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While we are reading this in the context of development economics, it is just very disheartening as an inhabitant of the planet. This paper brings a lot of environmental concerns and very clear proof and problems that the data shows. It reminds me of a lot of things I learned in an environmental science course, one that comes to mind immediately was a study between two communities one of which was situated in an area riddled with polluted water and air and the other relatively clean conditions. They examined the drawings of five and four year olds in a “draw a person test”. It’s incredibly sad to examine as the children in the first community had unintelligible drawings that looked like chicken scratch and the other community’s children had at the minimum stick people. The environment is so influential in the economy in such unexpected capacities. With our knowledge on human capital and its relationship with growth, seeing this data marks a huge economic cost of pollution. The pollution inhibits the developmental process of children, and in turn reduced the potential human capital of the community. The paper also talks about how a multitude of environmental effects could make farm land unusable. It talks about how floods (as a result of higher water levels) cause contaminants to make it into the land. Not only has the flood destroyed the working progress of that rotation’s crops but it has also prevented future crops from being as fruitful. In the other case it talks about the huge impact of the droughts in the United States affecting 80% of agricultural land. I feel that if the droughts (like the ones in California) persist and get worse, all that land will be unusable and if more water conservation techniques aren’t implemented then plenty of people will have to migrate from California since importing water (which they already do in mass quantities) will start to increase the cost of living too much. This will decimate the job market and make life a nightmare for the unemployed. I think this paper is a great example of valuable data being undervalued and ignored. This past election makes me very concerned as to what the future of this planet will look like. People seem to love hearing what they want to hear. News about global warming gets swept under the rug because it doesn’t really make people happy and hopeful. This may seem out of left field but it makes my day when I find a random minute long video about some random invention that reduces waste in some cool and convenient way (edible plates/silverware! Genius!) I think if the media uses things like that validates this kind of ingenuity will make people more conscious of their habits.
Goff and Signh show a very complicated correlation between trade openness and wealth production within impoverished countries. As we discussed in class on a micro level, when consumers have access to global markets that can minimize the cost of goods like food, it opens numerous possibilities and lowers the opportunity cost for consumers to buy other goods. Although, through a macro lens we see that the lack of demand domestically affects small businesses and hurts income as now those potential jobs are being outsourced. This in turn makes lower prices essentially irrelevant. As the paper demonstrates, the openness of trade can have any multitude of effects on the poverty gap of a developing country, normally the costs tend to outweigh or cancel out the benefits or there’s no clear correlation. It does however show that the countries with easier access to credit showed a positive growth when they had open markets. This, for me, raises some questions. Are those countries more successful because they have access to credit or is it a dual relationship between open markets and credit that’s helping them? Would those countries be better off with closed global markets, but then have access to loans? As we have learned credit can have substantial positive effects by enabling consumers to make long term investments in their businesses, But if they are exposed to a constantly changing global market, couldn’t that potentially compromise their market demand and make them more susceptible to losing everything? We have mentioned that changing professions is very costly and one can imagine switching business models should be exceptionally costlier. I think trade openness is probably difficult to limit. But when considering the tradeoff, I believe in the long run its more trouble than it’s worth. More knowledge and data could clear some of the mysteries, but I think countries need to pass a certain level of sustainability to be able to keep up with and interact with the global market.  
