favorite quotes

My two favorite blog posts so far for the semester are:
1. Investment opportunities.
I have been thinking about the quote “the rich get richer, and the poor get poorer”. One of the many of reasons that this is true is simply due to the ability to invest. I have been lucky enough to see people close to me succeed in their careers and have the ability to diversify their money into different avenues. One of the things that I find great about this is the fact that when you have the ability to invest you can limit your potential losses, making sure to not bankrupt yourself if you chose to. But, the beauty of it is that you have that one opportunity that may actually take off and the potential for return could be unlimited. Minimize your loses, with a potential of unlimited return.

2. Docs. Health care and gov’t assisted programs are always a good topic for debate.

I was a big believer in the new Health care system. Before I was able to get coverage through my employer, I was happy to be able to have health insurance coverage at a reasonable price. Although, my tax return for the year definitely did struggle, the fact that I knew a injury wouldn’t put me in financial hell. I was able to sleep at night. I think that everyone should be able to see a doctor if needed.

book report

I apologize ahead of time for this paper. My grammar/ writing skills are non existent!
The book that I have decided to read and do my report on is John Colliers, the Bottom Billion, why the poorest countries are failing and what can be done about it. The ISBN for this book is 978-0-19-531145-7. Copyright @2007 by Paul Collier, and published by Oxford University Press, Inc. 198 Madison Avenue, New York, New York 10016.
Paul Collier is a graduate of Oxford University where he currently the Professor of Economics and Public Policy in the Blavatnik School of Government at the University of Oxford. He is the director of the International Growth Centre. He was employed at the World Bank as the Director of Research Group. He generally specializes in poor economies, most of which are in Africa.
The main point to sum up from this book is obviously in the title. “Why the poorest countries are failing and what can be done about it.” I appreciated the approach to this book, as he made it very easy to understand for someone like me who doesn’t have a vast knowledge of economics. Generally, when I think of people in poverty I first come to think of just a basic lack of assets, cash itself. Being an American I forget to include in basic commodities that we have here in the states such as Health Care. The average life span for a “bottom billion” person in 50 years of age, 17 years shorter than one of a developing nation. With 14% of children perishing before 5 years of age. I don’t want to get off base with a comparison to the United States, but even without health coverage people still get treatment to simply keep them alive.
Collier breaks down the main four “traps” that these stagnant, or declining economic systems have fallen into to. The conflict trap is the first to be discussed. 73% of these struggling economies have been victim of a civil war or are currently engaged in in one. Collier asks the question on whether war makes a country poor, or does poverty make a country prone to war. Both ideals hold true. With Civil war being a statistical probability, the odd of outside private investor diminish greatly. You will get a mass displacement of the population, and a collapse of existing public health care in the region. Three main causes of a civil war are low income, slow growth rate, and a dependence on their primary export.
Collier goes into depth on the natural resource trap. This was the part of the book in which I didn’t necessarily agree with his position. Maybe I didn’t fully understand the economic impact that he was describing. What I took from his overall concept of a country that is rich in a globally demanded resource was that it will overall have a negative impact on the country. In short, what I took from the reading was that a country will not focus on anything other than their cash cow export. Being landlocked is considered a trap, obvious reason in infrastructure a dependence on roadways due to available access to waterway ports for import/export. The last important issue is bad governance. Just like what I would expect, either corrupt government, or an inefficient government. He coins the term “conditionality” which is receiving aid in condition that these nations have to make changes to some of their economic policies. What fascinated me about some of these poorer nations is their willingness to receive monetary aid, but were reluctant to receive aid in terms of changing economic policies, obviously, nobody wants to be told they are not fulfilling their job responsibilities. To me it is rewarding you for a job done poorly. It doesn’t make any sense to keep throwing money at these countries that have obviously failed. I personally would link the Natural Resource Trap in with bad governance. I find a comparison in his concept of the NR trap as what had happened here in Lansing after the departure of most of General Motors from the area. Lansing had all of its eggs in one basket so to speak, manufacturing was huge in Lansing, and once that died off, we turned into Flint, Michigan. Just like in peoples professional lives, an economy must keep evolving, growing to be successful… to succeed.
The countries that have struggling economies must make the hard changes to turn their situations around. But, they are trapped in a vicious cycle of failure in most cases. Just as in any nation there are a handful of financially well off individuals that thrive even as the majority of the population live in horrible conditions. For the rich, there is obviously not a demand to change economic policies. Not to downplay the book but it reminded me of the old HBO series “the Sopranos”. Heads of government were involved in many unethical situations, bribery, companies buying presidencies in third world countries. The powerful heads of governments were living well, investing their money into outside bank accounts, or the US stock market. There was a general lack of transparency and the people living here had no way of knowing how much money in aid they were receiving or how that money was being spent. He makes a reference in the book about an oil pipeline being built in Chad. The NGO’s were worried about the money going into the country not being well spent. So an attempted solution to have the funds controlled by the College de Controle et de Surveillance des Ressources Petrolierers. A college was placed in charge of the countries funds.
Now to kind of touch back on the issues of government corruption, much of the aid that have been given to these countries generally end up not necessarily going to actual spot it was intended to. More transparency means the future projects, or natural resource extractions actually may produce bid wars, to get the job done for less money, instead of satisfying individual agendas, by signing contracts for personal gains. An individual named Tumusiime- Mutebile made a tremendous impact in Uganda by making the aid for education transparent with the public. He would track down the actual amount of aid that was dedicated to a certain district, and made the school officials aware as well. This if there was an issue with a lack of finances it was noticeable for the public. A system of checks and balances is crucial to implement, as well as accountability.
The bottom billion countries have a tough road ahead of them. The average length of turnaround time for BB economy is approx 59 years. They must continue to receive and rely on aid for lengthy periods of time, they must also devise a system of economic policies based closely to the thriving economies surrounding them. With a decline in wealth, there is also a decline in education. With what little educated population living in the area wanting to head out to thriving countries to pursue better opportunities a slippery slope develops.

Collier

Paul Collier describes a term in his book The Bottom Billion, on “conditionality” on which a country could only receive aid if they were to change some of their business practices. He was referring to the the poorest of all countries in the world, but it seems that we were guilty of it in the great bailout. Execs from giant corporations were pretty much given money with no restrictions on how to spend the money. I understand to a certain extent the bailout, but if business isn’t working a change is needed.

investment opps

I have been thinking about the quote “the rich get richer, and the poor get poorer”. One of the many of reasons that this is true is simply due to the ability to invest. I have been lucky enough to see people close to me succeed in their careers and have the ability to diversify their money into different avenues. One of the things that I find great about this is the fact that when you have the ability to invest you can limit your potential losses, making sure to not bankrupt yourself if you chose to. But, the beauty of it is that you have that one opportunity that may actually take off and the potential for return could be unlimited. Minimize your loses, with a potential of unlimited return.