dimanche 21 août 2011

Rebuilding Haiti: How Not to Do it

Tim Worstall, Contributor
I write about business and technology.
8/21/2011 @ 6:35AM
I'm a Fellow at the Adam Smith Institute in London, a writer here and there on this and that and strangely, one of the global experts on the metal scandium, one of the rare earths. An odd thing to be but someone does have to be such and in this flavour of our universe I am.
The author is a Forbes contributor. The opinions expressed are those of the writer.

This piece at Rolling Stone is a guide to how not to go about rebuilding a devastated country like Haiti. Apparently, sending all the really bright people to plan things and giving them all the money they could possibly want doesn’t work. Who knew?
It’s worth reading all nine pages of it it: it might depress you or it might enrage you but there is a lesson to be learned. A few snippets that help to make my point:
The dysfunction, say reconstruction officials, was like nothing they’d ever seen. “I wish I could organize a trip of Tea Party activists and take them to Haiti, so they could see what happens if they have a country with no government,” says Earl Kessler, an urban-disaster consultant for USAID. A central complaint was the lack of strategy: The “Action Plan,” while laying out the core priorities for Haiti’s recovery, didn’t go into many specifics. That left it up to Haiti’s ministries to devise their own plans. Some, like the health and agriculture ministries, came up with robust strategies. But in other key areas — housing, debris removal, waste management — nothing happened. Some Haitian ministers simply refused to pick up the phone; others demanded large payoffs before they’d sign off even on small plans.
“I’ve had two ministers come up to me this week, personally, and ask what’s in it for them,” says a frustrated IHRC official. “But that’s how this game gets played down here. He who has the most money buys the best minister, and gets the work. And since money grows on trees in this disaster, the attitude among Haitian officials is: Just call up your buddies in Washington, and they’ll send another check.”
We’ll come back to that Tea Party point in a moment. Just note that the government that Haiti has isn’t doing them a lot of good at the moment.
Sanitation remains a major problem. There is no functioning waste system outside of Haiti’s cities, making toilets that rely on water impossible. In the Croix de Bouquets area near Port-au-Prince, where USAID intended to build dozens of small dwellings known as “core homes,” planners had come up with an alternative solution — compost toilets — but USAID wouldn’t accept it. “They claimed it didn’t comply with U.S. codes,” recalls Vastine, who spent months working on the project. “But you cannot provide the kind of toilet mechanisms we have in the U.S. in most parts of Haiti. Simply to build the infrastructure would cost tens of millions of dollars.” The entire “core home” project, which cost $53 million, according to Vastine, wound up spending about a third of the money trying to replicate American-style toilets for Haitian refugees. “It was ridiculous,” says Vastine.
Foreign government rules don’t seem to be doing much good either. While they were arguing about whether to build toilets to US code or not a cholera epidemic was sweeping through the country killing hundreds, if not thousands. Cholera being one of these diseases prevented by simply making sure that defecation isn’t taking place into the water supply: it really is that simple and doesn’t require codes of any kind.

The home grown bureaucracy wasn’t any better:
An official from an international aid agency notes that Port-au-Prince is now overflowing with waste, yet 52 disposal trucks that have been imported to handle it are still sitting in customs.
And yet things are getting done:
In Port-au-Prince, however, the one true achievement of “building back better” was engineered not by the Haitian government or the IHRC or the State Department, but by Haiti’s largest employer — the telecommunications giant Digicel. The company’s founder, Denis O’Brien, is a major Clinton Foundation contributor and chairman of the Clinton Global Initiative’s Haiti Action Network, a consortium of largely private-sector partners who have committed more than $224 million to reconstruction projects. In February 2010, only a month after the earthquake, O’Brien embarked on a project to rebuild the Iron Market, a 120-year-old marketplace in downtown Port-au-Prince, contributing $12 million of his own money to do so. The project took just 11 months. Bill Clinton, who has cast O’Brien as the model philanthrocapitalist, lauded the Irish billionaire as a “catalyst” for positive change. The reconstructed landmark was the only project “of any scale” to be completed in Haiti, said John McAslan, a British architect whose firm worked to restore the Iron Market. “It’s amazing it’s been so fast,” he said. “It could have taken five years without such a determined client.”
That’s enough for us to be able to provide some sort of advice.
We’ve seen that taking all the bright people from the aid agencies, the Clinton Administration (this is not a reflection upon the Clintons personally, rather the mindset that wonks with plans are going to be able to do things) and giving them all the money they could possibly need doesn’t in fact rebuild a shattered economy. This isn’t the way to provide toilets: nor is being over-respectful of “democracy” or the established institutions such as the Customs Service. These are simply opportunities to extract bribes.
The one piece of effective reconstruction mentioned has been done by a private sector entrepreneur in pursuit of profit.
What’s so sad about all of this, the wasted money, lives, is that we in fact already knew this. We’ve seen it happen before. Some 20 % of Haiti’s housing was destroyed in this earthquake. Some 20% of Germany’s housing was destroyed in WWII. How did they manage to rebuild?
After World War II the German economy lay in shambles. The war, along with Hitler’s scorched-earth policy, had destroyed 20 percent of all housing. Food production per capita in 1947 was only 51 percent of its level in 1938, and the official food ration set by the occupying powers varied between 1,040 and 1,550 calories per day. Industrial output in 1947 was only one-third its 1938 level. Moreover, a large percentage of Germany’s working-age men were dead. At the time, observers thought that West Germany would have to be the biggest client of the U.S. welfare state; yet, twenty years later its economy was envied by most of the world. And less than ten years after the war people already were talking about the German economic miracle.
What caused the so-called miracle? The two main factors were currency reform and the elimination of price controls, both of which happened over a period of weeks in 1948. A further factor was the reduction of marginal tax rates later in 1948 and in 1949.
There really are times when less is more.
We might also think of Adam Smith’s point that there’s a lot of ruin in a nation. We in the rich nations can afford to have those wonks with their plans crawling all over our lives. Sure, low flush toilets are an annoyance we could do without and they don’t do much good either but they are just that, an annoyance. The insistence upon them does not mean children dying of cholera, evacuating their guts into the gutters. However, people in poor places cannot afford that: there isn’t a nation there to ruin. Which is why we need to turn to that capitalism red in tooth and claw to build one before we have the luxury of allowing the do-gooders to waste that slice off the top with their plans.

For, and this is the important thing not our desires or morals, we know that it works. We know that in extremis ripping up the rules and simply getting on with voluntary exchange unencumbered by rules and regulations, however well meaning they may be, produces the wealth that enables people to stay alive.
Or as Joan Robinson pointed out, the only thing worse than being exploited by capitalism is not being exploited by capitalism. So get rid of the rules that prevent that exploitation.
Which brings us back rather neatly to that Tea Party point mentioned at the beginning. When you’ve bad government, when you’ve government that is falling over its own feet, when you’ve government that is preventing the wealth creation that will enable people to thrive, heck, when you’ve government that is killing people by insisting upon protecting the governors’ ability to make a buck then yes, it really is true that the solution is less government.
And isn’t that an interesting lesson to learn from Bill Clinton’s attempts to rebuild Haiti?

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