I thought Haiti had qualified for the Heavily Indebted Poor Countries program and the cancellation of its external debt?

Although I am sure such a vulnerable nation will be a target for shock capitalism, surely it cannot happen, it has already been tried and failed there.

Haitian institutions fail to protect citizens from the kind of earthquake that other countries can handle.

LibDem blogger proposes structural reform, not of Haiti, but of the IMF and World Bank.

Structural reform of Haiti is to be inherently distrusted because it might promote (gasp!) Capitalism, rather than the aid dependency which has worked so well for Africa since the 1950s.

That’s not all of the picture though Edward is it? It really is not as simple as that, we all know of the terrible impact that the policies of the IMF and World Bank has had on many developing nations and is still having; it is not a loathing of capitalism but of the shock capitalism or voodoo economics expounded by some on the right.

3 – surely, if voodoo economics should be tried anywhere…

More seriously, the entire economy, government and society of Haiti have effectively been destroyed. The reconstruction needed is on a par with that of Western Europe after the war. Wouldn’t it be a bit irresponsible of the IMF and the World Bank (and donor nations) to provide cash in hand without advice and guidance on what to do with it?

After all, the Marshall Plan was rather more than a blank cheque.

what the hell does “pushed to shock capitalism” even mean?

you’re right that debt has been a big part of the story but blaming Haiti’s problems on structural adjustment programs is just laughable (and says you don’t know much about Haiti’s history).

As DHG suggests this September, Haiti qualified for the cancellation of $1.2 billion of its $1.9 billion in external debt source. In fact the Nation article you link to says as much. It also says the $800m still owed is recent debt (since 2004). You are calling here for more money to be lent at the same time as calling for recent debt to be canceled, and objecting to lenders imposing conditions that might mean the country is able to repay. That’s not a very consistent position … who’s going to lend money in those circumstances?. It sounds to me like what you want to be doing is arguing that the country should not be lent any money at all – it should be given grants. I wouldn’t be surprised if that’s what happens anyway, and that IMF money is written off and turned into an effective grant anyway.

loans made to the Haitian government have to be repaid out of its budget, so the fiscal budget needs to balance if that’s to happen …. aside from challenging the wisdom of lender imposing conditions aimed at trying to reduce the fiscal deficit, does this notion of “shock capitalism” have any content at all?

For anybody who is interested, here is a very readable short pdf. discussing the long-run history of countries like Haiti (blaming plantations and slavery).

There has been an absolutely disgraceful lack of reportage on the fact that Cuba have set up field hospitals and ARE ACTUALLY HELPING PEOPLE unlike the sham that the US & UN are fucking up.

EU’s just pledged 330 million euros – hmm…to whom one would ask. I smell a rat considering France only coughed up £2 million but then again, i’m a cynically old git.

“that Haiti is about to suffer from its own version of Naomi Klein’s ‘Shock Doctrine’. ”

That might actually be the best thing that could happen to the poor benighted place. GDP per capita in Haiti is around $1,300 a year (at PPP). Around what England’s was in 1700 or so. About double what per capita GDP was in the Roman Empire (yes, all adjusted for inflation).

This sort of poverty isn’t something that someone made: it’s the default position, it’s how just about everyone lived until the Industrial Revolution. This is the Malthusian trap folks.

What is needed (obviously, after tending to the sick, consoling the bereaved and burying the dead) is probably a very good dose of that liberal capitalism that raised our own forefathers above this level of destitution.

They need wealth generated.

I don’t think you’ll be surprised Tim that not many here at Lib Con would buy into the idea that what Haiti needs is what you describe and the fact that Preval already tried man of these measures (and they only made things worse) does not bode well for any repetition of that approach.

Haiti has been quite resistant to tired old approaches to its problems, perhaps it needs some new thinking as to how to offer some form of long term change there.

