“Haiti doesn’t have a voice. It doesn’t have an identity. We, Haitians, need to take back the role of storytellers and tell our own history.” This was one of the reasons for filmmaker Raoul Peck to follow the reconstruction efforts in his home country after the earthquake in January 2010. Peck emphasizes that he was not planning on filming crying women and dead bodies in the streets. His goal was to challenge the country’s role of victim and turn the cameras on those who normally do the storytelling and the observing.

The result is the documentary “Fatal Assistance” (Assistance Mortelle), a painful 100-minute exposé on how international development and humanitarian aid have gone bad. It is a story about well-intentioned donors and aid organizations that have lost themselves in rituals of red tape, having become the inefficient players of a rudderless multinational aid-industry. Last week the documentary had its American premiere during the Human Rights Watch Film Festival in cooperation with the Margaret Mead Festival and the Tribeca Film Festival. Peck himself was available for questions after the screening and I had access to an earlier interview that Peck had given to a crew from Haiti Reporters before the film’s first screening in Haiti.

Peck has documented the efforts of the Interim Haiti Recovery Commission (IHRC) that was created shortly after the earthquake. With the Haitian prime minister Jean Max Bellerive and Bill Clinton as its co-presidents, the IHRC was tasked to oversee the spending of billions of dollars of international assistance in a way that was in alignment with the concerns of Haitians and the Haitian government. It was not new to see that after more than two years of “reconstruction,” too many Haitians are still living in extremely poor living conditions. Or, to quote a man who has lost his house in the earthquake, “in houses that the donors wouldn’t even let their dog live in.” It was new to see a two-hour indictment of those who try to help. The main critiques are that the international organizations left the Haitians and its government out of equation and that subsequently, too much of the money has been spent in terribly inefficient and non-transparent ways.

Economic rules that have long been proven to work elsewhere have been ignored and turned on their head. One example is the problem of NGOs that keep prices and salaries artificially high because it is in the interest of their organizations and their donors, while it ruins the workings of the local market economy and destroys incentives. Another painful phenomenon is the urge and conviction of many do-gooders that this moment in history will be Haiti’s finest hour to start with a clean slate, and en passant can function as a laboratory for people’s craziest ideas. As Priscilla Phelps, an American adviser on housing and neighborhood reconstruction explains in the film, “We’re dealing with what people can think of in their wildest dreams. We had an offer for the development of plastic houses. Plastic houses? But it is not only houses but people come with all kinds of products and ideas!”

Media have long been reinforcing the frame of Haiti as the ultimate example of a failed country. Raoul Peck is tired of the endless refrain that the country is too corrupt, its government too weak and its citizens too helpless. In his film, Peck points the accusing finger at the international organizations, Clinton’s organization chiefly among them, but he lets the Haitian government easily get away without much critical questioning. Only one of the heroes in the film, the Head of Sanitation in Port-au-Prince, squarely puts blame on both the local government and foreign helpers for the overall lack of progress. It causes the film to lose some of its strength and begs the question if this was the trade-off for Peck after getting such extensive access to filming the former prime minister and President René Préval. Interestingly, after the showing in Port-au-Prince, many Haitians were critical of Peck for giving the former Haitian government carte blanche.

While not during the documentary, in interviews Peck admits that corruption in Haiti certainly is a problem, but he says it cannot be used as an excuse. In the meantime, the atmosphere in the streets of Port-au-Prince and among Haitians and the foreign visitors isn’t changing for the better. At a recent conference on investing in Haiti, the Haitian crowd answered a berating of USAID (United States Agency for International Development) practices with cheers and applause. During a walk in the neighborhood of Delmas in Haiti, you will hear young kids at the market place yell at foreigners, “go back to your own country,” and many a disillusioned aid worker is wondering if they have overstayed their welcome.

With his film, Peck wishes to start a discussion, which should have started years ago. And it is not only about Haiti. Of course, discussions about a better approach to foreign aid have been brewing for at least ten years. Economists Jeffrey Sachs and William Easterly represent the two main camps between a more clinically planned strategy and a local market based approach to foreign assistance. Peck, clearly closer to Easterly, pleads for stronger involvement of the people for whom the assistance is organized in the first place. Peck: “If all these NGOs would have been private companies, they would long have been shut down, and their CEOs would have landed in prison. …We have sixty years of experience of development work. The current approach doesn’t work. It needs to stop.”

In the ongoing American and British debates on the financial crisis and the best ways to bring the economy out of the woods, two opposite views repeatedly collide – the one represented by those who prioritize deficit reduction, the other by those who argue for recapitalizing the economy. The case of the United Kingdom shows that drastic cuts – if not supported by stimulus packages – instead of tackling the debt may actually inflate it. The American policy record on the other hand, proves that even substantial stimulus packages do not always lead to economic revival. It’s not enough to throw some extra money into the pool – equally important is what these resources actually fund and whether they are accompanied by structural reforms.

