Yesterday was the Oscars. Last year's Best Actor Sean Penn made the morning's headlines, donating a million dollars to Haiti's relief / reconstruction effort. Collectively U.S. citizens have donated $1 billion so far. Two questions arise: one, which I and many others have asked numerous times, where is this money being spent, how, and what plan? A second, related question is where Haiti will get the funds for the rest of the effort conservatively estimated at $16 billion.
Private charitable donations can only go so far. Where is the rest of the reconstruction coming from? What is the plan of these other actors? Generally speaking there are two sets of actors: the "public sector" and the "private sector." I put both in quotes because there is considerable slippage between governments and private, for-profit investors or companies, in the U.S. as in Haiti. Both sets of actors have a planning conference coming up, one in Miami and the other in New York.
Given tomorrow's "Haiti summit" in Miami organized by International Peace Operations Association, this first blog will focus on the private sector. The argument goes something like this: official development aid can set the conditions for development, but its impact is always going to be smaller than that of the private sector, which provides jobs. Globally, private sector "foreign direct investment" (FDI) dwarfs public sector "overseas development assistance" (ODA). For example, FDI to "developing countries" in the Global South reached $636 billion in 2004, compared to $93 billion in ODA.
The opposite is true in Haiti. FDI is a pittance in Haiti. In 2002, it was $4.7 million, growing to 160 million in 2006 only to shrink again to 29.8 million in 2008.(1) By contrast, ODA has been high following Aristide's ouster, beginning with a rushed, top-down process in the Interim Cooperation Framework wherein donors pledged 1.4 billion.(2) Why is capital investment so small and volatile in Haiti? First of all, it should be noted that Haiti's traditional elite(3) was not a capitalist but a mercantile class. In other words they did not build like the Rockefellers or the Carnegies but always benefited directly off of monopolizing trade. They therefore always took foreign interests as their own.
To many people, especially foreign investors, the devastating earthquake wherein recent estimates count 230,000 dead, presents a "window of opportunity." First and foremost, there is the obvious money to be made in reconstruction: private prison company GEO pulled a quarter-million no-bid contract for security; Cooperative Housing Foundation received $117 million for housing reconstruction. This is one element of what journalist-activist Naomi Klein dubbed "disaster capitalism," what I would call "nonprofiteering."
In addition to the money to be made, there is another component to disaster capitalism, what longtime humanitarian provider/scholar Antonio Donini calls "world ordering." Disasters -- both "natural" and "man-made" -- provide the opportunity to clear the slate, to make anew. To some agencies, disasters create a terra nullius(4) -- blank slate -- upon which new plans, new visions and new policies can be written and imposed.
If there really is a new Haiti and a new Port-au-Prince coming, that would be welcome to most of my neighbors, friends, and colleagues. Imagine a Port-au-Prince where everyone in all neighborhoods has equal access to a large enough, dry, safe house, electricity, clean drinking water, and sanitation. Imagine a Haiti where everyone, girls and boys, can go to school for free, which is mandated by the Haitian Constitution (Article 32.1). Imagine enough primary health care in close proximity so that women who want to have prenatal care can have it, so that the 75 children out of 1,000 who currently die before their fifth birthday can be but a painful memory.
Unfortunately this isn't the plan from the private sector, and it is anything but new. While the name has changed, from Reagan's Caribbean Basin Initiative to the Interim Cooperation Framework to the HOPE Act to the Collier Report, the plan essentially remains the same.
Since the 1970s and 1980s, with support from the World Bank, Inter-American Development Bank and USAID, Haiti has been the site for offshore textile plants, alternatively called Free-Trade Zones, Export Processing Zones, maquiladoras, and sweatshops -- the core plank in neoliberalism. Dictator "Baby Doc" Duvalier promised to turn Haiti into the "Taiwan of the Caribbean." Neoliberalism pushed peasants off their land. According to Haitian economist, director of research at the State University and author of seven books Fritz Deshommes, neoliberalism destroyed 800,000 agricultural jobs in Haiti. Even at its height in the 1980s the offshore apparel industry only provided 70,000 jobs. Port-au-Prince grew up from 500,000 people (only built for 250,000) in 1980 to an estimated 2.5 million in 2005.
