Haiti: Avoid the Statist Model
HAITI'S president-elect, the Rev. Jean-Bertrand Aristide, might well look to Mauritius for guidance. The economy of that Indian Ocean island has boomed since it dropped socialism for capitalism. But Aristide, a self-described socialist, looks favorably upon the impressive education and health system of his neighbor Cuba. Like Mauritius and Haiti, Cuba overinvested in sugar and can no longer afford its achievements now that the Soviet subsidies are ending. Aristide would be wise to visit both islands and compare.
During the presidential campaign, Aristide hinted he'd respect the Haitian private sector, and eschewed some of his rhetoric against the US (the ``devil incarnate'') and foreign enterprise.
Yet, his economic platform argues for statist, protectionist, and populist initiatives. Aristide may be planning a post-Berlin Wall socialism for the most impoverished country in the hemisphere.
Aristide must contend with corrupt and inefficient state ministries and enterprises, a largely mulatto business elite that is totally uninterested in the mostly indigent, illiterate black masses, gross underemployment, and a new phenomenon of 35 percent inflation. Urban migration has spawned some horrific slums, the worst of which possibly has no rival anywhere.
Aristide certainly has an overwhelming personal mandate to exercise leadership and enjoys an absolute majority of the Senate and a de facto majority in the House of Deputies. Moreover, Aristide will doubtless be Haiti's first honest ruler.
Without government experience, Aristide makes his proposals sound as if they are risk- and cost-free, which they are not. He is faced with many unhappy choices about whom he will have to disappoint. Aristide will lose more than a halo.
His populist camp has contradictions between those complaining about the high cost of living and those seeking protection from much cheaper imports. If Aristide proposes price controls, there will be a scarcity of basic goods.
Aristide was supported in his campaign by an ``unholy alliance'' of self-styled progressives advocating national economic self-sufficiency and protected industrialists like Antoine Izmery and the Association of National Producers.
Aristide proposes war on contraband, the sign of a sick economy. Contraband is the peasant's entrepreneurial response to Haiti's monopolistic prices. The real enemies are predatory, Duvalierist trade practices like licenses, tariffs, duties, and quotas. They only serve Duvalierists that collect bribes and the military that takes fees on illegal imports that the poor need.
Aristide also wants to shut down secondary, provincial ports not beholden to the corrupt customs house. These cheap, but illegal imports have been a lifeline for many poor Haitians.
Port closings would cause a depression in many regions based on efficient foreign commerce. Gonnaives, Haiti's most radical city, which probably voted at least 70 percent for Aristide, would become a ghost town. An additional irony would be that Aristide could only stop contraband by using the army.
Worst, Aristide wants to build the inefficient kleptocratic state by nationalizing more industries, creating state banks, and forcing private ones to lend. Sounds economically disastrous.
Gerard Pierre-Charles and Aristide used to criticize Minister de la Tour when he closed some of the state monopolies, which were overcharging Haiti's poor consumers, such as 30 cents a pound from the Darbonne Sugar Mill in Leogane when the world price was only 10 cents a pound. Now, the world price of flour is about $12, but the Haitian Minoterie flour mill charges $26.50.
Yet Aristide's charismatic leadership might also engender the kind of public-private cooperation in which Haiti's government has never been interested. Former Social Affairs Minister Claudette Werleigh noted, ``With Aristide in charge, Haitians can start working again for the public good, something they have not been allowed to do before.''
What Aristide should do is get his government out of flour and sugar and into education and health. Invest in public education that will create thousands of jobs instead of ironically preserving basic parts of the Duvalierist economic system.