Friday, January 29, 2010

The Dangers of Bandwagons, or The Future of Haiti's Oil Industry

I was reading an op-ed in the New York Times today suggesting that Haiti become like every other country in the Carribean. Why do people never seem to learn?

A lot (though admittedly not all) of what caused the recent US economic crash was the inductive tendency. This is the belief that trends continue forever. Because the Dominican Republic has successful garment producers, lets build garment producers in Haiti! Because LA has seen its housing increase in price, lets build even more housing there. Because that other guy got rich (and served the poor) off of subprimes, I can get rich (and served the poor) off of subprimes too. There's this bizarrely inadequate idea that if we do exactly what the other guy did, it will work for us too. Did it ever occur to them that the need for garments is limited?

Further, demand for the most profitable kind of garment making for small manufacturers, luxury and designer label, is severely hurt by recessions, for the simple reason that people don't like spending outlandishly large amounts of money on a single dress when they don't have a job! It will be a long time before Americans are spending the same amount on designer clothes that they were in 2006, and I doubt it will be much faster for the rest of the world.

The Gulf of Mexico has signifcant crude deposits in it, as do Mexico, Venezuela and Texas. America has insufficient refining capacity to handle all its oil needs, and refuses to build more, and already has to ship some oil a much further distance to Japan. Haiti could also use the Panama Canal to bring in oil from (and send to) Southern California, Argentina, Western Venezuela and Chile. Brazil could also benefit from a Haitian oil terminal.

Oil Refineries would also create support services for other kinds of chemical industries, including Ammonium Producers, Cosmetics makers, Cement plants, Sulfuric Acid producers (which are neccesary for eveyr kind of heavy industry), and perhaps even Steel Mills and Metal Smelters. This could in the end allow Haiti to become the industrial motherland of the Carribean, much as Japan was in the West Pacific.

So why Haiti? Simple. Haiti's not a tourist destination, and even if it was, the tourists were good far to the North, to see the Citadel, Tortuga, and other valuable World Heritage sites and NOT Port-Au-Prince, except maybe the Airport, along with beaches facing open ocean with comparatively few people living near them, in the far North and South. There are some nice(looking) neighborhoods in Port-Au-Prince, but centuries of poverty have destroyed most of the neighborhood businesses that make such places more then a photo moment. As such, there is no economic cost to putting up NIMBY-type industry, of the kind that would kill half the economy in the Bahamas or Saint Thomas.

Further, the destruction in Port-Au-Prince has cleared massive amounts of land. Now, massive amounts of land having nothing in them does nothing good for light industry, which requires a lot of support services, but how many places left on earth are there that have large tracts of available land AND several million unemployed people available to work in your plant in the exact same point on earth. And by the coast too. Likely large enough, in fact, to build a 100-acre Oil Refinery!

Further, Oil Refining would also help repair Haitis infrastructure, both by creating, as a waste product, large amounts of asphalt, good for every kind of pavement including roads, sidewalks, ports, and airport tarmacs, and by using pent-up demand from eco-regulators in Western countries to create a mammoth industrialization involving every kind of support service and industry for these refineries as, building at nearly (but not past) break-even cost is still better then not building at all. This industrialization would also create a large demand for track-laying by railroad companies, in a landscape destroyed by quakes and thus with easilly clearable (and usable at little cost) right of ways.

The better infrastructure would aid in the development of Haitian agriculture and tourism to the North, and allow Port-Au-Prince to grow in to a major port, carrying much of the cargo for the Dominican Republic as well. Port-Au-Prince could build a passanger railway station, allowing for easy and cheap transportation of people throughout Hispaniola. This is especially possible because Port-Au-Prince is located centrally on a large bay that digs deep in to the Island, thus being the shortest railroute to the ocean on average for the entire island. PAP could easilly be the Chicago of Hispaniola, and we all know how much Chicago, Seattle, and San Francisco grew after their great fires, with the destruction as their benefactor, clearing way for better design and more profitable businesses like Chicagos great stockyards.

Oil refineries are also much higher profit margin factories then garmentmakers, allowing higher wages and lower unemployment for the Haitian working man in the near future, and gearing Haiti away from heavilly servile low-margin industry that can only lead to poverty for their workers. In the end, oil refining could help not only put Haiti back to work, but put it on the path to wealth and prosperity. After all, it's only been a few centuries since Scotland went from being the poorest nation in Europe to the third wealthiest in a very short period of time.

So why aren't people suggesting this? Because they've already seen the garment factories, and all they can think is, another Carribean Banana Republic.


Anonymous said...

...they may also be thinking what a long-term investment oil refineries would be, and how small the positive impact it would have on the global press. Quick fixes mean quick congratulations, then the problem can be forgotten. This is a fantastic idea, btw. I haven't heard anything this positive and constructive anywhere else! x Alice

Clockwork Kitten said...

I would have to agree. I don't keep up with global news much, simply because it's not something I'm interested in. It's hard to get direct facts from a place you've never been to, so instead of pretending to know what I'm talking about, I keep my nose out of it. However, a well informed individual should take the time to let people know what options there are. I like the positive thinking on this, instead of just whining about how many people died. Even the local news has said that the donations aren't helping because Haiti is not really POOR, it's just broken. They have plenty of food, water and other stuff still available, they just need help putting the country back together. Throwing more money at them isn't going to help, and it's nice to see that there are still a few people that grasp this concept.