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Corey_connelly
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This class has exposed us to how interdisciplinary economics can be and climate change is a perfect example of this. It is clear that climate change will have dramatic effects on the natural world, in addition the societal structures and health. All of these combined will greatly effect the world economy, and may be exacerbated by globalization. This report does a good job of briefly mentioning the wide variety of climate change effects that must be taken into consideration when considering the future costs of climate change. With increasing temperatures, it may become harder to continue the same level of agriculture in some regions, which could lead to malnutrition in many areas while also having serious effects on the global market. Or with rising sea levels, we may see entire tropical islands disappear from the map. These people obviously would have to go somewhere, creating another large refugee crisis. Rising sea levels will definitely not ignore higher developed countries though. The projections for major coastal cities like Miami are quite scary and could have ruinous effects on everything from property values to global shipping patterns. In all of these examples, we will eventually have to divert resources to cope with these hardships. So we can either pay now to prevent the problem or pay later while dealing with chaotic situations. It is clear that action must be taken, and this report states that there are economically feasible ways to achieve our goals. I understand that the scientific community is somewhat trying to scare society about climate change and the need to take action, but I think the scare factor may be too dire. I believe many people think the problem is too great and impossible to solve so they continue to ignore it (this may not be true, as there are still plenty of people who are not on board with climate change). So I wish the message was made more clear that the steps to halt climate change are more attainable (not that it will be easy, but that it is still possible) and economically feasible.
Keeping with the theme of the class, it is impossible to pinpoint one particular policy as the solution to poverty. The main takeaway I took from this paper was the need for complimentary policies to trade liberalization such as stronger institutions and human capital investments. A country may not be ready for trade deals if they do not have a baseline level of education and institutions that will ensure they are able to hold their own against the stronger developed countries. A country may need to focus on strengthening their workforce before exposing them to large scale changes that will occur under large free trade agreements.I also think its important to remember that the goal of trade deals is not to reduce poverty, but they instead focus on lowering prices for domestic consumers or increasing the market size for domestic producers. Like a profit-seeking business, the U.S. does not enter a trade deal seeking to increase the livelihoods of citizens of another country. However, this could change with more studies like this and others that compare the costs and benefits of trade or aid. I am working on a research paper in another class on the constriction of a canal through Nicaragua. While this is not the same thing as free trade agreement, it still shows who tends to gain from globalization. Nicaragua is working with a Chinese firm to construct a canal to compete with Panama. They claim it will drastically increase economic growth and lower poverty rates. However, many observers do not believe this is what will actually happen. The construction jobs will only be temporary, and the engineers of the project will not even be Nicaraguan, so much of the benefits may go to wealthier people in Nicaragua or foreigner. With the increased exposure to trade, they may be able to increase their service sectors that are related to the canal (similar to what has happened in Panama), but this will require increases in education levels, infrastructure and institutions.
Toggle Commented Nov 30, 2016 on Reading for Thursday at Jolly Green General
We studied microfinance institutions in my social entrepreneurship class, focusing mainly on Banco Compartamos in Mexico. BC started as an NGO and slowly became a commercial bank. They were constantly seeking more funds to loan out, so they became interested in going public and becoming a for-profit organization. BC claimed the move increased their access to investors, allowing them to scale up their business and serve more people in Mexico, while keeping their cost of capital low – and interest rates low. The goal of MFIs is to keep their costs down, so their cost of capital needs to be as low as possible, in addition to their transactions costs which include the cost associated with lending the money (storefront, employees etc.) Critics argue that it will be much harder to not raise the interest rates now that there are shareholder seeking profits, and the larger public company will certainly require higher transaction costs as the bank moves up into larger corporate offices. Muhammad Yunus responded with “just because they are willing to pay does not justify it, that is if you call it microcredit, cause microcredit has a philosophy, a purpose, to help people get out of poverty.” He and many other skeptics believe it is impossible for an organization to keep the social mission of microcredit while seeking profits. This week’s reading on microfinance points out the importance of the design of MFIs. It is clear that the programs can be designed to be more beneficial to the lenders of the borrowers through the repayment periods or group liability aspect. One would hope the social mission of the MFI would guide its decision into create the most beneficial situation for the borrowers, but we already see that that is not the case. With the introduction of for-profit MFIs, it is interesting (maybe scary) to see how programs will be designed to meet the needs of the borrowers or the shareholders. This whole case study emphasizes the questionable role of business in economic development. I can’t really pinpoint what someone like Sen would think of this particular organization. While they are providing a much needed service, it could be that they are exploiting uneducated people into unfavorable transactions.
Toggle Commented Nov 16, 2016 on Readings for this week at Jolly Green General
Schultz starts his lecture by arguing that people in developing countries care about improving the economic situation for themselves and their families just as much as people in developed countries. This point reminds me of our first reading on the Economic Lives of the Poor which explains the economic reasoning behind the choices made. With this thinking in mind, my first thought when reading about malaria was the problems associated with distributing bed nets to fight malaria. I first heard about this in a previous class and found this article today (http://www.nytimes.com/2015/01/25/world/africa/mosquito-nets-for-malaria-spawn-new-epidemic-overfishing.html?_r=0). Aid agencies had distributed bed nets throughout Africa to help combat malaria, but many families were using the nets to fish instead. This obviously meant that nothing was being done to fight malaria, but there were also environmental concerns associated with introducing the toxins into bodies of water and killing off fish populations. This is an example of the importance of health education in addition to investments in health and education. Investments in health education will ultimately make the health and educations initiatives more effective. This was an important point in Professor Blunch’s health economics in developing countries class. When large international organizations attempt to distribute goods without taking customs into account there may be adverse affects. It is hard to convince someone that their actions are harming their families (failure to protect against malaria) and the community (harmful effects to fish populations) when these bed nets may provide the only source of income when used for fishing purposes. This is another example of the poor distributive processes serving the poor in developing countries. Public health measures like these are vital to increasing human capital and will have many spillover effects (such as increased personal investments in education or increased foreign investment or tourism, a point I never considered before this essay), but must be executed in the most efficient manner that respects the situations and tradeoffs that the beneficiaries deal with.
Toggle Commented Nov 2, 2016 on Readings for Thursday at Jolly Green General
In section 2, when discussing whether development leads to women’s empowerment, Duflo cited studies that saw less discrimination towards girls than we may have thought. One found that spending on ‘adult goods’ decreased the same amount for families with girls and boys. My first thought was how complex this study must have been. On first glance, it seems to be quite a complex study with many variables that would be hard to pinpoint. Are changes in spending on alcohol and tobacco the best way to study changes in spending patterns when children are born? It also seems like it would be hard to find families with just boys or just girls? And can this study from Cote d’Ivoire and Pakistan be generalized to other countries? Duflo then discusses how discrimination towards girls only becomes evident when a family enters a crisis; citing changes both in girls’ nutritional levels or increases in witch killing during droughts. This is obviously a problem and a clear sign of discrimination, but there is a rationale (that the girls are more likely to die later in life from child birth, etc.). That does not mean this is okay, and my first reaction was that we need to address women’s rights in these areas. However, with a second read and less emotional feelings about these awful injustices I do understand that focusing simply on economic development may be a more efficient way to achieve the goal of increasing the wellbeing/agency of women. “As households become richer, they will also be less likely to face choices at the margin of subsistence.” Questions of whether the son or daughter should receive food, healthcare or education. Changing the attitudes and historical traditions may be too hard of a goal to achieve with limited funding.
Toggle Commented Oct 19, 2016 on Reading for Thursday at Jolly Green General
Rodrik reminds us that there is a not a one-size-fits-all solution to development economics. Thinking of context-specific solutions follows the recurring theme of the class where we think about poverty as more than low incomes, considering capabilities and other measurements. It makes sense that we must must consider the society and traditions of the country when thinking of growth strategies. This discussion reminds me of my social entrepreneurship class, which touches on the failures of intuitions and the traditional philanthropic sector. A social entrepreneur relies on the market to spur economic growth in an efficient and sustainable way. For these ventures to be successful they must take the regions culture into account in order to create a marketable solution. To see success, they may not on the ‘Washington Consensus’ or choose to be more innovative and meets the demands of the community where they work. I think that the development field could learn from this. This paper also reminds me of our discussion last week on the shortcomings of models. Economists cannot simply transfer the model directly into policy in other regions where it does not match.
