Thursday, August 31, 2006

Fighting Poverty for Dummies 3

Big picture guy on deck.

Jeff Sachs

Who’s Who? American economist and director of the UN Millenium Development Project. Mentor to Bill Gates and key economic advisor to a bagload of developing countries.

Must Read: The End of Poverty: Economic Possibilities for Our Time and his regular columns on economic development and the environment in Scientific American

What’s the Big Idea? Hard to do his subtle thinking justice in a few paragraphs. While my other Jedi poverty fighters focus slim, Sachs goes wide. Here are some highlights:

Sachs wants to lift the hundreds of millions of people living on less than a dollar a day out of extreme poverty in the next 20 years. He believes it can be done with a serious investment on the part of wealthy countries, a change in unfair international trade policies, and the application of new and powerful economic, environmental and technological tools.

Though he’s a visionary he’s also a pragmatist who breaks down that larger goal into practical and realistic steps.

Sachs observes that most folks think the anti-poverty efforts of the past 50 years have been a waste of time. He rejects that view as nonsense and decisively demonstrates just how effective many development efforts have been and how booming economies around the world—in places like Southeast Asia, India and China, for example—have transformed impoverished nations and delivered hundreds of millions out of extreme poverty in the last 20 years alone.

At the same time, he recognizes that a lot western efforts to do good for the world’s poor don’t cut it because they usually go with a one-size-fits-all approach that doesn’t take local cultures, environmental conditions or political realities seriously. He kicks the World Bank and the International Monetary Fund hard in the ass. In the Gospel According to Jeff, the technically phat and ideologically happy tend to impose intrusive changes that are often too complex and technical, unacceptably socially destructive, and environmentally disastrous.

Sachs has developed a new analytical development tool he calls “clinical economics.” Basically, he carefully breaks down the history of economic development and uses his experience helping developing countries bust out endemic poverty to create what he calls the ‘ladder of development.’ He argues that nations typical advance up the ladder rung by rung, with very specific economic achievements and social changes characterizing each rung. He identifies common obstacles to advancing up each rung too.

Here’s his third term of pregnancy insight. Sachs argues that many countries—particularly in sub-Saharan Africa—are so poor and face so many obstacles to development that they can’t even get on the first rung of the historical economic development ladder. Nations where the vast majority of people live in abject poverty and who face a host of unusual obstacles to development like widespread malaria and a lack of useful farmland, for example, simply can’t ‘pull themselves up by their bootstraps.’ They require a carefully calibrated development approach based on practical, situation-appropriate steps backed by an intensive investment on the part of wealthy countries.

Sachs also believes that some aspects of the international economic system and international trade policies are stacked against the poorest countries. He’s no radical—the guy breathes markets—but he calls for many important changes including the end of western tariffs against agricultural imports and subsidies for American farmers because they wreak havoc on poor economies.

He calls for the US and other wealthy countries to give far more for development. Lots more than the miserly 15 cents out of every $100 of GNP the US now gives. Sachs makes a powerful argument that if the US gives what it has already promised but hasn’t followed through on a huge dent could be made in extreme poverty in sub-Saharan Africa. Hundreds of millions of poor folks could step up as a result.

Hard to summarize his specific prescriptions for various countries and regions because he insists that each situation has a unique fingerprint, but they include steps like widespread campaigns to distribute anti-malarial mosquito nets to the poorest of the poor, the building of transportation infrastructure in rural areas to increase the access poor farmers have to markets, intensive grass roots investments in widespread primary education, etc. Concrete, straightforward and doable stuff that local folks value and understand.

Sachs argues that ending extreme poverty in the next few decades is not only the right thing to do morally, but it’s the best way for the haves to protect themselves against have not extremism and the terrorist campaigns and wars that blow up when people on the bottom of the pile get sick of it. Like de Soto, he knows you’ve gotta massage the phat and the phrightened if you want your anti-poverty dreams to come true.

