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Julia Moody
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"The World is Enough," by John Quiggin, is about how we can reduce poverty while simultaneously preventing further environmental harm. Quiggin believes that the question should not be if we can complete these two goals at the same time, but rather if we will. He argues that this should be possible through reducing fossil fuels, technological advancement, slowing population growth, and using more sustainable food systems. He admits that these changes may take a long time to implement and may be expensive and that there may be limitations on how much the poor are benefitted. I liked that Quiggin offered many counter-arguments to his main points. For example, he talks about how moving to more sustainable food systems could increase food production and potentially improve the well being of many impoverished people all over the world. He also brings up the point that increased food production does not always directly increase the food distributed to people living in poverty. A lot of food may go to middle-income countries, who are more capable of paying for it. I appreciated that Quiggin focused on how his proposed infrastructure changes and the chaining environment specifically affect the poor. It reminded me of the paper "The Economic and Social Burden of Malaria,” by Jeffrey Sachs and Pia Malaney, which talked about the impact of the ever-warming climate on low income countries. Countries in Africa that lack simple malaria-prevention technology will be affected exponentially more by global warming because the increase in global temperatures and rainfall also increase the prevalence of mosquito-borne diseases, such as malaria. Middle and high income countries may not have to worry about this problem because they either do not have tropical climates or can afford implementing malaria-prevention techniques. I liked how both of these papers had sections focusing specifically on how people living in poverty are impacted by technological and environmental changes.
Toggle Commented Dec 4, 2019 on Last Blog Post for the Year at Jolly Green General
I liked how the author points out that economic growth is not always good for the poor. I think it is easy to assume that a country’s economic growth and development automatically improves the lives and wellbeing of everyone in that country, but that is not always the case. This perspective reminded me of the last paper we read, “Does Trade Reduce Poverty?”. In this paper, the author emphasized that trade increases economic activities, which simultaneously can increase income inequality. Although economic development and trade openness has many benefits, there are other policies that would target poverty more directly. Also, I had mixed feelings on the measurement of poverty used in this paper. I liked that the author used a more complex measurement than just the poverty gap or poverty headcount, instead opting for a weighted score of how deprived of basic needs a person was. This measurement yielded a larger number of observed people living in poverty and included more information on their wellbeing. However, this new measurement had some limitations. It only included a few years and had a limited number of observations, in some cases only one observation per country. Also, the measurements come from different years in different countries, so it seems like it would be hard to find trends throughout the data. Despite these concerns, I thought it was smart that the author used data on US aid from 1946-1999 and data on poverty from 2000-2014, because aid would be expected to have delayed effects on a country’s poverty.
Toggle Commented Nov 20, 2019 on Next Week at Jolly Green General
As we have discussed in class, financial institutions are extremely important in developing countries to facilitate borrowing, which increases savings, future income, and consumption smoothing. The paper “Interest Rates in the North and Capital Flows in the South: Is There a Missing Link?” delves into the ways financial institutions contribute to economic growth on a macro level. The authors conclude that looking at both the supply and demand sides of debt and global interest rates is important when studying how financial decisions affect the economies of developing countries. I found it interesting that none of the past studies on the bond market had results that agreed with one another. Although the studies used data from different countries and different demographics within some of the countries, I would have thought they would have still come to similar conclusions since from a purely conceptual standpoint, interest rate changes should have the same effects on bond markets regardless of the country. Both studies discussed in the paper analyze the effects of characteristics of countries and time periods on international bond prices. Not only were the results different, but the coefficients from each model had different signs, meaning the data in each study was telling us very different things. The authors examined a new model to find more conclusive evidence on what factors affect spreads. I understood Equation 1, log(spread) = fX + u, and how it would show us what affects the spread. I found Equation 2, B’ = g(X’) + u, more difficult to comprehend because of the latent variable B. Does B' represent when the value of log(spread) surpasses a certain value? I am a bit confused about this, but I am glad the authors included both the “before” equation and “after” equation, showing that they took into account the bias that the first equation presented.