Toggle Commented Oct 5, 2016 on Reading for Thursday at Jolly Green General
In the beginning of the paper Krugman mentioned Hirschman’s strategy to reject “buttoned-down, mathematically consistent analyses” and replace that with “muscular pragmatism” in the field of development economics. This means, to me, that economists should not automatically narrow their minds and make their mission to solely ‘prove’ something with a model. Instead, they should work to use some degree of an interdisciplinary approach when tackling their research, and think of the many complexities of humanity. This does not mean that there is no place for models in economics, or that we should be making them more complicated. I appreciate Krugman’s assertion to be aware of the simplicities when reading models, because they are still very useful in explaining and giving some substance to a theory, but the reader must remember a model has its limits. This leads me to our discussion of Kremer and his paper on the deworming children in order to increase educational outcomes, which all started with the simple logic that investments in education must be creating benefits. Sometimes, you have to be able to back up from the economics of the situation and realize the models are not always perfect. In Krugman’s conclusion, however, he asks us if we are sure we really have the insights that can reverse the modern economics community, so the main point I have gained from this piece is to simply be aware of the complicated process that creates the simple models we see in our textbooks and to understand their strengths and weaknesses.
Sen has revolutionized the field by forcing economists to start thinking of the non-monetary aspects of development, which I can’t imagine was an easy task. To think of development as a checklist of needs other than income and to include such qualitative aspects of the level of participation in society is a radical change in thinking. I saw a link between Kinsey’s points about the Civil War and slavery with Cara’s about the livelihoods of African Americans today and think it is interesting that Sen brought up both of these aspects of American society. It is easy to connect the unfreedoms that occurred within the intuition of slavery with the struggles that African Americans face today. With the abolition of slavery, African Americans gained some freedoms, but still suffered from a lack of access to political freedoms and others. Without addressing the lack of many of these freedoms it is hard to bridge the gap between groups even within our own society, which we consider free. It is hard for rapid change to occur when the way of thinking is deeply ingrained in a society. This makes me think of the struggles of disadvantaged groups in developing countries, where the political system may be significantly less transparent, and the challenges that those groups must overcome to reach a higher level of freedom. This is an example of the needs to reconsider the definition of poverty and development, where we move away from strictly monetary measure and start to consider the freedoms of people in society.
I previously read this piece prior to my Shepherd international internship as part of the curriculum. It was a very effective reading for me prior to spending the summer in Nicaragua because it reminded me of the challenges the poor face in all aspects of life. I think it easy for people to become so focused on one issue, and forget that poverty is multidimensional. I was able to see most the of the topics mentioned in this piece this summer. The main takeaways from this piece were that while the poor do lead incredibly stressful lives, they are still relatively happy and will rarely complain about the situation. I noticed that while many households did not own the land they lived on, they still cared about their social lives and networks and would often serve me plates of food. I am not too surprised about the money spent on festivities, alcohol and tobacco products based on my LACS 101 class, which talked about the monotonous lifestyles that the poor faced in colonial Spanish America, and that many would turn to alcohol and cultural events to provide excitement and some relief in their lives. Unfortunately, the statistics on land ownership also did not surprise me. Historically, the laborers have not owned the land they work and today not much have changed around the world. It is crazy to not only compare the earnings of average Americans and those living on less than $2 a day, but to also compare the levels of wealth, since most Americans hold most of their wealth in their homes. I am interested in how the lack of land ownership creates conflicts with neighbors and/or the state. The psychological effects of the lack of security must be quite detrimental.
Toggle Commented Sep 14, 2016 on ECON 280 Reading for Thursday at Jolly Green General
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Sep 14, 2016