DHG if you don’t think Haiti would benefit from liberal capitalism – that is capitalism in the context of a functional civil society with strong institutions, rule of law, protected property rights and a welfare state* – well, I think you need to think again. You talk about tired old approaches and ask for new thinking … I don’t know what you think the alternatives to liberal capitalism are, but some of the alternatives I’m aware look rather worn around the edges (I’m looking at you, socialism).

One piece of new thinking is the idea of Charter Cities. This is an idea that many vehemently oppose. But even it’s proponents don’t advocate it for Haiti.

* here I may (or may not) differ from Tim. I would certainly emphasize the institutional prerequisites for capitalism to flourish (I expect Tim might too). If you really do advocate socialism or whatever, that also comes with some prerequisites.

Luis,

How is it balanced to be paying more than 50% of your total budget out in debt repayments which is what has happened with Haiti? The whole point here is that the debt is the biggest barrier to the kind of development you want to see. In fact, debt is the new means of developed countries enforcing servitude from developing countries.

Id be very surprised if it becomes a grant indeed. The same question goes to Tim; how in a situation where the government spends more than 50% of its budget on debt repayment can ‘wealth be generated’?

I’ve seen somewhere around that Haiti has just qualified to have their debt forgiven under one or other of the schemes.

I’ve no problem with that at all. Just as with companies, when a debt cannot be repaid it’s best to acknowledge that and start again.

It’s still true that we only know of one economic system which provides a significant and long lasting rise in the standard of living of the average schmoe. That liberal capitalism.

It might be that in the future we find another one, it’s possible even that we have the knowledge now but have simply never applied it. But sustained and significant rises in standards of living for the general population have only happened where wealth is being created and pretty much the only system we know of to do that is this markets, private property and (as Luis E points out, some intervention from government) shtick that we call liberal capitalism.

Look what they did to their own people in New Orleans.
What chance have the Haitians got.

Darrell,

I fear you are deeply confused.

“How is it balanced to be paying more than 50% of your total budget out in debt repayments which is what has happened with Haiti?

nobody is disputing that large debt burdens are bad news, which is why it’s good to see that so much of Haiti’s debt was canceled last September. I just questioned the wisdom of arguing for debt cancellation and no conditions at the same time as hoping that people are going to lend Haiti more money, but that’s a debatable point. If you were relying on private lenders, that would be insanity, but because the IMF is not profit motivated, it may indeed provide new loans at the same time as canceling old ones (it does so habitually), so it’s possible new money will be forthcoming on the terms you’d like to see.

The whole point here is that the debt is the biggest barrier to the kind of development you want to see.

right …. so if debt is bad, explain again why you want to see them lent more money (under IMF’s rapid credit facility)?

In fact, debt is the new means of developed countries enforcing servitude from developing countries.

you what? loans are meant to be repaid. If a country has a good reason to borrow money, why call repaying that money “servitude”? If a country has no good reason to borrow money, and ability to repay, then you should be arguing against them borrowing money. Countries get into trouble borrowing money, intending to spend it in ways that are going to grow GDP and grow the fiscal balance in order repay the loan, and then they fail to grow GDP (or tax receipts net of govt expenditures). If you think that is inevitable, you should be arguing against loaning them money in the first place, as I suggest, but I really don’t see how this scenario amounts to “servitude” from developing countries .. it’s lending countries such as that is hardly a profitable business for the West.. as you see the IMF continually lending money to countries that don’t repay and having to cancel the debt …. how exactly do you think we benefit from this pattern of behaviour?

Luis,

I am only confused if you accept the premise that investment must mean debt being recouped. I know this cuts against the logic of the system somewhat but profit isnt the motive here at all. The point is to rebuild a country and save peoples lives and provide them with a decent standard of living.

Its servitude because that debt comes with conditions that determine domestic policy. Put another way; how would it be received if personal loan companies started dictating how often the receipents of credit went out of a week? This also denies the electorate of that country a clear choice; how can they have one if the IMF has already imposed its terms?

I think the article in The Nation outlines quite clearly how the US agribusiness has benefitted from Haiti.

