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Caroline Sanders
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Schultz’s Nobel speech almost immediately reminded me of Banerjee + Duflo’s “Economic Lives of the Poor.” Despite almost thirty years between the two papers, they have strikingly similar motivations; they both seek to offer some deeper insight on the economic constraints and challenges faced by the poor. Despite three decades of improvements in standards of living and other components of quality of life, the same problems appear in both papers like issues of land ownership, agriculture, and the need for greater investment in health and education. I’m not sure if this speaks to the sheer permanence of these obstacles to development and our ability to focus our attention on increasingly specific facets of these issues as technology progresses (maybe both). One really interesting difference between the papers, however, is their respective discussion of entrepreneurs. Schultz presents entrepreneurs in a more capable sense. He writes that they are “calculating economic agents” and an “essential human resource.” In his critique of some trends in economic thinking, he says that farmers are “fine-tuning entrepreneurs, tuning so subtly that many experts fail to recognize how efficient they are.” Schultz seems to see the entrepreneurial spirit as a skill to be fostered, a vital component of human capital that can bring increasing returns in time. Banerjee + Duflo present entrepreneurship in a more cynical, but perhaps more realistic light, as a less-favorable alternative to wage-earning. The entrepreneurship they describe seems more similar to hawking and may be the only option for those with few skills and limited access to capital. They stress that these “businesses” are extremely small and therefore remarkably inefficient (lacking economies of scale), and they do not create new jobs for others in the economy. This type of entrepreneurship, despite its good intentions, “reinforces the proliferation of petty entrepreneurs” and may ultimately contribute to limiting the potential for economic growth.
Toggle Commented Nov 4, 2015 on econ 280 for Thursday at Jolly Green General
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Nov 4, 2015