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Lucas Flood
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While the World Bank’s Report, “Turn Down the Heat,” was certainly interesting and thought-provoking, I was left without an answer to how we can economically reduce the impact of climate change on the world. On the other hand, John Quiggin’s work, “This World is Enough,” provided policy proposals to address the inherent questions posed by the World Bank’s work. Quiggin contends energy sector reforms represent the best opportunities for cutting carbon emissions. He argues a combination of cultural changes, increasing the use of renewable energy sources, and utilizing technological advancements could lower emissions by as much as 90%. While Quiggin’s goal of lowering carbon emissions by 80-90% is an excellent cause (and would resolve many of the issues addressed by the World Bank’s report), I am not convinced that such a policy would be as simple as Quiggin argues. I agree that wind and solar power are the future of energy and should be pursued as the replacement for fossil fuels, but I disagree with Quiggin’s assumption about the ease of implementation. According to Quiggin, it would be necessary to build massive public transportation infrastructure to replace the current fossil fuel-based economic system. This is certainly a worthy cause, but Quiggin never addresses the cost behind implementing the technology necessary to replace cars in the United States; he only says that there is “no technological reason why [mass transit] could not be extended to a much larger portion of the population.” Additionally, I found Quiggin’s argument for the feasibility of electric cars to be persuasive, but hard to implement in the short-term without significant and aggressive government regulation. The problem is that Quiggin’s argument for the 80-90% drop in emissions costs seems to only be possible through a combination of implementing mass transit (at substantial cost to the U.S. government) or mandating the use of electric cars (at substantial cost to the U.S. consumer). I agree with the foundation of Quiggin’s argument, but I disagree with the methods he seeks to utilize to achieve his goal. Finally, I found Quiggin’s indictment of political opposition to be disingenuous, particularly when he blames “rightwing culture warriors” for the lack of action on climate change. Although some individuals do not accept the existence of climate change, it is important to remember that climate science is not nearly as polarizing as is often thought. Even in the world of public policy, influential conservative and libertarian think tanks, such as the Heritage Foundation and the Cato Institute, agree with the scientific consensus about the existence of climate change. After all, the first article on Heritage’s “Environment” page states: “Climate change is happening and humn activity undoubtedly plays a role”. Under the page “Global Warming,” Cato says: “Global warming is indeed real, and human activity has been a contributor since 1975.” Both organizations clearly agree with Quiggin’s argument about human involvement in climate change, but simply disagree with his implementation strategy. In my opinion, the real challenge to passing policies to address climate change is found in the lack of people from across the political spectrum getting together to discuss issues in a constructive manner. As the World Bank report demonstrates, it is vital to find a solution to climate change in the near future. However, in order to find such as solution, it is important to search for policies designed to balance implementation costs with a fiscally responsible approach.
Toggle Commented Dec 4, 2019 on Last Blog Post for the Year at Jolly Green General
A comparison of Juliana Yael Milovich’s work and the work of Susan W. Parker and Tom Vogl demonstrates the perennial determining factor to whether a particular development economic policy is beneficial: it depends. In the case of Milovich’s work, she was able to find that aid helped people from a multidimensional poverty perspective, but was unable to find statistically significant results for the relationship between aid and income. Milovich’s conclusions illustrate the importance of approaching development economics from a perspective that includes variables other than income. Although aid may not have led to statistically significant increases in income, the fact that U.S. increases in aid led to increases in education, health, and living standards in developing nations is a victory in and of itself for increasing human capability. This week in my international relations class we have been discussing the end of colonialism in Africa. Along with our discussion, we have been reading Frederick Cooper’s 2002 book, Africa Since 1940. Cooper’s main argument, that independent African governments simply replaced colonial governments as the “Gatekeepers” of economic development, is highly relevant to the discussion of foreign aid. Cooper argues that many of the governments of modern African countries simply replaced the authoritarian, tariff-based trade controls of colonialism with their own system of corruption and nepotism. According to Cooper, many African countries are still in the process (or at least was still in the process in 2002) of reshaping their economies in order to free themselves of the corruption stemming from the north-south dependence of colonialism. In the meantime, while Milovich may not have found that foreign aid has statistically significantly increased income in developing nations, the usefulness of aid in regards to the MPI is certainly a strong argument to continue aid; especially in light of the historical challenges in Africa that have stemmed from centuries of colonialism. To synthesize Milovich and Cooper, Cooper establishes the economic challenges faced by developing nations in Africa, while Milovich provides the evidence of the success of aid for developing nations. Of course, it is important to remember the political ramifications of American aid. As Milovich argues, by comparing aid to the status of the recipient country in the United Nations Security Council, American aid often comes with political strings attached. With Milovich’s argument in mind, one cannot help but think about the benefits of a Progresa-style program in Africa. As Parker and Vogl found, conditional cash transfers can have an incredible impact on the educational, economic, and social lives of individuals living in low income environments. Such a measure is, in my opinion, more successful than typical American approaches to aid. Instead of supporting the apartheid government of South Africa and a variety of ruthless dictators throughout the 60s, 70s, and 80s, small, targeted aid packages, following the method of Progresa’s conditional cash transfers, could have done a lot to benefit the disadvantaged and poor individuals of post-colonial African countries.
