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Charlotte Braverman
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As others have mentioned above, the refusal of so many to acknowledge the legitimacy of climate change is dumbfounding after reading “Turn Down the Heat.” The willful ignorance and denial that dominate today’s discourse are in direct opposition with an enormous body of research and pose serious threats to the future of the planet. This creates two challenges- not only halting and ameliorating the harmful effects humans are having on the Earth but also making people aware of these effects in the first place. Otherwise, we cannot expect that people will modify their behaviors in ways that are eco-friendly and sustainable. The question of global warming is an empirical one- and the conscientious and the rigorous efforts of researchers and scientists have answered it to some degree. This article enumerates many of the deleterious impacts we can expect to see if the issue is not addressed. Climate change is occurring but convincing people of this has proved immensely difficult. It bears repeating that climate change will most harshly impact those living in developing countries. Is this a contributing factor behind inaction? Does that fact that many of us in the developed world are not seeing or expecting to see the effects of global warming that enables our sense of complacency? Or is it the somewhat longer time horizon that precludes us from realizing the very tangible and real effects of climate change? Is a problem of diffusion of responsibility and a tragedy of the commons? Whatever the reason, it is essential that climate change is brought to the front of the public consciousness. Once this has been accomplished however, the challenge will be developing creative and convenient ways that people can live more sustainably. The widespread nature of recycling is a promising indicator that when these outlets are available to people, they are more than willing to use them. It may also be helpful to think of sustainability in a proactive rather than a reactive way- meaning commodities and goods should be produced in ways that are sustainable instead of mitigating the negative externalities later. The modern scale of production creates a huge necessity for clean and ethical business practices. Ultimately, the responsibility falls on all of us- individuals and corporations alike to alleviate and prevent the harmful effects of climate change.
Goff and Singh makes a strong and concise argument that trade can be beneficial to developing countries with the caveat, however, that a number of conditions must be present for these benefits to be realized. Without the requisite infrastructure, access to credit, and investment in human capital, Goff and Singh make it clear that the benefits of trade will be much more elusive. Ultimately, their paper echoes the recurring theme that there is no silver bullet for development and that in order for trade to be beneficial, there must be the presence of mutually-reinforcing policies and conditions conducive to development. What stuck out most to me, however, was the point that Goff and Singh make that oftentimes developing nations hold the comparative advantage in markets that demand unskilled labor. This presents its own unique set of concerns. The abundant and replaceable nature of unskilled labor in developing countries creates the dangerous potential for an exploitative labor market and one thing that came to mind while reading this paper is the issue of exploitative labor conditions in developing nations imposed by big, multinational firms. Outsourcing for the sake of cheap labor can be a slippery slope, especially without a strong infrastructure to protect unskilled laborers. While the presence of these firms may bring hundreds and thousands of jobs to developing countries, if working conditions are not safe and equitable, poverty-reduction is an unlikely result. This need not preclude trade from benefitting developing countries- but it essential that this threatening potentiality be seriously considered and actively prevented.
Toggle Commented Dec 1, 2016 on Reading for Thursday at Jolly Green General
Eichengreen and Mody’s paper, “Interest Rates in the North and Capital Flows in the South: Is There a Missing Link?” made me think a lot about what we’ve been discussing in my intermediate macro class. Eichengreen and Mody contest the prevailing notion that capital flows to developing nations are not terribly sensitive to interest rates and ultimately, their research suggests that the interaction between the supply and demand side for this capital has somewhat obscured any effects due to changes in the interest rate. They conclude that interest rates in industrialized countries do in fact affect capital flows to developing countries. With regards to the Keynesian theory we have been studying in intermediate macro, we have talked a lot about how the flow of financial capital around the world is highly sensitive to interest rates. If this is true, Eichengreen and Mody argue, “emerging markets may find themselves alternatively swamped by and starved of foreign capital” (Eichengreen et al, 2). Conversely, Keynes argues investment in plant and equipment is dependent on a whole host of things and much less sensitive to changes in the interest rate. Therefore, the Keynesian framework may have interesting implications for foreign direct investment and though FDI is not discussed in this paper, it too is often thought to be a critical piece of modern economic development. While the flow of capital to emerging markets may be vulnerable to changes in the interest rate, it seems possible from a Keynesian perspective that FDI may be more stable and resilient. When crafting potential policy responses to the issue of volatility due to changing interest rates, the question then becomes which is more important: capital flows or FDI? If these capital flows are thought to play a critical role in the successful development of emerging markets, it might make sense for developing countries to impose the capital-inflow taxes that Eichengreen and Mody mention. However, if more consistent FDI can mitigate the effects of changing capital inflows, it may make more sense to focus instead on policy that encourages FDI.
