This was originally published in the May 2017 issue of The Casey Report
Last month Doug and I (E.B.) went to Haiti. It was more of an experiment than a vacation.
The Caribbean country has hundreds of miles of unused beaches yet sees almost no leisure travel. There is one cruise ship dock in the north, but it’s protected from the rest of the country by spiral barbed wire and armed guards.
Doug Casey:I first visited Haiti in 1970, when Papa Doc Duvalier was running the show. It was already going downhill, but the per capita GDP was above that of Hong Kong or Singapore, now two of the richest places on the planet. Port-au-Prince was extremely safe, if only because the Tonton Macoute would make anybody who even dreamed of hurting a tourist regret it for the rest of his short life. I considered setting up a scuba business here in those days. Now the hotels that are still open are empty. And there’s nothing for a visitor to do but engage in poverty tourism.
Haiti is the poorest country in the Western Hemisphere. It’s in the running for poorest in the world. The average Haitian gets by on less than $2 per day.
The country’s largest source of revenue comes from its diaspora, remitting more than $2 billion per year.
Foreign aid is another tremendous source of income. Unwitting Westerners donate thousands to quell feelings of guilt when they see photos of Haiti. Western governments send tens of millions.
Almost all of this aid money ends up vanishing. In one of our meetings, our host shared a 50-page report prepared by the United States Agency for International Development (USAID). It was a postmortem on a $50 million aid package. There is no quantifiable data to show where the money went. It’s a bureaucratic way of saying the money was stolen.
Our trip was an experiment because we see Haiti’s plight as tied to bad choices and not bad luck. Like most impoverished countries, Haiti has valuable resources. Its citizens are ignorant, but they are certainly not stupid. There’s a difference, by the way…
After visiting dozens of dirt-poor countries, most rich in mismanaged resources, Doug came up with a radical economic plan. We went to Haiti to share that plan, free of charge, with the country’s leaders. If they are open to change, this plan could make Haiti one of the wealthiest countries in the world in as little as two decades. Here’s how it works.
Doug, Haitian Finance Minister Salomon, our host Susie Krabacher of HaitiChildren, and me in the finance minister’s office
Right now, we estimate Haiti to be worth around $200 billion. That number is up for debate…but it’s a fair starting point.
Doug Casey: Or maybe only $20 billion. It depends almost totally on the legal environment. Wealth is fluid—something that’s constantly either created or dissipated. But right now Haiti has nothing but dead capital; nobody even knows who owns anything, for openers.
There are around 11 million Haitians. Statists claim a democratic country’s state-owned resources belong to its citizens. If that’s true, the average Haitian has close to $20,000 worth of birthright assets. Instead, he’s battling starvation, malaria, Zika, cholera, dengue fever, rabies, and other diseases.
Doug Casey: Demographics have a life of their own, and are quite predictable. Most Haitians are under 18, and they’re reproducing at warp speed. There will be 30 million by 2030. At that point, unless there’s a truly radical change here, you can expect not thousands, but millions of Haitian boat people everywhere. But especially Florida. And there will be a bloody revolution on the island itself. Here’s an FYI. It’s estimated that 40% of the residents of Turks & Caicos are already illegal Haitians, and 20% in the Bahamas.
The plan works like this. First, retitle all state-owned assets into a for-profit corporation. This corporation would own all of Haiti’s natural resources, beaches, air rights, water rights, mineral rights, and even hundreds of thousands of hectares of arable land that has never seen pesticides.
Next, statists would make good on their grandstanding by giving every Haitian citizen shares in the corporation. Here’s how we suggest distributing the shares:
•70% — Split amongst every man, woman, and child who is a natural-born Haitian citizen
•10% — Held in a trust for the next generation
•10% — Used to accommodate people of influence (currently holding the country back)
•10% — Sold in an IPO on the New York Stock Exchange
While we strongly oppose state limitations of any kind, we do make one exception. The 70% of shares given to Haitian citizens should have a selling restriction.
