Tuesday, December 8, 2009

Thomas Sowell and Black Stigmas

I read this little bit on a recent Thomas Sowell column. This is in essence why I adamantly disagree with affirmative action. Each person should be judged upon character and productivity, not skin color. We shouldn't lavish awards on certain races of people that would not be given to other races for similar accomplishments.

"In response to the news of President Obama receiving the Nobel Prize for peace, an e-mail from a reader recalled a black classmate's comments upon graduating high school many years ago. When asked to list the advantages and disadvantages of being black, the black student facetiously listed as an advantage 'being praised for infinitesimal accomplishments.'"

Joseph Stiglitz's How Globalization Works - Chapter 4

Stiglitz laments, “even if trade does follow, not everyone is a winner.” It is difficult to take the author seriously when this is a concern of his. Of course not everyone is a winner! Some companies produce terrible products; we don’t want them to win. We want companies to produce high quality products that we desire. As globalization continues, domestic markets are going to be shaken up due to the new recognition of more efficient industries abroad. If foreign unskilled lose their jobs, why should the domestic government care? It should only care about its own citizens.
He goes on to argue that rich nations should unilaterally open their economies developing nations, essentially providing unbalanced trade rules. I believe that this could actually be beneficial to a domestic economy. After all, if the developing nation is able to provide a better product than a previously protected domestic industry, then the domestic consumers are better off. If the developing nation is unable to provide a better product, then the domestic industry will have proven its worth to the domestic economy. Either way, the developing country is given a chance to grow and the domestic economy wins.

Joseph Stiglitz's How Globalization Works - Chapter 3

Stiglitz writes that the Washington Consensus was idealistic economics that didn’t produce real-life success. He believes that most economists have gotten past the question of whether markets are inherently efficient and have moved on to “whether government can improve matters.”
He cites the growth of Asian countries as being the product of governments “choosing which sectors their countries would develop rather than leaving it up to only the market to decide.” The spillover effect supposedly increased returns from this policy since technologies developed in “chosen” industries could be applied to the castaway industries.
Stiglitz goes on to make the audacious claim that “it is important for countries to focus on equity, on ensuring that the fruits of growth are widely shared. There is a compelling moral case for equity…” He then concludes his chapter by saying; “it would be even better if we titled [the playing field] to favor the developing countries.”
This author would surely feel right at home in the former Soviet economy. His mind must be in a fantasy world to consider that equality is something to be obtained through markets or that governments choosing economic winners and redistributing wealth is morally desired.
The only way humans will ever all end up equal from an economic perspective is if no one has any economic assets at all. People are by nature selfish and equality should hardly be pursued. Rather, freedom of the individual to pursue economic wellbeing should be promoted.
Stiglitz clearly believes that national governments are in place to pursue equality of their own citizens as well as the good health of all foreign citizens. I fundamentally disagree with him on the grounds that national governments should simply promote freedom for its own people. They should be founded on the belief that all humans are selfish, not benevolent, as Stiglitz mistakenly believes.

Razeen Sally's New Frontiers in Free Trade - Chapter 5

Sally writes that Preferential Trade Agreements are generally hedges on the part of nations that see the WTO multilateral negotiations as weak and slow. These PTAs “secure preferential access to major markets and are a means of managing and defusing trade tensions with powerful players.” He states that these should ideally go above and beyond the liberalization that is agreed upon during multilateral negotiations.
These agreements are frequent in East and Southeast Asia between the booming markets. However, these agreements are proving to be generally ineffective because disciplinary action for lack of compliance is a weak force. Thus countries do not have strong incentives to abide by more than the original WTO agreements.
Of course it would be lovely if nations would act in less political of a manner during PTA negotiations and if they would abide by their self-imposed restrictions. But again, trade agreements between sovereign nations are secondary in the eyes of executives who want to be reelected and guard their respective nations. It seems that Sally is pushing political science to the wayside and writing idealistic views on these agreements.