Toggle Commented Nov 16, 2016 on Readings for this week at Jolly Green General
Most striking to me about Sachs’ piece on malaria were the myriad spillover effects of the disease burden. A cursory glance at the evidence and a superficial analysis of its effects on economic growth might lead one to consider only the lost output and the costs associated with disease prevention and treatment. However, upon closer consideration, Sachs and Malaney reveal a whole host of negative externalities. One that particularly stuck out to me was the impact of malaria on fertility rates, this in turn causing a decline in investment in women’s education and agency. Constrained by the societal obligation of childbearing, women are robbed of the opportunity to pursue an education or gainful employment. As we have already discussed in class, there is evidence to suggest that this lack of investment in women, an injustice in its own right, can also hinder further economic development. Perhaps equally concerning are the high population growth rates that result from high fertility rates as it is important to consider the additional pressures more children will have on already resource-constrained families. Ultimately, it seems this phenomenon will not only negatively impact women but their children as well. It had never occurred to me before that something like malaria could be a contributing factor to these issues. The concerns about foreign direct investment and isolation from the rest of the world were also particularly compelling to me. Thinking particularly about the rapid economic growth of China, trade has been an integral part of their growth story. As emphasized by Rodrik in Growth Strategies, the engine of sustained economic growth will look different in different countries so trade is not necessary the key for all developing countries. Nonetheless, a potential disconnect from the globalization that is so essential to many economies is concerning.
Toggle Commented Nov 3, 2016 on Readings for Thursday at Jolly Green General
Duflo’s hesitation to promote female empowerment initiatives as a solution to economic development was at first at bit off-putting. After watching Sheryl WuDunn’s TED talk that so strongly supported the idea that empowering women is the key to development, I somewhat expected Duflo to advocate for a much more women-empowerment oriented approach. Instead, she presented a range of studies and many different sets of data, some of which supported the hypothesis that women empowerment facilitates economic development and other studies that maybe were not so conclusive. While recognizing the interrelatedness of women empowerment and economic development, Duflo did not belabor the degree to which that women empowerment begets economic development. Instead, she presented a much more tempered viewpoint that argued both may generate mutually reinforcing effects, however, neither are the magic bullet. Another part of the paper I found interesting though not terribly surprising was Dulfo’s argument that is it often the most financially disadvantaged families that are forced to make decisions that compromise the wellbeing of the women. Consequently, when families are a bit more secure and better able to meet their needs, the sacrifice of women’s wellbeing becomes more infrequent. Within the context of Sen’s wellbeing and agency distinction, it seems possible that increasing a family’s income by just enough to lift them out of poverty, could significantly improve the welfare of women. However, in order to truly achieve gender equality and promote the agency of women, it will be essential to craft much more pointed policy that specifically targets women empowerment in the context of institutional law, educational and employment opportunities.
Toggle Commented Oct 19, 2016 on Reading for Thursday at Jolly Green General
While reading Growth Strategies, I was particularly struck by the distinction Rodrik draws between stimulating economic growth and sustaining it. He emphasizes that though it may require relatively little policy action to stimulate growth and get things up and running, institutions will play a central role in sustaining growth in the long run. To these ends, however, Rodrik argues that there is no universal, one-size-fits all approach appropriate for all developing countries. I found this an interesting and well-argued point, especially in the case of China. Table three on East Asian anomalies is particularly helpful in conveying the degree to which developing countries can deviate from the institutions that are widely thought to promote economic growth. Instituting policies often dramatically different from the prevailing ideal, China is nonetheless a poster child for rapid economic growth. Ultimately, this piece makes a strong and persuasive argument that effective growth strategies will look different in different places and successful strategies rarely “travel well” (Rodrik 19). Even with roughly the same objectives, policy will need to be tailored to the specific needs of the locale. While broader economic theory can be in agreement about the conditions most conducive to economic growth such as property rights and non-corrupt government, Rodrik goes so far as to call these standards “institution-free.” This is perhaps equally disheartening as it is encouraging. While it supports the disappointing reality that strategies that have been successful in the past might not work as well in other places, it does leave room for a wider range of non-traditional and innovative policies.