Darrell,

I’m afraid I still don’t follow you. I know with respect to Haiti the goal is not profit but to rebuild a country … what do you mean by “the premise that investment must mean debt being recouped” … a loan is something that is repaid … if you don’t want the money to be “recouped” then as I have already suggested twice, don’t be pushing for more loans, push for grants.

Regardless of the merits of conditionality, I really don’t think the existence of conditionality amounts to servitude. Large loans frequently come with conditions … you wouldn’t say a corporation is in “servitude” to its bank just because its loans come with banking covenants. Yes conditions do deny the electorate a clear choice … the choice they try to rule out is running such a large fiscal deficit that they’ll be unable to repay the loan… and if you see such things as democratic decisions you have a rather rosy view of the political process in some countries.

“I am only confused if you accept the premise that investment must mean debt being recouped.”

Well, investment does imply that something must be recouped. Investment via loans means that interest comes back for example.

If you mean that we send money out of the goodness of our hearts, with no strings attached (as of course is indeed being done in terms of disaster aid and rightly so) then that isn’t investment. That’s a gift.

“Definitions of investment on the Web:

* investing: the act of investing; laying out money or capital in an enterprise with the expectation of profit
* money that is invested with an expectation of profit ”

Now, if you’re saying that there should be investment and that it shouldn’t be loans then that, if you’re using investment in its proper meaning, means that you’re in favour of direct investment. People setting up factories, employing the workforce and hoping to make a profit that way. And I agree, this would be a wonderful thing and would help to develop Haiti.

However, I have a feeling you wouldn’t like that either for some reason.

It’s also possible that you really do mean we should just ship over money as a gift in the long term. Which, sadly, is unlikely to develop the place. Ever heard of “aid dependency”?

I doubt if the poor people of Haiti will have any choice, liberal capitalism is their future whether they want it or not and, because of the dire situation, they will have to accept any conditions that the rest of the capitalist west wish to impose, then afterwards be congratulated about their sensible ‘choice’
Tim W, you mention GDP frequently, but it is meaningless outside the realms of economic theory, Luis, I found your thread on post 5 interesting and thank you for the trouble of referring us to this, but essentially all it states is that different starting points and environments will result in different outcomes. One factor which wasn’t mentioned was the large population of the USA which enables economies-of-scale, which must have a significant bearing, for the differences with Canada. If we look at industrialization in the UK, we had a pretty easy ride as most of our competitors were locked in revolutionary conflicts and war, but a small country such as Haiti, starting from its’ current situation, will always be locked in inequal trading conditions and open to exploitation.

“Tim W, you mention GDP frequently, but it is meaningless outside the realms of economic theory,”

What? Are you serious? GDP per capita is the simplest and most obvious number we can possibly calculate to describe the average living standard in a country.

I most certainly do not claim that GDP per capita is a perfect measure. But it is true that living in a society with a high GDP per capita means that life in general ain’t shit while living in a society with a low GDP per capita is shite.

This is “meaningless”?

@ DH-G

we all know of the terrible impact that the policies of the IMF and World Bank has had on many developing nations and is still having; it is not a loathing of capitalism but of the shock capitalism or voodoo economics expounded by some on the right.

er, and New Labour, one of whose most dismal mistakes was the Commonwealth Development Corporation (CDC) and its spin-off ACTIS, as exposed in Private Eye most issues.Read this. New labour are most definitely not saints in this field, and the deeper you look into it, the murkier it gets.

19 Yes I am quite serious Tim, GDP is an average measure and certainly does not describe/reflect the distribution of wealth within any population. It’s as meaningful as saying that the average person in the UK has less than two legs.

Fuck the IMF and fuck liberal capitalism too.

http://www.newstatesman.com/books/2008/08/haiti-aristide-lavalas

21 That’s a ridiculous position. Would you tell India and China to go back to the 1970s just because they have become less “equal”? (Whatever “equal” means when a corrupt government decides whether or not you starve, I don’t know.) If we opposed any measure that helped the rich relatively more than the poor, we’d be hunter-gatherers, and everyone on this thread would probably be a grandparent.