Razeen Sally's New Frontiers in Free Trade - Chapter 4

Sally writes that the WTO provides a few advantages within trade but is currently neither being used efficiently nor effectively. He mentions that it helps governments fight foreign protectionist policies, hinders predation practices, and encourages good domestic policies. Yet two major problems are that the WTO is rather political and it is leading to too much standards harmonization.
He notes three ways to fix the WTO’s problems: “restore focus on a core market-access and rules agenda…. revive effective decisionmaking; and, not least, scale back ambitions and expectations.”
I believe that the WTO could theoretically be a helpful tool that fosters international trade. It should be used to fight members’ protectionism, as that is antithetical to globalization. However, it seems to be quite a lofty dream to believe that numerous countries could possibly sit down to negotiations and produce rules that are “fair” to each member. What is fairness anyway?
The most important prescription that Sally makes is that the WTO should have more modest expectations for future agreements. It should humbly recognize that sweeping multilateral agreements are not effective in a world full of selfish, sovereign nations. Instead it should seek to mediate between nations as they individually trade with others.

Razeen Sally's New Frontiers in Free Trade - Chapter 3

Sally writes that liberalization critics should be silenced on multiple accounts. First, he notes that according to an OECD study, countries with liberal trade policies grow faster than less open countries. He cites Southeast Asia as a region that opened up its borders and provided incentives to invest in their markets. These countries subsequently had FDI-led growth according to Sally.
He writes that external shocks or crises can be beneficial to growth, as can mitigating the power of domestic interest groups. Strong institutions are seen more often in developed countries than poor countries and seem to provide the stability necessary to foster growth.
Sally provides a few ideas on how future liberalization can happen. First, he writes that “trade policy should be coupled strongly with competition-friendly measures to improve the domestic business climate.” Second and third, he requires that trade be seen “through the prism of the domestic economy” and that policy-making should be simple and transparent.
I generally agree with Sally on these issues. Waiting on non-governmental institutions to provide agreed upon resolutions for trade policy takes too long and inevitably does not properly look after the interests of each domestic economy. The US Senate writes up thousand page bills regarding health care that no one reads or can completely comprehend. This is not a good example for trade policy, although having politicians and NGOs draft trade agreements follows essentially the same process. Each government should make simple trade policies based on unilateral liberalization that echoes domestic economic policies.

Razeen Sally's New Frontiers in Free Trade - Chapter 2

Sally demonstrates the mercantilist’s view of economics, only to slay each of its five tenets quoting classical economists as saying that mercantilism is economic nonsense. He instead believes in Adam Smith and David Hume’s line of classical liberal economics.
This school of thought requires that rule of law be established and argues that enacting free trade practices helps economies and is simply morally better than mercantilism because free trade is inherently non-discriminatory.
Sally states that protectionist arguments “presume too much government intelligence and capability, and overlook the probability of interest-group capture.” I wholeheartedly agree with Sally on this issue. Most politicians have law degrees and massive egos. Neither of these are proper prerequisites for choosing economic policies. The Soviet Union had geniuses run its economy into the ground with nice-sounding economic theories. The best domestic policies involve little government intervention, so too should the best trade policies.

Joseph Stiglitz's How Globalization Works - Chapter 8

The problem that is looked at in this chapter is that poor countries receive too many loans, which they are not able to pay off. Stiglitz proposes the question, “Who is to blame? The lenders or the debtors?” He goes on to answer that both are to blame, however lenders should be held a bit more responsible. The goal of reform according to Stiglitz would be to have poor countries borrow less and have more of the risks shifted to the lenders.
Dr. Luis Maria Drago stated a century ago, in regards to Venezuela’s debt problems, that military intervention should not be considered a manner in which lender countries may seek repayment from debtors. This is based on the concept that all countries are sovereign and that lenders should create contracts that create incentives for repayment. But he goes on to say that Argentina defaulting on its debt got it to growth faster than any other policy would have. So he’s demanding that lenders give better terms but telling major debtors to default. This seems a bit lopsided in favor of the debtor.
Stiglitz also writes that countries should not be required to pay back odious debt and that an international bankruptcy court should be established.
Some of his ideas seem sensible, but it’s a cause for worry that nearly all of his suggestions are bent toward helping borrowers and hurting lenders. Also, his suggestion to create an international bankruptcy court may seem nice, but it is simply more wishful thinking to believe that such an institution would be efficient and/or authoritative.

