Naomi Klein is known for beating up on a straw man shaped vaguely like Milton Friedman. She calls her hypothesis (and her book) the “Shock Doctrine.” There is a movie about it, too, which ain’t getting rave reviews. “The biggest flaw of all is that [the film] offers no alternative to the shocking capitalism it so roundly condemns,” writes Peter Howell for TheStar.com.
Not a big fan of logos either, Klein has distanced herself from Michael Winterbottom’s on-film branding of her ideas. Whatever their artistic quibbles, the thrust of Klein’s thesis is that right-wing ideologues use Machiavellian tactics to impose policy on people while they are vulnerable. (This may sound vaguely familiar. Recall “The Prince” himself – Rahm Emanuel – reminding power elites to “never let a serious crisis go to waste.”)
In any case, I’ve never understood how allowing people to be freer to do anything is an imposition – unless you think of human beings as children or lab rats. Despite whatever warmed-over Marxist meta-narratives Klein and Winterbottom would have us swallow, Haiti could use a lot more Milton Friedman right now.
Why? Because Haitians are a people who have nowhere to go but up.
Chile is Klein’s favorite punching bag. But consider that Chile, notwithstanding the serious brutality of Augusto Pinochet’s coup d’etat, is both the economically freest and wealthiest country in South America. Pinochet’s Chicago-influenced policies after the coup quickly made Chile wealthy (and not just the elites, as Ms. Klein would have you believe.) They’ve just joined the OECD–that is, they are now a “developed country.” If this is the shock doctrine then bring out the defibrillator.
Haiti, by contrast, has been trying everything but economic freedom since their independence from France. From colonialism to variations on a corrupt, predatory state, nothing has worked: It is still the poorest nation in the Western Hemisphere.
Of course, this is not to argue that the contributions of emergency supplies, food and water should be thought of as unwelcome or unwarranted. It is rather to say that more foreign aid, more corruption and dependency politics are to blame for Haitians’ difficulties getting through national traumas in the first place. In short, they are suffering more because they are poor. And they are poor because they do not enjoy the institutions we take for granted every day. Milton Friedman knew these institutions give rise to prosperity, which means Haiti could use a seismic shift from how they were doing things before the current crisis.
Here’s more evidence from economist Donald Boudreaux, citing a colleague:
What should Haiti do to get back on its feet – even thrive – in the coming months and years? A quick list:
1. Security. People can not get on their feet if they are predatory.
2. Solid property rights. Carve out the legal difference between mine and thine so trade can commence.
3. Imported institutions (or charter cities a la Paul Romer). Haiti needs dispute resolution, contract enforcement and preferably Common Law versus the French civil code.
4. Freeing trade with all comers. Remember when Hong Kong was scarcely a barren rock, then they started a unilateral free trade policy. Today, Hong Kong is the wealthiest place on earth.
5. Low, low taxes. Here is an example in Africa of the kind of growth that can quickly be realized in a low-tax zone.
6. Free prices starting now. None of this “price gouging” talk. Resources should find their highest valued use as determined by prices. Otherwise, no economic ecosystem will develop. Privatize and price even water.
7. Wean Haiti from emergency aid fairly quickly. (No foreign aid or debt relief.) And let them know it’s being weaned. Too much dependency – even food aid – can create disincentives to plant and trade agriculture products. Agriculture is the cornerstone of an economy.
8. Western countries should lift their agricultural subsidies, but that, sadly, is unlikely. If you must help, send in the Grameen Bank. Don’t let the IMF/World Bank within 200 miles of Haiti.
9. Introduce simple low-cost business law. See also 3. Even local administrators can help people set up low-cost, legal businesses with civic identities.
10. Make the costs of corruption higher through enforcement.
11. Seek the consultation of Hernando de Soto, not Jeffrey Sachs. (Watch the video.)
