Week 2 Redings: 1.

The End of Poverty, 2005, New York: Penguin Press On Chapter Three from the book The End of Poverty Jeffrey Sachs outlines the reasons why some countries fails to thrive as follows: Trapped in poverty o Where the is lack of all sort of machines farming machinery to auto, lack of infrastructures o o o Low human capital Depletion of natural capital Insufficiency in immediate and future capital

Geography o o o o Mountainous regions Lack of coast and navigable rivers like the Nile in Africa Arid areas Tropical disease

Fiscal Trap o o Lack of good governance/corruption Population and poverty results in lack of government source of revenues(taxation) o High debt loads resulting to a large expense in debt interest and repayment.

Government Failures o Failure in collection of taxes resulting to failure to build infrastructure, create conducive environment for investment and provide security.

State failure is the end result of poor governance, resulting in wars and economic failure like Somalia.

Cultural Barriers. o o Religion dictated social norms such as unequal gender rights Tribalism

Geopolitics o Trade barriers between countries that impede economic development

Lack of Innovation o o o Limited market for new inventions resulting in minimal profits. Lack of financial resources as most countries have small GDP Mostly operate on subsistence level which does not promote innovation.

Demographic trap o o High fertility levels Many children per family and low education rates

To move away from Povery these are some of the main issues that Jeffrey Sachs mentions in his book that needs to be addressed in the countries with failing to thrive.

Jeffrey Sachs indicates that the main reason why other countries grew while others failed has to do with food productivity. As such poor countries that had high food productivity from the 1980s end had developed further by 2000 in comparison to those that did not. With higher food productivity poor countries were able to avoid the poverty trap. According to his studies, Sachs also indicates that increased food productivity contributed to higher literacy levels, lower infant

mortality and lower total fertility rate. Thus these countries were able to avoid the demographic trap. There is also a mention of the tendency of countries with larger population to do better than the one with smaller population probably due to the increase in market size which attracts foreign investments. Most Latin American countries have failed to thrive because of: geography, sharp social diversion among the inhabitants, vulnerable to extreme external natural and economic shocks. Recommended check list for improvised countries include: The extent of extreme poverty. Economic policy The fiscal framework Pysical geographical and human ecology Patterns of governance Cultural burriers to economic development and Geopolitics

On a personal level, having lived in some of these countries I agree with Jeffrey Sachs and agree with some of the solutions that he proposes. Addressing issues like: tropical diseases, good governance, foreign investments, debt cancellation, education for girls are a few examples of solutions that can have a positive impact on countries that have failed to thrive. It is important to mention that the issue of corruption and good governance which is a major hindrance to development in these countries is very complex and one that can take even longer to root out.

2. Larry Summers, Washington Post In Shutdown debate, focus on growth instead of deficit According to the Congressional Budget Office, given the magnitude of forecast uncertainties, there is a chance of close to 40 percent that with the no new policy actions, the ratio of debt-toGDP will decline over 25 or 75 years. In this article Lawrence Summers explains that the issue of debt facing the American economy can be addressed by focusing on growth and that a growth of just about 0.2% annually is likely to eliminate the projected budget gap. Such growth would more than likely result in the rise of household income and strengthen the U.S. economy. Lawrence suggests the key areas where spurring growth can be effective include: Long-term Infrastructure investment Education Renewable energy technology

Short-term Natural gas resources Information technology Public policy that promotes entrepreneurship

This article makes a lot more sense now than the first time I read it. There is a great importance to addressing the real issues, other than the politics as usual. Even though Larry does not address the issue of income inequalities in details, I believe that a little bit more focus on growth in the

areas mentioned will bring about some positive changes in the area of inequality (assuming that there are policies to address the issue of inequality as part of this option). In this article Larry fails to address the issue of income distribution, which I understand is very paramount to the future of the U.S. Economy. Any growth experienced in the current condition will result to the same results that we have seen in the past where the rich get more and more and the gap continues to widen. As we have seen in the past and based on my understanding, growth from corporations mostly leads to bubbles due to speculation, overproduction and consumption crisis. Fiscal policies may be useful in addressing some of the issues that arise from corporation lead growth.

3. Hans G. Despain, Worcester Telegram-Gazette Obamas oligarchic capitalism

On this article, professor Despain, speaks on the economy and politics right after the recession of 2008. The response from the federal government with regards to the recession continues to support the notion that the markets will self-regulate. Consequently, the corporations continue to concentrate more and more economic power becoming perhaps too large to fail.

In summary Professor Despain outlines the outcome of government response to the crisis as follows: a. TARP: Supported financial corporations growth and rescued auto industry Increase in the poverty gap b. Stimulus Minimal impacts in reduction in unemployment and increase in consumer spending The package was far too small than required to have a larger impact. c. Tax Cuts With a reduction in payroll taxes and increase in the months of unemployment, this package was targeted at the middle income earners and would therefore have been much more effective were it size larger than it was. The article by professor points out to the fact that the basis of the government response obamanomics is oligarchic capitalism. Issues that could have an impact on the economy but not in-line with the ideology of Big Business, like household debts, jobs and income inequalities have not been addressed by the Obama government. Never the less, this is a clear indication of the administrations faith in oligarchic capitalism.

4. Paul Kruger, New York Times: The Fear Economy On this article, Paul Kruger addresses the issue of unemployment and the need for addressing the jobs issue as a political priority. Here, Paul points out that employment involves power relationship, where the employee is under the employer. This relationship weakens on the employees end and grows stronger on the employers end with high unemployment. As such, the employers tend to exploit the employees who have fewer choices during such times of high unemployment. Consequently, the employers in this case the U.S. corporations may be said to have profits increase derived from such exploitive relationships. With the corporations profits increasing, the issue of unemployment is no longer a priority in the political arena. This article again makes it clear that as long as there is growth in corporate America, issues affecting the citizens that could jeopardize the success of corporate America remain none issues for the politicians. In summary Paul points out the main reason why workers are losing in the job markets are due to weak labor markets. Additionally, nothing is being done about the jobs due to the excessive power of corporations and the wealthy. Politicians will continue to avoid issues that can hurt their main source of funding the corporate America.

5. John K. Galbraith, The New Industrial State The corporation and motivation

In this article John Galbraith starts with explanation of corporation as a legal entity established, mainly to conduct business as an individual would but with an added ability of raising capital beyond individuals ability. Suppliers of such capital are protected by limited liability in the corporation that is based on the supplied original capital investment.

The first sections end with the conclusion that corporations are homogeneous and they all derive from the same framework some are subject to market, while others adapt to the requirements of planning and the needs of the technostructure planning system.

Here are some of the characteristics discussed in this article: Large size Need of the technostructure These are the executives that run the corporation, they understand the objectives of the corporations and ensure that all the required planning is followed to ensure the objectives are met. Capital abundance Shareholders Run by technostructure According to Gabraith the management runs the corporation pursuing their interests and not necessarily those of the owners/shareholders. The management pursue the objective of growing larger and acquiring competitos

6. James Hoopes Corporate Dreams