Toggle Commented Dec 1, 2016 on Reading for Thursday at Jolly Green General
“The Economics of Being Poor” and, “The Economics and Social Burden of Malaria” present similar arguments in the role of human capital in economic development. The Malaria paper offers a great insight into the numerous externalities of disease on an economy, and provides good research that supports Schultz’s paper to an extent. Sachs and Malaney provide startling evidence on the adverse effects of malaria on the GNP loss due to loss in human capital, especially the youth of these countries. It seems clear that more should be done to prevent cases of malaria and provide treatment. The article mentioned needing an expected $2.5-4 billion dollars a year to combat the disease in these countries. It’s difficult not to go to the cliché of military spending when thinking about this issue. One could argue that spending money on malaria prevention in developing countries isn’t our responsibility, but when military spending is in the hundreds of billions per year and this article says that they’d need less than 1% of that to make some significant change can you really argue the necessity of such costs? I believe if we spent more time investing in the youth of these countries to prevent such debilitating diseases (among other similar causes to improve development) There might not be as much need to spend on the military as the economic stabilization of these countries would hopefully lead to the diplomatic stabilization as well. Schultz brings up some interesting points about how land is overrated. I didn’t know if I believed him at first and to be honest I don’t think he did a good job convincing me. He compared the similarity between the economies of two areas in India with severe differences in the fertility of their respective land. If his argument hinges on the fact that geographic advantage is irrelevant or at least overrated then I have to passionately disagree. That has been the key factor in history since the beginning of time, who are we to say we have evolved beyond the point of such influence. The malaria article proves that geographic conditions greatly influence economics and I’d go to the extent to say that it has a strong relationship with human capital. If a piece of land is fertile but has is plagued by mosquitos then it would drastically affect the inability the community to develop. In that sense I guess Schultz is right, but I think he fails to prove his point by accounting for the fact that land and development has a direct relationship with your ability to produce human capital.
Toggle Commented Nov 3, 2016 on Readings for Thursday at Jolly Green General
I enjoyed reading Duflo’s arguments, I’m glad we got to see a snippet of her speak before reading this piece because her voice really came through the paper. It’s shocking reading the results of these studies and the statistics and finding these disparities. How, for example, in sub-Saharan Africa, the mortality rate during childbirth is as bad as 1-31, where its 1-4100 in developing countries (which if you think about it is still pretty risky). Also in Iraq women work ten times as much for childcare as compared to men in contrast to Sweden’s 70 percent (classic Sweden). It’s also irksome to read a good case like India showed the difference in immunization rates between boys and girls to be 4.79 and 4.55. It’s clear that this is a huge improvement on other developing countries, but it shows that many countries have a lot or progress to make. Incidentally, I found it amazing the various methods used to eliminate extraneous variables in the studies used in this paper. For example the monitoring of cost cuts on extra goods like cigarettes and alcohol to determine the “cost of a child” and the using that data to compare the male and female “costs” on a household. It shows how extensive Duflo is and I respect her work a lot as an economist. When faced with the question of causality between development and empowerment a kind of “chicken egg” question, Duflo answers “both” with great analysis on both parts. From what we’ve read there seems to be such an inherent patriarchal response to poverty. When looking at these cases I look inward and also to countries like Sweden who excel in many aspects over the United States and who happen to have 43.55 percent of the parliamentary seats held by women (I stumbled upon this statistic while researching Sweden as a possible candidate for future permanent residency and thought of our last discussion about the senate). When looking at these extremes it’s very apparent the advantages of progressive policy on economics and how we can try to adapt that to work for other countries.
Toggle Commented Oct 20, 2016 on Reading for Thursday at Jolly Green General
The article “the rise and fall of development economics” by Krugman, brought forward some interesting insight about the use of models. Krugman makes an interesting point that models, while they may be considered oversimplifications, are necessary for economists and there’s no avoiding the “narrowing affect” as Krugman calls it. Krugman starts with the comparison to the cartography of Africa. At first I failed to see the relevance of the anecdote, but as I continued it became more apparent. It described poignantly how lack of knowledge and technology can limit our perceptions and constrain our information. True intelligence is realizing what you don’t know, and as our knowledge of economics has developed it’s become apparent that the models we use don’t provide all the answers. In the case of the maps of Africa, cartographers realized they had made mistakes with their models. Similar to that economists realized the models they used were not sufficient to account for the variables that weren’t accounted for initially. Krugman’s article was an interesting read and I enjoyed his conversational tone. Admittedly it was hard to follow at times since a lot of his explanations and evidence was more theoretical and analytical, but I found his work very interesting and look forward to reading more.
