The Ricardo effect in Haiti

by on February 23, 2004 at 8:10 am in Economics | Permalink

The civil war in Haiti is intensifying, to the detriment of virtually everyone. Many American observers do not understand how poor Haiti is, how few good institutions it has, and how much it is currently hovering on the brink of a true disaster. The new blog HaitiPundit.com offers regular updates.

One of the most memorable accounts I read of Haiti concerned the time when a ferry sank off the coast, leading to hundreds of deaths (this has happened more than once, I might add). Oddly enough, a large number of employees were on hand to help bring in the bodies. Normally when a boat comes to shore it stops at a dock. Haiti could not afford the dock, so a large number of people are hired to wade out into the water and carry the passengers back to shore on their shoulders.

No, flying around the island isn’t safe either, nor is driving. Here is a short explanation (scroll down a bit) of the Ricardo Effect, which notes that capital is substituted for labor at higher wage rates.

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