Thank you for observing and evenmeasuring the obvious. The first andobvious task that must be undertaken by the state is to ensure every child getseducated as far as they are reasonably able. Fiat currency management lets you do this.
A step beyond this is to providecredit for all levels of society starting from the lowest echelon. The trickle up impact is huge and swift.
The reverse has never properlybeen made to work. Latin America and
Africa have made a science of all that. The Muslim world is only now beginning toshow signs of understanding.
Once Castroism ends,
willswiftly become the single richest country in the Latin sphere, because he dideverything else right except let go. Cuba
The greatest folly of the Westhas been to supply money to governing elites. They inevitably buy the appropriate Swiss bank account and no credit isestablished at all. Yet we keep doing itover and over again.
A far better plan is simply goand pay school fees through high school everywhere aid is needed and ensurethat the curriculum content meets western standards. Parents simply apply, vouchers are issued andschools bring in the vouchers to the aid office to acquire the cash. It would be pretty hard to make this acorrupt process and you can count on religious organizations to provide bootson the ground.
The other great lesson here isthat one must empower the poor in every way possible. Their rising strength will raise all boats.
Tracing families’ escape from poverty
Economist’s study shows how the poor in developing countries becomewealthier.
Peter Dizikes, MIT News Office
January 11, 2011
Robert Townsend, the Elizabeth and James Killian Professor of Economicsat MIT.
January 10, 2011
For all the detailed tools developed to study finance in past decades,relatively few scholars have brought those methods to bear on a pressing socialquestion: How do poor people manage their finances?
Now, a long-term study of the poor in small villages in
The study, based on a unique set of data collected under the direction of MITeconomist Robert M. Townsend, shows that among rural households, 43 percentrealized significant and lasting gains in net worth over a seven-year period,and that 81 percent of that wealth accumulation was due to savings of income,as opposed to gifts or remittances, that is, contributions the family did notearn.
“There is not a poverty trap in these Thai villages,” says Townsend, theElizabeth and James Killian Professor of Economics at MIT. “There arestrategies people can pursue to increase their relative wealth.”
The findings are summarized in a new working paper, “Wealth Accumulation andFactors Accounting for Success,” written by Townsend and Anan Pawasutipaisit of
The Thai villagers in the survey tend to be farmers, fishermen, laborers or runsmall businesses. Households that do get ahead have some generally sharedcharacteristics. The heads of households tend to be younger than in thefamilies that do not increase their worth. Additionally, gains in wealthcorrelate specifically to the highest level of education obtained by a familymember, and not the family’s median educational level, as Townsend notes.
“It’s not the average wisdom of household members pulled together,” saysTownsend. Rather, he notes, “It’s suggestive that it is the ability or talentof one individual” that can change a family’s entire economic trajectory.
Moreover, the data show financial success to be a persistent feature of certainhouseholds, meaning it is not the case that “successful entrepreneurs are thosethat simply get lucky” due to one good crop or fish harvest, as Townsend andPawasutipaisit write in the paper. But new ventures are sometimes behind theaccrual of wealth. In one survey village, the household with the highest annualrate of return on assets (17 percent) was headed by a corn farmer whose wifeinsisted that they try raising dairy cows instead, sensing that owninglivestock would be more profitable in their area; the idea came in part after amilk cooperative sent workers to educate villagers about cows.
“This work really lifts the veil on the lives of low-income people that hadbeen hidden, largely because we don’t usually collect data with thisfrequency,” says Jonathan Morduch, a professor of public policy and finance atNew York University. “Once you do that, you see that people are not passivelyaccepting their fates. We see a lot of consumption smoothing — people’s incomesare going up and down, but they’re borrowing, saving, insuring with each otherand reducing risk in an informal way. People are actively seizingopportunities. That’s exciting and important to know.”
Townsend has also summarized some of his research in a 2010book, Households as Corporate Firms (
How do small gains feed a large economy?
In turn, another area of ongoing research for Townsend and his colleagues isthe attempt to take the microeconomic data from individual households andvillages, and use it to flesh out the macroeconomic analysis of
“It’s easy to think of
The financial activities of people in the more rural areas of
“And then that money becomes somebody else’s loan,” says Townsend. “In the
Some funding for the research was provided by the John Templeton Foundation,the Bill & Melinda Gates Foundation, and the National Institute of ChildHealth and Human Development.