Tim – the idea that our forefathers were raised on neo-liberal capitalism is comical. The industrial revolution happened when Britain had massive import tariffs on developed goods, and export tariffs on raw materials. No country has ever built up it’s economy through unfettered free markets. The idea that developing countries could do so now, and compete with massively mobile capital is ludicrous.

Also, the economist who invented GDP, Simon Kuznitz (or something) said “You can scarecly tell a nation’s well-being through a crude measure like GDP alone.” or something to that effect. The idea that it’s a good measure really doesn’t stack up. Especially when you look at things like the fact that the infant mortality rate in downtown Detroit is higher than that in Libya – try telling those parents that ‘life ain’t shit’.

But if it does, global GDP grew around twice as fast in the 1950′s-1970′s period of roughly Keynsian consensus than it has in the post ’73 system of liberalised capital. This idea that liberalised capitalism has created untold wealth has always confused me.

You can join the Facebook group ‘No Shock Doctrine for Haiti here:

http://bit.ly/5ECsQA

thanks for the mention in the piece, which is excellent.

Adam

What does Naomi Klein mean by

“But we have to be absolutely clear that this tragedy, which is part natural, part unnatural”

Whats unnatural about the earthquake?

I would be the first to critisise the IMF and World Bank about how they have operated in the developing world. Far from helping they have often made things worse. The conditionality attached to loans enforcing Austerity Programmes and Structural Adjustment Programs have often been totally unsuitable. The SAP usually means privatising state assets. Many of the countries do not have the capital markets to buy the assets and they end up in foreign control. The foreign companies have teams of lawyers and accountants who can run rings round the local officials leading to a loss of revenue for the government. However, it is rather simplistic to imagine that it is the fault of the IMF and WB that the developing world end up with a crippling debt burden.

If one counts the total sovereign debt as D
The nominal GDP as Y
The primary deficit as PD
The average nominal interest paid on the government debt is i
The nominal GDP growth rate is y

There will be a ‘snow-ball’ effect on debt at even modest interest rates if (PD) increases at a faster rate than (y). Leading to an increasing proportion of government revenue devoted to (i) as a ratio of (Y). The increasing proportion can only come from other budgets. If (Y) contracts that really exacerbates the problem of (i) payments. For the IMF to be involved it is a fair assumption that there was initially a problem with (PD). Although the IMF have often made things worse they do not cause the (PD) problem. Moreover, the currency that (D) is denominated in is a very important factor but does not usually cause the problem but will make it more burdensome.

The best way to help the developing world is through trading with them as that will increase their (y). Many of them have agricultural produce that would sell in Western markets if they could get access. Getting rid of the EU CAP and US farming subsidies would do wonders for the developing world and would stop Western subsidised produce being dumped on the developing world markets. Moreover, increased trade would give them the capital to develop their economy away from the current monocrop economies which prevail in the developing world. It always amazes me why more liberal minded people do not agitate more against rich Western farmers being subsidised at the expense of the developing world.

“the idea that our forefathers were raised on neo-liberal capitalism is comical”

Who said they were? I said “liberal capitalism”.

“Also, the economist who invented GDP, Simon Kuznitz (or something) said “You can scarecly tell a nation’s well-being through a crude measure like GDP alone.””

Sure. But remember what GDP does measure: the value added in an economy. Alow GDP per capita means not much value being added, Thus not much value to be enjoyed by the populace, however it is distributed. Thus while there are obviously other things which are also important (distribution for example) a low GDP per capita means a poor society.

“compete with massively mobile capital is ludicrous”

Umm, sorry, but who “competes” with massively mobile capital? Capital is a complement to labour, not competition for it. Other things being equal add capital to labour (provide machines for labour to use for example) and the productivity of labour rises. As sure as eggs is eggs rising productivity of labour leads to higher pay for labour (as well as a rise in GDP of course). Isn’t that actually what we want? More capital in Haiti so that labour productivity, wages and GDP all rise? That is, that the place becomes less poor?

