Jeff Frazier (0:00)

Foreign. Welcome back, everybody, to the Stimpak podcast. My name is Jeff Frazier, your host. You made it. Thank you. Thank you for being willing to spend some time with us this morning learning something new and being a part of doing some good for the people in Haiti. I promised you on the last episode that we would begin to present this puzzle that is Haiti and claimed that we here at Stimpak have an understanding of what the missing piece is to that puzzle. And I promised that we would then try to mobilize you as our audience of advocates for Haiti to put that missing puzzle piece into place. So that's. That's what we'll be doing today. Let's start by explaining to you a little bit about the situation. I won't go in too deep. You understand that it's bad in and terrible, and it needs your assistance. I want to give you a little bit more information around that, but we're not going to beat that dead horse. But just a little bit by way of stats. So in Haiti, probably about half of Haiti lives in food insecurity, which is scary and terrible and shocking. But the most devastating number is that probably 1.8 to 2 million of them are in that critical starvation phase. So that there, if this continues, they die. Right? They cannot survive on the amount of food that they get. So that. That should be a shocking number that you've got a couple million people just off the coast of Florida who are going to die from malnutrition or starvation. So that's scary. And. And it's about 22% of the whole country that are children that are living in that kind of chronic malnutrition space, which is obviously frightening. Very few get access to proper healthcare. That's. That's no shock. Very little education, tons of violence, murder, mayhem, kidnapping, the whole deal. You know, that unemployment, you're probably looking at somewhere around 40 to 50%. All of these numbers are just estimates. Like the ability in these developing nations to collect good data is. It's tough. So, you know, a lot of this is just estimates. And so don't, you know, don't be writing this stuff down, but get the idea that, okay, it's bad, we're probably looking at 70%, maybe north of that. That is. We might in the U.S. call it gig economy there. It's basically they're unemployed and they. They just have side hustles, or maybe they're subsistence farmers. There's certainly a lot of that. And one of the big problems in Haiti is their environmental degradation. So you've got total deforestation. They're like 98% deforested. There are very few trees in Haiti compared to what there should be or, or has been there historically. And lastly, about the, the gangs, the gangs control about 80% of the. Of Port au Prince kind of metropolitan area. When people say Port au Prince, Port au Prince proper is a fairly small geographic area, but it's metropolitan area, which is all kind of connected city is, is a big chunk of the country. And that's usually what people mean in, when they say Port au Prince, they mean the whole area. And that area is essentially totally under the control of gangs. They, they estimate like 80%, but it's a really important 80% that they control because the main port in port opens is really closely monitored and controlled by really strong gangs. Right there by that main port and then the airport. And then there's essentially three ways out, three and a half ways out of Port au Prince western corridor, the eastern corridor and the northern corridor. And then there's mountains to the south. But it's still a tiny kind of corridor, but it's also controlled by gangs. And so you, you kind of can't get anything out unless they allow it to get out. Right. And that's, that's a big deal. So that's kind of the situation in Haiti. And you know a lot about that. We'll talk about it in more detail as we, we go on. But it's bad. And so what I wanted to talk about a little bit is why is that a puzzle? Why is that surprising? Well, Haiti shouldn't be poor, certainly not as poor as it is. And so I want to answer why. And we'll talk about history a little bit. But first I want to talk about kind of the pieces of why are these poor countries so poor? There's some pretty predictable components to understanding why that is. They're typically landlocked. They've got trade issues because they're landlocked. Like. So imagine somewhere like Dr. Congo. They're, they're going to have a hard time getting trade outside. They're dependent on their neighbors, that kind of thing. They don't have easy sea access. That's also a fishing thing. But they've got, they've usually got scarce resources. It could be a climate issue that might be suffering from desertification. Right. That's like Chad is really poor for that reason. There's often ethnic tension, some sort of civil war that's gone on for a long time. And that's the reason civil wars last a long Time is usually because of either an ethnic issue, meaning like a tribalism. So think of the Hutu and the Tutsis in Burundi and Rwanda. And if you stack up all these factors that usually contribute to a poor nation, so civil war, ethnic issues, bad climate, landlocked, poor geography. Haiti has none of those. They're not landlocked. They're in a great location. They have great neighbors like the US and all of North America and all of South America and the Caribbean to do business with and