Toggle Commented Nov 12, 2019 on For Thursday's Discussion at Jolly Green General
“The Economic and Social Burden of Malaria,” by Jeffrey Sachs and Pia Malaney, explores the various effects of the deadly disease on the global population as a whole, delving into household wealth, education, climate patterns, gender inequalities, and economic growth. Sachs and Malaney discuss how poverty and malaria are correlated and the endogeneity between the two that make it difficult to assume causation in either direction. The lack of spending on malaria-prevention techniques in impoverished countries accounts for the higher malaria incidence, leading one to possibly believe that the lack of income in these countries leads to more disease. On the other hand, studies show that holding the countries with high malaria transmission constant, the economic growth is less than 1.3% of growth in other countries. Looking at malaria through the lens of economic growth made me wonder how malaria incidence changes depending on the type of political system in place. In class, we have discussed the trend of famines never occurring in countries with democratic governments and I am curious if democracies or other systems are more likely to have higher transmission of malaria. Obviously to study this, one would have to control for the region of the world the country is located and the climate patterns in that area, as tropical regions usually have a larger population of mosquitos. Because much of malaria prevention has to do with government spending on improved housing, environmental management, and indoor insecticide sprayings, the structure of the government and involvement of the government in society could greatly affect how widespread malaria transmission is in a country. Another thought I had while reading “The Economic and Social Burden of Malaria” was of Kremer’s o-ring theory explaining the relationship between health and education in underdeveloped countries. Kremer found that a small factor like treating intestinal worms in children, which only cost $1 per child, increased class attendance and test scores of the students. He shows that investments in health improve education and therefore improve economic growth and productivity of the society. When discussing child mortality, Sachs and Malaney write that a lot of times, malaria can be easily prevented by using insecticide-treated bed nets. This simple change could have a huge impact on the health of children in countries with high malaria transmission and society as a whole.
Toggle Commented Nov 6, 2019 on 3 readings for next week at Jolly Green General
My favorite part of Schulz’s lecture, “The Economics of Being Poor,” was his description of the entrepreneurial spirit of farmers and people working in the agricultural sector. I think it is easy for people who grew up in urban areas to subconsciously paint an inaccurate picture of farm life in their heads. The stereotypes of agricultural laborers that come to mind are low-skilled and poorly educated, but Schultz points out that farmers do much more than tend to their crops or livestock; in reality, they are all running their own businesses. He compares them to entrepreneurs and describes how they fine-tune their businesses more efficiently than many other industries. I thought Schulz’s description shed a lot of light on the value farmers bring to society and the economy as a whole, as well as erasing stereotypes readers might subconsciously be believing. I also really appreciated his mention of women as similarly productive and efficient entrepreneurs, running their entire households and contributing to the business of the farm all at once. Women in farming households have a lot of organizational ability and business smarts, which positively influences society in more ways than we see when we are just looking at the agricultural sector or low income families in aggregate.
Toggle Commented Oct 30, 2019 on Blog Post for Next Thursday at Jolly Green General
Esther Duflo’s “Women Empowerment and Economic Development” made a number of influential points about the relationship between the inequality of genders and economic growth. Much of the first half of the paper discussed how females are discriminated against when families or societies are put into stressful situations, such as poverty, starvation, or extreme weather events. Duflo gives the example of parents in low income countries giving up more of their “adult consumption” to feed their sons than to feed their daughters in times when money is tight. It makes sense that Duflo mainly focused on developing countries’ attitudes towards women, since the paper is also about economic development. The parts of the paper I found most interesting; however, brought to light the discrimination that still persists in high-income, developed countries, such as the United States. When we talk about discrimination against women in a global sense, our minds might immediately jump to thoughts of women not having the right to drive or vote, women being sold off to adult men at young ages, genital mutilation, or other egregious acts that we know go on in less developed countries. Duflo pointed out that inequality still exists in many forms in highly developed countries as well. In the US, many parents still fail to encourage their daughters to pursue higher education and professional opportunities. Women are still associated with taking care of the family and tending to household chores. Although the outcomes may be different, females in high income countries are treated differently from birth onto adulthood, just like in low income countries. Female children are funneled into liberal arts and humanities at school, instead of math and science, narrowing their professional opportunities and damaging their confidence in those areas. Once in the professional world, women are constantly not taken seriously by their coworkers and discriminated against in the workplace. I liked that Duflo pointed out that economic development is not enough to accelerate the empowerment of women because clearly in highly developed countries, inequalities still persist.
