Without getting too much into the economics, I wanted to share with you an 'alternative' explanation of this phenomenon, which I saw in 'Mafalda' - a very popular Argentinian comic strip during the sixties and seventies.
Susanita, the character at the left, says:
-"C'mon! Don't you understand that they are poor because they want to? Use your brain... use your brain!"
Mafalda replies:
-"Ohh, my god!"
Then Susanita talks again:
- "Think about the hovels they live in, the bad and ugly furniture they have, the clothes they use! Don't you understand that if they already earn too little money, and besides that they have the guts of spending it in bad quality products, they will stay poor forever?"
Then when Mafalda leaves she thinks to herself:
-"There is nothing to do with people who don't think enough..."
PS: Just for the record, the purpose is only to understand what a poverty trap is... Not to learn about policy making from Susanita...
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I still don't understand what a poverty trap is. Can you please explain it?
ReplyDeleteHi,
ReplyDeleteWell, I think actually Wikipedia have a very good and intuitive explanation here:
http://en.wikipedia.org/wiki/Poverty_trap
However, I can give you a common example:
A poor individual knows that if he goes to college he will be able to earn more money during his lifetime. However, he does not have the money to pay for the tuition, so he decides to start working in low-wage positions and he does not improve his salary during his lifetime. Because of credit markets imperfection, he cannot even get a loan to study.
So, his son, will have to face the same decision. Since his parents don't have enough money to pay his tuition, or again, he cannot get any loans, he will acquire no educations, and will earn a low wage during his lifetime. This cycle goes on and on, keeping this 'dynasty' always under poverty. This is a poverty trap.
I hope now it is clear... :)
Thanks for reading my blog,
The Homo Economicus
Yes, it is very clear now. Thank you
ReplyDelete