Why Nations Fail Part II: Why Haiti is Still So Poor

Yesterday I explained how a nation’s political system determines the economic future of that country. Every sovereign government can take one of two paths with regard to its economic future; a nation can provide an open playing field, allowing competition and the competitive process to take place, or a nation can design an economy that will function to benefit a particular market or industry. In order for a nation to provide an open economic and social playing field, it must create an equitable and fair legal system, allow for competition rather than favoritism, protect property right, sponsor infrastructure and public goods, and prevent monopolies and cartels from having too much market influence. This is usually called pluralism, and the types of institutions that embrace pluralism are described in the book Why Nations Fail as inclusive institutions. If a nation does not take the path of pluralism and sponsors one particular industry, it may have a short period of growth, but will not achieve any real economic growth in the long term. These governments are described in Why Nations Fail as extractive because they extract wealth from one group and distribute it to another group. Usually (but not always) the nation’s rulers are also those at the forefront of the economy, and design the economy to benefit them. This not only causes great poverty, but in many cases can denies people fundamental rights to land, liberty, and property. 

Considering how governments can shape their economies, and many times shape their economies to keep a small elite group in power at the expense of the rest of the society, Haiti’s political history begins to explain its current state of dismal poverty. As a Spanish and French colony, Haiti was a prime example of an extractive institution. The society was designed to benefit the elite class of white plantation owners at the expense of the African slaves brought to Haiti. Before the Haitian revolution, less than 10% of the Haitian population was white. At first the Haitian economy grew thanks to the large French investment into the plantation system, but that growth soon began to dwindle once all of the farm land was occupied by plantations. Even though new technology could have benefitted the entire economy as a whole, it would have meant that a new group of people would have risen and displaced those currently occupying power, the White plantation owners. The French plantation owners did not want any threats to their power, so they resisted implementing any new technology in order to keep their firm grip on the economy.

When the French were overthrown in 1804, most either left the island or were killed. This created a power vacuum. The leaders of the revolution who filled this vacuum were apart of a relatively small class of educated Haitians. Many of these Haitians were of mixed race, the children of French men and their slave mistresses, and they were put in charge of the day-to-day operations of the plantations. The new elite class of Haitians, lead by Jean Jacques Dessalines, wanted to overthrow the French and end slavery, but they did not have any intention of ending the plantation system. At this time, goods produced in tropical climates, namely sugar, was extremely profitable, and the new rulers of Haiti wanted to be at the forefront of this trade, hoping it would propel Haiti into as a world super power. They were also, with the French plantation owners gone, in charge of many of the large plantations and greatly benefitted from keeping the plantation system intact. This system came to be known as the fermage system, and did help Haiti attain some wealth, but most of which was unfortunately enjoyed by a small elite at the expense of the majority of Haitians. This system did not promote the development of property rights of any pluralistic institutions that would have created an even playing field.

In 1825, the France sent a team of diplomats in to negotiate with then President of Haiti Jean Pierre Boyer. The negotiation focused on an indemnity that France felt entitled to by Haiti. Though France had lost the Haitian Revolution, they asked Haiti to repay the French for the profits lost from the slave trade. Their argument was not very solid, but the French battleships parked outside of Port Au Prince were, so Haiti ended up signing the treaty. This is the only time in history when the victors of a war pay an indemnity to the vanquished, but the French managed to negotiate a loan of 150 million Francs from Haiti. This loan was a quite onerous on Haiti and was paid by Haiti for the next seventy years, many times consuming over 50% of Haiti’s public expenditures.

Throughout the 19^th century, Haiti had two extractive forces working against its development: the semi feudal land arrangement that aimed at boosting farm production at the expense of the rural Haitian peasant, and the debt to France. Needless to say this created an unstable environment that saw one government topple after another. Governments rose as quickly as they fell, and there was no effective rule of law or enforcement of property rights. In one twenty year period in the middle of the century, the governments was toppled over twelve times. In order for a society to prosper, the government has to provide certain services (for starters they need to provide a reliable police force and a fair judicial system) that would benefit the whole society. Some extractive governments don’t implement these services because it would cause a threat to your rule (it’s a lot easier to rule when no one can sue you in court). In Haiti’s case the government didn’t resist these policies as much as they never really had a chance to implement them due to the continuous political upheaval. This political upheaval continued until 1915, when the US Marines began their occupation of Haiti that would last until 1934. Though this did end the continuous intimidation from different European powers as well as the continuous political upheaval, it did not promote the development of the Haitian legal system, forcing those Haitian peasants to be without property rights or any of the other legal utilities that foster a growing economy.