Toggle Commented Oct 5, 2016 on Reading for Thursday at Jolly Green General
Kruger’s analogy to the map of Africa resonated with me and reminded me a lot of our discussion in class last week. Uncertainty bred ignorance when cartographers refused to consider or incorporate information that may not have been entirely accurate or easily represented. This in turn gave way to passivity and the interior of Africa remained blank until there was complete confidence in cartography technology. The notion that a failure to produce a perfect model of something would discourage or discredit efforts to engage with or understand ideas is incredibly concerning to me, particularly in the context of development. Similar to what we discussed in class the other day, just because we cannot always determine definitive casual relationships between phenomena does not mean we should shy away from alleviating the suffering. Ultimately the models are not the primary concern and should never preclude us from doing something poverty. Of course models are often incredibly useful. However, just because we struggle to craft the perfect model, does not mean we should shy away from or delegitimize the underlying theories or ideas. In accordance with Sen’s freedoms-based approach, poverty-related issues can rarely be reduced to numbers and statistics. Oftentimes the complexities of poverty make it difficult to model and understand but that does not mean we should not try.
Sen’s mention of the Aristotelian notion of eudaimonia, or human flourishing, caused me to think back on an ethics course I took last semester. We spent a few weeks comparing various ethical frameworks and ultimately, I was most strongly persuaded by Aristotle. Most compelling to me is Aristotle’s recognition of the humanness of individuals. When applied to the objective of development, this sort of framework honors the humanity of all people and strives towards a world that enables them to live their most fulfilling lives. Therefore, when thinking about the ends of development, a higher income is no longer the sole objective. Instead, in accordance with Sen’s freedoms-based approach, we must consider the different conditions that allow individuals to self-actualize. These things may include access to healthcare, quality education, or freedom from servitude- none of which directly relate to one’s income level. However, one thing I find myself constantly struggling with when talking about issues of poverty and inequality is the degree to which income is a relevant factor. On the flip-side to the freedoms-based approach, is it sometimes important to recognize the degree to which low income may be a powerful factor holding people back? At some point, we must confront the unfortunate reality that development initiatives are costly. To completely ignore the fiscal constraints of poverty is perhaps as equally dangerous as forgetting about the issue of freedom. From a pragmatic and policy-based standpoint, it will be important to consider the financial side of things, feasibility and cost-benefit analysis. I believe striking the balance between a freedoms-based approach and an income-based approach will be essential to alleviating poverty. I wholeheartedly agree with Sen’s argument that wealth for its own sake is not an end worth pursuing. Instead, the value lies in what one’s wealth enables them to actually do, the freedoms they are permitted to enjoy. The focus should not be just raising incomes but instead on developing a world that allows individuals to live more freely and humanely. However, it is important to grapple with the complex ways in which freedoms and income are interconnected and the plethora of other factors that are also at play. After all, this is something Sen himself points out. The freedoms-based approach provides a solid framework from which to determine the standards of living, capabilities, and resources people ought to have. However, an appreciation for the fiscal constraint people are under is also an important thing to consider when crafting policy and initiatives.
In their piece “The Economic Lives of the Poor,” Banerjee and Duflo illuminate many of the harsh realities that affect those living in developing countries. Perhaps the most powerful aspect of this work is the degree to which they are able to convey how hard working, adaptive and rational these individuals are. For me, the two most salient portions of the article are those that discuss employment opportunities and the financial decisions which the impoverished face. Ultimately, the two seem inextricably linked to the banking systems and credit markets, or lack thereof, existent in these communities. Compounding the sheer scarcity of economic resources is the lack of a formal and secure market for saving and lending. In this way, Banerjee and Duflo illustrate that it is actually quite rational for someone with limited economic resources to forgo saving in order to make sure their money is used in a way that is utility maximizing. Alternatively, they run the risk of having it get stolen or lost. Without a trustworthy institution to deposit their money into, people are forced make tough decisions about how to protect their financial resources. Corollary to this issue of saving is the issue of lending which seems to bleed into the employment opportunities for those living in poverty. Banerjee and Duflo emphasize that though people tend to be entrepreneurial and proactive in seeking out employment opportunities, with many people working multiple jobs, the job market is oftentimes structured in a terribly inefficient manner. The women making dosas in South India are a strong example of this. This seems to be due in part to the inability of individuals to raise capital and invest in their businesses. Instead they are constantly scraping by, forced to make ends meet by doing whatever jobs are available. Ultimately, this central issue of saving and lending led me to think about microfinance, something we will focus on later in the term. Microfinance appears to offer a great opportunity to invest in communities while allowing them to develop in a self-sufficient way, providing jobs and facilitating the development of a more robust job market. This is something I am looking forward to learning about in the coming months.
Toggle Commented Sep 14, 2016 on ECON 280 Reading for Thursday at Jolly Green General
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Sep 14, 2016