Economics divides itself into two. Macroeconomics is about how the whole economy works, and it's what we always see the talking heads on TV chattering away about. Inflation, the deficit, interest rates, and so on. Macroeconomics is also the part of economics we don't know much about, and much of what we think we do is wrong.
Microeconomics is the details of prices and markets and interactions between people. Much of what we know here is correct even if many people would prefer that it weren't. For many people would much prefer it if humans didn't go around acting so human all the time.
Those words, macro and micro, also give us a clue. Macro means large, micro small. So, if you want to be a big and important person -- or a talking head on TV -- then you'll want to lean on macroeconomics. You know, chatter on about the big stuff.
But the bit that really makes the difference to how life is lived is that small stuff. As is true in life itself of course -- it's the little things that make life enjoyable and worth living. Further, with micro, we can do experiments and really zero in on what actually works.
The news is that the Bangladeshi government has understood one part of this sort of research and is even doing the right thing about it. It's this: “The government's school feeding initiative is set for a major expansion in 2027, with plans to increase coverage from 3.1 million to around 11 million students at government primary schools across the country.”
We could just say that parents should feed their kids at home and that's that. We could also say that isn't it great that the kids get a lovely meal from the government? But that's not really the point or issue here, it's this: “Ensuring student attendance.”
A lot of research has been done on who sends their kids to school and why. One alarming result was that when child labour is made illegal, then fewer poor children go to school. The logic is that some people are so really poor that any child has to start work so that that child brings in enough money to feed that very same child.
Poor parents know that education is a good thing, it will make the children richer when they're older. But it is necessary for that child to survive long enough to get older.
Research shows that such poor families might well send one or some of the children to school and others have to go to work in order to bring in the necessary money to feed all of them. Of course, it will be more likely to be girls who are made to work while the boys learn to read and write.
If we make child labour illegal, then this will lower the wages the children can receive when working. This is obvious and logical as people will exploit those working illegally more than those working legally. If the wages of the children working fall, more of the children have to work to be able to feed all of the children.
Note that economics is not saying this should happen. It's certainly not approving of it happening. It's just noting that this does happen.
We'd prefer there to be no child labour, of course we would. But as we see, just making it illegal can actually increase the amount of it.
So perhaps we require a different way of achieving our goal?
One of the basic findings of that whole field of microeconomics is that people respond to incentives. In fact, Charlie Munger (he was Warren Buffett's partner) used to say: “Show me the incentive and I'll tell you the outcome.”
Another way of putting that same point is that we should try to tempt people to do the right thing rather than attempt to force them. You know, promising a toddler a sweetie often works better than slapping them in getting them to do something.
So, to restate the poor children and school problem. The parents can only feed the child if the child works, so therefore the child doesn't go to school and is thus trapped in lifelong poverty.
What if we feed the child at school? Then they will both be fed and also be educated? And this time, all the kids can go to school because all the kids will be fed.
This has been studied a lot. There are whole shelves of research in libraries on this. As far as anyone can tell, this works really well.
The World Food Program from the Americans pays for this in many countries and is going to help in Bangladesh. There's also a charity, Mary's Meals, which does the same thing for whole countries. The charity does it possibly better and certainly cheaper than the government, but that's another story.
We've got something that is going to make that future world better. Children will be fed, that's good, but also more children will gain more education.
I personally don't like macroeconomics but a lot of that is because I simply cannot get my head around the advanced mathematics used in it. A failing of mine rather than the subject perhaps.
But I also like this microeconomics because it provides answers to how to make the world a better place in simple, pragmatic, doable ways.
We can just feed every child at school. Feeding every child at school works, makes the world a better place in the future. So, we should do that then.