Toggle Commented Nov 20, 2019 on Next Week at Jolly Green General
The article demonstrates the unfortunate trend of highly industrialized, high income countries disproportionately impacting the economies of developing nations. While the impact is not as drastic as the colonialism of recent history, the fact remains that economic policies instituted in developed nations, such as the United States, can have substantial impacts on the economies of developing nations. The end result, unfortunately, is that developing nations often do not possess the necessary agency to implement positive reforms. Barry Eichengreen and Ashoka Mody do an excellent job analyzing econometric data in a supply and demand framework to demonstrate the importance of U.S. financial policy. From the perspective of macroeconomic reasons to raise interest rates, it is fascinating to think that strong economic growth in the United States would lead to higher interest rates, thus limiting loans to borrowers in developing nations. Without loan availability, economic growth through entrepreneurship, investment in research and development, and job creation is limited in developing nations. This conclusion is fascinating, simply because it flies in the face of the concept of economic growth benefiting everyone, all over the world. In regards to Eichengreen and Mody’s specific findings, it was interesting to read that “there is a tendency for relatively poor credit risks to drop out of the market in periods of relatively high U.S. rates.” As we have discussed throughout the semester, when challenges face a particular economic system, the first casualties are the most vulnerable members of society. Oftentimes those individuals first impacted are the very individuals who would benefit the most from economic involvement. In developing nations, individuals with low credit scores (potentially because loans have not been available in the past, eliminating many opportunities to raise credit) most likely are already disadvantaged in the society as a whole (women, minorities, and individuals trapped in the lowest income brackets). In my opinion, the impact of Eichengreen and Mody’s work, therefore, is that further opportunities for microcredit should be insulated from swings in interest rates in developed nations as much as possible. Without such an approach, the benefits of microcredit could be limited in the same ways that Eichengreen and Mody argue regular loans are limited when interest rates rise in the United States.
Toggle Commented Nov 13, 2019 on For Thursday's Discussion at Jolly Green General
Baranov, Kohler, Sachs and Malaney make excellent, empirically supported arguments about the importance of investment in resources to fight malaria and AIDS. From the perspective of our class, I think the relationship between the two articles this week is centered around the essence of development economics: increasing human capability. In true Senian fashion, Sachs and Malaney discuss the issue of malaria from the perspective of malaria as a capability-inhibiting disease. Without proper treatment and preventative measures, malaria stifles economic growth by lowering opportunities for investment in both human and physical capital. Baranov and Kohler’s paper on AIDS treatment also makes excellent points about human capability. In light of our discussions on Michael Kremer and externalities, it is fascinating to read about the increased expenditures on education following the establishment of an Antiretroviral Therapy treatment center in the area. As always, human capability is important though, specifically in regards to the correlation between higher expenses on education and health and the distance to the facility. When individuals can easily make it to a facility, they feel more financially secure and, therefore, are more willing to spend money on other important items. The key for both papers is found in what Sen calls the ultimate unfreedom: death. When efforts are made to prevent an inherently and irreversibly severe effect on individuals, human capability is vastly increased. From a personal perspective, if I did not know if I would make it past 25 years old, I am not sure I would be attending W&L. However, because my surroundings increase my human capability by granting me certain amounts of security, it is in my economic best interest to continue attending school. Finally, the discussion about savings was fascinating as well. Although Baranov and Kohler are able to demonstrate a connection between fighting disease and increasing spending on children’s human capital, it is fascinating to think about the relationship between life-expectancy and saving from a broader perspective as well. In the end, by comparing savings patterns to Sen’s economic value framework, it becomes clear that the ability to save or to not save, an ability created by protection from disease and death, is simply a determinant of human capability. Through the efforts of those attempting to fight disease around the world, individuals are given an opportunity to decide their own economic future based on preferences instead of constraints.
