Hunger and Free Trade: Haiti can't feed itself because rice is too cheap

My heart goes out to the people of Haiti.  They have experienced absolute wretched poverty, primarily because of the Socialist leaders which have governed their country and disallowed external investment. 

San Diego Union Tribune has put out an article which is blatantly wrong, inconsistent, and blames free trade for the current woes of Haiti.  Bill Clinton even went down to Haiti and apologized to the Haitian people for free trade.  It is so blatantly wrong and has so many falsehoods that it deserves that a humble economist break it down (See http://bit.ly/aTXCfE).
Decades of inexpensive imports - especially rice from the U.S. - punctuated with abundant aid in various crises have destroyed local agriculture and left impoverished countries such as Haiti unable to feed themselves.
How  does cheaper food make it more difficult for Haitians to feed themselves.  Cheap food makes it easier.  What they meant to say was that cheaper rice makes it more difficult for a nation to produce all the rice that it consumes.  This discredited, "I produce everything" theory, has been abandoned by liberal and free-market economists alike.  It removes the benefits which come from specialization.

While those policies have been criticized for years in aid worker circles, world leaders focused on fixing Haiti are admitting for the first time that loosening trade barriers has only exacerbated hunger in Haiti and elsewhere.
Hong Kong has 100% free trade.  Anyone can bring in food without tariffs.  They don't produce almost any fed, yet there is no hunger.  How does that work?  Cheap food is actually good to aleviate hunger.  Expensive food makes it difficult for peope to feed themselves.  Intuitively that makes sense.
They're led by former U.S. President Bill Clinton - now U.N. special envoy to Haiti - who publicly apologized this month for championing policies that destroyed Haiti's rice production. Clinton in the mid-1990s encouraged the impoverished country to dramatically cut tariffs on imported U.S. rice.
Clinton should be apologizing for the crony deals that they made with Fusion telecom.  That was a shady deal which kept the prices of telecommunications 20 times their peers on the other side of the island. 

They should be also be apologizing for imposing quotas on sugar imports to the US.  Haiti's climate is especially suited to sugarcane, not rice.  The US maintains sugar quotas, that keep the prices artifially low by imposimng quotas.  Hait should be selling lots of sugarcane at the market price, and importing lots of cheap rice.  That would make farmers happy and keep food prices low. 
"National rice isn't the same, it's better quality. It tastes better. But it's too expensive for people to buy," said Leonne Fedelone, a 50-year-old vendor.
But they always have the choice.  Haitians consume cheaper rice because it makes sense for them.   
But for Haitians, near-total dependence on imported food has been a disaster. Cheap foreign products drove farmers off their land and into overcrowded cities. Rice, a grain with limited nutrition once reserved for special occasions in the Haitian diet, is now a staple.
It's the staple for much of the world.  The question that needs to be asked is, What would Haitians be eating were it not for the rice?
Imports also put the country at the mercy of international prices: When they spiked in 2008, rioters unable to afford rice smashed and burned buildings. Parliament ousted the prime minister.
Once again, they just said that high prices were good for Haitians.  Now when prices spike, the Haitians rioted.  And the solution is to make the high prices of rice permanent?  That would be good for the Haitians?  Give me a break.

The Dominican Republic possesses similar people, climate and natural resources as Haiti.  Dominican Republic is poor but progressing; but Haiti is in a class of its own in the Western Hemisphere.  It pains me even more to listen to the idiotic proposals to aleviate the grinding poverty.

Comments

  1. So why did Clinton apologize then?

    ReplyDelete
  2. Clinton Apologized because he said that free trade had decimated their ability to feed itself. He said that because there was free trade, the rice farmers were hurting and that caused poverty for the people.

    I don't know how he made a leap from the rice farmers to the people at large, but he made it.

    ReplyDelete

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