Two Interventions in Economy Engaging in Agricultural Reforms

Imagine you are an elected representative (like an MP or a congress person) in the government of a developing nation. According to the reports by the Ministry of Agriculture and the Food and Agriculture Organization (FAO), while your country is not starving, productivity in the country’s agricultural sector is much lower than it could be. Because of this, the Ministry of Economic Development (MED) and the World Bank recommend that some sort of agricultural reform be undertaken as a means of enhancing prosperity in your country. As part of their assessment, the MED and the Bank have identified several opportunities for intervention. These include:
1) Collectivist land-ownership practices throughout the countryside
2) Patriarchal institutions limiting female labour market participation
3) Child labour laws preventing children under 12 from working
4) Inefficient irrigation infrastructure limiting rural access to water
5) A surplus of unemployed, ‘left over’ men congregating in cities
In 300 words or less, develop, discuss, and justify up to two interventions that you will implement in this economy. Do not restate any of the sentences contained in this question. Use examples from the lecture and class discussion to support your answer. Outside information will be accepted, but we will fact check any and all claims we cannot immediately verify.

CITB08 – ECONOMIES OF CITIES (MIRRON) – Lecture Notes Week 1 – Jan 3rd 2017READING 1A – John Mirron; THE ORGANISATION OF CITIES: INITIATIVE, ORDINARY LIFE; Charles Stelly • Sociologist• “Wars make states and states make war”Michael M.• Division of laboro Has each person specializing in a certain tasko Requires command and control o Leads to loss of autonomy§ Autonomy: the right of an organization, country, or region to be independent and govern itself o There are tradeoffs w/ division of labor • Sate organizes production to realize benefits of teamwork All-Encompassing State • All decisions are made centrally (by the state)• Is cumbersome (inconvenient/complicated) in operation and is unable to fully incentivize teamwork • State can decentralize in several ways Microstate• Small groups of people making their own decisions and working together cooperatively• Competitive markets serve the interests of the state better then cooperative or consensus based approaches Decentralization • Incentivizes teamwork, creates wealth, and leads to a market economy and on urban economy• Is the process of redistributing or dispersing functions, powers, people, or things away from a central location or authority (government)What is an economy?• Production and allocation of goods & services Why produce goods?• For the state and its people to use/consume (i.e. gift to others or exchange)Market?• Voluntary exchange of goods among purposeful individuals absent reciprocity • Presupposed rights (entitlements) to ownership, possession, use and sale• Homogeneous products• Enough traders (buyers & sellers) to ensure no monopoly• Freedom to participate (or not)• You do not know anything about the ‘producer’ (i.e. do you know which farmer grew the apples you bought?) State?• State as governance -Action by political actors • Subjects -Persons subject to governance by the state • Consent by subject -Approval, deference, or acquiescence• Rule of Law (no one is above the law) enables legal privilege -Subjects may do anything not expressively forbidden (by the law)• Laws may grant rights to some subjects and oblige others to respect (not violate) those rights -Ex: Private land was created; few were able to buy land thus became private land owners & others who could not simply had to respect the privately owned landAs purposeful individuals, what motivates political actors? What are their interests?• Security (survival & internal orders) and well being (including protection of moral codes) of its people ß ‘The Commonwealth’• Security and well being of the state as currently operating and one’s place (power) in it • The position of those who are disadvantaged or opposed and other causes seem to be neglected or abused (e.g. environmental protection)• Self-actualization that arises from the exercise of power (ex: respect, status, authority) [Nietzsche-power] and/or accumulation of wealth ß‘Aggrandizement’Governance?• Outcomes arising from actions of political actors o Outcomes include action (e.g. law, regulation or subsidy) and inaction• Governance as the set of political actors with sufficient interest in the outcomes of governance to be motivated to participate How might have State(s) originated?