Rodrik’s “Growth Strategies” discusses how traditional or neoclassical economic theory influences policy decisions and whether or not these policies are effective at igniting growth. He argues that policy-makers perceive neoclassical theory too stringently and lack flexibility when applying it to real-world situations. Neoclassical ideas about development certainly parallel the paths that many economically successful nations have followed and are a good basis to start thinking about the relationship between growth and policy decisions. These ideas, which were originally included in the Washington Consensus, include fiscal discipline, tax reform, and trade liberalization. I liked how in the appendix of Rodrik’s paper, he included many tables and graphs to illustrate the models and documents he refers to throughout the paper. The policies in the Washington Consensus mostly have shown success in Western nations, and because of this many policy-makers think they should apply to every developing nation. Rodrik does a good job of explaining that many countries benefit from untraditional growth strategies and lists numerous examples, such as China and India. I thought this part of the paper tied in nicely with our conversation in class on Tuesday about behavioral economics. We discussed how economic theory suggests that if the marginal cost of completing an action is next to nothing (such as checking a box on a drivers license to become an organ donor), individuals should always complete that action. However, in reality, individuals are much more likely to become organ donors if it requires absolutely zero action on their part, even if the action requires minimal effort. The discipline of behavioral economics studies and tries to explain these anomalies. Rodrik’s writing about countries following untraditional paths to growth or adhering to traditional policies but not experiencing growth made me think about how in every realm of economics, there are exceptions to the rule and unusual or untraditional ideas should not be discredited.
Toggle Commented Oct 2, 2019 on Rodrik article for Thursday at Jolly Green General
In “THE FALL AND RISE OF DEVELOPMENT ECONOMICS,” Krugman explains how Albert Hirschman changed the field of development economics, in his eyes, for the worse. High development theory, which basically asserts that modernization causes more modernization, was the dominant theory before Hirschman entered the conversation. High development theory lacked a strong mathematical base and the typical models that underly most economic theories because economies of scale are difficult to put into formal models. Hirschman changed the way people thought about development by completely discarding the idea of formal models all together and instead opting for metaphors and a more abstract approach. Krugman clearly views this change in the way economists study development as a “dead end” in terms of further exploring the development process. In order to show that one can formally model the ideas behind high development theory, Krugman uses a simple equation showing the relationship between the labor market and production in a scenario of a “traditional” and a “modern” sector. He makes a point to convey that the model is not perfect and probably leaves the reader with some blanks to fill in and questions to ask. I liked how Krugman emphasized that that uncertainty in the model is okay and should drive further exploration on the subject. This kind of intellectual curiosity being sparked could lead to new discoveries and maybe even more complete models being created in the future. I agreed with his viewpoint that just because a model is not complete or formalized, it should not be completely discarded as knowledge from the topic at hand. However, I also support the idea that studying topics in the social sciences does not always need to have a traditional base of mathematical models. I liked how in the conclusion, Krugman encouraged readers to not turn away from non-traditional or abstract methods of learning.
Toggle Commented Sep 25, 2019 on Reading for next Thursday at Jolly Green General
The article “Institutional Barriers and World Income Disparities” made me think about how the Cobb Douglas production function can be applied to macroeconomic growth, as well as the development of specific industries within particular countries or regions. While reading the cross-country analysis of the ten "fast-growing economies" and ten "development laggards”, I couldn’t help but to think about Japan’s post World War II increase in economic growth that I learned about during my macroeconomic theory class. Japan’s growth was due to a breakthrough in production levels in its manufacturing and auto industries. The Japanese borrowed and improved upon many technologies and organizational structures that the United States was using at that time. These changes involved a period of de-industrialization and limiting exports of previously profitable goods, such as textiles. Investing heavily in the manufacturing industry lead to major productivity gains and eventually propelled Japan onto the global stage during this time. It was interesting to read that countries classified as “fast-growing economies”, such as South Korea and Taiwan, used similar technology and organizational strategies as Japan to increase their economic growth. I also liked how the authors consistently talked about the United States because it gave the reader a good unit of comparison.
I thought the section on the poor's self-reported happiness was interesting because despite the constant stressors related to finances, health, and inequality in their lives, the poor do not have especially low self-reported happiness levels. This plays into the points that Sachs’ article made about human wellbeing involving more than just economic performance. It might benefit countries to emphasize measuring gross national happiness, instead of solely the gross domestic product, like Bhutan does. Happiness does not necessarily correlate with income for many people, which is clear from the study in Economic Lives of the Poor. From a policy perspective, policymakers could aim to increase overall happiness and improve attitudes among people of low socioeconomic status as well as focusing on the financial aspects of being poor.
Toggle Commented Sep 11, 2019 on Readings for next week at Jolly Green General
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Sep 11, 2019