__________________________________________________________________ David Chávez Salazar and Walter E . Block Haiti : Strengths , Challenges and Paths to Development Introduction In 1970 , Haiti had an economic level similar to that of South Korea , Singapore and Hong Kong ( World Bank , 2018a ). Today , almost fifty years later , the Caribbean nation is the poorest in the Western Hemisphere , while its former Asian colleagues are among the most prosperous places on Earth . According to Mises ( 2006 ) the difference between the developed and underdeveloped economies is a “ difference in the supply of capital , the quantity of capital goods available . The amount of capital invested per unit of the population is greater in the so-called advanced than in the developing nations .” Unfortunately , in Haiti , there are all too few institutions favorable to capital accumulation . This has translated into miserable living standards for its people . We present our suggestions for improvement in three main areas : I . rural reform , II . open markets and III . government efficiency . In the first part , we address the situation of the rural sector , and identify three major problems : the excessive fragmentation of the land that leads to a tragedy of the anti-commons , prohibitions on foreign ownership and political and economic uncertainty . In this regard , the idea of a rural reform based on the assembly of scattered property rights and the lands market liberalization is outlined . In the second part , we explore why Haiti is such a poor economy given that at the same time it is one of the most open in the Western Hemisphere . The answer is that although there are tax incentives for foreign investment and a relatively free trade , capital is not invested in Haiti because the country does not have good infrastructure conditions , the monetary system is unstable , and it is difficult to establish businesses . As alternative solutions , it is proposed to liberalize the port , energy and monetary sectors ( eliminate central banking ) and end bureaucratic obstacles to commerce . In the third part , the three most harmful actors of Haitian governance are characterized : state , non-governmental organizations ( NGOs ) and foreign powers . We offer a transition plan towards a Private Law Society based on six principles : respect for consent , protection of fundamental rights , independent adjudication , clear and fair interpretive rules , remedies .. David Chávez Salazar is CEO of Libertas Phyle , a think-tank based in Chile . Walter Block is Harold E . Wirth Eminent Scholar and Professor of Economics at the College of Business Administration , Loyola University , New Orleans ( USA ). Laissez-Faire , No . 52-53 ( Marzo-Sept 2020 ): 42-70

__________________________________________________________________ for wrongs , and freedom of exit . We offer a series of reforms that could be implemented in the country to improve its situation in four areas : property rights , open markets , government efficiency and role of the international community . I . Rural Reform . The Haitian countryside is a world of contrasts . On the one hand , it seems to be the only country in Latin America and the Caribbean where access to land is not a problem . While landless peasants abound in other parts of the region ( Schneider , 2016 ), in Haiti approximately 80 % of the farmers own their plots and only 20 % are tenants ( Smucker , White and Bannister , 2000 ). Likewise , the skills and knowledge of these farmers ( what neoclassic economists call “ human capital ”) are not negligible . Most farms have adopted crop diversification and rotation techniques ( Coello , Oseni , Savrimootoo and Weiss , 2014 ), and it is common for them to use an innovative and “ unusual form of farming called arboriculture ,” 1 which has made it possible to cope with the difficult edaphological conditions of the country . Unfortunately , these positives are overshadowed by two factors that completely undermine agricultural productivity . First is the very high level of technological backwardness , as farmers basically work with hand tools . It is rare to see animal-powered vehicles and much less heavy machinery . 2 Second is an extreme 1 Nations Encyclopedia ( n . d ): https :// www . na tionsencyclopedia . com / Americas / Haiti-AGRI CULTURE . html . cash shortage 3 ( Smucker , White and Bannister , 2000 ). According to several commentators ( Lundahl , 1983 ; Jickling and White , 1995 ; Palsson , 2018 ), the lag in the rural sector is the main cause of the country ’ s underdevelopment , which makes Haiti a unique case in the region . Does rural poverty have to do with the property regime ? With great concern , Hernando de Soto ( 2000 ) tells us that , in Haiti , “ 68 per cent of city-dwellers and 97 per cent of people in the countryside live in housing to which nobody has clear legal title ” ( p . 20 ) ( italics added ). Not surprisingly , this Caribbean nation typically occupies a very low position on the International Property Rights Index . In has an average of 1 . 6 tractors per 100 km 2 of arable land , while the regional average for Latin America and the Caribbean is 119 . While these statistics are old , they are the latest available at the time of this writing . It is unlikely that the situation has improved in the last twenty years due to the constant economic problems the country has faced . However , this cannot be anything like a full explanation of the economic disarray in this country , for there are numerous jobs in first world countries where machinery plays little or no role . For example , artists , artisans , potters , hand weavers , botanists , masseuses , choreographers , dancers , musicians , psychologists , teachers , policemen , lawyers , judges , interior decorators , chefs , the list goes on and on . It is our contention , of course , that the underlying cause of poverty in this nation , or , indeed , any other , is lack of free enterprise and secure private property rights . 3 This aspect is very interesting from the economic point of view . Due to the shortage of cash , some functions of money have been assumed by the most abundant factors of production : for example , the land has assumed the function of deposit of value , and labor , that of medium of exchange ( Smucker , 2According to the World Bank ( 1998 ), Haiti White and Bannister , 2000 ). __________________________________________________________________ 43