Toggle Commented Nov 7, 2019 on 3 readings for next week at Jolly Green General
I found Theodore W. Schultz’s work on “The Economics of Being Poor” to be interesting, informative, and refreshing. Schultz goes straight to the point on one of the challenges of poverty alleviation: the rich simply do not understand the poor in many cases. Growing up, although my family was certainly far better off in comparison to families in developing nations, my family had a fairly low income in comparison to most Americans. Growing up without much money meant I did not get to participate in many of the things my friends participated in when they were younger. Nevertheless, I was still able to pursue a better future because of the two main variables Schultz identifies: education and health. Despite a relatively lower income in comparison to my friends, I was still able to get an excellent education in high school; an education that prepared me well for Washington and Lee. When comparing my family’s experience to the experience of families in developing nations, I therefore recognize the value of educational opportunities to create upward economic mobility. Thankfully I was not prevented from participating in anything due to my good health (something I certainly recognize is not the case for too many people). As Schultz pointed out, I am also incentivized to continue education after my time at Washington and Lee due to a relatively higher life expectancy in the United States. It is fascinating to compare my experience in the United States, a developed and economically strong nation, to the experiences of the relatively poor in developing nations. In my experience, educational opportunities opened up and I was able to improve my own human capital; an improvement that in turn increased population quality. The logic of my situation makes sense to Schultz, specifically because he points out that “education accounts for much of the improvements in population quality.” When reading Schultz’s argument that “poor people are no less concerned about improving their lot and that of their children,” I was struck with the dual opportunities of education and higher life expectancy and the good fortune of being born into a family living in a developed nation.
Toggle Commented Oct 30, 2019 on Blog Post for Next Thursday at Jolly Green General
Duflo’s “Women Empowerment and Economic Development” is a fascinating discussion of the key publications and arguments of the development economics field. Although Duflo only briefly mentions the inherently intertwined topics, I was fascinated by the way religion, superstition, and cultural norms impacted women in Duflo’s analysis. The topic of superstition or religious norms comes up twice: in relation to the murder of “witches” in Tanzania and South Africa and the treatment of Muslim women in the Indian province of Gujarat. Following the end of apartheid in South Africa, reforms to the old-age pension programs (programs that provided a key economic safety net to the some of the most vulnerable members of society) have coincided with massive decreases in witch killings. However, in Tanzania, where reforms have been lacking, natural disasters resulting in low harvest yields, such as floods or droughts, lead to increases in violence towards women. While Duflo does not particularly focus on these two case-studies, the differences in inputs and corresponding results from the two countries is important. Of course, South Africa certainly experienced significant cultural reform at the same time as the implementation of the pension program. However, it is interesting to examine the way economic policy changes can influence cultural change, even if the influence is not proven to be more than incidental. In contrast to the successful example of South Africa, Duflo’s example of business training initiatives in India shows the oftentimes ineffective nature of economic reforms, especially when faced with severe cultural discrimination. For Muslim women in Gujarat, India, a lack of economic and social mobility prevented them from benefitting from the training offered. The ineffective nature of the training in Gujarat demonstrates the challenges many women can face when confronted with major religious and cultural opposition to female autonomy.
Dani Rodrik’s “Growth Strategies” is, for the most part, an excellent analysis of various methods to economic development. I found Rodrik’s compare and contrast exercise between China and other East Asian nations in the context of non-standard practices to be interesting. Rodrik makes a persuasive argument about the unorthodox methods of achieving orthodox results. However, I was left unconvinced that China could not have been better off under a plan closer in nature to “best-practice” strategies. From a human capability perspective, the strategies adopted by South Korea, Japan, Hong Kong, and Taiwan certainly allowed individuals far more personal freedom than China’s strategy of limited property rights, very few political rights, and few opportunities for economic mobility. I find it concerning that Rodrik simply concludes that other strategies would not necessarily have worked better. While that is technically true, the argument is disingenuous, for the simple reason that it implies that China could not have done better. Between a failure to uphold human capability on a broad scale and China’s environmental problems, China certainly could have developed a better economic growth strategy. In Rodrik’s defense, he returns to the example of China when discussing the challenges of continuing economic growth, surmising that China will more than likely need to improve its institutions in order to guarantee future growth. Additionally, Rodrik’s conclusion is very persuasive. In true Econ 280 style, Rodrik concludes his article arguing against unconditional generalizations of economic policy. For Rodrik, the debate between central planning and laissez-faire approaches to economic development has a simple solution: it depends.