Once the Marines left, there was hope for Haiti. There was hope that finally, after over two hundred years of instability, Haiti could develop a government that would promote the general interests of the Haitian people, and allow for Haiti to begin on the path to creative destruction and increased prosperity. The hope came in the form of Dumarsais Estimé, who was president of Haiti from 1946 to 1950. Estimé looked toward economic liberation, and attempted to remove the American corporations that held too much political sway in Haitian government. Estimé’s policies, however noble, were overturned. President Rafael Trujillo, the then president and brutal dictator of Dominican Republic worked with Haitian military to unseat Estimé, who was eventually exiled to Paris in 1950.

This chaos prevented the attempts at economic liberalization and hampered any attempt to implement a fair and equitable legal system that could foster economic development. The chaotic state of Haitian politics made room a dictator to come forth, someone to rise from the ashes and grip Haiti with an iron fist. That leader came in 1957 in the form of François Duvalier, better known as "Papa Doc". Duvalier had served under Estimé as a Physician, but was also very involved in public discourse and was known for his influential editorials. Duvalier came to the presidency with high hopes but ended up being on of Haiti’s most brutal dictators. Duvalier saw himself as the embodiment of all things Haitian, and created a personality cult around him to whom he delegated state power. Duvalier set high taxes on the general population in order to fund his massive police force, the TonTon Macoutes. The TonTon Macoutes terrorized all of Haiti and prevented any force from rising that would have challenged Duvalier’s rule. All those who opposed Duvalier were imprisoned or tortured by the TonTon Macoutes. The only power in the state was that held by Duvalier. In 1971, Duvalier died in office, and his then nineteen-year-old son Jean-Claude Duvalier became president. Jean Claude, called “Baby Doc”, ruled with the same iron grip as his father, working only to keep himself in power, and intimidating the rest of Haiti with the TonTon Macoutes. Pope John Paul came to Haiti in 1983 and actively spoke out against Baby Doc. In 1986, Baby Doc was thrown into exile.

In a state of flux, Haiti saw the rise of the charismatic priest named Jean Bertrand Aristide. Aristide came out of the tradition of liberation theology and, in February of 1991, became Haiti’s first democratically elected president. This was a short lived presidency however because Aristide was overthrown in a coup d’etat in September of 1991. Aristide resumed his presidency from 1994-1996, and was then elected again in 2001. In 2004 Aristide was thrown out of power during another coup d’etat and exiled to Africa. The history surrounding Aristide is a mixed history, some claim that he was the savior of Haiti unfairly ousted from power, while others feel that he was equally as corrupt as previous heads of state. Regardless of what historical perspective you examine Aristide’s presidency from, there was little development of any pluralistic institutions during Aristide’s presidency, and today Haiti remains still quite poor.

So where is Haiti headed now? Is the President of Haiti, Michelle Martelly, a reformer who will set Haiti on a course towards pluralism and prosperity, or is he another dictator looking to just maintain his own hold on power? Martelly was elected in 2011 so time will tell if he can help Haiti develop the needed political institutions to sponsor growth, but I can’t help but be a little positive about his prospects. Martelly has been a champion of education, a resource necessary for any type of national development. Martelly has specifically focused on vocational education, something I am also quite invested in as well. Martelly has proposed a tax on all remittances that will go directly to sponsor education. Martelly has also worked very hard to develop Haiti’s infrastructure. The road outside of the mission has been greatly improved since I’ve been here, and there is now a paved road that leads to the mountain community of Paul that wasn’t here when I was first in Haiti last January. Once of the principal contractors for all of this work has been Estrella, a Dominican construction company. Though this means that some of the government expenses on the road construction will leave the country, it also means that Martelly is contracting the work out to the best firm available rather than his good friends firm. A few months ago there was a kidnapping ring that was broken up and some of those involved were members of an extremely wealthy Haitian family. Though the family was one of Haiti’s ruling elite, they were still brought to justice.

Now to be fair, all of these signs point in one direction, but Haiti still has many hurdles to clear before it is set on a path to prosperity. For starters, Haiti has to figure out a way to issue property rights to the rural communities. Haiti also has to establish a legitmate police force, something that takes years to do. Even if Martelly is honest and really wants to implement a pluralistic and inclusive form of government, he has to remain in power long enough to implement these changes. President Dumarsais Estimé fought a similar fight that Martelly is fighting, but his presidency was cut short when the Dominican Republic overthrew him. One cultural force America has benefitting it is the incredible high regard we have for the US constitution. Senator Rand Paul willing to filibuster for thirteen hours on the suspicion that the constitution was being violated. Haiti’s history of dictatorship toppling dictatorships does not have this cultural value. Haiti’s future is uncertain. They certainly appear to be pointed in the right direction, and since they have nowhere to go but up, I can’t help but be optimistic.