great trade relationships. They've got good natural resources. They should have a lot of trees and great agriculture. They've even got good mining. That should be happening. Gold and copper and I think bauxite as well. Those could be huge industries. Their climate is great. There's no ethnic tensions. They haven't had civil war. So why is this nation the way it is? Why are they so poor? Let's talk about that. So to understand Haiti in the present, you have to have a little bit of a history lesson. And I'm not going to bore you with that. We'll go, go through it quickly. But in order to get Haiti at all, you have to know a bit about its past. So imagine with me, if you will, that you are a young 15 year old boy in Africa around the late 1700s, and you and your tribe have been captured and you've been put into the belly of one of the transatlantic slave ships headed for, in this case, Saint Domingue. That's an island that will eventually become Haiti, an island called Hispanola. And you get inside the belly of the ship and are worried about your survival. You've heard about the terrors of these ships and you hope to just make it to the other end of this journey. Congratulations, you made it. You arrive in what will someday be called Haiti, and you come to find out that you will be enslaved for the rest of your life and will be working on one of the many sugar plantations. To your surprise, you are now joining over 500,000 other slaves that have been working these sugar plantations for years. And at this point, the French have been there for about 500 years, following Christopher Columbus landing there. And of course, 1492, when you arrive about 1780. The island is an absolute machine of agricultural production. This is making France super rich at this time. There's more wealth flowing from Saint Domingue at this era than from all 13 US colonies combined. @ the same time, most of it's sugarcane. So when you join the rest of the enslaved workers there on Saint Domingue, you Begin to grasp the harsh reality of your new life on a sugar plantation in Saint Domingue. It's horrific as you can imagine, and you're hanging on to life by a very thin thread. And so as the years go by, you begin to run out of patience and hope. You know that if you attempt escape, you risk death. But then you hear some rumors that others have escaped up into the mountains and that they are beginning to rally. In late August of 1791, you are freed by a large group of former slaves that have revolted from their captors. Fantastic. Then you get great news. You come to learn that there are a ton of enslaved people that are available on the island to join your revolt. So at that same time period in the US There were many, many enslaved people, but it never crested more than about one to one, meaning there were about as many enslaved people even in the south as the southern states of the US as there were free people. But in Saint Domingue at this time, it's more like eight enslaved persons to every one free person. So you're out joining this revolution, and you start to realize the numbers are really heavily in your favor. You're further thrilled when you see that men like Toussaint Louverture step up and organize to lead the revolt. And so it takes about 14 years of you fighting tooth and nail, many battles, many different enemies, the French army and others that you fight. But eventually your revolution succeeds. And on January 1, 1804, Haiti becomes the first black led republic in the world. That's your new country. And this marks a successful culmination of this revolution that you've been fighting tooth and nail for many years. You're thrilled you're free, and for the first time since your initial capture back in Africa, you're a free man. So you and your fellow Haitians can now go about your lives as free men, women and children. Fantastic. You find love. You're finally allowed to marry and start a family without threat of being ripped apart. You get a little tiny piece of land to grow sugarcane for yourself. And as you cultivate your own land proudly, you're excited to sell it into market. But then you get bad news. No locals want to buy your sugar cane. Why? Because the large commercial growers haven't been able to sell their sugar cane on the international market. Why? Because the whole world is afraid of the spread of slave revolts. The world has decided that this first free black republic is a threat. It's a cancer that cannot be allowed to spread. So the world refuses to work with the newly formed country of Haiti, your country. You're embargoed, blackballed. Nobody will touch you. So now all of that sugar cane and other crops have nowhere to go. The vast production that has been coming out of Haiti for many years almost immediately has no value. So now you are free from slavery, but you've got an uphill battle to just survive. You and the rest of the country are going to need to reinvent yourselves, and you won't be getting any help doing it. So this kind of isolation of Haiti continues for the rest of your life. You die around 1880 at the very old age of 45. Your children struggle in the same national isolation their entire lives. And at the same time that the rest of the world is experiencing the thrilling developments of the industrial revolution, your children have never even seen a machine in Haiti because this