Sunday, November 15, 2009

William Easterly's The Elusive Quest for Growth - Chapter 7

Bono and so many other celebrities are touting the idea of debt cancellation for poor nations. But is this really a good policy? Easterly says no.
Countries that borrow enough money that they can’t pay it back have done so by “mortgaging the future”. Cancelling the debt, which is implicitly just more aid, is rewarding bad behavior.
After debt was relieved in the past, the countries with the most new borrowing were also the ones who received the most debt cancellation service. Thus these poorly managed governments decided they could rely on free aid that they knew would never be required to be paid back.
HIPCs received less foreign direct investment through the private sector than non-HIPCs. Yet they received more in IMF and World Bank financing. This simply shows that money-managers that are concerned about being paid back don’t put their money into HIPCs but NGO bureaucracies do invest (unwisely).
Again, Easterly and I agree that aid and debt cancellation should only be given to countries that have already made proper policy changes. Until they have a proven track record of trying to change and be responsible, there is no reason to pump money into their economies.

William Easterly's The Elusive Quest for Growth - Chapter 6

Growth between 1982-95 was expected to be between 2.7-3.3%. Yet it ended up being near zero. During this time an average of 3-6 adjustment loans were given to poor countries throughout Latin America, Africa, and Asia. Ghana was one of only a few success stories. The rest were failures.
In some cases no one considered inflationary consequences. In the Soviet break up, aid wasn’t doled out quickly enough.
Many countries kept receiving loans even though they hadn’t followed through on policy reforms. This is sometimes simply because lenders didn’t want their ideas to be failures, so they gave loans in order for countries to pay off old loans.
Easterly and I agree that aid should only be given after good policy is made. I personally am unsure if any country should actually be giving out aid. I believe this is in the hands of private investors and that foreign countries should deal with their own sovereignty issues.

William Easterly's The Elusive Quest for Growth - Chapter 12

Higher corruption reduces growth, which reduces investment. Centralized corruption is a top down approach that brings in more money to corrupt officials but hurts an economy less. Decentralized hurts the economy more, brings in less money to officials, and is more difficult to kill.
Ethnic diversity, foreign aid, and commodity markets generally cause more corruption.
The keys to ending corruption are creating a high quality bureaucracy, which includes a meritocratic civil service and imposes “hard and fast” rules for government.
I believe that whether corruption is decentralized or not, punishment should be severe for corrupt officials and salaries should be raised dramatically. This would reduce the incentives for corrupt activity.

William Easterly's The Elusive Quest for Growth - Chapter 11

This chapter was rather simple. Easterly makes a case that seven factors kill growth. These are: high inflation, high black market premiums, high budget deficits, strongly negative real interest rates, restrictions on free trade, excessive red tape, and inadequate public services.
Inflation is a tax because it reduces the value of holding money, which is a mechanism for making production more efficient. Black market premiums tax exporters because they increase input costs while prices are stuck at an artificial level. Budget deficits cause people to expect future tax hikes, thus it makes people wary of investing in an economy. Negative real interest rates clearly hurts an economy because any money put into a bank is essentially taxed. Thus, there are no deposits with which to give loans. Trade interference distorts pricing and effectively causes resources to be used inefficiently. Red tape taxes entrepreneurship. And poor public services tax future productivity because money will have to spent to do major repairs to utilities such as roads that could have been maintained consistently at a low cost.
Looking at this list really makes me wonder whether America is killing growth right now. Inflation is very possible, our budget deficit is enormous, deposits are barely earning interest, and Obama is less of a free-trader than his predecessors.

William Easterly's The Elusive Quest for Growth - Chapter 5

Population alarmists believe that increasing population is going to be the cause of famine and devastation. However Easterly and I are not convinced.
He points out that no one cannot afford condoms because they are much cheaper in the long run than having children. I would point out that poor citizens might not think in this economic mindset. Also, many of these people having so many children might actually want to have children.
Easterly writes that population grew rapidly in the 19th century, but humanity survived. He argues the reason for this is that people are not deadweight to GDP, they can actually add to the economy. Over time technology has also allowed for more food to be produced on less land.
His conclusion is that since rich people invest more in education because they have a higher rate of return per child, governments should create incentives to invest in people. This will cause citizens to have less children and spend more on those few kids.
I enjoy this lambasting of population alarmism because the philosophy is so vehemently against the value of human life. Our goal should never be to reduce people. It should be to increase the standard of living for however many people that so happen to be born.