Toggle Commented Oct 2, 2019 on Rodrik article for Thursday at Jolly Green General
In the context of the “Big Push”, I find it interesting that Krugman is supportive of the Rosenstein-Rodan strategy of bold policy intervention. While government intervention may be a method of achieving the Big Push, the example of China discussed on Tuesday was certainly not something that should be followed completely. China was successful in creating massive economic growth by controlling the flow of its population between rural and urban areas. From a prescriptive policy perspective, following the example of China would more than likely create growth in an economy. However, under the Amartya Sen framework of increasing human freedom, the cost of China’s economic policy is significant. It is easy to think of China as a success from the perspective of increased life-expectancy, continued economic growth, and education. In the end, the anti-democratic policies of the Chinese government are the primary reason Hong Kong continues to experience violent protests. In light of widespread population control policies in China, I would argue China fails to uphold the human capability factor in Sen’s analysis. With China’s anti-democratic and controlling policies in mind, I would imagine a democratic government would have to adopt a vastly different approach to successfully implement the Big Push.
Toggle Commented Sep 25, 2019 on Reading for next Thursday at Jolly Green General
In Wang, Wong, and Yip’s work, “Institutional Barriers and World Income Disparities,” the authors provide compelling comparative analysis of the domestic and international policies utilized in various countries around the world. In particular, Wang, Wong, and Yip do an excellent job analyzing the effects of international trade barriers on the GDPs of developed and developing nations. Addressing trade barriers in such a way is fascinating in light of recent political discussions surrounding trade. While the evidence from China and India would seem to indicate the value of limiting trade protectionism, both Democrats and Republicans in the United States have recently expressed interest in expanding trade protections. Although Democrats tend to approach the issue from a human rights perspective and Republicans from the perspective of unfair trade practices, a considerable percentage of leaders from both parties seem to agree that tariffs have a place in the modern American economy. However, developed nations have frequently engaged in aggressive protectionism throughout history, often at the expense of developing nations. If opening trade opportunities benefits emerging economies, as Wang, Wong, and Yip suggest, the increasing rhetoric in favor of trade protections holds great significance. While the authors of “Institutional Barriers and World Income Disparities” addressed trade protections from a purely economic perspective, it is interesting to compare the underlying reasons behind certain proposed trade protections to Amartya Sen’s approach to developmental economics. In the case of China, some American policy proposals have been put forward in an attempt to address human rights concerns, particularly for workers. Because protecting human rights clearly enhances human freedom, it is difficult to imagine Sen being in opposition to the furtherance of human freedom and economic development. Of course, Wang, Wong, and Yip do distinguish between unnecessary and necessary trade protectionism. Nevertheless, it would have been interesting to see Sen’s ideas about human freedom in the context of the economic liberalization touted so highly by Wang, Wong, and Yip.
In Wang, Wong, and Yip’s work, “Institutional Barriers and World Income Disparities,” the authors provide compelling comparative analysis of the domestic and international policies utilized in various countries around the world. In particular, Wang, Wong, and Yip do an excellent job analyzing the effects of international trade barriers on the GDPs of developed and developing nations. Addressing trade barriers in such a way is fascinating in light of recent political discussions surrounding trade. While the evidence from China and India would seem to indicate the value of limiting trade protectionism, both Democrats and Republicans in the United States have recently expressed interest in expanding trade protections. Although Democrats tend to approach the issue from a human rights perspective and Republicans from the perspective of unfair trade practices, a considerable percentage of leaders from both parties seem to agree that tariffs have a place in the modern American economy. However, developed nations have frequently engaged in aggressive protectionism throughout history, often at the expense of developing nations. If opening trade opportunities benefits emerging economies, as Wang, Wong, and Yip suggest, the increasing rhetoric in favor of trade protections holds great significance. While the authors of “Institutional Barriers and World Income Disparities” addressed trade protections from a purely economic perspective, it is interesting to compare the underlying reasons behind certain proposed trade protections to Amartya Sen’s approach to developmental economics. In the case of China, some American policy proposals have been put forward in an attempt to address human rights concerns, particularly for workers. Because protecting human rights clearly enhances human freedom, it is difficult to imagine Sen being in opposition to the furtherance of human freedom and development. Of