Who’s Walking the Talk? Let’s face it, when the do-gooder NGO crowd, the development folks at the UN and the hard core bottom line capitalists like Gates all think this guy’s the man, you gotta believe he’s onto something! Gates is pouring most of his billions (and eventually Warren Buffet’s) into Sachs’ approach, and the UN, NGO’s and many developing governments are listening carefully and shaping some of their approaches accordingly.

My Take: Sachs recognizes that even healthy economies produce harsh unfairness—he makes no claims about ending the sickening inequality in some advanced capitalist societies. And he knows corruption and bad political and local leadership can torpedo the best anti-poverty approaches. He makes no predictions about what will happen. Only what can happen.

But sometimes the right guy shows up at the right time.

I just wish he and Gates would get a second ‘celebrity’ front man so we don’t have to listen to Bono endlessly :^)

Next Time: John Perkins and an Appeal to Christian Conscience.

5 Comments:

Blogger 3wishes said...

I would like to see an organization that uses "the ground up" philosophy. Start with drilling for water,sanitizing it etc. Cant someone just get that basic part down........then carry on from there? Why are there more thinkers than do'ers? Just my thought.

11:01 AM  
Blogger Wordcat said...

Oh, you'd be surprised how many doers there are. All three of these guys (de Sota, Yunus and Sachs) are elbows deep in the real work on the ground. But yeah, doing stuff from a ground up perspective is the key--I think that's what Sachs is really calling for. He just wants to make sure the stuff on the ground is designed well--he's trying to overcome decades of donor fatigue and the attitude in the west that dollars for development are wasted.

11:17 AM  
Anonymous Alex said...

The series of posts has been interesting - I wonder if you're familiar with a discussion earlier this year over at "cato unbound" on a similar topic, something like "does foreign aid help the poor?"

11:53 AM  
Blogger Wordcat said...

Yeah, I've been following that discussion Alex. I didn't have time in the post on Sachs to go into all the controversy he's stirred up. So glad you mentioned it :^) From the debates and discussion I've seen, his critics seem to come from three places:

1. The group I would call the "incrementalists." I'm very sympathetic to that angle and even think of myself as one of those types. These are the folks that think the best approaches tend to develop piecemeal over time and that attempts at a 'grand plan' inevitably fail. I think that's the strongest argument against Sachs' approach though I'm not sure these folks have really fully grasped what he's proposing. In a sense, he's all about encouraging approaches that are very basic and time tested. Nothing fancy. He just thinks basic approaches that we know will work simply haven't been tried seriously and that millions are dying needlessly and hundreds of millions more are stuck in abject poverty as a result.

2. The second group are the hard core Adam Smith free market types. And I mean hard core beyond folks like Gates and The Economist, both of whom think Sachs is great. These are the invisible hand types who believe that if only free markets are allowed to function abject poverty will end. Sachs agrees that markets are key, but rejects the 'invisible hand' idea, as many economists do. He thinks the invisible hand people are simply being dishonest about the necessary building blocks that even rudimentary markets (first rung markets in his language) require to be successful. I agree.

3. The third group are the hard core self-reliance folks. They think aid equals 'handouts' and charity and believe this actually does more damage than good. There is something important in this point of view, but from what I've seen of Sachs and his thinking, I think he understands that too. His career as a key development advisor for a whole slew of countries suggests that he's all about local folks taking responsibility to make things work. His track record is excellent and speaks for itself in terms of his practical successes. So while I think the philosophical critique is important to raise--especially after so much paternalistic western aid in the past--I'm not as concerened about it in this instance. Again, if Gates is sold, it's hard to believe this is simply going to be paternalistic handouts.

1:51 PM  
Anonymous Jon said...

I am a strong proponent of the ending of unfair trade law. The breakdown of talks on this matter earlier this year was extrememly disappointing. And while I was disappointed in the US, I've been really upset at the Europeans who have tariffs and subsidies at obscene levels.

And I like Bono, but he's gotten so much face time that just about everybody has to be annoyed by now. Pleeeeeaase - can some other respectable (this cancels out most entertainers) famous person step up?

6:32 PM  

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