• From a population autonomous (independent) by nature, a state enables security, clarifies rights of each party in a dispute, prescribes remedies, and adjudicates and enforces a settlement • Teamwork & cooperation – the central belief of a community – bringing them (people) together Decentralization (and Entitlement?)• State might delegate it authority to an agent who acts on its behalf• With decentralization, the state assigns (makes) decision to an agent and does not intervene in each decision that follows o The agent need not always act in the way that the state might prefer • Entitlement is a form of decentralizationo The state designates rights, and remedies to individuals, or guarantees access or transfers that cannot be superseded by the state Why Decentralize?• Acknowledgement of a moral code• Competition between state and organized religion for hearts and minds • Reduce bottlenecks in governance • Local concerns may vary (i.e. the state government cannot know what may be going at street level)• Permit state to focus on most important question• Provides incentives for agents • Promote self-actualization• Orderly succession of government How urban economy came to exist• Granting of land (real property) as a joint venture between state and “owner”• Protection of personal property• Law of Contracts• Family rights and urban home ownership• Municipal Self-Government• The government does this to earn money and utilize the land more efficiently READING 1B: Bairoch, P.; CH. 2 THE URBAN REVOLUTION: ITS BEGINNINGS IN THE MIDDLE EAST Paul Bairoch• Born 1930; Died 1999• Economic HistorianMain Ideas • In the Middle East, first major instances of trading (commercial) cities• Prerequisiteo The local economic and especially agricultural support base responsible for the city’• Phonetician commercial cities exemplify this o Settled farmers and artesiano Resemble Palestinianso The lands they occupied were fertile due to irrigationo “Idea” of agriculture was passed around• Diffusion of knowledge and civilization1. Trade – goods produced and exchanged2. Information – people find out info. Through merchants about food, clothing, roads, etc.; Emergence of Agriculture• Domestication of animals and herding od sheep in semi-desert areas• Dry crops• Mesopotamia – Tigris & Eupharis was very rich area b/c every spring the water from the mountains would re-fertile the landOther Info. ü Catal Huyuk – The First City! ü A lot of movement of people ü Large empire productions & demolitionsü 825 B.C. – Major trading cities were in the Middle East Development of cities in Middle East• Before these developments, people usually live in small human settlements• Sumerian cities larger in areaHow and why did cities get large?• Capacity as retailer to farm in its hinterland• Capacity as traders to the outside world• Capacity as producers of goods sold elsewhere• Capacity exploiter of agricultural surplus• Capacity center of state security• Capacity center of state administrationü Early cities had a lot of trades and handcraft activities Cities cope with problems of urbanization?• Ensuring adequate clan water supply• Handling waste and garbage • Ensuring efficient flows of people and goods within the city• Ensuring adequate income or consumption by residents• Ensuring adequate…The city-states of Mesopotamia• Ex: City of Ur• No protection if you’re a city without stateo If the emperor is not living in you city he might not care about your city as muchPhoenician City States • Notably produced glass• Also sold services such as construction • Created string of coloniesAdvances in Ancient Warfare• Keeyan Hypothesis: Focus on speed, strategy and intelligence and overwhelming force to avoid stalemateWeek 2 – Jan 10th 2017READING 2A – Chapter 2 – STATE ECONOMY & CITY: A RECONSTRUCTION (MIRON) Prehistory • Original governance as microstates (people living, traveling together)• A lot of marriages between bands, which then came to become tribes o Tribes are group of bands linked by marriage§ Increase in gene pool§ People had to trust each other*• Trade involves substantial risk (highly dangerous as you may be killed during the travel) • Band to band trade was prominent (Redistribution Exchange)• Absence of rule of law Ancient World• Beginning of time to Roman Empire (200-300 B.C.)• Communities require specialization (teamwork) hence command and control• Communities enable residents to do and have things different from rural life • Cost of shipping produce and goods to the community must be prohibitive • Trading, first banks of settlement, and then currency developmento *Families dispersed through various towns & trust is key thus the basis of trade • 600B.C. – Greek invented currency Settlement• Spatial concentration of population o Not necessarily capable of producing to meet all its wants locally Trading City• Larger and more important as source of incomeCommercial City• City firms plan, design, finance, organize, fashion, fabricate, assemble, refine, market and or distribute a product/service primarily for markets elsewhere • Usually emerge from trading cities Roman World• City construction and the state• Flows of tribute in kind created need for market exchange• Trade in slaves, minerals, grain, oil, wheat, etc.; • Tax Leakage (corruption)• Losses from piracy and or shipwreckRoman Law • Legal laws are applied coherent (legal codification) • Stoic ethical thought from Stoya (everyone in society needs to be treated equally despite social or class differences)• Lack of market system• Right to individual ownership• Regulation of common calling (Professional Standards)• Bailment & Negligence• Warranty • Just fair price • To get people’s respect, had to own property • Bailment is right to possess someone’s item for a particular period of time or till the item is fixed • Merchants accountable for products they sellEarly Medieval Western Europe• Roman empire gone • Emergence of great lords• Decline of Roman provincial cities• Absence of free labor • Survival of Trading CitiesThe Rise of Towns• Town as escape from great lords (provided liberty & privacy)• Rivalry between crown & great lords• Freedom of town residents • Emergence of trading cities & then commercial cities READING 2B – Chapter 1 – BEFORE EUROPEAN HEGEMONY: THE WORLD SYSTEMMain Ideas• 1250 A.D. – remarkable moment in history• Never before had so many regions come in contact with one another• Roman & Chinese empires had indirect contact but connections declines as these empires fragmented • 7th & 8th century – Islam unified as much of the region between Europe & China• 11th & 12th century – System of exchange new wealth and growth in culture• System: a set of connected things or parts forming a complex wholeo Things here are towns with significant amounts of trading activity What enabled world system?• Sufficient surpluses of production locally to make trade possible • Organization of production – through division of labor – to achieve these surpluses• Extensive network of traders (based on agreements, trust and accountability)• “Free labor an important antecedent • Archipelago of towns along trade routes• Technical knowledge was not widely available, and production was largely “gathering up”Middle East, Asia, & Europe – common ideas/things• $ & Credit • Pooling of capital & distribution of wealth• Merchant wealth The Historiography Problem• We assume once we have found something, we assume that’s how the history evolved, but this (our assumptions) does not necessarily have to be true • Historians observe “outcomes” then construct narrativesEurope pulled ahead after 1350?• Fragmentation of the overland trade route to Europe • Black death decimated cities along major trade routes • Population decreased by 10% in towns• Ability to trade, produce, and surplus were undermined• Sea routes to Asia reduced importance of Middle East• Access to wealth of the ‘Americas’READING 2C – Chapter 2 – EUROPEAN CITIES AND STATES Main Ideas• Wars make states and states make warso Need for financing and organization to make war or defend oneself • Production “surplus” in the economyo To be diverted to finance war• Surplus division of labor & urban economy o “Command & control” industrial goods vs. craft goods• Cities needed: “weapon of war”o States are richer with a city, poorer without• States make war…o Security & Aggrandizement o As a result, states are enlarged and become fewer in ‘number’o Size of state limited by ability to control over large distancesEurope at 990 Century• Europe not an entity• Clusters of trade: silk roads• Rulers were conquerors, tribute-takers; • Subordinates were used by rulers for their own interestsStates & Coercion• 1490; armies largely mercenaries-hired by the campaign-and citizen militias; standing armies uncommon• Within larger states, communities, guilds, churches and regional magnate had some immunity and self-governmentCities & Economy• Systems of cities (linked by trade) distinct from systems of states (linked by coercion)• Impact of plague on the size and economies of cities• Dispersion of production locallyCity-State Interaction• Cities as central places for serving hinterlands vs. city systems as networks of places (further apart)• With state control of imports, central place systems are typically national in scale• Cities as containers and distributions points for financial capital• States need capital and as economy becomes more…Transectories of change for the State• Coercive Intensive: o Land-base economyo Reliance on local warlords• Capital Intensive: o More manufacturingo More wealth o Commercial urban economy with emphasis on trading and accumulation of capital and expertise