William Easterly's The Elusive Quest for Growth - Chapter 4

Easterly writes that education without incentives is useless. If education causes people to miss out on more profitable outcomes, they will skip the education and do what is necessary to be most profitable.
He mentions that there is no correlation between education and output growth. If education spurs growth he argues that young workers should have relatively higher wages than the older population because they are the more educated demographic. However, that trend is not occurring in reality. Instead, he argues that growth causes education.
Gregory Mankiw argues that growth is dependent upon a combination of physical capital and human capital. Thus, growth cannot be forced by only one variable change.
Easterly makes the case that skills are definitely needed for growth, but that there must be proper incentives to obtain these skills.
I consistently agree with Easterly’s arguments because I too believe that aligning incentives properly is essential to development. Thus, it would be beneficial for governments to reassess what the terminal incentives are for their citizens under the current policy. Governments in LDCs should ultimately care most about growth and not about trendy fixes to growth.

William Easterly's The Elusive Quest for Growth - Chapter 9

This chapter was all about creative destruction and it being a necessity for economic growth. Implicit in the idea of advancement is leaving old technology behind. However, occasionally new technology can exist without proper incentives to use it, so growth happens slowly. In these cases, Easterly proposes that governments might create incentives to use the newest technology.
The reason America and other countries have experienced sustainable growth is due to the fact that technology builds on itself and continues to provide increasing returns to scale.
In regards to moving toward new technology, older generations generally fight the change while youth embrace change. This conflict will continue forever. Easterly argues that war sparks economic growth because it destroys old institutions and forces the demolished countries to embrace new technology.
Technology can flow to developing countries in two ways. The first way is by foreign direct investment. The second way is through imports of new machines.
Easterly argues that path dependence causes some countries to stay poor and others to stay rich. This philosophy is based on the idea that past decisions affect current choices.
Overall, the main idea is that innovation concentrates in regions, it builds on itself, and accelerates into the future.
I generally believe that government intervention in economies is undesired, but this chapter showed me that in poor countries governments could be helpful for the economy.
It seems unfortunate but just that countries must reap what their previous actions have sown. In some instances, however, outside forces could have distressed a country and caused it to fall into a vicious poverty trap.

William Easterly's The Elusive Quest for Growth - Chapter 8

The author discusses the importance of knowledge leaks and matching to create traps of wealth. Easterly points out that we have high incentives to gain the knowledge of what works in whatever industry we work in. A great aspect of ideas is that there is no limit to how many people use them. They provide increasing returns as opposed to diminishing returns like machines.
Leaks benefit those who receive the leaked information, but overall society benefits the most. This is a good thing in developed economies, but in poor economies this means that there is no incentive for an individual to learn. This creates a poverty trap.
Easterly says that in such poor countries, he government should create incentives for individuals to innovate. Otherwise the proverbial ball will never get rolling.
Increasing returns to scale can occur when leaks are matched with complements. However decreasing returns will occur if leaks are matched with substitutes.
Easterly noted that because the poor are less educated, the economic fallout involves poor people producing less valuable resources while rich countries produce more valuable resources.
He also points out that particular groups of people continuously battle poverty and some groups, like Jews, are consistently rich. He attributes this to the fact that these people are attracted to each other and join their poor friends without considering the poverty trap they are joining.
The ideas of leaking and matching are important for non-economic students to understand. They aren’t complex, but explain many economic situations.
I also enjoy reading that some groups are simply predisposed to poverty due to their sticking with each other in poor circumstances. Many people like to say that governments are systematically against some races, but these races truly have economic attributes that simply cause poverty.

