How Haiti Stays Poor

Consistently one of the most-read posts on this blog is the one titled "Why Is Haiti So Poor?"  Although written about six months ago, lots of people keep finding it by searches on Google and other search engines.  Very appropriately, there is a lot of curiosity out there as to how it can be possible for this particular country to stay consistently so much poorer than all those around it.

Take the Dominican Republic for example.  It shares the same island with Haiti.  U.S. policy toward the two countries is not meaningfully different.  Haiti is not subject to any kind of special embargo like Cuba has been, and Haiti even gets some preferential trade treatment due to its extreme poverty and to the severe earthquake of 2010.  On the foreign aid front, Haiti gets a lot more per capita than the Dominican Republic.   But in the rankings put out by the World Bank, the IMF and the CIA, all three find that GDP per capita is in the range of 7 to 8 times higher in the Dominican Republic than in Haiti.   Haiti has far lower income than any of the other Caribbean island countries, and for that matter than any other country in the Western Hemisphere -- only some sub-Saharan kleptocracies rank lower.  In the CIA ranking, even North Korea ranks higher!  (The other two don't rank the Norks.)

Wasn't this all supposed to turn around with the outpouring of aid that followed the earthquake?  Leading the aid bandwagon were the Clintons, Bill and Hillary and their Clinton Foundation.  They came up with the idea of putting together an industrial park called Caracol in Haiti to attract private investors to create jobs.  On the web page of the Clinton Foundation you'll find a glowing write-up:

In collaboration with the Government of Haiti, the Inter-American Development Bank, and the U.S. State Department, the Clinton Foundation assisted with the development of the Caracol Industrial Park, which could ultimately create up 60,000 jobs and help to decentralize the Haitian economy. In October 2012, President Bill Clinton joined Secretary of State Hillary Rodham Clinton, President Martelly, Prime Minister Lamothe, and President Moreno of the Inter-American Development Bank (IDB) for the opening of Caracol Northern Industrial Park. Today, the Korean apparel manufacturer Sae-A is the anchor tenant and will create 20,000 jobs alone.         

They actually got one building built there and formally opened the place in 2012.  Here is Hillary at a photo op in connection with the opening.

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So where is this project today?  Mary Anastasia O'Grady of the Wall Street Journal traveled to Haiti and visited the site, and filed a report over the past weekend.  The answer to the question is that the project is inexplicably stalled.  Employing the 60,000 Haitians requires building some 40 simple factory buildings.  In the U.S., once you have a site, these things can be slapped together by private businesses in a few months.  In Haiti, four years after the project was announced, they have built all of three buildings.  The anchor tenant, South Korean garment manufacturer Sae-A Trading, says that it is willing to hire 20,000 people itself -- but to employ them it needs another dozen or so buildings, and so far it only has three.

So why in heavens name doesn't Sae-A just slap up the buildings and get on with things?  And now we come to the crux of the matter.  Sae-A doesn't control the building of buildings -- the Haitian government does.  Per O'Grady:

A Dec. 12 IDB [Inter-American Development Bank - a foreign aid agency] press release says the Haitian government is approved for a new $70 million grant to construct, among other things, three new production buildings by 2018 with a goal of providing space for 6,800 workers.

So we get to the issue that even O'Grady doesn't address directly, although it is strongly implied.  Why would the Haitian government insist on building the buildings itself with U.S. foreign aid money at a pace that will only get three more built in the next three years when forty are needed right now and private investors can do it right away?  And the answer of course is that the way it has been set up with the Haitian government in control of the land and the building, the $70 million must then flow through the Haitian government, where officials can skim a very nice part of it off for themselves.  And meanwhile while we all wait for that process to play out the people have no jobs and starve.

And the person who is the public front for this disastrous project is none other than frontrunner in the prospective race for Democratic nomination for President, Hillary Clinton.  It's not just that her foundation is in up to its neck and that she is the lead at the photo ops; she also got the U.S. commitment to the foreign aid when she was Secretary of State.  This project is her baby.  And she has no understanding of why this project is stalled or for that matter of what makes an economy work.  She should be screaming bloody murder about the corruption and obstructionism of the Haiti government, and instead her foundation web site brags about being in bed with them.  Her foreign aid is the very mechanism that the corrupt government of Haiti uses to enrich itself and keep the people in abject poverty.