With well over $1B donated so far to Haiti relief, the issue is not more donations, but effective deployment of existing donations.  If the Indian Ocean tsunami of Dec 2004 is any lesson, nine months after well-meaning intentions, just 39% of the money promised had been spent.  It was just not possible to spend the donations faster in any reasonably helpful way.  It is even more likely this will be the case in the devastation of Haiti.

What’s Next?

Paul Collier, an economist at Oxford University and author of The Bottom Billion, believes that a temporary new administration (instead of the current Haiti government) is required to administer proper allocation and investment of donor monies.  The emphasis is on investment, not just unaccountable hand-outs which Collier knows have been a complete boondoogle in Haiti and other poor countries.

There is enthusiasm from folks like Jeff Sachs for donors to commit $10-15B to Haiti for a grand 5 year rebuild.  While this sounds all wonderful and hopeful and exciting, this has been tried many times in situations like Haiti and has not worked.  Easterly, a former World Banker, has de-mystified this failed approach with data.  Calderisi, another World Banker has documented the failure of this strategy in Africa.

Bottoms Up, Not Top Down

Status quo approaches to aid are fundamentally flawed because they focus on a top-down “planner” approach where the giver assumes to know the formula which will work.  The real world doesn’t work this way.  This contrasts with the bottoms-up “searcher” approach where ownership is taken locally to experiment to find local solutions which actually work on the ground.

From a previous blog post:

The main issue, [Easterly] argues, is that our international aid agencies … are run by planners, not the entrepreneurial, finding-what-works “searchers”. We in the West are very utopian with a grand plan to eliminate poverty always the goal and what the politicians like to talk about.

If we really care about prosperity for Haitians

In the short-term, many Haitians need help to survive.  Most of this must come from foreign charity.   Let’s not confuse this with what Haitians need longer-term to thrive.

I believe Haitians deserve the opportunity for a better future, not another failed attempt of utopian charity.  To increase their own prosperity, Haitians must attract foreign private capital and generate an export economy which leverages its key competitive advantages … low cost of labor and proximity to the USA export market … to grow its economy.  A purely super-sized continuation of what some have called Haiti, “The Republic of NGOs” is recipe for continued human misery for most Haitians.

UPDATE 4-20-2010:  Interesting recent post:  Haitians don’t deserve our Sympathy