Laughable: Kamala Harris's big corporate 'root causes' plan for Central America

So in her quest to find all those root causes for the current migrant surge into the U.S., Kamala Harris has focused on Central America, where two-thirds of the illegal aliens pouring over our border are coming from.

And not surprisingly, instead of going to the border and asking a border surger about it, or even doing diplomacy, as she claims, she's got big plans to bring in huge corporations and NGOs to the region, kind of like the United Fruit Company, which lefties in the past have complained about.

It's downright laughable.

Here's her press release:

As part of this Call to Action launch, 12 companies and organizations announced commitments to support inclusive economic development in the Northern Triangle, including: Accion, Bancolombia, Chobani, Davivienda, Duolingo, the Harvard T.H. Chan School of Public Health, Mastercard, Microsoft, Nespresso, Pro Mujer, the Tent Partnership for Refugees, and the World Economic Forum.
 
Our comprehensive strategy to address the root causes of migration will involve significant commitments of U.S. government resources to support the long-term development of the region—including efforts to foster economic opportunity, strengthen governance, combat corruption, and improve security. This approach will leverage commitments and resources from the governments in the Northern Triangle, as well as partnerships with multilateral development banks and international financial institutions.
 
Supporting the long-term development of the region, and in the Western Hemisphere more broadly, will require more than just the resources of the U.S. government. For this reason, Vice President Harris is calling on the private sector to draw on its unique resources and expertise to make commitments to support inclusive economic growth in the Northern Triangle. Together, we can work to overcome obstacles to investment, promote economic opportunity, and support long-term development in the region. 

Those "12" who have "answered" her "Call to Action" are actually just four corporations worth noting, plus a startup -- Mastercard, Chobani, Microsoft, Nespresso, and DuoLingo (an app startup with 200+ employees). The rest are just NGO do-gooders, or else large Colombian banks that already had operations in Central America, not actual new entrants.

Let's just say the list of private-sector companies that seek to get involved with Central America is actually kind of thin. 

And not surprisingly, all of the companies among them have longtime associations with supporting Democrats, particularly Biden and Harris. It sounds like there was some arm-twisting, some phone calls from Kamala's team brought this about, rather than actual attraction to Central America as an investment destination based on market considerations.

That's obvious enough, given that none of them, (except possibly Nespresso which says it will "invest" $150 million to buy coffee), have any plans to set up operations to create jobs. Some of the NGOs, such as the World Economic Forum, plan to exhort other companies to create jobs, not actually lay money down to create them themselves, just get some other guy to do it. Some of them, such as Grupo Bancolombia (a very respected Colombian bank, I'm sorry to say), plan to focus on remittances, which is to say, harnessing, incentivizing and entrenching the illegal alien trade as its money maker -- all those new but abandoned remittance roofs as happened in Mexico will be the model. Others plan to hand out goodies, free stuff, free Internet, free language lessons assuming the poor have a computer or cell phone. Internet connections, and "branchless banking" for the "unbanked," as some are promising, will help with remittances, not build prosperity at home. Most likely, they'll incentivize more Central Americans to send 17-year-old junior up north to get a U.S. job paid in dollars and wire cash with new ease back home. In the case of Nespresso, the company will buy stuff, but may or may not actually put money down to set up shop and put locals on payroll. I have a feeling that if Nespresso intended to hire locals with their $150 million investment, to buy Central American coffee, they would have said so to help Kamala. I even suspect the investment was already planned, given the market demand for the excellent coffee. But if they intended to hire locals with actual jobs, it's hard to think they would not have said so in their release. There's no promise at all, even from them, to create actual jobs. 

Job training, sure, but not actual jobs, quite a few of them say. Some, such as Chobani, say they will foster startups. But operate there themselves? No thanks.