After what they’ve been through, most citizens would choose quick cash over holding shares. The corporation’s bylaws would mandate a dividend payment. Restricting sales would allow citizens to receive their share of the national income as the country developed.
More on development… We have specific ideas. In the map below, notice the large island naturally protected by Haiti’s northern and southern peninsulas. This island, Île de la Gonâve, has limited development and few residents.
We suggest making Gonâve a tax-free zone. Geographically speaking, think of it like Hong Kong is to China.
Doug Casey:There’s more, in addition to the share distribution. It’s important no income goes to the State, but all to the People’s Empowerment Corporation (PEC). The Gourde would be exchangeable at a fixed rate for gold, so Haitians can save. Banks would necessarily be 100% reserves. A complete free market, with no duties, taxes, or regulations. The PEC’s dividends would be an improvement over the government’s taxes.
I’ve had some truly memorable adventures pitching this deal to a dozen countries around the world. Military dictatorships, countries on the edge of revolution, and basket cases are the best prospects. That’s because, for reasons EB touches on, people generally won’t do anything until they absolutely have to.
The corporation would install basic infrastructure in the island first. This entails a dedicated fiber-optic broadband connection not attached to the Haitian mainland, a closed-circuit water and sewer system designed and built by a leading Western infrastructure firm, and, finally, basic roadways throughout the island.
Once fitted with basic infrastructure, international buyers could gobble up Gonâve’s massive 75,000-hectare landmass parcel by parcel. Most name-brand companies would want an office in the Caribbean’s new state-of-the-art tax-free zone.
In every meeting, we kept hearing about “the six families” and how they’d fight and kill this proposal. One family runs the nation’s commercial banks. It charges fees to desperate Haitians waiting in line for hours to receive money from relatives working in developed countries.
Rich by Haitian standards, these families would blend in with average wealth in Fort Lauderdale. Their quest to hold on to perceived power comes at a price. In our view, it’s 11 million starving people.
This densely populated hill has tens of thousands of residences
The same shot at night shows few of them have electricity
The president’s advisers told us they would have newspapers print headlines saying, “The colonists are back.” They’d induce riots to stop development.
We met with the patriarch of one powerful Haitian family. In 2006, he negotiated duty-free shipment of finished clothing from Haitian factories with the U.S. government. Here’s how it works.
He can order denim, buttons, and zippers from other parts of the world, sew them together, and ship them to the U.S. tax-free. The average pair of blue jeans costs about $7 to produce. Normal import duties in the U.S. are 20%, or $1.40. With Haiti’s deal, it’s $0. The U.S. Congress calls the deal the Hope Act.
As you can imagine, this family does not want Haiti to improve too much. If it did, Congress might repeal the Hope Act…which gives Haiti a tremendous advantage over the rest of the world. The irony of this whole meeting was that the family isn’t even Haitian; it’s Lebanese.
Doug Casey:Other than assembling and trans-shipping simple clothing, Haiti produces absolutely nothing. Except Barbancourt rum. And a few mangoes and bananas. They used to make most of the world’s baseballs, but (I once had dinner with the operations manager) the government just made it impossible. So they moved. Amazing, to have to leave a trained labor force being paid almost nothing. Incidentally, in case you’re wondering what the people lucky enough to get a job sewing jeans and T-shirts make… the answer is $.70 an hour. Unemployment is around 80%, as near as anyone can tell. When I say Haiti produces nothing, I’m not kidding. 90% of all food is imported. Unsustainably mismanaged? The power company is subsidized to the tune of $350 million a year. Fuel? All the trees have already been cut down for firewood.
We gave more details on the plan, how it would start, and what it would look like in 10 years.
Gonâve is large enough for an airport. Right now, Haiti’s airport is the size of what you’d expect to see in a rural Midwest farm town. It has inadequate security. U.S. carriers will not park planes on the ground in Haiti overnight.
The country actually has a compelling geographic advantage in the way of air travel. It could become a hub for the Americas.