British clamps

Moody’s decision to downgrade UK’s rating from AAA to AA1 announced at the end of February was a serious blow to David Cameron’s government as it undermined the whole austerity program Conservatives embarked on precisely to regain the trust of both financial markets and rating agencies. Nonetheless, in a speech delivered on March 7th Prime Minister announced he would keep on the chosen course since – as his famous predecessor once asserted – for this policy “there is no alternative.”

Many British economists do, however, see an alternative, and their number grows as it becomes clear that the spending cuts introduced so far, instead of reducing the debt, have increased it (from 600 billion in 2008 to 1.1 trillion four years later to be precise). How is it possible to cut down on expenses and inflate the debt at the same time? Excessive savings lead to economic contraction, which in turn reduces state revenues and forces the government to continue on borrowing. “What truly is incredible” – argued Martin Wolf in his “Financial Times” column – “is that Mr. Cameron cannot understand that, if an entity that spends close to half of gross domestic product retrenches as the private sector is also retrenching, the decline in overall output may be so large that its finances end up worse than when it started”.

Even The Economist magazine, known for its “favorable neutrality” towards the Conservative Party, criticized the government’s policies and encouraged chancellor George Osborne to dig out some additional funds for infrastructure investments, which could boost the economic growth (compared to 2009 such investments were reduced from £48.5 billion to £28 billion). But where to get the money from?

At least some of the needed sum can be obtained by reducing expenses on civil service. Those – despite all the austerity rhetoric – not only were not diminished but increased in the past decade by £300 billion. However, in case these savings are not sufficient, should the government borrow the missing funds? “Economist’s” editors reply in the positive, but on the condition that these resources are spent on infrastructure – roads, bridges, railways, broadband, etc. – thus contributing to long-term economic growth and improvement of the competitiveness of the British economy. Then, the increase in debt will be offset by rising state revenues, and – thanks to the improving condition of the economy – interest rates should stay at their current low level. As a result, debt service costs will also remain low.

American stimulators

If, however, the money is spent on immediate tax cuts and exemptions, it will simply be wasted. The economy might benefit from such policies in the short run, due to the increase in personal consumption, but as soon as the money is gone, we will go back to square one. This is an argument Jeffrey Sachs makes in yesterday’s New York Times, thus criticizing anti-crisis remedies applied by President Barack Obama’s administration so far. According to Sachs, stimulus packages signed into law first by George W. Bush and then by Obama failed not because they were too small – as for example “The New York Times” columnist, Paul Krugman has long maintained – or too high – as the entire American right seems to believe – but because they have been poorly targeted.

“The original stimulus legislation” – Sachs wrote in another of his articles – “was overwhelmingly of the form of temporary tax cuts and temporary transfer payments, the kind of deficit spending especially likely to have little effect on aggregate demand. Only $88 billion of the $787 billion stimulus-package was in direct purchases of goods and services by the federal government. The rest was temporary transfers and tax cuts.” To make matters worse, in the debt ceiling deal signed by Democrats and Republicans on January 1, many of these cuts became permanent, which will further inflate American national debt. Currently it amounts to 15.5 trillion, which is about 105% of GDP.

According to Krugman – whose views Sachs openly challenged – we should not be particularly worried by these numbers. On the contrary, in order to succeed in reviving the economy, stimulus packages should be enlarged. To introduce any major savings at this stage would throw American economy back into recession, cause economic contraction and decrease government revenues, thus leading to a predicament roughly similar to the one British economy has found itself in. Following the advice of John Maynard Keynes, Krugman argues that the secret of managing the state economy lies in saving the money in times of prosperity, while spending surpluses in the time of crisis, when the economy needs a push.

The trouble is, replies Sachs, that American decision-makers have long spent much more than they should, both in times of economic prosperity under President Bush, and at the time of the current crisis. Besides, once they have decided to stimulate the economy, they chose wrong targets. The same dollar invested well can bring substantial return, but if invested badly, will either bring loses or have no effect at all. According to Sachs Krugman and other “crude Keynesians” – unlike Keynes himself – seem to have forgotten this simple truth. Sachs repeats in the U.S. the same arguments, which in Britain were put forward by The Economist. In his view American economy needs long-term investments in infrastructure (similar to those administered by the Federal Aid Highway Act of 1956 or the moon program launched a few years later), not short-term incentives and benefits. How to get the money for these investments? Part of it can be borrowed. The rest may be obtained by curbing short-term tax-relief programs and finally introducing significant spending cuts, chiefly in the defense budget, which consumes more than $700 billion a year, or in other words more than 20 percent of all the federal resources.

Is it then better to tighten or stimulate the economy in crisis? Challenges faced by the United States and the United Kingdom make it quite clear – the best solution is to do both these things at the same time.

Łukasz Pawłowski is a managing editor at ‘Kultura Liberalna’ and a PhD candidate at the Institute of Sociology, University of Warsaw.