course, Wang, Wong, and Yip do distinguish between unnecessary and necessary trade protectionism. Nevertheless, it would have been interesting to see Sen’s ideas about human freedom in the context of the economic liberalization touted so highly by Wang, Wong, and Yip. In Wang, Wong, and Yip’s work, “Institutional Barriers and World Income Disparities,” the authors provide compelling comparative analysis of the domestic and international policies utilized in various countries around the world. In particular, Wang, Wong, and Yip do an excellent job analyzing the effects of international trade barriers on the GDPs of developed and developing nations. Addressing trade barriers in such a way is fascinating in light of recent political discussions surrounding trade. While the evidence from China and India would seem to indicate the value of limiting trade protectionism, both Democrats and Republicans in the United States have recently expressed interest in expanding trade protections. Although Democrats tend to approach the issue from a human rights perspective and Republicans from the perspective of unfair trade practices, a considerable percentage of leaders from both parties seem to agree that tariffs have a place in the modern American economy. However, developed nations have frequently engaged in aggressive protectionism throughout history, often at the expense of developing nations. If opening trade opportunities benefits emerging economies, as Wang, Wong, and Yip suggest, the increasing rhetoric in favor of trade protections holds great significance. While the authors of “Institutional Barriers and World Income Disparities” addressed trade protections from a purely economic perspective, it is interesting to compare the underlying reasons behind certain proposed trade protections to Amartya Sen’s approach to developmental economics. In the case of China, some American policy proposals have been put forward in an attempt to address human rights concerns, particularly for workers. Because protecting human rights clearly enhances human freedom, it is difficult to imagine Sen being in opposition to the furtherance of human freedom and economic development. Of course, Wang, Wong, and Yip do distinguish between unnecessary and necessary trade protectionism. Nevertheless, it would have been interesting to see Sen’s ideas about human freedom in the context of the economic liberalization touted so highly by Wang, Wong, and Yip.
In Abhijit V. Banerjee and Esther Duflo’s “The Economic Lives of the Poor,” Banerjee and Duflo synthesize and analyze data from around the world in order to better understand poverty. Their ability to take information gathered around the world and tell a well-evidenced narrative of the challenges faced by the poor is beneficial to any study of developing countries. While the arguments made in “The Economic Lives of the Poor” are certainly valuable, I thought some of the conclusions drawn by Banerjee and Duflo partially undermined their argument. First, I found the manner in which Banerjee and Duflo approach the concept of “How the Poor Spend Their Money” to be particularly problematic. Banerjee and Duflo approach the issue from the perspective of benevolent and all-knowing members of academia by arguing that poor people lacking adequate sustenance could spend more money on food, but simply choose not to do so. To Banerjee and Duflo, entertainment is simply not a logical use of income share. Therefore, it is perfectly logical to argue, as they do later on, that “Carrying enough savings to make sure that they never have to cut meals, should not be too hard for these households since, as noted above, they have substantial slack in their budgets and cutting meals is not that common” (Page 9). However, such an argument is derived from a lack of recognition of societal pressure, quality of life, and religious beliefs in poverty-stricken communities. While poor families would certainly benefit from greater amounts of savings, arguing that such an action is simple or easy is simply ignorant of the larger and self-evident issue: lack of adequate income, instead of the manner in which the income is spent. Additionally, Banerjee and Duflo’s answer to the final question of “Why don’t the Poor Migrate for Longer?” demonstrates the pitfall of focusing almost exclusively on an issue from a monetary point of view. According to the data provided, the incomes of poor individuals would be increased by simply spending more time in jobs far away from home. Banerjee and Duflo argue the reason for many poor individuals to ignore such an opportunity is “a reluctance of poor people to commit themselves psychologically to a project of making more money” (Page 24). Such a conclusion reveals yet again the approach taken by the authors. Instead of recognizing the emotional and societal benefits of staying and working in close proximity to the family unit from the perspective of quality of life, Banerjee and Duflo ignore such a possibility. Instead, Banerjee and Duflo essentially argue the poor are afraid to better themselves economically. In conclusion, “The Economic Lives of the Poor” certainly makes a variety of informed and well-reasoned arguments. However, Banerjee and Duflo’s failure to recognize the value of non-food expenses, particularly in regards to community celebrations and religious activities, diminished the overall impact of their work.
Toggle Commented Sep 11, 2019 on Readings for next week at Jolly Green General
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Sep 11, 2019