Chapter6 - Chapter 6 The Wealth of Nations Alice Toe was...

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Chapter 6 – The Wealth of Nations Alice Toe was three years old when she contracted tapeworms. Alice lives in Monrovia, Liberia, the capital of an impoverished country in West Africa about the size of Virginia. Unfortunately, her family could not afford to send her to a doctor. Soon, her stomach was enlarged and her hair was bleaching; indicators of malnutrition caused by tapeworms. Alice almost certainly was infected by tapeworms from drinking contaminated water; her drinking water comes from a neighborhood well. Filtered water, which costs about $3.00 per gallon in Liberia is too expensive and must be transported by foot. Tapeworm infection is easily treated with a pill that costs only about five cents , and lasts for six months. But Alice’s family has no access to this either. Fortunately, an American missionary happened to meet Alice and she received this treatment. Without help, she likely would have died. Alice and brother Reuben. Alice’s story is anything but unusual. Many thousands of children die in Liberia each year from illnesses like tapeworm. One of every eight children born in the world’s poorest nations do not reach the age of five years, though many could be saved with treatments that literally cost pennies. One and a half million children die each year from dehydration from diarrhea. Diarrhea is hardly the only scourge in poor countries. Three million children die each year from bacterial pneumonia, even though treatment for this is costs only about twenty-five cents. Children in rich nations rarely die from these diseases because they benefit from clean water, good nutrition and more medical knowledge. Wealth is not important for wealth’s sake; wealth (and economic growth) is important because wealth helps us live longer, healthier, and often happier lives.
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The Big Questions The biggest and noblest questions in economics regard the wealth of nations. Here are three: Why are some nations richer than others? Why are some nations getting rich faster than others? Can anything be done to help the poor nations become rich? These questions are about economic growth, the rate at which a nation’s average income level grows. Finding the best answers to these questions is quite literally a matter of life and death. These are not new questions. Adam Smith wrote his seminal economics text in 1776, which many believe launched economics as a discipline. The full title? An Inquiry into the Nature and Causes of the Wealth of Nations . Economists are still driven to ask these questions today. During much of the twentieth century, macroeconomists focused on short run economic fluctuations such as recessions and, of course, the Great Depression. But over the past two decades, macroeconomics has re-defined itself as a discipline which cares first and foremost about economic growth. Consider this quotation from 1995 Nobel Prize winner Robert E. Lucas: "Is there some action a government of India could take that would lead the Indian Economy to grow like Indonesia’s or Egypt’s? If so, what
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Chapter6 - Chapter 6 The Wealth of Nations Alice Toe was...

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