__________________________________________________________________ 2018 she was dishonored with the very last position globally ( 125th ) ( Property Rights Alliance , 2018 ). According to De Soto , 4 formal property titles is the key to economic prosperity . Therefore , in his opinion , it is up to the government to define private property rights and defend them through a robust judicial system . Allegedly , this legal support would protect the owner “ against threats of eviction , grant him absolute freedom to alienate his assets ” ( Smucker , White and Bannister , 2000 , p . 14 ) and guarantee investment security , which would stimulate growth economic ( De Soto , 2009 ). When property rights are not well defined and protected , as occurs in Haiti , two great tragedies come to existence : the first is the tragedy of the commons . Here , as nobody knows clearly what belongs to whom , unlimited rights of use arise over resources and very few rights of exclusion . This leads to overexploitation of the resource ( Hardin , 1968 ). 5 The second tragedy is the generation of dead capital , 6 an economic concept that is defined as “ a set of assets that cannot be easily exchanged or given a market value because no one owns them or has the right to exchange them . Those who use or occupy the assets will have no incentive to ‘ add 4 Also see Boserup ( 1965 ), Demsetz ( 1967 ), Faría and Montesinos ( 2009 ), and Besley and Ghatak ( 2010 ). 5 Ostrom ( 1990 ) denigrates this concept . For critiques of Ostrom , and defense of this notion , see Jankovic and Block ( 2016 ). 6 According to Hernando de Soto ( 2000 ), the Haitian economy has $ 5 . 2 billion in dead capital , which at that time was equivalent to four times the total assets of the 123 largest value ’ to these assets because they cannot realize or unlock any capital gain ” ( De Soto , 2000 , p . 8 ). However , this interpretation is contested . Some authors 7 suggest that , despite the scarcity of formal titles in Haiti , farmers are very clear about their land and even “ feel secure enough to … invest in their land ” ( Smucker , White and Bannister , 2000 , p . 19 ). How , then , can we explain this apparent paradox ? The first thing to note is that De Soto ’ s theory has a strong statist accent . It assumes that , if the property is not formalized by the government , the owners ( most of them poor ) would not enjoy the protective mantle of the state apparatus and would be at the mercy of the many “ villains ” who abound in the black market . In the absence of a legal title , they would not hesitate to plunder properties or impose their terms on land transfers . The weakest aspect of De Soto ’ s theory is his claim that without a formal property title , the government would not know who the rightful owner of an asset is and could not tax him , and without taxes , it would be impossible to make “ decisions in health care , education … and environmental planning ” ( De Soto , 2000 , p . 195 ). 8 De Soto would be shocked to learn that Haitians rarely formalize their property titles because culturally they are a society that absolutely disregards the state . In two hundred years of independ- 7 Baland and Platteau ( 1998 ), Smucker , White and Bannister ( 2000 ). 8 See Calzada ( 2004 ), who demystifies De Soto , from a libertarian perspective . De Soto , properly , enjoys a reputation as a supporter of free enterprise ( Freddoso , 2015 ). But we can see that it is not an unvarnished one . Another critic of De Soto , also from a laissez faire formal companies in the country . capitalist point of view , is Ahiakpor ( 2008 ). __________________________________________________________________ 44

__________________________________________________________________ ent life , they have managed to live insofar as possible away from the influence of the government . Their efforts have been so successful that different systems of law coexist and interact there . In the countryside , for instance , a private customary system rules , under which virtually all land-related conflicts are settled ( USAID , 2010 ). Haitian farmers deeply value their personal freedom . They are aware that each procedure they engage in with the state means paying higher taxes . Better to stay under the radar . Furthermore , they know that public officials , especially notaries , are usually unscrupulous and can legally alter the dimensions of their lands ( USAID , 2010 ). For example , they may register more acres than a property actually includes , to force them to pay more real estate taxes . This widespread distrust of the state would ruin any massive titling program , which is De Soto ’ s prime solution for these countries . Haitian landowners are also interested in minimizing transaction costs . Formalizing property means choosing between five different property regimes contemplated in the civil code , which have the reputation of “ generating rival property claims ” ( Smucker , White and Bannister , 2000 , p . 17 ). On the other hand , due to the malfunctioning of the judicial system ( Gwartney , Lawson , Hall and Murphy , 2018 ) it is almost impossible for a judge to do anything to resolve a claim . In fact , in the mentality of the average Haitian , state courts are the last resort to be used in a dispute . 9Social capital can be defined as “ the aggre- recognition ” ( Bourdieu , 1986 , p . 248 ). __________________________________________________________________ 45 individuals accumulate . Thus , access to land depends on the social ties they establish throughout their lives , which can be based on kinship , ethnic-religious factors or simple business relationships . An important aspect of this system is that the agreements are self-regulated ( Smucker , White and Bannister , 2000 ) and are usually made verbally ( this is a weakness of the system ), because in the Haitian peasant society a man ’ s word has more value than a paper issued by the state . If a farmer formalizes his land , likely few if any of his fellow citizens will care . In fact , land is easily bought and sold without the need for deeds and approximately 95 % of sales are also conducted informally ( FAO / INARA , 1997 ). Haitians cannot be expected to renounce their traditional governance and leave all their legal affairs in state hands . Although it is not perfect , customary law represents a comparatively superior alternative to formal law , since , on the one hand , it “ offers a more manageable level of risk ,” and , on the other , its “ arrangements lower financial and transaction costs . They are flexible and adapted to daily realities of peasant decisionmaking ” ( Smucker , White and Bannister , 2000 , p . 18 ). Unlike state law , based on perverse incentives , Haitian customary law is predicated upon the social capital 9 that The irrelevance of state certificates is such that statistics tend to ignore whether property was acquired formally or informally . In this regard , 75 % of owners accessed their land through inheritance ( 38 %) or purchase ( 37 %), while the remaining 25 % were accounted for through other mechanisms such as usugate of the actual and potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance or