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Julia Mayol
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I think what makes this paper really interesting is the fact that it clearly presents the extreme, shocking, and terrible consequences of global warming. As we were talking in Tuesday’s class, people usually tend to start caring about stuff when it negatively affects them or their family. As a 20-year-old person, and I am not sure about the rest of the Americans my age, but I think I can generalize it in relation to my generation in Argentina, I think the problem is that we all know that global warming is something wrong, but none of us know in detail why it is this bad. That is why I think this paper does a great job in explaining its consequences. As the paper states, without further action to reduce greenhouse gas emissions, the world is likely to warm by more than 3°C above the preindustrial climate. This will have an effect in the rate of loss of ice, and as a consequence there will be an average global increase in sea level of around 15 cm by the end of the 21st century. This might be really ignorant of me, but if I were to read only this, my thoughts towards climate change would not change at all; in other words, this would not raise my awareness towards it. However, data such as death toll of 55000, an annual crop failure at about 25 %, burned areas at more than 1 million hectares, and economic losses at about US$15 billion, 1% of the GDP, which were the effects of the heat wave in Russia in 2010, do raise my awareness. The paper explains how higher temperatures reduce economic growth (especially in poor countries) and have wide-ranging effects, reducing agricultural output, industrial output, and political stability. The raise in sea level is likely to cause floods, that interfere with food production, and could also induce nutritional deficits and the increased incidence of epidemic diseases. Moreover, flooding can introduce contaminants and diseases into healthy water supplies and increase the incidence of diarrheal and respiratory illnesses. It seems to me, that one of the greatest problems with global warming is raising awareness of the immensity of this issue, and I believe a good way to do it is by emphasizing its mostly irreversible consequences.
As we were discussing yesterday in class, the paper briefly explains how economic models and specifically the statistic approach (the Stolper-Samuelson theorem) suggests how trade openness should result in an increase in countries’ real income. However, we know that models just give us an insight of what happens in real life, but due to the amount of assumptions, what models predict does not always happen in real life. In this case, the model assumes labor mobility is not as easy as the model predicts. Once again, I think this paper enforces the importance of every institution and how they are all related. “Trade openness tends to reduce poverty in countries where financial sectors are deep, education levels high and institutions strong,” in other words, they reduce poverty in developed countries. I think this paper shows evidence that there are things that need to be done before trade openness in order to achieve economic development. Moreover, even though the paper does not go into detail on this, it shows the importance of education levels, well developed financial markets, and efficient governance. As we saw before, polices “do not travel well” from country to country, and the same happens with trade openness. Its effect on poverty depends on many different characteristics of the countries. The fact that trade openness might have reduced poverty in more developed countries does not mean that it will do so in any other country. And here is where different institutions play a role. The fact that more developed countries have more developed financial systems, means that the poor people from those countries have easier access to cheaper credit, which allows them to benefit more from trade openness. In relation to education, it allows people to take advantage of the new opportunities offered by trade. Finally, what is most relevant to me, is the quality of bureaucracy, meaning that high quality bureaucracy is more favorable for the emergence of new firms and the closing of older ones. Additionally, even though the paper does not talk about this, I should mention that in order to help developing countries develop through trade openness it is not only important the country's decision, but also the policies that different countries adopt in relation to trading with the developing country. I think it is really interesting how, as mentioned in class, the best way to help developing countries is not through aid but by eliminating tariffs and quotas.
Toggle Commented Nov 30, 2016 on Reading for Thursday at Jolly Green General
I think this paper does a great job in clarifying the effects of microcredits. Many people believe that it has the potential to increase household health, education, empower women and reduce poverty, which in fact it does not. The authors do a great job in showing that, even though microcredits have a positive effect in poor households, it is not magical and that some people overvalue it. To me, one of the most important effects microcredits has is the fact that it can change poor household consumptions: not the amount but how they spend it. Households changed from “temptation” goods such as alcohol and tobacco to durable goods. I think that from Sen’s points of view, in which what matters is not what you buy but what are you capable of doing with it, this change in the consumption is really important. Even though alcohol and tobacco might give you instant happiness, durable goods are more likely to increase your well-being. They might have the same effect as alcohol and tobacco but besides lasting longer, durable goods might benefit an entire family, rather than just one individual. It is a little bit disappointing to read that it has little effect, if any, in female empowerment. Moreover, when talking about savings, studies suggest that women face significant barriers to savings. Once again, we see the necessity of empowering women. Even though microcredits do not seem to show any effect on health, savings do. I think it is really interesting how something that seems so trivial and of simple access for us, such as a saving account, can have an effect in making women less vulnerable to health shocks, and making them able to afford medical expenses. Furthermore, I thought it was really interesting how a small thing such as a SMS text reminding the saver of their purchase goal, could increase average savings balances by 16%. I think sometimes we fail to understand that “low income people” are still people who own few things, and whenever they have a chance to buy something that they can afford and they like, such as alcohol, they will do it. Additionally, I thought it was interesting how teaching simple rules of –thumb is more effective than teaching traditional principles-based accounting rules. Households which were taught the first one applied the concept more often and earned more revenue. The authors then write “less may well be more when it comes to training poor business owners in sounds financial practices.” When reading this I had a weird feeling. This sentence makes poor households seem not smart enough to understand complex things. But I believe this study is really important, as it shows two things. First, the lack of education and its importance, as I believe these people are not able to understand traditional principles-based accounting rules since they lack basic knowledge of education, and might even struggle with other concepts. Second, this study shows that poor households are smart and capable of applying concepts and are also willing to improve the performance of their business.
Toggle Commented Nov 14, 2016 on Readings for this week at Jolly Green General
Both papers are extremely rich in content. I must admit, that even though I have been exposed before to information such as “every 30 hours a woman in Argentina dies due to gender violence” it still shocked me to read that “every 40 seconds a child dies of malaria”. I think it is really interesting how malaria, as well as women empowerment, have a two-way direction relationship with poverty and economic development respectively. Poverty may promote malaria transmission, as well as malaria may cause poverty by impeding economic growth. In like manner, we learnt that economic development may lead to women empowerment and, on the opposite direction, women empowerment can lead to economic growth. In the same way as it happens with women empowerment, economic development alone is not enough. “Even relatively wealthy countries with high year-round temperatures, such as Oman and the United Arab Emirates, have been unable to eliminate the disease.” What is also interesting, is how malaria seems to have an effect in human capital, even thought that field seems to be somehow unexplored. This leads us to the second paper, which talks about the relevance of human capital. I believe the most relevant aspect from the paper, is the fact that it considers capital homogeneity assumption absurd. What I also found interesting from this second paper is something we kind of went through before when we read “The Economics lives of the poor” and is how sometimes ones tend to judge poor people, as irrational or careless, because when they have increase in income they tend to spend that in festivals, or alcohol instead of buying more food, for example. But what we are forgetting here, as Theodore W. Schultz, Sir Arthur Lewis, is that poor people are no less concerned about improving their lot and that of their children than rich people are, but in the end they are still humans. I really like how the authors also vindicate the people who own less by showing how they care about their future, the have an entrepreneurship attitude and they are also smart. However, their main problem is their lack of access to different things such as education, health, credit, markets, among others. Which shows evidence of the importance of this factors in contributing to human capital, such as health and education, which end up having a great impact on economic growth.
Toggle Commented Nov 2, 2016 on Readings for Thursday at Jolly Green General
As a woman, I had mixed feelings while reading this paper. Firstly, some things were shocking and terrible to read: I did not have any idea that things such as sex-selective abortion existed. It is appalling to read that people could actually think of their daughters only in terms of how much they would cost them in the future. “Better pay Rs 500 now than Rs 50,000 later.” This is something I find really hard to believe, as I was raised by a mother who does everything for me and my siblings and tells me everyday how happy she to have me as her daughter. However, not everything was that bad when talking about women´s well-being and agency. I think this paper presents all the benefits empowering women would bring to society in a really good way. I was a little confused, as I think the paper contradicted itself. It first states that women’s control over resources will improve their say within the household, increasing their welfare, child nutrition and health. Nevertheless, it then states that “the identity of the income holder matters. […] when men receive the pension that they make the decision favorable to well-being and development.” I think this also contradicts what we have discussed in class. Moreover, I really liked Dulfo's conclusion and especially the sentence: “Bring about equity between men and women, in my view a very desirable goal in and of itself, it will be necessary to continue to take policy actions that favor women at the expense of men, and it may be necessary to continue doing so for a very long time.” I think the key aspect to the latter is “very long time.” The inequity between men and women has existed for so long that it will take a much longer time to desapear. Living in the US, which is without a doubt a developed country, I found out that the idea that men are better than women is still somewhat present. As Durfo points out “there is a widespread implicit bias, shared by both men and women, associating men with career and the sciences and women with family and liberal arts,” and I was able to experience that. During my first semester at W&L I was talking a Calculus class and a male friend was in that same class. After the midterm, he went to female friend that we have in common, and with amusement and a little bit of confusion asked her: “Hey, Julia is in my math class, and she is actually really good at it? How come?” This is just an anecdote that illustrates what Durfo says in her paper, and which shows why it will take lot of time to change people’s mind over topics related to women's role.
Toggle Commented Oct 19, 2016 on Reading for Thursday at Jolly Green General
While reading “Growth Strategies,” I very much enjoyed two of the main points made by Rodrik; the first one being the role of institutions. As he states: “In the long run, the main thing that ensures convergence with the living standards of advanced countries is the acquisition of high-quality institutions;” it is almost impossible to have economic growth if the country's institutions are not willing to work towards it. My comments might be a little bit redundant, as I am always bringing up things from Argentina, but the fact the past government “stole” an entire year's GD, as some sources say, blows my mind. Having a government with that level of corruption makes it impossible to think about the existence of high-quality institutions. By lying about the unemployment level, poverty indexes and inflation, among others, institutions make economics growth unimaginable. The second point I enjoyed reading about was related to how economics policies cannot be randomly applied to any country. The fact that a set of policies created constant growth in one country, does not mean that it will do the same in other. Local conditions matter because those economic principles come “institution free and filling them out requires local knowledge.” Once again, I will bring up Argentina as an example. While the economic, education, energy resources, among other ministers, have studied abroad and earned MBA degrees, seeming to be totally qualified for their jobs, they fail to understand that the policies that work in the USA, will not probably work in Argentina, unless local conditions are analyzed and modified.
Toggle Commented Oct 5, 2016 on Reading for Thursday at Jolly Green General
 There are several points I find really interesting about this article. First of all, I think it is frustrating to think about the amount of years of knowledge that were lost because of the mere fact that some thoughts were not able to be written or presented in models. I honestly did not know of the relevance of development economics until some days ago. Development, as Todaro and Smith describe, is a “multidimensional process involving the reorganization and reorientation of entire economic and social systems” with the purpose of searching for models and forms of implementing solutions to increase people’s living standards and freedom. Knowing this, I think it is really disappointing to think about the time that was lost and the fact that a field as important as this one could have suffered such a “long slump”. The other aspect, I believe, was interesting and we have gone through it in class, is how models of almost every system are “to some degree a falsification,” as they leave aside many aspects of reality and they involve an amount of assumptions that many times do not apply to real life. I think it is interesting how representing the world in simple models is important to get an essential point or several key points about our society. As I was reading the article, I was thinking how, in the same way economies of scale represented a problem (as economist did not know how to incorporate this important concept to the existing models), freedom as presented by Sen, is also an extremely important concept in development, which is hard to introduce to models. Freedom is not a quantitative variable; however, according to Sen, it is not only the main end of development, but also the means to achieving that main end. In my opinion, it is shocking to think that Sen’s idea would have “decay” due to the fact that it would “have not been embalmed in models.”
Saying that Sen job’s is amazing is nothing new, knowing he is the winner of a Nobel prize. However there are a number of aspects and thoughts that completely captured my attention and helped me understand development through a different perspective. After reading the introduction, the two chapters, and the information provided in Todaro and Smith’s book about Sen’s “Capabilities” approach, I saw the story a friend once told me through someone else’s eyes. One of my friends spent two months in the summer in Belize with the Sheppard program. One night, when she was going back to the place where she was staying she found out that her door was open, and that the celling had an enormous hole; someone had clearly broken into her room. Nevertheless, her computer, GoPro and other electronic devices were still there. As time passed she realized that the things she considered small and insignificant were missing: her shampoo, razor, tooth paste, body lotions and, some t-shits had been stolen. I think this is somehow an example of what Sen calls functioning’s, that is, “what a person does with the commodities of given characteristics”. For those Belizeans, the computer and the GoPro were probably useless, while the small insignificant things were those they actually appreciated and did not have. Moreover, it is really interesting to see how Sen manages to go over a field of economics from a more humanistic side, leaving partially aside the graphs and formulas, and introducing the concept of freedom, which is not only a means of development, but also of the primary end. Sen also transmits the importance of democracy, and of having a government that both cares about their citizens and is against corruption. Corruption and tyranny are ways of unfreedom that need to be avoided and eradicated in order to help the poorest. In Argentina, the last president used to give Argentinean citizenships to immigrants that came from Paraguay. These immigrants would vote for whom they were asked to and in return would receive pensions, or social benefits. The greatest problem associated with it, is that they are now finding that these Paraguayans do not even live in Argentina. Even more, it has recently been discovered that, in many cases, around 20 different citizens share the same address when, in fact, nobody lives there. Thus, all the money that is being used to buy votes, could have been used to help the poor people that actually live in Argentina, instead. I think Sen is presenting us with different examples of the same thing: the importance of democracy, and of governments who seek to eradicate corruption, poverty and inequality, in order to achieve development. Finally, the fact that “the most speedy expansion of life expectancy occurred precisely during those two war decades” surprised me. During the war decades there was a much greater sharing of health care and limited food supply which, as a consequence, led to great improvements in life expectancy. If someone had asked me my opinion on life expectancy during the war decades I would have probably answered the opposite. However, as Sen shows, even though per capita availability of food decreased, the cases of undernourishment declined significantly. This shows evidence of the effectiveness of support oriented policies, social attitudes and public arrangements, which demonstrate that development is not only having a high GNP per capita.
When I first read the article it amazed me how people living with less than $1 per day could spend their money in things other than food. One would think that $1 is not even enough to buy food for a day. However, after reading the article and thinking about it, I realized that the extremely poor people’s behavior in spending their money was what I had noticed when talking with poor people back home, in Argentina. The fact that in Mexico, in extremely poor rural areas people spend 8.1% of their budget in alcohol and tobacco did not surprise me. Both the article and what I have seen and experienced in the different developing countries, showed me how poor people tend to live their daily lives without thinking about their economic future, but rather trying to enjoy the present. It might seem shocking that people living with less than $1 per day can spend part of their budget in festivals; however, I have seen extremely poor people selling things from their houses and not being able to afford electricity, while spending the little money they have in 15th birthday parties for their daughters. Moreover, it surprised me how poor people’s levels of self reported happiness are not particularly low. This maybe due to the fact that, as I mentioned before, poor people tend to enjoy each day, choosing to spend the money not only in food but also in things such as radios, televisions or even festivals, which make them happy. It seems to me that one of poor people’s greatest weaknesses is the lack of education. “[…] only about two-thirds of the total spending on grains is on these grains, while another 20 percent is on rice, which costs more than twice as much per calorie, and a further 10 percent or so is spent on wheat, which is a 70 percent more expensive way to get calories.” I think this is a great example of how lack of education affects them in every aspect. Lack of knowledge in different things, such as nutrition, makes poor people spend money in a less efficient way. The former is due to the fact that “The expenditure on education generally hovers around 2 percent of household budgets,” the reason for this being that, as Banerjje and Dulfoo explain, young people attend public schools. This would not be a problem if these schools were good; however, as the paper says they are often “dysfunctional.” It is crazy to think that people in Indonesia spend the same percentage of their budget in alcohol and tobacco as they do in education. This lack of education is then reflected in the type of jobs people get after graduating school. Therefore, I think education is one of the pillars for progress, and after reading the articles, I can see it as one of the main steps that need to be taken among poor people in order to improve their lives’ quality.
Toggle Commented Sep 14, 2016 on ECON 280 Reading for Thursday at Jolly Green General
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