Growing up I always had a piece of tortilla and a small cup of coffee for breakfast. Yes, I ate the same thing almost every morning. My parents did not have enough money to buy anything else. Many times I took my piece of tortilla to school and sold it to a classmate for 10 cents. Dad used to wake up at 3:30 am to milk the cows and then sell the milk to a local dealer. He earned approximately $4 per day. Some of our neighbors used to call dad ‘Andres Plata.’ Plata means ‘money’ in Panama, so ‘Andres Plata’ roughly translates to ‘Andres The Rich.’ Yes, we were better off than some people, but we were not rich. Our neighbors thought my family was rich just because we owned a few cows. A few cows gave us some sort of ‘status’ within the community.
I spent every Christmas Break in Panama City. My parents did not have enough money to buy me presents, so they sent me to my godmother’s house for the holidays. Every year she bought me new clothes, shoes, and school supplies. She lived in a middle-class neighborhood and had a nice car. I loved visiting her because I did not have to eat tortilla! She always made ham and cheese sandwiches for breakfast. I loved the sandwiches! Yes, the ham and the cheese were good, but my favorite part of the sandwich was the sliced bread. I only ate sliced bread at her house. Every time I went to the store with my dad I asked for sliced bread, but he never bought it. He just could not afford it. I used to think that only rich people could eat sliced bread, so every time I ate sliced bread I felt very especial…I felt rich.
Oven at Home
I am currently staying at my Godmother’s house in Panama City. This morning I had a ham and cheese sandwich for breakfast. I saw the sliced bread on my plate and I laughed a little bit…then I cried. Childhood memories suddenly started rushing into my mind. I was so innocent back then. I did not fully understand the concepts of ‘rich’ and ‘poor’…heck, what am I saying? I still do not understand what those words truly mean. I will go home Saturday Morning and finally hug my parents and my grandma. My parents still can’t afford sliced bread, but I won’t complain about the tortilla. I no longer need sliced bread to feel rich. I do not need money either; I just need to spend some quality time with my family.
Dad, Mentor, Mentor’s Husband, and Mom
According to the Economic Commission for Latin America and the Caribbean (ECLAC), Panama is the region’s fastest growing economy. ECLAC predicts Panama will achieve a growth rate of 10.2% in 2012. If W.W. Rostow were alive, he would argue that Panama is between the third and fourth stages of growth (take off and drive to maturity, respectively). If you are not familiar with the Rostovian Take-off Model of economic growth, I encourage you to learn about it here.
Panama City Skyline
Watch: Panama + City
I arrived in Panama City Friday night. Panama’s breathtaking skyline is the product of its impressive economic growth; however, you quickly begin to realize that there is a much different side to the city. Sunday morning I went to visit two slums, Curundu and Calidonia. It’s so strange that a place just a few blocks from the financial district seems like a completely different world. I talked with several community residents. Many of them are unemployed, sick, and uneducated. Marta, an unemployed mother of two, eloquently said to me “I dont believe in growth. I was poor before growth, and I am still poor. My kids and I will continue to be poor until we die.” Perhaps Marta is right… She may never be able to get out of poverty.
Calidonia Slum – Panama City
Jeffrey Sachs believes some ‘people, such as Marta, are poor, because they are poor.’ They have the potential to become rich, but they are stuck, they need a big push. Sachs claims that his Millennium Villages Project offers people the ‘big push’ they need to succeed. On the other hand, William Easterly points out that many people that used to be poor are now rich, and vice versa. He does not believe in poverty traps. According to Easterly, Marta could potentially find a job and get out of poverty without much help.
Watch: Inequality Traps Children in Poverty - The World Bank
Do you believe in Poverty Traps? Is Marta trapped in Poverty? Is there anything she can do? Does she need help? Watch ‘Inequality Traps Children in Poverty.’ What are you thinking?
What does it mean to be poor? Amartya Sen and proponents of the capabilities approach believe being poor means not having the capability to realize one’s full potential as a human being. According to Poor Economics, being poor, among other things, means having limited access to information. Most of the poor do not have a salary, a retirement plan, or a bank account. The World Bank‘s latest estimates show that there will still be around 1 billion people living below $1.25 per day in 2015. Furthermore, the number of people living between $1.25 and $2 has almost doubled from 648 million to 1.18 billion between 1981 and 2008.
