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.

What's next for Haiti?

John R. Chapins "The Rush for our Lives over Randolph Street Bridge", an image of the Great Chicago Fire, Copyright expired.

When four square miles of Chicago burned to the ground in 1871, many were killed, but it also led to a massive redevelopment of the city that made Chicago among Americas mightiest centers. Further, the wisdom of insurance executives and reformers like Arthur C. Ducat reworked the laws so nothing like Chicagos fire would ever happen again.

A friend of mine who is a civil engineer pointed out that in Port-Au-Prince, a lot of the buildings were 10-stories. If you notice, in most parts of the world 10-story buildings aren't built, and the reason is resonance. If structures are built in a way to aid the natural vibrations of their material, then when severe winds or earthquakes hit them, their vibrations will be magnified to the point of destruction.

Quakes like the one that hit Haiti have hit many other parts of the world without causing that degree of damage. For instance, the 6.7 magnitude Northridge quake in San Fernando killed well under a 100 (out of a population of over 3.8 million affected) in the Los Angeles Area. Not a fair comparison, okay, but even in the third world, the 2009 Honduras Earthquake, out of three countries affected (further away, but 7.3 magnitude in scale) killed "at least 7." The difference is preparation.

Now, everybody feels sorry for Haiti, and a lot of people have been killed or made homeless, but Haiti is not helpless anymore then Chicago was. Sure, they're poor, but the world was poorer in 1871, and technology less sophisticated so wealth didn't even go as far when you did have it. If Haiti takes this opportunity to rebuild Port-Au-Prince, enact the right legislation, and make Haiti a great center of commerce and industry, they will cease being the poorest nation in the Western Hemisphere, and perhaps become among the wealthiest. If they do not, this WILL happen again, maybe next year, maybe the year after, just as many other disasters have routinely killed thousands in that country.

Now, in addition to preparing for future earthquakes, Haiti's transportation should review PAP's transportation systems to see if any improvements would be beneficial. They should also take an opportunity to, in order to raise money for reconstruction and provide work for those who need it, find large plots of relatively uncentral, but well-connected to railway, demolished land to sell to Industrialists, who can build up industry to bring Haiti in to a more prosperous future and provide better work for Haitians. Among other things, any good coastal land could be valuable for a shipyard.

If Haiti is open to construction of things, like nuclear plants and oil refineries, that are difficult to build in other nations, these private projects, built with private money, could bring Haiti a high-level of prosperity. If it cuts down on its corruption, much of the benefit could go to the Haitian working man. In particular, Haiti, if it gets on the ball, could end up reprocessing America's nuclear waste and selling it back to us, since our own government has already shot us in the foot on nuclear waste disposal and reprocessing. This would provide good work for the average Haitian at a high-profit margin, which helps gear a countries working people to higher standards of living by making it possible for them to be paid better. After all, no worker can be made more then he makes for his business, and most will be paid well less.

There's only one nuclear reactor shell foundry in the world night, Haiti would really reduce the price of nuclear energy if they built a second, and they would be among the largest beneficiaries (and benefactors.)

I hope the Haitian government will take this as an opportunity to learn, and if they don't I hope the Haitians will find a chance to ask for a new government, perhaps prepare a very special bowl of chili for the starving...