“But if it does, global GDP grew around twice as fast in the 1950’s-1970’s period of roughly Keynsian consensus”

Leave aside that a lot of that growth is the bounce (also known as reversion to the mean) from the depression of the 30s and the war of the 40s. Are you trying to say that Keynesianisn is not a version of liberal capitalism?

Anyway, leaving that aside there is one thing you should remember about such Keynesian policies. They do depend upon good government. You know, people competent at deciding whether we need fiscal stimulus of fiscal contraction this year etc.

Anyone seen evidence of government in Haiti good enough to handle this responsibility?

Keynes was a capitalist … it’s quite possible to be Keynesian, and have a large and active government, and still be liberal capitalist. See, for example, most of the OECD.

23
I haven’t a clue what you’re talking about, I made a comment about GDP being meaningless in terms of describing reality. And wasn’t inequality prevelant in India and China long before the 1970s
As far as asking people where they would like to be, how many people here have personally done a comparative study based on living in societies where the term ‘GDP’ had not been coined and living in a society which accepted it as some kind of natural given.
Cultural imperialism is alive and well and currently living on LibCon.

steveb you have some weird ideas. only a fool would think that a single statistic can provide information about every important aspect of the quality of life in any given country, but only a fool would think that the fact that per capita GDP in Sub-Saharan Africa in 1/20 that of the OECD is “meaningless in terms of describing reality”. Lord knows what cultural imperialism has to do with it. I think without any cultural interference Africans would like to be less poor, and GDP is simply one indicator of poverty. Your point #21 is nonsensical. If there was great variation in the number of legs people have then knowing the average number of legs in a country might be useful. You might as well say that because it’s merely an average, knowing that the average banker is paid £500,000 while the average cleaner in the bank is paid £14,000 “is meaningless in terms of describing reality”.

Nobody is saying that GDP is perfect as a measure of prosperity, happiness or quality of life. It just really acts as a type of macro benchmark that economists use to measure economic activity, and the GDP purchasing power parity as a comparison between different nations. For example, if someone walks through your town tonight and smashes all the shop windows. When they are repaired it will raise GDP. However, it is questionable whether society was improved. Although the glaziers might say it was improved for them. It is easy to criticise the GDP measure but no one has come up with a better benchmark.

What you are talking about Steveb is micro whereas GDP is macro. Of course the distribution of income is unequal in every economy. Therefore, figures for median incomes and the difference between the bottom 20% of incomes to the median income would be what you would look at for poverty rather than GDP.

30 and 31
I know what GDP is, but thank-you for reminding me. There have been various posts, not just on this thread, which have quoted only GDP, in order to suggest that having a higher GDP makes a ‘better society’ than having a lower GDP, whether they are fools or not is not really for me to say.
Why are my ideas weird? they do challenge the prevailing dominant views, particularly on industrial capitalism, but isn’t diversity a basic premise of liberalism?

Steve, perhaps I think your ideas are weird because you over-state them. If your objection to GDP is merely that it’s not a sufficient statistic for whether one society is “better” than another, then what you wrote about it being “meaningless outside the realms of economic theory” or about as useful as knowing “the average number of legs is two”, are both weird things to write, because GDP can plainly still say something meaningful about the real world without being the measure of which society is “better”. And your argument concerning legs just makes no sense (to me). I don’t understand what you think cultural imperialism has to do with it, unless you are referring to cultures that place importance on the level of material wealth, in which case I think you might find that is not confined to Western capitalist cultures. And even so, it would still be weird to turn your ideas about culture into an objection to using the statistic GDP when discussing the wealth of nations.

I have no beef with challenging dominant views or diversity, but you can have both of those things and still have some weird ideas.

Oh dear. Someone who’s read the Shock Doctrine and not realised it’s one of the worst-researched, poorly-argued books of recent times.

There’s very little evidence in Klein’s laughable polemic (though lots of “references”*) though predictably all the little mini-Kleins of the world have lapped it up so they can lecture the rest of us with their new nonsensical grand narrative.

