Book review: ‘The End of Poverty’ by Jeffrey Sachs

Jeffrey Sachs clearly knows what he’s talking about.  Having worked and travelled in over 100 countries in the globe, ‘advising leaders on economic development and poverty reduction’, he approaches the immensely challenging and long-debated issues within his book with several decades’ experience in the field.  And indeed, we the readers are inducted into his personal involvement in the economic development of a range of countries through the plethora of case studies detailed, from Bolivia to Poland, China to India. Sachs is clearly at pains to emphasise that he has worked in countries from all walks of GDP, and his cumulative observations affirm his belief that poverty can be ended by 2025.

A bold claim indeed! From the outset, Sachs plainly states that he is not predicting what will happen, but what can happen (p.1) if the nations in the West uphold their agreements to support countries in need with financial aid.  After painting a ‘global family portrait’ of the varying stages of developing countries (Malawi is below the bottom rung of development; Bangladesh has started to develop and has seen improvements in education and health; India is several steps up the ladder with improving technologies and skills raising living standards), Sachs distinguishes between extreme, moderate and relative poverty, and explains that the premise of his argument is that it is possible to eradicate those in extreme poverty: the approximately one billion people whose households cannot meet the basic needs for survival.  His vision of the ‘economic possibilities of our time’ (p.25) is thus:

–         to meet the Millennium Development Goals by 2015

–         to end poverty by 2025

–         to ensure well before 2025 that all of world’s poor countries can make reliable progress up the ladder of economic development

–         to accomplish all of this with modest financial help from the rich countries, more than is now provided, but within the bounds of what they have long promised.

 In the early chapters, Sachs explains why it is that the modern world witnesses such inequality of wealth, tracing back to the early 1800s when broadly the playing field was much more level.  Focussing on ‘why some countries fail to thrive’ (p.56), nine reasons are highlighted in causing an economy to stagnate or decline, including physical geography – the world’s poorest countries are often hindered by high transport costs because they are landlocked; many countries are trapped in arid conditions with low agricultural productivity or vulnerability to prolonged droughts; adverse geography raises the costs of solving the problems of farming, transport, and health, and thereby makes it much more likely that a country will be caught in a poverty trap. The idea of the ‘fiscal trap’ is expanded upon so as to make it clear that ‘debt’ can encompass an inability to tax the population because it is so impoverished; an inept, corrupt or incapacitated government unable to collect tax revenues; or ‘debt overhang’ already being carried.  Sachs also raises the interesting observation of ‘lack of innovation’, whereby poor countries lack the revenue to invest in research and development, whereas rich nations move ‘from innovation to greater wealth to further innovation’.  Sachs certainly does not underestimate the complex underpinnings of poverty.

Sachs proposes that the economic world needs to apply the discipline of health professionals, in an approach that he calls ‘clinical economics’ (p.79).  Overtly critical of the IMF with its narrow focus and overlooking of urgent problems undermining economic development, Sachs urges the development economics community to take more responsibility with the work it takes on, and to start with detailed mapping of poverty: the proportion of households that lack access to basic needs; the cost of doing business in the country; the current levels of budget spending and public revenues; whether the systems of public management work effectively; if the society is torn apart by class, caste, ethnicity, religion, or gender equality; whether the country is subject to international sanctions, and if so, what the consequences are of the sanctions for economic development.  The outcome will be development strategies that are far more effective because the right questions are being asked in the first place.

 In persuading the reader of his overarching point, Sachs discusses in depth the Millennium Development Goals: 8 goals and 18 targets to achieve sustainable development for the world’s poorest people signed up to by a congress of world leaders in 2000 (p. 211).  He is under no illusion that the initial momentum and commitment to achieve the goals remains strong, admitting that the ‘international community’s approach remains incoherent in practice’: it announces bold goals and even ways that the goals can be achieved, yet when it comes to real practice they are expressed only as vague aspirations rather than operational targets.  However, Sachs remains resolutely optimistic that the challenge is lessened by already have secured agreement of the need to address global poverty. 

 As Sachs builds his argument for how and why the end of poverty can be attained, he outlines six major areas of capital that the extreme poor lack (human, business, infrastructure, natural, public institutional and knowledge) and carefully delineates which support should come from the public sector and which from the private (p. 251).  Sachs explains that governments should finance schools, clinics and roads to avoid private monopolies and because of the positive spillover into other parts of society; they should, however, generally not provide the capital for private businesses as ‘entrepreneurs do a much better job of running businesses than governments.’

Sachs makes a strong effort to build an evidence base of examples that bolster his theory.  The eradication of smallpox, the campaign against malaria and the mobile phone revolution in Bangladesh are cited as ‘dramatic examples that prove the naysayers wrong’ – particularly those who would say that projects successful on a small-scale will not be possible when played out at a national level. 

In one of the most interesting chapters in the book, Sachs attempts to dispel the myths that greatly hinder the aims of the economic development community (p.309):

Africa needs around $30 billion per year in aid in order to escape from poverty.  But if we actually gave that aid, where would it go? Right down the drain if the past is any guide.  Sad to say. Africa’s education levels are so low that even programs that work elsewhere would fail in Africa.  Africa is corrupt and riddled with authoritarianism.  It lacks modern values and the institutions of a free market economy needed to achieve success.  In fact, Africa’s morals are so broken down that it is no surprise AIDS has run out of control.  And here is the bleakest truth: Suppose that our aid saved Africa’s children.  What then?  There would be a population explosion, and a lot more hungry adults.  We would have solved nothing.

            If your head was nodding yes … The paragraph above repeats conventional rich-world wisdom about Africa, and to a lesser extent, other poor regions.  While common, these assertions are incorrect.

Contrary to the ‘money down the drain’ myth, Sachs contends that relative to the population and the need, there has been very little aid to Africa, and thus it is no surprise that no impact has been seen.  The deep pessimism about Africans’ ability to utilise aid must be addressed; the focus on corruption and governance is exaggerated; judgements on cultural values are usually based on prejudice rather than measurable evidence.  These are strong statements made against deep-seated ideas, and it is unsurprising that Sach’s claims are not universally accepted.

In drawing to an end, Sachs emits a rallying cry for the world to take up the challenge.  Talking numbers as economists are wont to do, Sachs seems to provide a compelling picture of a task that is not as great as is feared, and can be achieved if nations (particularly the US) uphold what they have agreed to in the first place (committing 0.7% of GDP to aid), let alone going further. ‘Let the future say of our generation that we sent forth mighty currents of hope, and that we worked together to heal the world’. Sachs’ optimism is inspiring.

JDJ

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