World travelers are getting tired of being treated like stray dogs by U.S. Customs and TSA employees. Our friends tell us they’re willing to sit on a plane longer if it means not getting off in Atlanta, New York, or Miami.
The western tip of Gonâve is a perfect spot for the home of a new Haitian airline. Further, with a newfound financial structure, the country could send representatives to negotiate with and lobby Western corporations. This also gives the country’s hundreds of ministers something to do.
Boeing and Airbus could provide an international fleet of wide-body aircraft for the country’s flag carrier airline. The airline, managed by our proposed national corporation and a Western board of directors, could be the Americas’ version of Emirates.
We reminded government officials that Emirates is the flag carrier airline of the United Arab Emirates. Not long ago, the country was a useless collection of windswept sand dunes. Then it came up with a radical economic plan. Forty years later, it’s a world powerhouse.
The same goes for Singapore, a backwards swamp in the middle of last decade. The story of Hong Kong is similar.
Throughout the week, we kept scratching our heads. Talking to Haiti’s leadership was like reasoning with someone dealing with substance abuse.
From the outside, the situation seems obvious. The country is bankrupt. In fact, as it stands now, the best thing that could happen to Haiti is another natural disaster. That would funnel in hundreds of millions in aid money.
Sending aid money to Haiti is like trying to irrigate the Sahara desert with purified drinking water.
The interesting thing about bustling Port-au-Prince is people seem very busy. We had a flat tire downtown on the way back from the Haitian central bank. Here’s a picture of the tire shop the security detail chose to make the repair.
Open for business—cash only
Haitian people know how to survive. Life gets worse, and they adapt.
While getting the tire repaired, we watched people rushing around trading, dealing, and conducting an odd form of business. Everyone is very busy, but they’re not doing anything particularly productive.
Doug Casey: That’s partly because there’s no capital in Haiti. And no person with any sense will put a nickel here, unless the political situation is totally reformed.
Bartering seems to be the way things work for average people. From what we hear, many of the containers of aid supplies end up stolen at the port. There is a black-market price for everything from baby formula to medical supplies. It’s pennies on the dollar compared to what the senders paid to get it there.
Right now, one U.S. dollar gets you 67 Haitian gourdes. Businesses would rather have the dollars.
Haitian gourde-printing factory
I spent Sunday afternoon at a hotel owned by the country’s new defense minister, Hervé Denis.
Minister Denis loves Cuban Montecristo No. 2 cigars
Like the rest of his cohort, Denis realizes not much is possible in Haiti. He likes the idea of a radical plan. He even acknowledges that it would catapult the country into the world spotlight.
Mr. Denis is also a realist… He wouldn’t want his name attached directly to the proposal.
While we’re bullish on the people of Haiti…we’re not optimistic.
It’s hard to escape human nature. Nobody wants to change until they’re out of options. Haiti’s “elite” have a firm grip on the nation. They’re happy with pennies on the dollar, as long as they control the pennies.
Just like a disillusioned addict who’s holding on to nothing…Haiti might have to get worse before the handful of small-minded people who control the country are ready to make a change and lift 11 million people out of 19th-century poverty.
As for us…we’re going to take Doug’s plan to an African nation next…one that knows it’s on the edge of revolution. That might be just the type of rock bottom that paves the way for real change.
Doug Casey: An excellent and accurate description by EB of some of the highlights of our trip. But he had to leave a day early. So he missed a final high level meeting I had, before I too had to rush to the airport to make it back to Buenos Aires for a party I’d signed up to host.
At my final conclave, at the Palace, I laid the plan out in rough detail. The listeners asked me to come back, at month-end, at their expense, for detailed discussions. It’s not my favorite, since travel time is something like 18 hours. It’s one of the disadvantages of having political reform—as opposed to, say, stamp collecting—as a hobby. But you have to fill those idle hours somehow; might as well be trying to save the world.
But who knows? Stranger things have happened. Third world countries have bought into every stupid idea that’s come down the pike for the last 150 years. Why shouldn’t they buy from me, when it will do them some real good?