The heartbreaking devastation of Haiti shows again that as deadly as Mother Nature can be when acting alone, she is far more lethal when she conspires with poverty. The immediate cause of the deaths of the hundreds of thousands Haitians was the earthquake, but most of those people might be alive today if Haiti weren’t poor. And why is Haiti poor? Because for centuries foreign and domestic tyrants exploited the Haitian people and blocked their routes out of poverty.
Thus, those deaths are on the heads of anyone who stood in the way of Haiti’s economic development.
In the immediate aftermath of a disaster such as the one in Haiti, many people feel it is inappropriate to talk critically about the political economy and social structure of the stricken country. It is thought to be using a terrible tragedy to score “ideological points.” But, curiously, when Haiti was in its normal impoverished condition, it also wasn’t the right time to raise such issues. It seems it’s never the right time to put a place like Haiti under the microscope and point out what is wrong with how it is governed. Since that is the case, there is nothing to lose in examining Haiti’s plight from the perspective of political economy at this time.
Poverty kills and, as the late Aaron Wildavsky used to say, wealthier is healthier. The 7.0 earthquake that leveled Haiti was about the same magnitude as the San Francisco earthquake of 1989. But that quake killed about 60 people, while Haiti lost hundreds of thousands. Why the mind-numbing difference? The accumulation of wealth in the United States permitted the development and use of technologies that make buildings more resistant to earthquakes. (Technological knowledge is not enough; one has to be able to afford the technology itself.) And what makes the accumulation of that much wealth possible? Economic freedom — or at least a significant degree of it.
Economic freedom means that people are free to trade, produce, invest, and engage in entrepreneurship — to participate in a division of labor — without government interference. To have truly free markets, people must be able to work and take risks secure in the knowledge that the state will not confiscate the fruits of their labor or even their good fortune. Further, truly free markets require that government not regulate economic activity. While force and fraud are legitimately barred from social interaction, all voluntary exchange is left unmolested. (To be sure, the United States has never fully achieved that, but it has gotten close enough to experience many of the benefits, namely, a high standard of living for most of the population. Imagine if the people had had full economic freedom!)
This does not mean that free markets are “unregulated,” or “unfettered.” Those are often used as scare words. The thought of uncontrolled forces can be terrifying. Wasn’t it an uncontrolled force that leveled Haiti? But in fact, market “forces,” when government keeps hands off, are strictly regulated — by free competition. In a truly free market the economic behavior of one person is limited by the economic freedom of everyone else. If a grocer tries to sell apples for $10 apiece, his ability to succeed will be curtailed by someone else selling apples at a lower price. (That is why pure entrepreneurial profit, in the sense of the fruits of arbitrage, is fleeting.) Competition, that is, freedom, will ensure it. As long as politicians do not funnel privileges to favored companies or protect cronies from their rivals, competition will keep things honest, providing alternatives to workers and consumers when they are unhappy with the jobs and products they are offered.
A history of control
For Haiti the problem is that centuries of foreign and domestic tyranny have kept individual liberty and free markets from emerging. After Columbus’s landing at the island of Hispaniola, what would become Haiti (the western third of the island) was ruled and exploited by Spain and then France for about 300 years. Some inhabitants were enslaved, and Africans were imported as slaves. After the French Revolution, the slaves rebelled and efforts at independence began. French and then English campaigns to subdue Haiti failed, and the striving for both emancipation and independence finally succeeded in 1804, when the name “Haiti” was adopted. It is considered the only nation to have grown out of a slave rebellion.
But that was not the end of Haiti’s problems. Post-independence Haiti suffered under tyrants and a long string of political coups. It never was allowed to find its way to social stability based on respect for life, liberty, and property.
In the early 20th century, foreign intervention — from Germany, England, and the United States — also helped keep Haiti unstable. The U.S. government’s nearly 20-year occupation (1915-1934) in behalf of sugar interests did its part to maintain Haiti in its infantile condition. Later the Haitians suffered under the homegrown tyrannies of the brutal Duvaliers, “Papa Doc” and “Baby Doc,” who were backed for a while by the U.S. government as a Caribbean Cold War counterweight to Castro’s Cuba. Even under a semblance of democracy, Haiti found little relief from corruption and stifling control. During that time it has been the recipient of government-to-government “aid,” but that has not created prosperity; rather it lined the pockets of crooked officials.
The failure of aid
Conventional wisdom would say that Haiti did not get enough “aid” money or that it went to the wrong people. In fact, the record of “foreign aid” is miserable everywhere under all circumstances. It empowers rulers and inhibits growth of a vital private sector by making government the source of money, economic projects, and favors. It cannot improve society because governments are inept and ignorant in economic matters, and because people need freedom above all else if they are to become prosperous. (Of course, “foreign aid” is also illegitimate because it is money stolen from the taxpayers of the donor country.)
As the great free-market development economist P.T. Bauer wrote,
Since official wealth transfers go to governments and not to the people at large, they promote the disastrous politicization of life in the Third World…. Aid increases the power, resources, and patronage of governments compared with the rest of society and therefore their power over it…. And when social and economic life is extensively politicized, who has the power becomes supremely important, sometimes a matter of life and death….
In such circumstances, Bauer continued,
People divert their resources and attention from productive economic activity into other areas, such as trying to forecast political developments, placating or bribing politicians and civil servants, operating or evading controls…. The direction of people’s activities and resources must damage the economic performance and development of a society, since these depend crucially on the deployment of people’s human, financial and physical resources.
Once again, even good intentions are irrelevant in these matters. Government-to-government wealth transfers have bad consequences no matter what was in the hearts of the donors.
What now for Haiti? That’s really two questions, about the immediate period and the longer run. In the short run, rescue and relief should have been left to private organizations and donations. It is simply a myth that if the U.S. government had not taken charge, nothing would have gotten done. Americans are generous and willing to give ample amounts of money (as they always do). There is no generosity in government’s compelling taxpayers to help.
In the longer term, Haiti needs economic development. But Haiti will not achieve it until the people there demand individual freedom, the rule of law, property rights, and civil liberties. Only then will they begin to produce and trade and accumulate wealth. There is no shortcut.
The U.S. government can do something. First, abolish all barriers to trade. Shame on the U.S. textile industry for opposing this over the years. Second, open the borders. The U.S. government has vowed to send “undocumented” Haitians home, but no Haitian should have to suffer while waiting for his rulers to get out of the way.