Uncomfortable relationship between city and state• City as source of capital & expertise• City also as source of rebellion & resistance Convergence to a Common Form of State• Driven by need to mobilize for war• Success at war requires mobility and the application of overwhelming force: not possible without much capital and expertise• City states fell by the wayside, as did federations and religious organizationWeek 3 – Jan 17th 2017825 BC Prominent cities: Memphis, Tyre, Nimrud, Bahylon375 BCProminent cities: Memphis, Bahylon, Syrachau, Carthago, Crrthi, Athens145 BC Prominent cities: Alexendria, Rome, Antioch (trading city), Rayy362 ADProminent cities: Rome, Gast, Antioch528 ADEastern Roman Empire survives737 AD Empire EffectCenter of Trade1028 ADEmergence of Baghdad1212 ADProminent cities: Venice (arose due to trade), Jenova, Chiroch, Baghdad1478 ADProminent cities: Milan, Venice, Greece, ParisLondon still not huge 1600 AD New world exploitedNaples …1715 AD London is dominant (still not large as Roman Europe) London (500,000) – Rome had x2 the population1815 AD Prominent cities: London, Naples…READING 3A – Adam Smith- An Inquiry into the Nature and Causes of the Wealth of Nations. www.gutenberg.org. Book III: Chapter 3.Adam Smith• 1723-1790• Prof: Moral Philosophy4 Main Ideas – Smith’s Principle Ideas• Division of labor (production mainly “gathering up”)• Wealth of nations as its productive capacity • Market as invisible hand• Individual autonomy enhanced by market o Market replaced need for command-and-control Landlords after the end of Roman Empire• Villas become fortified castles• However, harbor, aqueducts (channels) and roads associated with provincial cities • Cities also had access to merchants and artisans• Tradeoff: fortified estate (can easily be attacked) vs. fortified provincial city (located near water, and can easily attack invaders)Towns at end of the Roman Empire• Towns inhabited mainly by artisans• Town folks lived in servitude serfs just like peasants• Shopped their goods from place to place • Local ruler taxed traveller & their goodsSmith, how did free towns emerge from these?• Local ruler could grant traders exemption from taxeso Otherwise servile, these were free traderso Free traders paid a poll taxo Free traders status initially at pleasure of local ruler• Similarly, cities become “free towns”• Farmland around town let to townsfolk annually • Later farmland granted to town in perpetual at a fixed rent: improved security of food supply• Eventually, exemptions ceased to be personalo Belonged to townsfolk collectively; hence free town• Town becomes legal identity o Freedom (from crowns tax collector) and responsibility for citizensHow did free towns contribute to liberty?• Liberty came to towns before countryside• Towns became corporations• Free town collects own tax revenue with own bailiffo Townsfolk jointly answerable to king for tax• Freed from insolence of king’s officials• Townsfolk granted property privileges by charter• In England, townsfolk exempted from suit to courts outside the city, pleas of the crown exceptedHow powerful did some free towns become?• In some case, king agreed to additional taxes without consent of town• Here, towns sent deputies to a general assembly where they might join with the clergy (ministry) and great lords to grant additional taxes to the king• Towns were a counter balance in that assembly to the authority of the great lords • In other cases, cities generally become…. Why and how did wealth accumulate in free towns?• As liberty and security become established in cities, rural folk still exposed to great violence• Rural folk content with subsistence living; to acquire more would only tempt great lord to seize it • In contrast, townsfolk had property rights able to better themselves and quire the luxuries of life • Crown wanted to diminish power of land lordsWhat was traded by the free-towns?• Goods from rich countries in exchange for coarse and local produce• Taste for better goods introduced, where it before didn’t exist• Shipping expensive and risky• Taste came in demand, merchants established manufactures to produce locallyManufacturing (Smith)?• Large country needs manufacturing activity• “Fine goods”• In a large country, clothing and furniture are the produce of own industry• No “manufacturers”, Smith means of the finer and mere improved goods as are fit for distant scale• Poor countries, may have no manufacturers; rich countries may abound (flourish) in them Manufacturing in Locale?