Thursday, February 07, 2008

Message on Economic Welfare...

From the conclusion of Debnath Guharoy's article in The Jakarta Post titled This is a good time for business to remember Robin Hood,
If cub bike demand is flat, can motorcycle manufacturers look at assembling big bikes for the top end of the local market? Can cosmetics companies examine the demand for an upmarket chain of salons? Can fast-food chains open more outlets in more metro areas? Can the telcos license more resellers to push broadband for them? Can everybody who can afford it please subscribe to cable TV, newspapers and magazines? I could go on and on but the message is simple: Sell more high-end goods to the fortunate minority because they can afford it, and create new jobs for the poor because they need it.

I am wondering the Guharoy's main message as bolded above. How economic policy could support such "normative" idea? It sounds like ask the economy to give charity...






3 comments:

Berly said...

and may not be statistically correct as well.

The high-end goods to the fortunate minority may not provide many jobs. The Prada shirt and Rolex watch do not require, even hardly could be produced with, high number of low income laborer.

Of course it depend on how high end the goods and how fortunate the minority that he addressing at.

Historically it is the drive to manufacturing goods that targeted not-so -very-rich buyers, mostly in east asia, that provide most job for the poor.

Rajawali Muda said...

hmm, I kinda disagree with the term charity, it might be a little bit normative, but it is normal in development economics right? the guy (Debnath Guharoy)was only reformulating the even more normative thinking of Nurkse, et.al, with the doctrine of balanced growth policies, although I respect some thoughts in demand supported development, it should be seen in extra caution, first, increasing employments without adequate supply of goods will only increase inflation (the kalecki-inflation), as the wage and demand increase have lack of support from the supply.Second, how about rural-urban differences? say, that we increase employment in urban areas(which is more likely in creating high ends goods)what would happen? simple todaro model, says that the probability of acquiring job has magnifying effect on migration,hence, employment in urban is not very effective, it only creates the higher burden to the cities..btw, Berly's argument went to far, the guy was talking about bikes, and McD's not Rolex or Louis vuitton..hehehee..

fajar said...

salam kenal