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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: SirRealist who wrote (14674)	12/25/2001 4:06:47 PM
From: frankw1900	Respond to of 281500

We empirically examine the importance of four such factors in determining the income share of the poorest: primary educational attainment, public spending on health and education, labor productivity in agriculture relative to the rest of the economy, and formal democratic institutions. While it is plausible that these factors are important in bettering the lot of poor people in some countries and under some circumstances, we are unable to uncover any systematic evidence that they raise the share of income of the poorest in our large cross-country sample. That blows a hole in my supposition of the importance of these things. I'm not sure it does. Historically, war is the greatest cause of poverty, famine, etc. Behind it is kleptocracy, out of date mercantilism, and flavours of tyranny. Given any small period of peace and quasi-honest government, the factors you mention are a byproduct of increased prosperity for everyone and are engines of further growth. They may be seen as "improvements" and part of the rising price level allowing further investment. This has application to the following: Thus, it is almost always the case that the income of the poor rises during periods of significant growth. I would guess that periods of growth often create labor shortages, creating income rises across the board. ............................................ Openness to international trade raises incomes of the poor by raising overall incomes. It does so by raising the general price level in the poorer country thus allowing new types of profitable investment and "improvement". The poor country then can start substituting some imports and begin competing with richer trading partners. Living standards of the poorest do improve because among the "improvemnets" made possible by the generally rising price level are sanitary sewers in towns and clean water and affordability of vacinnation programs. Thus the importance of the government not stealing all the spare cash. And I'll admit, their mathematic models whoosh right by my comprehension. This squares with my studies which indicate that (a) economists are overpaid because nobody can make sense out of their conclusions and (b) they look like werewolves when naked. Two things, First the basic structure of economic growth is often not mentioned or is obscured by discussion of numbers. Second, economic growth in areas starting from zero can be hard to measure quantitatively: a poor person's income may not have changed, but her health, nutrition and security may have improved and her children may be learning to read and figure. I think the conclusions are correct, generally speaking. Here is where to look: Rather, these findings leave plenty of room for further work, because they emphasize the fact that we know very little about what systematically causes changes in the distribution of income. Has to do with the possibility of applied human effort. Gotta run. Later.