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Steady-State Stagnation Is Not an Option



Some environmentalists advocate an end to economic growth. Inside economics, and in the broader world, a heated debate has considered whether an economy can long stagnate in a steady-state. The idea that it can, is captured in the circular flow diagram that has been a fixture of many introductory economics textbooks for many decades. I argue that without the dynamism that is achieved by innovative entrepreneurs, long-term stagnation is not an option. Exogenous events, such as earthquakes, will always come along to disturb the steady-state. And when they do, only entrepreneurs can restore the steady-state. If there are no entrepreneurs, there will be decline. If there are entrepreneurs, they will not stop at the steady-state; they will seek progress. The choice is forward or backward. Long-term steady-state stagnation is not an option.



(p. 10) SANKHU, Nepal -- As the anniversary of Nepal's devastating earthquake came and went last week, Tilakmananda Bajracharya peered up at the mountainside temple his family has tended for 13 generations, wondering how long it would remain upright.


. . .


Many people here pin their hopes on promises of foreign aid: After the disaster, images of collapsed temples and stoic villagers in a sea of rubble were beamed around the world, and donors came forward with pledges of $4.1 billion in foreign grants and soft loans.

But those promises, so far, have not done much to speed the progress of Nepal's reconstruction effort. Outside Kathmandu, the capital, many towns and villages remain choked with rubble, as if the earthquake had happened yesterday. The government, hampered by red tape and political turmoil, has only begun to approve projects. Nearly all of the pledged funds remain in the hands of the donors, unused.

The delay is misery for the 770,000 households awaiting a promised subsidy to rebuild their homes. Because a yearly stretch of bad weather begins in June, large-scale rebuilding is unlikely to begin before early 2017, consigning families to a second monsoon season and a second winter in leaky shelters made of zinc sheeting.


. . .


. . . , some visitors who came here to assess the reconstruction expressed shock at how little had been done.


. . .


"It has been a horrible year," said Anju Shrestha, 36, whose shed stands on a site that once held a three-story brick house.

A neighbor, Kanchhi Shrestha, guessed her age at about 75, based on a major earthquake that occurred two years before she was born. She pulled her skirt up to show feet splotchy with raw sores.

"I will die in this shelter if they do not give me money," she said. "I have nothing to eat."

However, she added, it would be inappropriate for a person like her to demand assistance from Nepal's government.

"We cannot scold the government," she said. "If the government provides, we will fold our hands and tell them, 'You are God.' "



For the full story, see:

ELLEN BARRY. "A Year Later, Nepal Is Trapped in the Shambles of a Devastating Quake." The New York Times, First Section (Sun., May 1, 2016): 10.

(Note: ellipses added.)

(Note: the online version of the story has the date APRIL 30, 2016, and has the title "A Year After Earthquake, Nepal's Recovery Is Just Beginning.")






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