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Raymond Monasterski
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Like Samantha, I often feel hopeless and also skeptical about what can be done. Certainly, there aren't many places where one can find articles that say climate change is a good thing. Many agree that climate change is something that needs to be alleviated or else we, not necessarily us particularly but future generations, will face the consequences. The first thing I thought while reading this is how eventually, the development topics we have talkd about won't even come to fruition without first addressing climate change. For example, agroforestry would be about impossible to implement because of extreme weather patterns as the planet warms. However, like we discussed in class, innovation is key to alleviating and/or responding to climate change. Reducing carbon emissions is one thing that could be be done. Developing systems that turn carbon waste in to fuel is another. Lastly, and I think the paper tries to to get to this by separating climate change in to distinct regions, is that ideas, innovations and policies need to be specific to each area. The people who are in the regions that will be affected most by climate change aren't necessarily the ones contributing to its acceleration. Thus, like we've said, the people who contribute the most to climate change should be the ones who incur the social cost. However, as we see now with the global powers deemed responsible for causing and now solving climate change, addressing it is very difficult. Just as some are skeptical about climate change itself, it's often hard not to be skeptical about alleviating and decelerating it, too.
Having had perhaps the "reader's digest" understanding of microfinance before this week, I found the first article to be particularly interesting and helpful, especially its points on group vs. individual liability. When I started reading I thought that group credit would be more beneficial, as the individuals in the group are taking less individual risk. But when the individual defaults in the group, the groups suffers. While it's a key assumption of liability, there's not much of a repayment difference between group and individual liability, so the creditor is taking a great risk in loaning to the individual over the group. Thus, the creditor might have the ability to lend to more people over time, which means that while costs of microfinance are, the creditor will have the ability to loan to more people and hopefully receive more in return. While the paper focuses on credit and savings, I thought it could have gone into greater detail about insurance. As we discussed earlier in the term, families in developing countries often use children as their "insurance policies." However, when they're able use some of their income/savings to make an investment in insurance, that allows them to better care for their children during bad times. Moreover, there isn't the risk of default when it comes to insurance, that there is when it comes to credit. Credit is still beneficial in the short-run, especially if used for proper investment, however, the credit users then have to pay back the amount of credit plus interest in the long-run. With insurance, there is not much of a change in the short-run, however the family is protected against long-run adversities. Moreover, since the family is protected against adversity with insurance, it will be able to leave children in school which improves human capital and eventually raises the children's ability to get credit. Certainly credit is important, but individuals will take less risk if they first use savings to purchase insurance, which I think has greater long-run benefits, especially in the already high-risk environment of developed countries and communities.
This paper clearly identifies the importance of human capital as it relates to agriculture. I also think it shows the linkages between environmental science, environmental economics and development. As mentioned before, this paper relates with our discussion in the last class about education, especially as it relates to agriculture. In this case, the next question might be how we're going to educate the farmers about agroforestry. As shown through land grant universities, there are investments in human capital that can be made through investments in agricultural education. Obviously this would need to take a couple policy steps in order to keep costs lower and affordable for the mostly poor population such investments help. Moreover, the students might need a primary education too, in order to gain a better understanding and educational base that can propel them into agriculturally focused education. Finally, as it relates to this article, trust and confidence are especially important in the model. They are found to be key ingredients in enacting the model and placing the "weight" in agroforestry. Obviously trust and confidence are very important, because at the end of the day, the individual farmers are making decisions to change techniques, which have consequences on themselves and their families. In the end, the relationship between agroforestry and development is clear, however, it is also appropriate to consider intermediate steps involved in helping farmers attain greater human capital which helps with growth and development and places greater weight on the evidence supporting agroforestry.