embargo. So Haiti misses all of that. To make matters worse, in 1825, when your children should be in the prime working years of their life, France shows up with a fleet of warships right off the coast and demands get this repayment for the theft of their property. You and all the other enslaved people that fought for their independence alongside you 20 years earlier. So France has come to collect. So the Haitian government relents because they're staring down the barrel of many ships, guns pointed at them off the coast, and they agree to begin paying an absolutely enormous sum of 150 million francs. And it ends up being, some people estimate, like $20 billion after all the interest accumulated and, you know, adjust for inflation, etc. It's an absolutely crippling amount of money for an already threadbare government. Right? So devastating. So Fast forward to 1840, this is. Your grandchildren are having children of their own. At this point, they should be working your land and selling the valuable cash crops and enjoying huge advancements that are happening around the world. But they're not. They're missing basic technologies like the telegraph and railroads, the steam engine, and even the steel plow, which was a big deal In, I think, 1837 when it was invented, and then spreads all around the world, becoming a huge boost for agriculture. But not in Haiti. Haiti doesn't have its own iron ore deposits, so even when it learns of the technology, it can't make its own because nobody's willing to sell them iron. So this embargo ensures that your grandchildren miss all of that. They miss out on advancements in science and medicine like smallpox vaccine, basic germ theory, and even anesthesia. Right? Banking and finance, political and legal reforms are all moving forward all around the world, and everyone's collaborating and moving their economies and communities forward. But Haiti isn't part of it. They're essentially a world unto themselves in many ways. So as a reminder, the economy in Haiti in 1791, when you began fighting for your independence, was bigger than the U.S. but 70 years later, now in 1860, when your great grandchildren are in their 20s and 30s, imagine that for a second. The U.S. economy, which was smaller than you, is now roughly 100 times the size of Hades. Over $4 billion. Embargoes matter. Global isolation matters, especially when you're on a small island in the Caribbean. Luckily for your great grandchildren, Abraham Lincoln lifts the embargo in 1862. Luckily, things begin to improve for them. The benefits of U.S. and international relations and U.S. investment begin to have significant impact. So much so that the US is starting to actually get nervous some years later when Haiti has some political instability, that should not be a surprise. It's a new political environment and a relatively new government that's been bootstrapping from the beginning. So it's going to have some instability. And sure enough, that happens and, and the US comes and takes over Haiti's banks and eventually in 1915, Marines land and take over the whole country, the whole government, and they stay for 20 years and kill thousands of Haitians. The soldiers all leave in 1934, but they maintain control of Haiti's finances until 1947. Why 1947? Because that's the year that Haiti finally finished paying off the 150 million francs and in debt to France and all those high interest loans and it was forced to pay. This is 122 years later, they finally were able to pay back this debt. So imagine being not just the Haitian people, but specifically the Haitian government that was saddled with that debt for so long. So finally relieved of so many burdens, Haiti enters its golden age of the 1950s. They're finally free. They get to grow significantly from foreign investment and international collabor. So Haiti actually supported the anti communism movement in the Caribbean. They helped, they got involved, they started being a regular country that worked with the US and others. And they enjoyed exporting. Haiti enjoyed exporting their sugar finally to the US and then tourism started to take off and it was a legitimate golden age for Haiti. Awesome. However, you can feel this coming. It all came crashing down in 1957 and this is with the emergence of a dictator named Francois Duvalier. His nickname's Papadoc. And then his son Jean Claude, which people call Baby Doc. And they ruled for nearly 30 years. Now. It's important to understand the level of destruction that typically comes with authoritarian rule. I think we all understand that dictators are bad for people. When we think of dictators like Hitler and Mussolini and Nero, these are all very bad guys. And there are very few benevolent dictators throughout history. Sidebar I spent some time on ChatGPT talking through dictators throughout history and which ones were benevolent versus otherwise. And the ratio is something around 100 to 1. Right? The odds of getting a benevolent dictator are extremely low anyway. So I think it's intuitive to understand or to believe that dictators are bad for human rights. I think it's less intuitive for people to understand all the other kinds of destruction that dictators levy on a country. So let's think about this for a second. Let's take a step back to understand the abstract concept of investment. So an investment is where we sacrifice