Sen presents a great argument about how the root of poverty is embedded in poverty. I found these chapters’ eye opening and thought provoking. Her argument reminds me of our class discussions in which we talked about the difference between income and quality of life. As we have affirmed fairly frequently in class, low income is an aspect of poverty, if when we refer to poverty we mean a below average quality of life rather than the mere quantifiable income. Sen argues that the root of this is a lack of freedom. Whether it manifests in slavery, imperialism/colonialism, or some kind of racial or cultural oppression. Sen made a really interesting point that famine essentially only occurs in places that were either colonies or dictatorships. Recognizing that the ones in power wouldn’t being experiencing the famine first hand and wouldn’t feel the need to do anything about it. A more democratic country would elect the people that represent them and make sure the ones that would represent their interests would solve the issue. Not to say that any democratic government fixes all problems and is perfect, but it guarantees a base level of freedom in that aspect thereby increasing the quality of life for its constituents. The other example that Sen used that I liked a lot was her argument about African Americans mortality rates. Her book being written in the late 1990s was on the back end of a period of intense gang violence within African American communities in urban areas. The violence is representative of the larger issue of a lack of public services and effort to support the lower class of these communities. While the deaths caused by gang violence was unfortunately high the numbers from Sen’s graph seem to indicate more of a problem of an overall lower quality of life caused most likely by a lack of healthcare, higher education and assets of that nature that statistically improve longevity. While her book was published in 1999 this issue of racial oppression is still persistent and has become a more sensitive issue in the last couple of years and is very much relevant to news today which is why it resonated so strongly with me.
The article “economic Lives of the Poor” By Banerjee and Duflo produced eye opening research in the spending of households living within poverty. Drawing many riveting facts and anecdotes the article piqued my interest to learn more about the purchasing power and the decisions made by communities in poverty. Within the data was the surprising statistics about how much is spent on consumables. Not only were people spending most of their income (about 55%-75%, depending on the area) on food, but a good deal was spent on non-essentials (depending on your perspective) like alcohol and tobacco products. Also those numbers account for food bought for festivals, ceremonies, weddings etc. The sad reality is none of these households are able to make savings because close to none of their earnings can go into “durable goods”. In most of the countries mentioned less than 14% own a bike and close to no households had chairs/stools/tables, a watch/clock, a fan, a sewing machine, a motorized vehicle or a bullock cart. It makes me think of the graphs we looked at in class where we noticed the quality of life increased the GDP of certain countries. Another anecdote on this chain of thought that genuinely surprised me was when they were talking about people in poverty taking up second jobs mostly as entrepreneurs. A very interesting point was made that since these entrepreneurs go out and buy their products independently to resell, and obviously there’s no big business entities involved in these transactions. But, they made the connection that because there are all these individual entrepreneurs, the jobs created (if any) would be overstaffed by family. Since no jobs are being created, they said, it in turn perpetuates the business of these, “petty entrepreneurs”. Poverty is cyclical and self-inducing, but this to me was an interesting point that the writes had noticed, and expanded my perspective to studying poverty.
Toggle Commented Sep 15, 2016 on ECON 280 Reading for Thursday at Jolly Green General
It seems very clear that a Balanced Budget amendment would be very risky and would prove to be very unsuccessful. The amendment is a great example of people trying to solve a problem that doesn’t exist. As we discussed in class, through deficit spending to countries like China, the United States is able to keep stability and lets the economy grow. The amendment comes from the fear of debt, when the debt is not as pressing of an issue as people perceive it to be. The article states that the inability to spend on deficit could cause a recession and in the event of one would make it worse. If we experienced a recession and were unable to borrow money, our entire economy would collapse turning recession to full depression. It would be in the world’s best interest if one of the biggest players didn’t hit rock bottom, so as a result China accepts our debt with open arms because it gives them business and allows them to grow as well. A balanced budget amendment is not only naïve, but ill-advised and uninformed. Such an amendment would harm the economy in the attempts to protect it and it doesn’t surprise me that a whole host of economists sprang foreword to warn of the problems this amendment would cause.  
