ODIOUS DEBT

Haiti won independence from France in 1804, but in return for recognizing its formerly enslaved colony, France later forced Haiti to pay an indemnity of 150 million francs and give preferential treatment to French exports. The debt was equivalent to 270 percent of GDP—Haiti only paid off its debt in 1950.

Considering the absence of Haiti in larger conversations around sovereign debt, a new paper by Kim Oosterlinck, Ugo Panizza, Mark C. Weidemaier, and Mitu Gulati argues that Haiti’s debt should be seen as odious. The authors make the case that Haiti paid an exorbitant cost on an illegitimate debt, and that the nation is entitled to reparations.

From the paper:

“By any reasonable definition, the Haitian Independence Debt would seem to be odious. The circumstances suggest coercion, as does the fact that the agreement obliged Haitians to pay compensation for the freedom they had already won. The amount has been reported at around 300% of Haitian GDP (270% in our estimates), and it was understood that Haiti could pay only by borrowing vast sums from French banks, thus transforming the indemnity into a debt burden that would persist for generations. The debt cannot reasonably be characterized as in the best interest of the Haitian people. Yet we see little mention of it in the literature on odious debt or, indeed, in the larger literatures on sovereign debt or debt and development. To be sure, authors writing in French examine the intertwined history of Haiti and France and often discuss the Haitian Independence Debt. Likewise, articles in the popular press occasionally ask whether France owes compensation to Haiti for the episode. But these discussions have not yet made their way to the general sovereign debt literature or into the sub-field examining the doctrine of odious sovereign debt. Nor have they prompted a deeper examination of whether that doctrine should extend to debts imposed by former imperial powers in the context of independence and decolonization.

From one perspective, it is not surprising that the odious debt literature overlooks the Haitian Independence Debt. The standard model of odious debt presumes corruption in the borrower government. The Haitian Independence Debt does not fit this model. Still, it is puzzling that the literature on “odious” sovereign debts ignores perhaps the single most odious sovereign debt in history.”

Link to the text.

• In a 2016 book, Jeff King traces the history of the doctrine of odious debt in international law. Link.
• Anna Gelpern, Sebastian Horn, Scott Morris, Brad Parks, Christoph Trebesch dive into more than 100 debt contracts China has signed with foreign governments, examining some unorthodox conditions that the world’s largest creditor demands when lending money. Link.
• In 1919, Keynes’ Consequences of the Peace made the economic case against war reparations, arguing that Germany did not have the budget to pay. He predicted that Germany would be hit by a transfer problem through worsening terms of trade, and that large reparations would have terrible consequences across Europe. Link.

The spotlight of this newsletter was written by guest contributor Simon Hinrichsen, a doctoral student at London School of Economics and a portfolio manager at a pension fund. His work and research focus on sovereign debt, international finance, and open economy macroeconomics in emerging markets. Find him on twitter @simonh_dk and link to his research.

NEW RESEARCHERS

Family Leave Policy & Civil Rights

PhD candidate in political science at Northwestern University KUMAR RAMANATHAN studies the emergence of the civil rights agenda in the mid-20th century. In a recent article, he examines the role of civil rights policy in family and medical leave.

From the text:

“Family and medical leave policy in the United States is often noted for its lack of wage compensation, but is also distinctive in its gender neutrality and its broad coverage of several types of leave (combining pregnancy leave with medical, parental, and caregiving leave). This article argues that the distinctive design of leave policy in the United States is explained by its origins in contestation over the civil rights policy regime that emerged in the 1960s. Before the 1960s, advocates had unsuccessfully pursued maternity leave provision through a social insurance model akin to that of programs such as unemployment insurance. In the early 1970s, women’s movement advocates creatively and strategically formulated demands for maternity leave provision that fit an interpretation of the new policy regime’s antidiscrimination logic. Because of this decision to advance an antidiscrimination claim, advocates became committed to pursuing a leave guarantee on gender-neutral grounds, which in turn enabled the broad-coverage leave design.”

Link to the article, link to Ramanathan’s website.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

+ + +

• “Higher ed institutions consistently underestimate the non-tuition costs of attending college, and overestimate the amount of incoming aid from grants and scholarships.” A new report by Laura Beamer, JFI’s Lead Researcher in Higher Education Finance, investigates how schools mislead students on costs. Link. Explore the rest of the Millennial Student Debt project here.
• Benjamin Franta on economic consultants in the oil industry, and attempts to shape climate policy. Link.
• Maximiliano Facundo Vila Seoane on data localization and securitization in India. Link. And a recent piece by Seema Chisti examines the Modi government’s position on Pegasus. Link.
• “We compare Union and Confederate policies directly and highlight the importance of taxation for assuring the value of inconvertible money.” Ariel Ron and Sofia Valeonti study taxation and currency depreciation in the Civil War. Link.
• Daniela Caterina and Nikolai Huke examine calls for austerity in Italy and Spain by looking at the “disciplinary effects of capital accumulation” and the state’s fiscal capacity. Link.
• “What makes US government bonds safe assets?” By Zhiguo He, Arvind Krishnamurthy, and Konstantin Milbradt. Link.
• Roni Hirsch examines John Hicks, Knight, and Keynes’ accounts of uncertainty and inequality. Link. (ht: Paul)
• Tatiana Berringer on regional integration and Mercosur under the PT government in Brazil. Link.
• “I study the political impact of the first populist radio personality in American history. Father Charles Coughlin blended populist demagoguery, anti-Semitism, and fascist sympathies to create a hugely popular radio program that attracted thirty million weekly listeners in the 1930s. I find that exposure to Father Coughlin’s anti-Roosevelt broadcast reduced Franklin D. Roosevelt’s vote share in the 1936 presidential election. Coughlin’s effects were larger among Catholics and persisted after Coughlin left the air. Moreover, places more exposed to Coughlin’s broadcast were more likely to form a local branch of the pro-Nazi German-American Bund and sold fewer war bonds during WWII.” By Tianyi Wang. Link.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org