The question is: do you want to be right, and contribute to people’s well-being, or self-righteous and contributing to your own sense of self-importance?

*They look good but if they don’t provide a balanced view of the evidence, what’s the point?

worth reading:

other ways to help Haiti

what it means for Obama

Luis,

Well I happy to change semantically and call for grants. Im happy to say the IMF should cease to loan countries money and should instead grant them it. A point has to be made here is that Haiti’s orginal debt was incurred not through a loan but through actually becoming free. So your insistance that loans have to be repaid doesnt really apply here does it? Why should countries have to pay for their freedom from an imperial master?

You have essentially dodged the question, there is a difference between conditions and dictation and these terms clearly cross that divide. The only condition that is usually attached to a personal loan is that the loan be repaid at the given rate of interest. No stipulations are laid down as to how that individual lives their life.

Darrel

The distinction between a loan and a grant is not mere semantics! I have said nothing about the particular origin of some of Haiti’s debts (“buying their freedom”) and in any case, all but post-2004 debts have been canceled. I am not insisting loans must be repaid, that’s what a bloody loan is. Talk about dodging the question.

I said it’s quite possible to question whether conditionality is a good idea or not. If there is a clean distinction between ‘conditions’ and ‘dictation’, I don’t know what it is (did you just make that up?) and yes personal loans do not often come with conditions (although you are often obliged to inform lenders of changes in your circumstances which may then change the terms of the loan) but lending to a country is not the same as lending to an individual and if you had read my link above about banking covenants you would have seen that loan conditions are an every day sort of occurrence in non-personal lending. If you really want to know, the consensus that loan “conditionality has failed” isn’t so much based on the idea they are harmful if enforced, but on the fact that they are so rarely enforced. Spend some time on google scholar and see for yourself.

Depressing that Leftist analysis of the plight of Haiti (eg also the Zizek statesman article) are a dreary selection of events of history and the inevitable ideological attack. The revolution cannot stop the earthquake. Please leave your petty ideologies to one side.

Luis,

Well surely the origin of these debts should be of some concern? If your not insisting it be repaid then what is the problem with actually cancelling its debt? As you have outlined there are other sources of finance avaliable so why did the IMF choose; instead of making a grant to increase Haiti’s loan? #

Accepted. However, not over the life-style choices of the person taking the loan though which is what these conditions equate too. Is there not a fundemental democratic issue here? That the governments of these countries are no longer sovereign over their own policies and finance. This is what I call dictation. I am glad they are not enforced; nor should they be. The irony is that it is liberal capitalism in the West that makes liberal capitalism impossible in places like Haiti.

Darrell,

of course the origin of debts is of concern, but as I said, those odious debts are canceled already and the OP was talking about fresh loans. The main objection to the constant call to cancel debts is simply that it’s going to be hard to secure more loans when loans have a habit of being written off, but as I said above, the IMF is non-profit and may just take the losses that comes with lending money that is not repaid. The reason why the IMF has so much money to disburse is because it makes loans and hence expects to get (some of) the money back … I imagine it extended the loans because it has the lending facility in place and Haiti needed the money asap. I don’t know what funds for grants the IMF has at its disposal. As far as I’m concerned, lending a country money to rebuild can be a perfectly sensible thing to do (to be repaid, maybe with conditions, in addition to grants) – it is the logic of your arguments above that is against loans, not mine.

Your second para makes no sense to me … any condition restricts choice (or imposes penalties on some choices) where’s the difference between conditions and dictation? But that really is semantics – fine, call some conditions dictations if you wish. Lord knows what you mean by your last sentence, how exactly is liberal capitalism in the West making it impossible in places like Haiti? I’m sure you don’t mean that some countries having to meet some conditions on, say, restraining public sector pay claims, in order to receive large loans, means liberal capitalism is impossible?

“The irony is that it is liberal capitalism in the West that makes liberal capitalism impossible in places like Haiti.”

Eh? That we can own property, that we have economic freedom, that we can make voluntary exchanges, somehow sucks up all of the property, economic freedom and possibilities for voluntary exchange so that there’s none left over for the people of Haiti?

