5990: Re: 5873: Durban to Poincy/Dorce on Int'l Economics: Poincy Replies (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Jean Poincy <caineve@idt.net>

My argument is not about Ayiti's incapacity to compete on the
international market (although a concern). Rather, it is about the
allocation of available resources along the country's production
scheme.  Where production is not aimed at responding to the nation's
needs or the local market, not many resources should be put in use
(remark that I don't say none). Cash crop activities are of such kind.
For a government conscious about economic development should give a very
low priority to such activities.  

The goodness of an economic activity resides in its potential of
stirring or pulling other sectors in an economy.  This is a key factor
in economic development. If missing, it should not be given too much
consideration for resource allocation, even when alleviating a present
bad situation is possible. Not doing so can engender irreparable damage
when economic development is really kicking. A responsible government
should make these assessments in its endeavors to improve conditions of
living. In fact, it would be irresponsible to jump on a strategy just
because it offers a few bucks and can reduce unemployment, but very
insignificantly. Apparently, this is what Durban, Knowles and others
embrace.

Leave aside the problem that Dr. Gill underlined with the sugar industry
in regards to Ayiti, let see the economic problems with cash crops to
see clearer how reviving the sugar industry in Ayiti would cause
significant damages.  Cash crop activities have one purpose only:
generate hard currencies that would enable the country to import what
they don't produce and pay their financial obligations (interests on
debts). Because Ayiti does not produce anything at all, it imports
everything that it needs.  As a result, the proceeds make a sharp U-turn
to where they come from.  Such a situation, if persists leads to a
chronic trade deficit as the ratio of import and export would show.
Considering the fact that the volume of the former is much greater than
that of the latter, the trade deficit is immineny. Moreover, none of the
imported products are geared to increase the national production. 

What makes matter worse is the price volatility of cash crops on the
international market due to many competitors. In the case of sugar,
sugar substitutes, sugar making alternatives and an increasing tendency
to consume honey rather than sugar for health reason are big culprits. 
Due to the nature of things, cash crops tend to follow a negative trend
on the international market. From this perspective, Ayiti cannot
generate enough hard currencies to replenish its reserve. Take all these
negative factors in consideration, would it be wise to allocate much of
Ayiti's labor force to the sugar industry? Doing so would further impede
Ayiti in its progress.

Helping a country gets back on its feet is not a matter of finding a
quick fix to feed a few mouths for a short period. Yes, the massive idle
labor force could be occupied in earning a few bucks, but what good does
it do when the relief is not sustainable? Where is the hope when most of
the country's infrastructures will be conceived in light of the sugar
industry? 

I want to give Durban and Knowles the point that is better to put the
idle labor force to use rather than leaving them idle. However, you guys
fail to look at the problem that rent-seeking would pose. The economic
development would be further undermined. We saw it happening in the 70s
with the import substitution strategies. The rent-seekers could no
longer avail as their irrational and selfish attitude toward the
country's well-being contributed much to the country's economic
degradation. Of course they got richer all right but at the expense of
the collectivity.  

To think that sugar industry is a good thing now because there is
nothing else to fall back on is accepting that Ayiti will never get
anywhere no matter what's being done. This is also saying that the
people and public officials have no ability to think of something better
to do to survive.  

My argument is the sugar industry needs to be left as is, if not helping
it to improve production for national consumption. If Ayiti engages to
revive the sugar industry with the international market in the horizon,
a big chunk of the labor force would be absorbed there while other
activities are in much greater need for the unemployed. 

Any economic activity that can spur other related or unrelated economic
activities are to be considered as more promising alternatives than the
sugar industry.  Hence much of the resources should be geared toward
them. When thinking of economic development, the local market must be at
the center of all economic strategies. Only when the local market is
energized, one can talk of economic development. To make the local
market the center stage, creating linkages among different sectors of
the economy is of prime importance. Subsequently, the domino effect is
more feasible and living conditions can begin to change.  

If Cuba or any country for that matter is willing to help Ayiti revive
its textile industry and lay the ground work for a milk industry, I
think Ayiti would be on a better road to help itself later. The textile
industry for reasons that I amply discussed in prior posts and I need
not to repeat them here.  From all related activities to a finish
fabric, to their distribution and confection/tailoring. These are
necessary links to emerge once a cottonseed is planted. These linkages
will occur necessarily if the production is geared to the local
(national) market. Just imagine how many people would be employed in
each area. Ayiti is a perfect terrain to produce cotton.

The milk industry also geared toward the local/national market would
improve the health of the nation. Raising beef, setting and maintaining
the milk and diary production plant in a way appropriate to Ayiti
natural conditions, distribute and transport it throughout the nation
and even export some to other Caribbean countries. Don't we envision how
the transportation, construction and service sectors will be pulled as
these two economic activities are underway? If an economic activity does
not raise the prospect of pulling the above three sectors it should be
flushed.

With this development, we can imagine how the rate of unemployment will
decrease, how the national production will raise and how the Ayitian
currency would begin to regain value. We can go on in imagining all the
limitless goods that would come from these two activities alone. I am
not even advocating the production for food, like rice, corn and the
like staples; for they can be obtained cheaper on the international
market as the country is able to increase its national income.

Contrarily to what one thinks, financing is the least to worry about,
because these activities don't acquire much. We should not forget, that
money is not what makes a country to produce. In fact, the ability based
on the creativity of a people to transform what's already in their
surrounding is key. One may have a lot of money, but it would worth
nothing if there is nothing in the environment capable of bringing some
satisfaction to his/her need. A people can create money only when they
begin acting on their surrounding to produce what they need. This is
what missing in Ayiti today. 
 
Most of the resources needed to boost these activities are already in
Ayiti. They can be conducted very cheaply and virtually with no labor
cost to start with. Participants would receive most of their benefits in
kinds or small subventions put in place by the community itself and the
government. All that I would suggest to President Preval is to create an
atmosphere of security for the undertakers. Protect their properties and
produce. Encourage the privates to engage in these activities (there are
zillion ways the government can do that).  I would ask of the President
to promote/stimulate fair competition through fair regulations. 

Considering that infrastructures such transportation, electricity,
communication are public goods, also private goods to a certain extent,
I would suggest to the President to enter into a partnership with any
private willing to put them in place. With this framework, we would see
less of government where privates only need to be. We would begin to see
the Ayitian government assuming finally its true role. Then PEACE and
PROSPERITY would be written in bold in the horizon.  

I would not suggest to the President to draw an economic development
plan for the entire nation. All that I would ask of the government is to
create a guideline of what the country needs to produce to respond to
the country's needs and to that of the rest of the world. The privates
according to their region should develop the details of such guidelines.
Finally, I would suggest to the President to become an international
salesman for the country's products. 



Ayiti has lived, lives and will live
Mozeb