Toggle Commented Nov 6, 2014 on Econ 280 for Thursday at Jolly Green General
When I started reading the Sachs & Malaney article, it first reminded me of the article on child labor—both are “insidious evils.” But looking deeper than just the emotions attached to child labor and malaria, there are similar effects on education and health that then impact human capital. First, malaria affects mostly children, the group will benefit the mostfrom investment in human capital. But when these children can’t go to school because of the disease, they miss out on the opportunities of education and the development of human capital in the impoverished countries. Moreover, I found the affects on fertility rates because of malaria to be obvious, but astounding. Parents will have more children in hopes they make it to adulthood, yet with more children, they spend less per capita on investing in education. As a result of having more children, women also invest more time in child rearing and forgo possibilities of working on the market, thus affecting market productivity and consumption. This is magnified even more as more children survive past childhood and into adulthood. Clearly, the best solution is to eradicate the parasite that causes this disease. A vaccine would most likely be the solution to help prevent humans from acquiring the disease, while a cost-benefit analysis similar to the one we conducted in class on Tuesday would be able to help in analyzing the health outcomes of a vaccine. As previously mentioned, the vaccine would have positive externalities, as it would prevent not only the vaccinated individual, but also others from getting the disease. In regards to the second article, I found what Schultz said about land to be particularly interesting. While much growth (and poverty) happens in the modern sector, the productivity of the traditional sector cannot just be forgotten, as there are very poor people in the traditional sector, too. It seems that from what Schultz is saying, there has been an economic decline in the importance of farmland as the importance of human capital has risen. In most high-income and some low-income countries, acreage of harvested land has decreased but productivity has increased over time. Yet, farmers are still poor. Maybe I’m misunderstanding this, but it seems like this article/speech is ironically critical, given the award’s co-recipient, of the Lewis two-sector model, which essentially reserves growth to the modern sector, when in fact productivity can increase in the traditional sector as a result of gains in human capital.
Toggle Commented Oct 29, 2014 on Econ 280 for Thursday at Jolly Green General
I, too, was a bit skeptical of the subsidy program that Udry presents as a solution. Udry certainly shows the positives of the subsidies in his paper, however, I feel it's about impossible for the program to not have some failures. Similar to how Udry found child labor bans to be ineffective because there would be no way to enforce it, it is also likely there are some abuses of the subsidy system, like when children don't attend school or parents choose to have more children to collect more on the subsidies. Granted, the subsidies are taken to be more effective, however, the solution seems far from perfect, perfection being elimination or near elimination of child labor. While Udry focuses less on school quality than on school attendance, I would see school quality to be more or just as important as a subsidy. If a child goes to school, forgoing a wage or receiving a lower-wage subsidy, and learns nothing, then rationally, wouldn't uneducated parents choose to have their children work for a slightly higher wage? In the end, subsidies shouldn't be the only answer. Besides their abuses, which Juan especially points out, they should at least be combined with higher school quality, so that parents can have further reason to send their children to school and children will be better equipped to make similar decisions when they are parents, as well as have the opportunity for higher earnings as a result of their education. Then again, families are not always as forward looking as these theories predict, due to reasons often referred to in previous articles such as a lack of savings and credit or insurance against future adversities.
Toggle Commented Oct 23, 2014 on 280 Paper for Thursday at Jolly Green General
Like some of the bloggers above, Krugman's map of Africa metaphor really struck a tone with me and made the fall and rise of of development economics more sensible and easier to understand. While economists started to represent development economics with metaphors and not models, it was similar to the earlier maps with the small observations but inabilities to prove observations with scientific technologies. As economists started to use complex and simplemodels with scientific reasoning, metaphors disappeared, just like the interior of Africa as mapmaking improved. In the big picture, what we might have to consider is that not one model or metaphor holds the right answer. As economists we often consider our models with the disclaimer ceteris parabus, but how often do real-world applications hold such assumptions? Smaller models, which often have logical and credible evidence, are limited in application, while larger models, like a microeconomic case of supply and demand, make assumptions that aren't always true. Perhaps a solution to the model vs. metaphor debate is a combination of both models and observations or metaphors, as observations or metaphors could provide details, assuming they are true, while models provide the necessary scientific reasoning that can support or disclaim metaphors. In the end, it is clear from our readings and discussion that neither one metaphor nor a model alone can provide a complete understanding of development economics, just like a couple observations or a reading on a compass can't make the map of Africa.