Which would make sense. Central America is characterized as wretched in the World Bank's 2020 annual Ease of Doing Business survey, with no country in all of Latin America breaching the top 50 globally. They write:

A number of Latin American countries stood out for performing well on some business climate indicators. Costa Rica has a reliable electricity supply and transparent tariffs and ranks 25th on that metric globally – outpacing New Zealand and the United Kingdom. Similarly, Mexico, Costa Rica, Guatemala and Colombia are among the top 15 economies in the world for getting credit due to their robust collateral and bankruptcy laws. The region also performs well in the time and cost it takes to start a business: average start time has been halved to 34 days from 74 days since 2003, and costs has been slashed to 36% of income per capita from 66% in 2003.  Even so, despite these improvements, the region continues to have the highest average time and number of procedures in the world required to incorporate a company.

It's also bottom of the barrel on education, and among the lowest in the world for English-language skills, according to this year's EF Survey of English speaking skills in non-English-speaking countries. The CEO of DuoLingo, who grew up in Guatemala before making it big in the states, recognizes that all too well, based on this interview. And per capita income, read: buying power, ranging from $1,000 to $3,000 a year, doesn't speak well for a significant consumer market. All of this, despite coveted free trade agreements with the U.S., and in the case of El Salvador, dollarization.

Getting corporations to throw money without laying down roots, putting its money where the profit is, is just slightly better than throwing money at NGOs, which Harris also proposes with her $800 million aid plan. Will all this free stuff persuade illegal migrants to stay home instead of make their way to the U.S.? Seems like a poor deal actually, given the great bonanza that awaits them once they make it to the states.

Something is missing with this great masterplan to get at all those root causes, there's a reason these companies touted aren't going whole hog on Central America, because we all know that if it were profitable to do so, they'd have done it a long time ago.

Here's the real reason why.

In 2001, Peruvian economist Hernando de Soto wrote a best-selling book called "The Mystery of Capital: Why Capitalism Thrives in the West and Fails Everywhere Else" describing precisely why these Kamala schemes never work.

He laid out the problem in this passage, emphasis mine:

"Imagine a country where nobody can identify who owns what, addresses cannot easily be verified, people cannot be made to pay their debts, resources cannot immediately be turned into money, ownership cannot be divided into shares, descriptions of assets are not standardised and cannot easily be compared, and the rules that govern property vary from neighbourhood to neighbourhood or even from street to street. You have just put yourself into the life of a developing country or former communist nation; more precisely, you have imagined life for 80% of its population, which is marked off as sharply from its Westernised elite as black and white South Africans were once separated by apartheid.

This 80% majority is not, as Westerners often imagine, desperately impoverished. In spite of their obvious poverty, even those who live under the most grossly unequal regimes possess far more than anybody has ever understood. What they possess, however, is not represented in such a way as to produce additional value. When you step out the door of the Nile Hilton, what you are leaving behind is not a high-technology world of fax machines and ice makers, television and antibiotics. The people of Cairo have access to all those things.

What you are really leaving behind is the world of legally enforceable transactions on property rights. Mortgages and accountable addresses to generate additional wealth are unavailable even to those people in Cairo who would probably strike you as quite rich. Outside Cairo, some of the poorest of the poor live in a district of old tombs called 'the city of the dead.' But almost all of Cairo is a city of the dead – of dead capital, of assets that cannot be used to their fullest. The institutions that give life to capital – that allow one to secure the interests of third parties with work and assets – do not exist here."

Kamala Harris has talked a good game about ending corruption in Central America, which is the sort of thing that festers when locals have to jump through 10,000 hoops to start a business, as if telling government minions not to be corrupt is all it takes to get them to stop. She says nothing about property rights, nothing about the invisible architecture of capitalism, all of the things whose absence creates corruption, and all of things the presence of which enables people to use their money to create capital and from it, true economic growth. That is the mystery of capital that de Soto described.

All she's offering in her root cause claim is a goodie shower, and corporate favors, with a dollop of greenie goodness thrown in. By Kamala's logic, if Central America could just go greener and get an electrical grid like California's, they'd all gladly stay home.

It's ridiculous. It's laughable. And like all corporate-state schemes, it sure as heck isn't going to work. Money in, money out, dead capital all around. If anything, it's a platform for more migration given that it includes no actual investment in the region. So much for all those root causes. This one's a fiesta of unintended consequences.

Image: Gage Skidmore, via Flickr // CC BY-SA 2.0