Eichengreen in his article, “Confronting the Fiscal Bogeyman” argues firmly that in order for the economy stabilize banks need to stop saving and boost public spending. Since the interest rates are so low and are approaching negative quantities, Eichengreen believes the best option to pursue would be for the government to borrow money to invest in research, education, and infrastructure. This economic situation mirrors the conditions in Japan that we looked at earlier this year. The German government however sticks to “ordoliberalism” and refuses to interfere too much in the workings of the economy. Eichengreen’s arguments points out the problem that countries like the USA and Germany have with depending too much on history and personal bias to make economic decisions. The last time the German government took on a huge boost to public spending was when Hitler was in power. The German economy had experienced one of the, if not the worst case, of inflation seen by a developed country in the modern era. They focused on the improvements this article mentioned: education, infrastructure, research and more. As a result, Germany over the course of a couple years dropped from 6 million unemployed to merely 1 million. Hitler put the country back on its feet by creating jobs and increasing spending. Germany today most likely fears repeating the mistakes of the past so they are hesitant to repeat the policies of an almost totalitarian state (when these policies were put into place it wasn’t quite totalitarian yet). I believe Eichengreen is correct that Germany (and the USA) should invest in public spending in order to create jobs. Unemployment as we have proven is cyclical and the government can help that process by creating jobs and spurring the economy.
In, “Restaurant industry unharmed by modest minimum wage hikes.” Susan Kelly discusses the pros and cons to raising the minimum wage. The restaurant industry fears the implications of implementing increased minimum wages as it will potentially cause prices to rise. The theoretical wage raises would have varying results depending on a number of factors. Minimum wage increases could cause restaurants to cut staff and increase prices to maintain revenue. Kelley argues in her article that if prices are increased moderately that the decrease in consumption would not be significant enough to cause restaurants to make budget cuts. Los Angeles, San Francisco and Seattle have implemented a $15 minimum wage that could prove to present some negative effects on the economy. Other cities/states range from $7-9. The goal would be to get the minimum wage to a number close to $15 everywhere but the quick change from 7-15 could be potentially dangerous. The relationship between wages and spending is so volatile and interesting. In class we discuss how reactive the two are and this is a good example of how big changes can lead to big problems. By making large hikes for wages in the hopes of putting more spending money in the pockets of consumers, economies risk causing increased unemployment and in turn causing the opposite. I believe that a wage rate of $15 or greater is entirely possible and great for the economy, but to reach that goal local governments would have to make prudent and gradual changes to the wage rate.
Robert E Rubin’s article on How ignoring climate change could sink the US economy offers a very interesting perspective on the repercussions of climate change. Often times when considering the impacts of global warming people focus on the environmental impacts and seek to prove the possibility and existence of negative feedback loops that could devastate an ecosystem. This article talks about the next step further that normally gets overlooked. It puts a quantifiable value on the losses for example the article states that, “between $48 billion and $68 billion worth of property in Louisiana and Florida is likely to be a risk of flooding because it will be below sea level.” And how Katrina and Sandy that were very possibly made worse by global warming have caused almost $200 billion in economic losses. It also mentions unexpected statistics about how increases in temperatures will make it impossible to work for extended periods of the year and could cause up to 65,000 heat related deaths a year. This statistics and observations tie into the idea that we talked about in class how economists look at situations in a different way than most people. An economist will look at these circumstances and analyze the extraneous conditions that occur as a result. The article was interesting and was thought provoking, it begs the question: How will politicians and other people change their decisions based off this knowledge if any change where to occur? Will there be radical changes or will things continue more or less the same like they have been?
Toggle Commented Feb 7, 2016 on ECON 102 at Jolly Green General
The article from the Washington post discusses at length how the market experienced a big drop on 1/20/16. This is a big development as the market is down 1% on the day since the national market tends to grow. The article talks about how the slowing rates of growth are indicative of an impending economic crisis. Companies like Facebook, Apple, and even Netflix which has grown significantly in recent months, received big blows to as big as 6% decreases. It’s interesting to see an article based on something we discussed at length in class. We talked about how gas prices dropped as a result of the emersion of American energy production. The gas prices dropping even further suggests a bigger problem with the market as a whole. The international markets dropping sounds like the paradox of thrift, as the big players of the economy like gas companies take a toll everyone else follows. All international companies are affected, even Netflix and Apple saw big drops. As these big names find their footing it leaves analysists to point to the impending doom of another possible recession. Despite the market recovering the market recovering the last couple days the overall growth is slowing down and is raising some eyebrows.
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Jan 22, 2016