Even if you want to make that case for property it’s impossible for you to make it about economic freedom or voluntary exchage.

Noami Klein is one level above a conspiracy theorist. Contemporary neo-liberalism isn’t a doctrine but a “discourse” dreamt up in social science departments for people who don’t actually want to engage with economic liberalism, or economic arguments in general.

Here are some actual suggestions by various economic liberals that could be engaged with: http://www.marginalrevolution.com/marginalrevolution/2010/01/other-ways-to-help-haiti.html

Luis,

No, that is not the reason the IMF has so much money. Its main source of funds is the charge it exacts from each member nation. Your not making much sense saying a little of this money gets repaid and that is the source of the IMF’s money. You present the IMF as some kind of good fairy which it isnt; its primary aim is to ensure world financial stability (look how good it was at that!!!). It extended the loans because as we have already discussed any grant, any money ‘gratis’ would not have carried conditions therefore would not have extended its control.

Lending a country money under the terms you support is robbing Peter to pay Paul. Yes it will help in the short-term; however, in the long run that country is plunged into crippling economic debt and subjected to what I call dictation then have you not just done exactly what I described above? Its like saving from somebody from being hung only to shoot them an hour later to give a rather graphic metaphor.

Tim,

Precisely for the reasons I have said above. Credit and debt is a system of social control which effectively prevents smaller countries ever emerging into the fully-fledged ‘liberal capitalist’ utopia you idley dream of. I presume you also think every small business could one day by a nice big multi-national corporation. It does happen but its the exception not the rule and in the majority of cases such heights will never be acheived because the system simply wouldnt function if it did.

Similarly it wouldnt work if every Haiti could become a US and apart from the straight-jacket of debt there are obviously other factors which limit growth (like productive capacity being limited by a smaller population) but its things like debt that keep them down in the gutter. All they can ever hope for is subsistence at best but even that is denied them by debt.

“Similarly it wouldnt work if every Haiti could become a US and apart from the straight-jacket of debt there are obviously other factors which limit growth (like productive capacity being limited by a smaller population) but its things like debt that keep them down in the gutter. All they can ever hope for is subsistence at best but even that is denied them by debt.”

I’ll agree that at times I’m a tad Panglossian about the joys of liberal capitalism. But you’re positively funereal there. “All they can ever hope for is subsistence at best”?

Seriously? Personally I can see no reason at all why (in theory that is, I can see that it’s not going to happen overnight) the 9 million of Haiti should not be as rich as the 9 million of Sweden. Or the 10 million of Portugal.

Oh, and that limit of the productive capacity of a smaller population? We know how to get over that: it’s called trade.

Darrell,

I’m afraid you still in a muddle.

No, that is not the reason the IMF has so much money. Its main source of funds is the charge it exacts from each member nation.

now think this through… the IMF receives funds from member nations. How much money does it have at its disposal at any given point in time if a) the money is disburses is never repaid b) (some of) the money is repaid so it can be lent out again?

It extended the loans because ….. money ‘gratis’ would not have carried conditions therefore would not have extended its control.

why on earth do you think the IMF wants to “extend its control” of Haiti? (beyond, once having given a loan, when it has an interest in trying to ensure the country is able to balance its fiscal budget)

Lending a country money under the terms you support is robbing Peter to pay Paul.

er, what? who is Peter here? who is Paul? if Peter is Haiti, Peter gets the loan to help rebuild the country, and having a more rebuilt country, is able to repay the loan. If Paul is the IMF, how does Paul get paid … you think the IMF is doing this to make a profit? Are you nuts?

Yes it will help in the short-term;

What? If the money is used to rebuild infrastructure, stop the civil service from disintegrating, keep the population from starvation, whatever, I think that has some long term effects.

