crowd for years. It is part of their identification of Voodoo with Satanism. The really creepy thing is that the proponents of this insanity include some Haitians, among them the former ambassador to the US, Raymond Joseph. This crowd has also spread a preposterous story that Jean-Bertrand Aristide presided over the ritual murder of a baby in the presidential palace. I have written in detail about this insanity here if anyone is interested.