William Easterly's The Elusive Quest for Growth - Chapter 3

The key to this chapter is that Solow argued that technology is the critical indicator of long-term economic growth. He argued that Capital Fundamentalists had a flawed argument due to the idea of diminishing returns to investment. Increased benefit per machine continually decreases as more machines are added.
What economists are really looking for is greater production per worker, termed labor productivity. Income from machines is estimated to be about 1/3 of GDP, which is clearly smaller than from labor income (intuitively 2/3 of GDP). The way that diminishing returns effects on machines is eliminated is through technological advances. Essentially, labor becomes a more efficient resource, so returns continue to increase.
Easterly lambasts critics who dislike technological advancement on the grounds that it reduces labor demand. However, “labor-saving technology” can be termed “increased-output-per-worker technology.” Technology, he says, doesn’t mean a reduced labor force, but rather increased production.
Others criticize countries for allowing GDP growth to be higher than employment growth. He mentions that this simply means incomes are rising.
Easterly says that all countries were essentially poor at one collective time. Thus, the ones that made advancements first should be expected to still be leading economically today.
William Baumol theorized that poor countries grow fast than rich ones due to a study of about twenty countries that he followed. But data is generally only available from richer countries, so his theory was implicitly biased by his following of countries with data. Easterly argues that poor countries do not grow faster than rich countries.
I appreciate how he puts critics in their place discussing the positives of technological advancement. People in developed countries such as the one we live in shouldn’t be afraid of technology advancing. It’s people like the Taliban that don’t like high technology.
I understand that it can be assumed that most technology advances have come from America and other highly developed countries. But I’m curious as to how the technology level is quantified.

Joseph Stiglitz's Making Globalization Work - Chapter 2

The world isn’t flat, as Thomas Friedman suggests, and governments need to enable developing countries to gain a proper level of living, says Joseph Stiglitz. He writes that economic development can only be achieved when multiple groups get together to fix the problem. These groups include markets, government, non-governmental organizations, cooperatives, and not-for-profit organizations. Development cannot come about without synthesizing these groups’ efforts.
Stiglitz argues that the Washington Consensus is a misguided idealistic policy that has been proven a failure, particularly in Latin America. The Washington Consensus essentially calls for privatization, minimal government involvement in markets, few trade barriers, and deregulation. He shows that adopters of this philosophy obtained early growth only to fall into years of stagnation. Meanwhile, leftist regimes in Brazil and Venezuela provide fine health care and education, meaning a higher standard of living.
His seemingly favorite success story of government intervention is the growth of East Asia. Their governments allowed markets to work in a regulated manner and they made sure that benefits were widely shared. As well, Asian savings rates are consistently above 25%.
He argues that varying economic strategies should be applied in different circumstances. For example, Russia failed miserably when it rapidly privatized it’s markets because there was no solid legal system to enforce property or tax laws. But when eastern European countries joined the EU, they had quick growth because they joined an organization that provided a solid legal framework.
Stiglitz overarching philosophy for development can be summarized in the following paragraph. Development requires social and political stability. Economists need to focus on equity, not just GDP. Local community allocation of resources is most efficient. And to the West he says: don’t undermine foreign democratic systems and limit opportunities to join in corruption. Finally, since the world is set up to help the rich, let’s make policies that tilt the playing field in favor of the poor.
I agree with Stiglitz’s idea that no one economic strategy will work in every situation. We must act in different ways for various situations. I also agree that local governments do need to be at least somewhat involved in their own markets if development is going to occur. However, Stiglitz seemed to praise the Malaysian government for its affirmative action policies for native Malaysians and against Chinese-Malaysians. He seems to be so focused on equitable outcomes that he forgets about laws of equality. I completely disagree that any government should have any policies explicitly discriminating against a race of people.
Finally, I disagree that policy should be made that favors developing countries and opposes rich countries. This is completely disregarding the economic law of incentives. The reason some countries are rich is because they are productive. We want to create incentives to be productive because productivity is the basic goal of economics. Thus, policy should reflect that we are all created equally and we are equally responsible for our own productivity. Some countries will always be poor because their people are unproductive, their geography is not conducive to current economic demands, their governments are corrupt, etc. Economists need to be able to accept that poverty will never be abolished, so let the productive rise up and the unproductive stay put.

