What many economists fail to understand is that poor people are no less concerned about improving their lot and that of their children than rich people are.
Interpretation
Both rich and poor people share a common desire for better lives and futures for themselves and their children.
The quote by Theodore Schultz emphasizes that the aspirations and concerns for improvement in life are universal among all socioeconomic classes. It highlights the misconception that poor individuals are less motivated to seek better opportunities for themselves and their offspring, when in fact, they possess the same drive and determination as those in wealthier circumstances.
In practice
In a discussion about social programs, one might say, 'As Theodore Schultz noted, poor people are just as motivated to improve their lives and their children's futures.'
People who are rich find it hard to understand the behavior of poor people. Economists are no exception, for they, too, find it difficult to comprehend the preferences and scarcity constraints that determine the choices that poor people make.
A banker who is allowed to borrow money at X and loan it out at X plus Y will just go crazy and do too much of it if the civilization doesn't have rules that prevent it.
It is my guiding confession that I believe the greatest error in economics is in seeing the economy as a stable, immutable structure.
An economy can survive with 10% of the population insolation. It can't survive when 50% of the population is in isolation.
If you're totally illiterate and living on one dollar a day, the benefits of globalization never come to you.
Economic policies absorb almost the entire attention of government, and at the same time become ever more impotent. The simplest things, which only fifty years ago one could do without difficulty, cannot get done any more. The richer a society, the more impossible it become to do worthwhile things without immediate payoff.
That economic decisions are made without certain knowledge of the consequences is pretty self-evident. But, although many economists were aware of this elementary fact, there was no systematic analysis of economic uncertainty until about 1950.
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