This is the third of an eight part review series of the Patterson Summer Reading List.
1. Colossus, Niall Ferguson
2. Illicit, Moises Naim
3. The End of Poverty, Jeffrey Sachs
The End of Poverty made a big splash when published last year, as Sachs argued in provocative fashion that extreme poverty (essentially, deep rural poverty in Africa, some parts of Asia, and parts of Latin America) could be ended with a relatively small investment of capital by the developed world. Sachs argued that the ending deep poverty was not only a moral necessity for the developed world, but that, in the end, it would work to their positive good. Sachs central point, I think, is that poverty has specific causes (bad infrastructure, bad geography, bad health conditions, poor education) that can be solved with specific types of aid programs. Such aid programs can eliminate the worst of extreme poverty in the world, and would be relatively inexpensive for the developed world.
Sachs points out that the vast gulf between rich and poor regions is a relatively new phenomenon for the world. Until two centuries ago, most people everywhere in the world lived more or less in the same fashion, as subsistence farmers. Regional differences existed to be sure, but they did not approach the kind of inequality that we began to see with the industrial revolution. Putting this in perspective is important, because Sachs is calling not so much for redistribution of global wealth (the rich countries won’t become poorer) but rather for creating the conditions under which those regions that have not yet benefitted from the vast increase in wealth spurred by the industrial revolution (and its successors) can begin to take advantage of the possibilities of exponential economic growth. The creation of wealth, he points out, is not a zero-sum game.
Sachs also gives a good account of the many of the factors that keep countries poor. Governance is not the only problem, and indeed is rarely the central problem for economic development. Bolivia, for example, suffers from a number of critical handicaps on the international economic stage. Because of the transportation difficulties, exports from Bolivia must demand a very high price per unit of weight. Historically, the most successful Bolivian exports have been silver (which is now largely gone), tin (for which the market has collapsed), and cocaine. Bolivia will never be able to build development on the export of basic agricultural products, or even on the low level manufactures that developing countries often use as stepping stones. Sachs also attributes much poverty in Africa and continental Asia to geographic difficulties. Like any argument, this one is limited; it would seem to me that the answer for Bolivia would be to attempt to develop an economy based on the export of services, but that in itself requires a certain economic foundation.
The biggest problem with Sachs’ argument is his lack of focus on problems on governance. This decision is not surprising, as he is arguing against those who would assert that the primary problems of development stem from poor governance in the developing world. He does a good job of demonstrating how limited that perspective is, and how damaging policy based around that idea can be. Even an exceptionally well governed country, in the face of severe infrastructure, resource, health, and geographic drawbacks, will be unable to produce signficant, reliable economic growth. Nevertheless, in reading his prescriptions I couldn’t help but to wonder what kind of organizations could execute the kind of aid programs he was setting forth. The prescriptions, he points out, need to be tailored to specific countries, based on the needs of those states, and executed in cooperation with local governments. In a well-governed, more or less democratic, not overly corrupt society this seems like it could make a bit of sense, but precisely how many countries in the developing world does that describe? Largely because so many of the countries are so poor, and often because of Western interference, the states lack capacity and interest in executing and assisting the necessary programs. NGOs can help to an extent, but without the coercive power of a state are unable to make certain that the aid will get where it needs to go and do the things that it needs to do.
Sachs is quite correct to argue that unspecific aid programs without clear goals will tend to fail, which is why so much Western assistance has not produced the necessary effects. He’s also right to say that this failure does not mean that Western aid MUST fail. But the more specific the aid program, the greater the capacity needed for execution, and thus the greater need for robust and competent governance. In the absence of such governance, it’s unclear how to make the aid programs that he wants have the effects that he intends.
Nevertheless, an interesting and useful book. And he has a foreword by Bono. Which I didn’t read.