William Easterly's The Elusive Quest for Growth - Chapter 2

The post WWII era brought about an economic model that was misused for decades and is now considered defunct. Evsey Domar and Roy Harrod independently developed economic models that explained how aid could increase development in poor countries. Their combined work is known as the Harrod-Domar model. A summary of the theory states that to achieve a desired growth rate, a country must have a particular level of investment. But most poor countries have a low savings rate and can’t provide internal investment high enough to achieve desired growth. Thus, aid is given to fill this so-called financing gap. So countries get proper investment levels, enjoy growth and leave poverty in the dust. Or so it goes.
Easterly opens with the example of Ghana in its years of independence and explains the sense of hope that economists and Ghanians had in the 50s. He writes that President Kwame Nkrumah had a plan, banking on the idea that investment leads to growth, “to build a large hydroelectric dam on the Volta River, which would provide enough electricity to build an aluminum smelter” (26). In turn, alumina would be processed in a new refinery, which would be supplied by a new bauxite mine. The dam was also going to provide a fishing industry and irrigation capability. Our author points out that aluminum production did grow 1.5% per annum for 23 years, but all other aspects of the project were a failure and the people of Ghana are just as poor today as they were fifty years ago.
Easterly describes the failure of Ghana because he wants readers to understand that increased investment is not a lone predictor of growth. He notes the foolishness of economists for using the H-D model for nearly 40 years after the author of the model renounced it, saying that it isn’t meant to describe growth, but being based on situations involving unlimited labor supply, that it shows an increase in machines in the short run will provide growth.
He continues to argue that the H-D model is used in a flawed manner because economists assume countries receiving aid will increase savings to ensure their ability to repay loans. However, as Easterly points out, most aid recipients saved less after receiving aid. He attributes this to the idea that aid recipients are provided with no incentive to save, they just want to spend.
Finally, Easterly argues that there are two tests that must be passed before a country provides aid to another. “First, there should be a positive statistical association between aid and investment. Second, aid should pass into investment at least one for one: an additional 1 percent of GDP in aid should cause an increase of 1 percent of GDP in investment” (37). He shows that this doesn’t necessarily happen in many aid transactions. In the end this model fails to accurately predict which recipients will sustain growth. Thus, the idea should be scrapped and economists should begin building up incentives to invest in poor countries.
I am in absolute agreement with Easterly in this chapter. I believe in incentives and not freebies (with interest). It is ridiculous to consider that poor countries have an unlimited supply of labor and that machines are the only constraint. The population may be willing and hopeful to receive jobs, but there is a definite intelligence gap that exists between poor countries and rich countries where the investment would come from. This is not to insult the poor, but realistically workers can’t just begin working on any new technological machine thrown their way. The labor supply that economists should look at is the group of people who are unemployed but have the technical knowledge to begin using technology pumped in from the West. Combining the ideas that technical education takes time and the H-D model is for the short-run, aid creating quick growth is a somewhat silly concept.
I appreciate Easterly’s repetition of stating that incentives are absolutely necessary. I can say from personal experience (as can anyone), that I always make decisions based on which option provides the most incentives. Poor people and their governments around the globe are just the same; they react to incentives. Thus, as economists continue to search for solutions to poverty, they must emphasize the use of incentives and forget the notion of giving away relatively free aid.

William Easterly's The Elusive Quest for Growth - Chapter 1

William Easterly goes about presenting the reader with a bleak but realistic view of poverty in the poorest of nations. He demonstrates that a significant gap exists between the richest 20% of the world and the poorest 20% (from now on I will refer to the bottom 20% simply as poor or poorest countries). As with the majority of economists, Easterly argues that something should be done to increase the level of living at in the poorest nations. This is certainly his pursuit in writing this entire book.
The first telling statistic that Easterly provides is that the infant mortality rate in the poorest countries is a staggering 20% while the richest countries enjoy a miniscule rate of 0.4%. Some factors that likely cause such a high death rate are poor nutrition of mothers during pregnancy, lack of qualified doctors during birth, and widespread disease that can kill children before their immune system is strengthened.
If a child makes it past infant stage, he is at serious risk of malnutrition. Easterly writes that calorie intake is 33% lower in the poorest countries than in the richest countries. It is ironic that the poorest countries’ economies are largely agricultural, yet they have trouble eating enough.
A third woe that Easterly is concerned with is child labor. He points out that “forty-two percent of children aged ten to fourteen are workers in the poorest countries” (12). It should be noted that frequently children work out of necessity because of a missing father or a general dearth of family income. But in many poor countries the government simply ignores child labor laws. Children forced to work don’t always get the “luxury” of working in decent or poor conditions. Many young girls are forced into prostitution and many young boys are forced into the military. The result is devastating on the young generations and causes the economy to consistently lag behind the developed world.
Easterly argues that poverty is diminished in growing economies. He states that a 1% increase in per capita growth causes a 1% increase to the poor’s income. He seems ready to discuss the failures of many economic theories that attempt to diminish extreme poverty all while he argues that growth is the key to killing poverty.
It is sobering to read over the statistics that he presents about poverty in the world we share. I must humble myself when I consider my wild riches relative to others in this world. At first glance I buy into Easterly’s thought that growth is the key to eliminating extreme poverty. However, he is going to have to back up his argument with empirical evidence throughout his book before I become a faithful follower.
I like that he fixates on the idea that “people respond to incentives”. This tenet must be remembered as economists theorize on causes of poverty. We must understand that particular cultures or geographic regions are simply not going to promote industrialization as seen in the western world. As I learn of poverty theories and argue one or another, I believe it is essential that we leave our arrogance behind and recognize that no shift in wealth can happen in regions where the natives are not willing to change or the government is stifling. The West seems to have a guilty conscience about wealth, but it should not fool itself into believing that it has a monopoly on proper cultural economics and government. Once the guilt and arrogance is left behind we can begin our debate.

Economic Development Journal Assignments

I am required to write about the economic chapters I am reading for my Economic Development course, so I thought I would publish my work. You need not necessarily read the books to understand my arguments, but it may help.

Wednesday, September 30, 2009

Legacy

My first few years in college I was befriended by multiple great upperclassmen. They were imperfect but Godly guys who had their heads on straight. That's something that can hardly be assumed of anyone on campus here at Mizzou.

Some of my best friends are these older, wiser guys. They seriously impacted my path and taught me so much implicitly and explicitly throughout our time together.

I'm now the senior getting ready to move on in life to the "real world". Sometimes I had this thought that pouring into younger guys wasn't totally necessary if I got involved in other good activities.

But then it occurred to me, "If I don't pour into the freshman and sophomores, who will be the older guy in their life that they can look to and say 'he guided me into becoming a Godly man'?"

So now I see pouring into young guys as an obligation. Engaging in discipleship is Jesus' final command to us before he rose into heaven. We shouldn't take this role lightly, but rather we must remember to pass on the wisdom that was previously passed to us.

Don't break the chain.

Tuesday, September 8, 2009

Overreaction to Mr. President

President Obama made his speech to schoolchildren today. The speech has been the center of controversy for a week now as many conservatives think he's getting political with children. Some parents don't like his message or just don't think he should be addressing their children.

A curious fact is that all of the hubub began before anyone even knew what he was going to say to the children.

You can see the text of the speech here.

I can honestly say that this is a solid message that children do need to hear. The one gripe I have with his message is when he says that children are "quitting on their country" or owe it to their country. That's flat out wrong. Kids work hard so they can become independent and provide for themselves, their family, and their friends. Children don't owe anything to America. Their country is here for them, not the other way around.

President Obama is a great communicator as Ronald Reagan was in the 80s. While I disagree with his message much of the time, his ability to inspire and spark hope in some minds is a blessing during such a time of economic woes.

Monday, January 19, 2009

Bush Commutes Ramos-Compean Last Day In Office - Great News!

Today we should all rejoice for justice finally being served in an incredibly unjust case.

Two border patrol agents shot a drug runner in 2005. Their names are Ignacio Ramos and Jose Alonso Compean. Osvaldo Aldrete Davila was smuggling marijuana across our southern border when Ramos and Compean shot him in the buttocks as he ran from them. That seems reasonable. However, they were sentenced to 11 & 12 years for shooting the convicted drug-runner.

It was a gross misjustice for them to ever be convicted. But today President Bush relieved many people throughout the country who have been following this case by commuting their sentences.

I can't imagine how excited they and their families are. They will be released from prison on March 20.

Click here for the full story.