It is time for experts to understand that a poor Nepalese woman is just like any other woman in the world. She is not less rational than an American school teacher in Vermont – quite the contrary. Banerjee and Duflo argue that, precisely because the poor have so little, they put much careful thought into their choices: The poor have to be sophisticated economists just to survive! The World Bank‘s Voices of the Poor was a large research initiative which “collected the voices of more than 60,000 poor women and men from 60 countries, in an unprecedented effort to understand poverty from the perspective of the poor themselves.” Most members of the development community welcomed the report; however, nothing has truly changed.
The fight against global poverty has proven to be an extremely difficult task. Billions of dollars have been spent on anti-poverty initiatives, but many question the efficacy of such projects. The authors of Poor Economics, Abhijit V. Banerjee and Esther Duflo, believe development policy is constantly driven by what they call the three “Is” – ideology, ignorance, and inertia. How is it possible to send a robot to explore Mars while at the same time 800 million individuals go to bed hungry every night? Is poverty more complex than rocket science? Maybe we should follow Ernesto Sirolli’s advice: Shut up and Listen to the Poor!
Watch Ernesto Sirolli’s TED Talk
Is poverty a truly complex issue or should we just ‘shut up and listen’? Let me know what you think!
1) I encourage you to read “World Bank Mired In Dysfunction: Mess Awaits New Head,” an article published in the July 16 issue of Forbes Magazine. The article is a bit long…It explains the culture of corruption that is creeping into the World Bank.
2) Here you can access a summary of the latest statistics published by the World Bank regarding the state of global poverty.
Let’s play a fun game and learn a little bit more about foreign aid. I would like you to post a short comment answering two questions. Please, do not search for the answers. After you post your comment, watch a short video from the One Campaign. Feel free to comment again and let me know your reaction! Please, answer the questions before you watch the video.
Here are the questions:
1) What do you think about USA foreign aid?
2) What percentage of the USA budget do you think goes to foreign aid?
Now, watch the video here. What did you think?
Jeffrey Sacks believes that in order to eradicate poverty, rich countries must provide $195 Billion per year over twenty years in foreign aid. He argues that rich countries must help the poor. On the other hand, William Easterly and Dambisa Moyo believe aid does more harm than good and poor countries must rely on one simple idea: When markets are free and the incentives are right, individuals will find ways to solve their own problems. Who is right…? We simply don’t know.
Photograph by Foreign Policy Magazine
I was born in a small rural community in Panama. My family did not have much. We owned a two-bedroom house with a small living room and a decent kitchen. Our latrine was in the backyard and my grandma cleaned it almost everyday. We had running water and electricity; however, power and water outages occurred frequently. I was dewormed at school and my mother attended several farming and baking seminars sponsored by USAID. I consider myself a product of foreign aid. I was exposed to anti-poverty programs my entire life! Were they successful? Well…I think so, but maybe I was lucky…perhaps my family’s success is just the exception, not the rule.
In “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty” Abhijity V. Banerhee and Esther Duflo recognize ‘experts’ do not know how to effectively help the poor. The authors encourage ‘experts’ to embrace Randomized Control Trials (RCT) as the most efficient way to understand the nature of poverty. RCTs are extensively used in medicine to evaluate the efficacy of new drugs. Poor Economics argues that many anti-poverty policies have failed due to the insufficient understanding of poverty. We need to learn more about the economic lives of the poor and how they make decisions! Banerhee and Duflo believe ‘development experts’ should leave their offices and go to poor communities, interact with the people, and study the richness and complexity of their lives. This book will not explain whether aid works or not, but rather particular instances when aid did some good…or not.
Watch Esther Duflo’s TED Talk
Poor Economics was published in April of 2011 and it has attracted a lot of attention. Many have praised it and it has won numerous awards, including the Financial Times and Goldman Sachs Business Book of the Year Award (2011). Many have also questioned the arguments presented in the book and the effectiveness of RCTs in the development field, among them Martin Ravallion, Director of the Development Research Group at the World Bank.
Please, follow my blog! My next entry will consist of a more specific explanation of RCTs, and an analysis of ‘poverty traps’ and hunger.
Abhijity V. Banerhee and Esther Duflo
 “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty” Abhijity V. Banerhee and Esther Duflo – Chapter 1