Tuesday, July 19, 2011

What Do You Get When Capital Is Absent? One Word: Haiti

Jeffrey Tucker at the Ludwig von Mises Institute examines why commerce and trade alone are not sufficient by themselves to create wealth using Haiti as an example. Both are necessary conditions and both occur there, so why isn't Haiti prosperous? It is the lack of capital which he defines as an institution. Capital is goods, not goods to be consumed but to be used in the production of other goods for consumption. It is a near certainty in Haiti that any capital anyone begins to accumulate will be systematically looted by the government. It's a very insightful article and you should definitely read the whole thing but here is the conclusion: 

Now, to be sure, there are plenty of Americans who are firmly convinced that we would all be better off if we grew our own food, bought only locally, kept firms small, eschewed modern conveniences like home appliances, went back to using only natural products, expropriated wealthy savers, harassed the capitalistic class until it felt itself unwelcome and vanished. This paradise has a name, and it is Haiti.

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1 comment:

Anonymous said...

Lemme see now:

New Orleans - Haiti
Motown - Haiti
DC - Haiti

Yep, I get it!