• Manufacturers also as refinement of coarse production• Although coarse produce couldn’t support the expense of shipping, refined manufacture can • Greatest effect of foreign commerce is the extension and improvement of agriculture ü Liberty drives wealth! READING 3B – Adam Smith - An Inquiry into the Nature and Causes of the Wealth of Nations. www.gutenberg.org. Book III: Chapter 4.Main Ideas • Increase in and riches of trading and commercial cities contributed to improvement of the country side:o Spurred production of rude farm produce o Merchants bought farms and invested in improvements§ This tells us…§ How political, economic and social are related when we talk about economic development § How democracy spreadso Commerce and manufacturers led to order and good government, and with them the liberty and security of individuals, among the inhabitants of the country, who had before lived almost in a continual state of war with their neighbors, and servile dependency upon their superiors ü He’s talking about how growth of cities made farming better, then the farming equipment and then democracy in country sideEconomy of an Estate• Estate as autarky (Villas are its own economy)o Produce what you need locally with the local workers• Estate workers (serfs & tenants)• Great lords expenditures o The greater number of workers, the better• Retainers (entourage) o Workers will do anything “we” (landlords) wanto Retinue…Feudal Society, why crown weak?• Crown is a great lord too• Each had power and sources Federal laws emerge?• 2 purposes of law o Great lords & workers needed each other• Feudal (Medieval) law as a bargained “constitution”• Disorders and violence• CoercionHow did trade contribute to economic freedom?• Feudal wealth evidenced as a rustic hospitality• Tradeoff between consumption of fine manufacturers and retainers• Maintenance of artisans and their employers• Economic freedom (from tyranny of any one)o You get to choose who you want to trade with § The benefit of tradeHow did trade affect the behavior of great lords?• Fewer retainers • Fewer tenants and serfs • Long term lease (partnering with tenant) as an incentive to improve efficiency• Greater agricultural surplus o Great lords lend out parcels of land • Great lords become work and now can no longer control peopleUnintended consequences of trade• Social revolution (Liberty in cities)• Unintended by great lords• Unintended by merchants• Invisible hando Market place is making society better off o An unintended consequence o Def: The unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically is the ‘invisible hand’Why was cultivation slow to advance compared to commerce and manufacturers? • English law protects agriculture• Reduces incentive to improve farmingWhat happened elsewhere in Europe?• Italy: o 1st to develop foreign commerce; o Geneva & Venice were critical here • Spain & Portugal: o Next to develop foreign commerce;o Largely exploitation of colonies abroad• France: o Develops foreign commerce later, still, but still ahead of England Why was England so late? & Then grow big so after?• Smith got no answerSignificance of Capital investment• Capital investment is precarious and uncertain (ex: Lombardy and Tuscany, and Flanders)• If capital investment is flightily, where are the long-lasting local effects of wealth • Durability of agricultural investment because it can’t easily be taken apart and reassembled aboard• Capitalism doesn’t think about what will make the region prosperous READING 3C – Tawney, RH. 1926. Religion and the Rise of Capitalism: A Historical Study. New York NY: Harcourt, Brace, and World. 102-132.ü Religions constitutes for good and fair behavior, and it can help you make a good decisionü Religions creates codes of behavior, affecting the economyRichard Henry Fawney• 1880-1962• Professor of Economic HistoryMain Idea• How was religion thought about social and economic life impacted in the transition from medieval to modern social organization?• In Europe, 15th and 16th centuries are crucial: rise of prices, capital interest and land question• Modern social organization required that religion shift from being the keystone of society to a department within itEthics in the Economy• Not a question of religion but rather moral codeo Decent life and respecto Fulfillment of one’s own life ambitionso Fairnesso Environment and other ethicsReligion and Ethics• Religiono Place of worship and reverence • Ethico Set of moral principles relating to form of conducto Moral: acceptance code of behavior towards otherso Code: systemic collection of rulesCan national ethic be synthesized?• No such thingCentral paradox of Religious Ethics• Those w/ courage to turn the world upside down – motivated by a power of which they are humble instruments – act so as to reject their own humility• “The moment your moral code tells someone else what they should or should not do makes you not humble”– B.M.• Calvinism nicely exemplifies this paradoxCalvinism• John Calvin, 1509-1546, a lawyer