Developmental Econ Blog Post One of the key arguments of Rodrik’s paper is that “igniting economic growth and sustaining it are somewhat different enterprises.” While he focuses particularly on the Washington Consensus and how countries have used alternatives to the model and still succeeded in growth, his argument, in its most basic sense, is also related to neoclassical models of diminishing returns. In our analysis of the Solow growth model during Tuesday’s lecture, the theory of diminishing returns was evident, as when capital increased, income was increasing by a decreasing amount, eventually leveling off. So, when a country with a low capital and low income starts trying to grow the economy, perhaps by investing in capital, if possible, than the beginning growth will be remarkable. However, as Rodrik articulates, sustaining growth is a different project. Thus, he uses the Washington Consensus as a point of emphasis in his argument. As we see in East Asia, economic institutions are quite different from Western ideals of the Consensus. China, for example, when engaging in market liberalization, for example only allows farmers to sell at a market price after they have fulfilled state quota. With property rights, the government has maintained its equity in the land, because its prosperity has direct affects on the government’s revenue. These unorthodox institutions in comparison to the Washington Consensus have resulted in orthodox results, as it has provided incentives for growth based on market principles, only after producers and landowners have fulfilled state duties. China’s case simply shows that economic growth doesn’t have to be restricted to a particular set of ideals or institutions, according to Rodrik. Moreover, institutions must apply to their particular settings. It’d be difficult to take China’s fairly state-based development and put it in a free-market capitalist economy that relies primarily on free trade and privatization of business. Imagine the uproar there would be in America, for example, if the state controlled part of each business or transaction. (In a way they have, through taxes and tariffs or recession stimulus measures, but not necessarily to the extent of China.) With economic decision-making being highly politicized, it is also difficult and time-consuming to make significant economic progress. Meanwhile, China has been consistently growing, but its GDP growth has recently slowed, maybe due to diminishing returns or maybe not. In the end, Rodrik might take a more holistic overview on growth, at least in comparing growth and development on a global level but still emphasizes that there is no “magic bullet” that can work in every situation.
Toggle Commented Oct 1, 2014 on ECON 280 Paper at Jolly Green General
The policymaking in these papers is what strikes me as most interesting, and perhaps most pertinent, to the outcomes for women in developing countries. While it might seem odd to us, living in a country where we strive for equality, the simple inequities women face not only at a national level, but also in the household are quite striking. The quota system, as HeeJu mentions, is certainly a way to get women in developing countries involved in politics. But, what if these are the same women who dropped out of school and worked in the house their entire lives? Questions could be raised about their adeptness in working in politics. Moreover, stereotypes, perhaps the same stereotypes i mention in my question, constantly surround women in politics in these developing countries, making their jobs perceived as more symbolic than anything else. Duflo insists policymaking is essentially a zero-sum game; policies to help women, who as research shows are more cognizant of the household and children, are made at the expense of men. But, what if. as I would suspect, men are the ones making the policy decisions in most cases? (It could also be argued that said men are ignorant of the abilities of women if steps are taken to improve their education, income, health, etc.) Then the decisions of policymaking might in fact be one of gender relations, which in countries and cultures where women are already marginalized can be difficult to improve. The marginalization of women in these developing countries could compare to government corruption we discussed in Tuesday's class in countries like Nigeria, where they are rich from oil but an overall poor country. Until there is sweeping reform, whether its in gender relations or in corruption, AND a governing body that can enforce such reform then such problems will continue. Certainly, these issues cannot be solved overnight.
Toggle Commented Sep 25, 2014 on ECON 280 paper #2 at Jolly Green General
I am certainly not surprised by the findings of Banerjee and Duflo. While the people of their analysis lived off of $1-$2 PPP per day, they are still human and are likely to engage in certain "pleasures" like smoking or drinking alcohol or a soda, as many of us have mentioned. But more evident in this article are the linkages, or lack of, between education, health and the decisions of the poor. Coming from the United States, where nutrition is something that is reinforced in our daily lives, either through family, doctors or society in general, education on such topics is lacking in the the poor environments, where it is difficult enough for students to learn to read and write. This relates to my earlier point, and that is the people studied in the article have the same inclinations that most of us do to enjoy and relax, whether it's watching TV, having a drink, or attending a festival. Meanwhile, their lack of education still remains, an education that could help them realize that it might be better to have another serving of whole grain vs. another soda, or to save money for a more wholesome meal rather than a new television. Then again, poor people have a knack for entertainment just like the rest of us. In the end, I believe poor people do have choices, as this article introduces the poor as those without choices, but shows whether it's between rice and grain or a TV and a festival, that they do make choices on a daily basis. It is also important to consider that while poor, the people in the study also have cultural and societal norms that influence their choices. While we, as a society, might see the latest new movie as important, they might consider a harvest festival important. Yes, we as group of people and societies are different, in terms of PPP in this case, but we still make choices. While we comparatively have an advantage over those in Udaipur with our resources, perhaps, it might help all of us, whether at W&L or in Indonesia, if we're better educated on our choices.
Toggle Commented Sep 18, 2014 on 280 reading for Thursday at Jolly Green General
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Sep 17, 2014