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R H
  • R H
  • Chicago, IL
  • United States

TEDCRED 30+

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Why do we NOT invest effectively in the poor and marginalized so they can participate in the global economy?

Nearly half of the world's population cannot effectively participate or contribute to the global economy. Basic economic theory holds that each 'participant' in the economy is a 'unit of productivity' providing a return on investment. In other words, it's more profitable to have people working and consuming than not. Yet nations continue to allow and accept that the poor and marginalized are - to borrow from another popular phrase - 'too big to succeed'.

In my view, the (relatively) small investment in infrastructure, education, and basic healthcare in the poor and marginalized will be more than made up by their increased productivity and spending. The rich think they're rich now, just imagine the wealth created by having 3 billion more people buying their stuff? I know there are obvious problems with this: corruption, unified effort, immediate ROI, etc. - but why is this such a 'tough sell' to national leadership? They're always looking for ways to increase the tax base.

3+ billion people now contribute to the world gross productivity. What if that were doubled? To me, this is the next threshold of economic growth -bringing in those who have been left out. Yet, we don't even talk about it. What do you think?

Topics: economics society
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    Oct 31 2012: Hi RH,

    Excellent point. This topic ties very nicely into another discussion: http://www.ted.com/conversations/14360/debate_our_culture_isn_t_ada.html, in fact, doing what you suggest here would be a gigantic leap in our cultural evolution, but I think the matter you brought up is one of the most difficult problems to solve:

    Our economy is modeled very closely around what in game theory is called a "zero-sum game" (http://en.wikipedia.org/wiki/Zero-sum_game). In such a game the sum of all the participants' gains is exactly equal to the sum of all the participants' loses. Simply put, if one gains 10 dollars, a total of 10 dollars are lost by the other participants in the game. So given this economic model, what you are suggesting, although really cool and I am for it, is totally impossible.

    In order to bring those poor countries to a higher economic level, those countries need to export goods, to acquire trade suprlus (money enters the country). However, in order for them to be able to export, some other country needs to import those goods, which translates into trade defficit (money leaves the country). So as the country that exports gets richer the other countries get a little poorer therefore in this current economy every country struggles to export. Everything depends on it. Lones don't work either, because if you calculate it over the entire lifetime of the loan, it actually equates an process of import (money comes in, it is being used, meney goes back to to lender with interest). So no matter how much we shuffle it and turn it on its head, when we consider the closed system (the entire world) the end result must be zero.

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