our a resource, whatever that happens to be. Time, talent, water, food, money, some sort of resource in the present for some sort of increase in value in the future. For example, a Haitian might invest time and energy and resources to digging a well in hopes that he will enjoy fresh water. In the future, he might buy land and plant seeds in hopes of harvesting a crop. In the future, he might combine his money with others and build a power plant in hopes of having access to reliable electricity for their community. He might invest in his own education in hopes of securing a good career. But no one does any of those things if they don't have great confidence that they are going to be able to enjoy the fruits of their sacrifice, their investment. People need to feel certain that they can make good on their investment. So the uncertainties created by Duvalier and other regimes like that in Haiti absolutely killed the kind of confidence that investors of all types require. Papa Doc and Baby Doc would take whatever they wanted from whomever they wanted. Embezzlement, fraud, cronyism, human rights violations were the norm. Money's intended for roads and schools and health care. Legitimate policing, prisons, ports, et cetera were often siphoned off or otherwise misappropriated. So as a result, foreign direct investment, that's the fdi, the private business. Private businesses abroad investing in Haiti, Right? So FDI of understandably tanks during that period decreases dramatically, which of course makes sense. Who would, for example, build a textile manufacturing facility in Haiti? If Papa Doc or one of his many cronies can just take it from you at any time, right? Considering the degradation of the judicial system by that time, you have Very little legal recourse by which to recover any of your investment. Right. Property rights, like the ability to own and improve. You own something and keep it, are the absolute bedrock of entrepreneurism. Right. If you're going to invest in something, you need to be able to realize the gain. And all of the things you need in place to feel comfortable about investment were essentially absent during the time of the Duvaliers. So that. That cronyism that we talked about before, you know, only hooking up your buddies in business when you're the dictator in charge also favors monopolies. And so that kills competition, which simultaneously deletes small business and the middle class. So that lack of upward mobility. Right. Possibilities for. For growth within an economy, incentivizes all your smart young people to leave the country. Right. That's what democracy demographers and economists call brain drain. It's definitely an issue in Haiti. So what's more, foreign governments saw all of this and began to dramatically reduce their collaboration and investment in trade and foreign aid dollars. Right. So the foreign aid tap gets. Gets killed. So this is why most countries at the top of the poverty list worldwide are unstable nations. It's a downward cycle. It's a trap. Predictability and freedom are absolutely key to prosperity, and Haiti didn't have any of it during that time. It's tragic that at the very moment in 1957, when Haiti was starting to dig itself out, the Duvaliers throw him into that poverty trap downward cycle head first. Okay, so at this point, you're probably thinking, Jeff, that's it, right? We found the missing puzzle piece. You know, the bad international relations, the embargo that ruined Haiti, and then bad governance ruined Haiti. Right? That's it, Jeff. We figured it out. We solved the Haiti puzzle. Okay, well, let's step back for a second and remind ourselves of what we're trying to do here. So season three, I promised you that I would share with you the missing piece of the puzzle. So if our metaphor, the puzzle itself is defined as the necessary components for understanding how to help Haiti prosper independently and indefinitely, then good governance, so no dictators, good, stable government, is absolutely a crucial piece of the puzzle, but it's not the missing piece. The missing piece is the piece that we at STIMPAC believe everyone else has missed. Right? And we're going to get to that soon. Good governance is most, not, most certainly not overlooked. Right. To the contrary, there are massive amounts of effort and focus placed by the international community on helping developing, developing nations develop good governance. It's a known massive impact and of course international relations is a big part of that. And so yes, it's a huge piece of the Haiti puzzle, but it's not the missing piece. I hope this episode has helped you see a little bit about the value of international relations and good governance in pushing Haiti forward. I look forward to you joining us as we seek to further understand the missing piece of the puzzle in Haiti. I hope you felt something today during this episode. I also hope that you've learned something to make you more powerful for good. Thank you for your time. Thanks for joining us. You're good people for being here. We'll see you next time. We hope you enjoyed this episode of the Stimpak Podcast Season three. Will you please subscribe, rate, review and share it with your friends and colleagues? Thank you for your help. This podcast has been brought to you by stimpak incorporated. Copyright 2024. All rights reserved.