Where were these 2 million new residents going to live? Even for the lucky few that did make a steadily declining minimum wage (now valued at $1.65 per day), what kind of house could they afford? Said Hélène,(5) "If you pay 10 gourdes (Haiti's currency, around 40 to a U.S. dollar) for transport to work, 10 to return, and buy a plate of food for 50, that's all your 70 gourdes." I have visited dozens of people's homes in various bidonvil (shantytowns); many are seven feet square cinderblock and patchwork tin roofs that have no privacy, no water, no toilet or shower, and barely keep out the elements like pouring rain and scorching Caribbean sun. After the promotion of export-processing zones, literally overnight, these bidonvil were created, including the infamous Cité Soleil, according to a movie Ghosts of Cité Soleil "the most dangerous place on Earth." With state services privatized, also a plank in neoliberalism, families (especially mothers) have to pay for their children's education (40% of a minimum wage salary for one child) and health care, on top of high housing costs and increasing food costs.
On top of this, the offshore apparel industry is notoriously unstable; at its peak it employed 70-80,000 jobs but dwindled to 12-14,000 at the nadir of violence following Aristide's forced removal from office - both in 1991 and 2004. Combine this with an already weak state deliberately undermined through neo-liberal policies such as "structural adjustment" and these bidonvil have next to no public services, and even fewer jobs. Economist Camille Chalmers said, "We can say therefore that Cité Soleil is a child of the Industrial Park." Sub-contracted, low-wage factory work does not contribute much to the economy besides jobs. Being exempt from taxes, it does not contribute to the financing of Haiti's social services. According to a minister of finance, it is the sector with the least "value-added" in Haiti.
We'll be hearing soon another siren song about the "Asian Tigers" like Korea who pulled themselves up by their bootstraps through textiles and grew into heavy industry. We'll hear about China who has even lower wages and the world's greatest productive capacity. To be blunt, Haiti is different, given its place within the world system. It has always been drained by its former colonial power and later its powerful neighbor to the north, its productive resources steadily drained. Haiti had a small but important industrialization that supported a peasant economy but that has all been systematically destroyed. Korea and China both had large internal markets, huge infusions of cash, and iron-fisted dictators. Most importantly, however, both countries had and have a range of public services provided by the government to factory workers so their much lower wages actually go farther than they do in Haiti. This is part of what economists call "purchasing power parity," along with fluctuating exchange rates.
It is true that even before the earthquake Haiti was in desperate need of good paying jobs; estimates range from 70 to 85 percent unemployment. The lack of jobs definitely gives factory owners a sense of impunity, as factory worker Marie-Jeanne said, "they fire us if we join a union because they know that if they fire you they will find 50 people to replace your jobs." Job creation, especially now, is indeed an urgent priority. But we all need to be asking the questions about what the social cost of these jobs will be, what their long-term benefits are, and who in the end will benefit. For example, based on my research last summer, the cost of all the Haitian labor on a pair of jeans ranges from 12 and a half to 18 cents. My Levi's cost me - on sale - $35. The problem is the enormous imbalance of where the "value added" is being kept, with only the barest minimum staying in Haiti. The same is true, by the way, of mangoes and other agricultural exports.
To those who don't trust me because I am not a development economist, listen to the factory workers themselves, like Frisline: "when I was working in the factories, I only made pennies. And this didn't do anything for me. Now I am doing commerce, and I see I live better. I can invest in my business."She of course lost her house and her business in the earthquake. I hope to see her when I return at the end of the month.
If there is a plan to clear the rubble I would sincerely hope that people like Fritz Deshommes and the State University are framing the conversation with their expertise, and people like Hélène and Frisline are participating in the process, giving their priorities, their critiques, and actually setting agenda in addition to being a name on an attendance roster.
Haiti's future development, not to mention basic human dignity and respect, demand it.
Mark Schuller is Assistant Professor of African American Studies and Anthropology at York College, the City University of New York. He is co-director of Poto Mitan: Haitian Women, Pillars of the Global Economy and co-editor of Capitalizing on Catastrophe: Neoliberal Strategies in Disaster Reconstruction.
Notes: (1) Source: World Bank Haiti at-a-Glance. Accessed March 7, 2010. (2) See critique, "Haiti: the Tail Wagging the Dog?" on HaitiAnalysis or "Haiti Is Finished" in Capitalizing on Catastrophe. (3) Actually there were two: black military and lighter-skinned merchants, each competing with one another. See Michel-Rolph Trouillot's Haiti: State against Nation. (4) This legal term, Latin for "empty land," justified European and American expansion and genocide into already-inhabited lands. (5) Names are pseudonyms to protect their anonymity. All quotes are from Poto Mitan