Look, if I borrow money to buy some new machinery for my factory, I should be able to use the resulting income to repay the loan, that is to say, what I do with the loan changes how much future income I have. If the loan won’t change my future income, I shouldn’t be borrowing to invest. Now think about Haiti, think about two scenarios “with loan” and “without”. The point is that “with loan” the future income Haiti has at its disposal should be higher than “without” if it can use the loan to do things to help its economy relative to the “without” scenario (keeping people alive can help the economy, as can building new houses, roads, getting the electricity back on etc.).

however, in the long run that country is plunged into crippling economic debt

yes that can happen, but you cannot presume it’s going to, unless you know that Haiti “with” loan isn’t going to be any better off with all those things the loan is used to build and pay for, than it would be “without”. It’s quite possible that Haiti can use the loan to make the country better off that it would be without it, and use some of the resulting gain to repay the loan. [Of course I am not suggesting that Haiti doesn’t need grants too … I think it needs billions of dollars spent on it without any thought of repayment for years to come… the point is merely that it’s stupid to think of a loan as necessarily plunging a country into trouble when quite clearly they can actually benefit from it). I’m not sure why you hold such trenchant views on a topic you seem to know so little about.

@3 Daniel Hoffmann-Gill: we all know of the terrible impact that the policies of the IMF and World Bank has had on many developing nations and is still having

The subtext of this is that it’s the fault of the WB and IMF that Haiti is a poor country. I contend that this is bollocks: there are plenty of countries in the last few decades that have succeeded in having a good deal of economic growth which has significantly reduced poverty. E.g. South Korea, Mexico, Brazil, China, Thailand, Malaysia. All there countries have been living under the same world economic system that Haiti has been. If Haiti has been economically unsuccessful, it’s because Haiti has been badly ruled, not because of the world economic system.

And to prove this thesis, if you look at Haitian history is has in fact been spectacularly badly ruled.

Cabalamat:

What’s bollocks pal is you taking what I wrote, presuming what I meant by it (and may I add, making a huge fucking leap from what I wrote to your own personal prejudice) and then getting angry at me for believing something I don’t.

SO save your links to shit I don’t need to read cuz I already know and argue with someone based on what they say, not on what you THINK is inferred.

All the best.

@Darrell Goodlife – just a tip, your blogger login name leads to your old blogger libdem website, so you might want to change it

@18 steveb: a small country such as Haiti, starting from its’ current situation, will always be locked in inequal trading conditions and open to exploitation

Singapore is also a small country, and when it gained independence it was poor. Please explain why Singapore wasn’t “locked in inequal trading conditions and open to exploitation”.

It’s alright Cabalamat, no need to say sorry for jumping the gun, just drag out the right-whingers cliches of Singapore and pretend that the two countries are the same.

Dear me.

49
Post 5 has a good thread outlining the different development rates of different countries industrializing, nothing really radical there though, it concludes that courntries are what they are now because they were what they were then. You mention Singapore but clearly it was a diiferent beast in the 1990s than Haiti is today.
In fact there is quite a lot of poverty in Singapore despite an impressive GDP (see other posts for my views on GDP) Like many poor countries, there is often a class who are incredibly wealthy compared to the rest of the population Even in Africa (arguabley one of the most poverty-stricken areas), many colonizers lived a faboulous lifestyle.
I have no doubt that there will be a class emerge in Haiti that is not exploited.

If anybody is still interested, here is an excellent, extremely well informed blog post about the debt situation in Haiti, set in the context of all capital flows and explained what’s owed to other lenders (like Venezuela and Taiwan) together with some fantastic analysis and proposals for reform.

An excerpt relevant to the above discussion: “The World Bank is working to cancel its Haitian debt while the IMF has moved like lightning to create more debt through a no-strings 0% $100 million loan. Structurally confined to lending, the IMF hopes to be able to forgive its new loan after it is made, turning it into a grant. Meanwhile, the IDB is in a bind. Taiwan is scratching its head. Venezuela is mum. Traditional bilateral donors are at ease because they have already written off their loans”

damn link not working … here it is in full:

http://blogs.cgdev.org/globaldevelopment/2010/01/suspend-haitis-debt-and-take-official-lenders-beyond-lending.php