[lbo-talk] Jamie Galbraith on Sachs

Jim Devine jdevine03 at gmail.com
Thu Mar 23 08:42:20 PST 2006


Rich World, Poor World T at P Jeffrey Sachs fancies himself the word's Mother Teresa,...

By James K. Galbraith Issue Date: 04.08.06

The End of Poverty: Economic Possibilities for Our Time by Jeffrey D. Sachs, foreword by Bono (Penguin Books, 416 pages, $27.95) ... Jeff Sachs is in many ways the Mother Teresa of the economics profession. Like her, he has dedicated his life to the poor. Like her, he is a darling of the compassionate rich. And like hers, his methods engender, among close and thoughtful critics, a certain degree of unease.

In The End of Poverty, Sachs makes his case that extreme global poverty can be ended within a generation, raising nutritional standards, health outcomes, and life expectancies; reducing birth rates; and otherwise creating conditions for tolerable life throughout Africa, South Asia, and the most forlorn parts of South and Central America. It can be done, he contends, at a modest cost and in ways compatible with the inexorable spread of market capitalism and globalization. It can be done, mainly, by the actions of the rich, for the poor. Sachs asks: "Will we have the good judgment to use our wealth wisely, to heal a divided planet, to end the suffering of those still trapped by poverty, and to forge a common bond of humanity, security, and shared purpose across cultures and regions?" (emphasis added)

The path of wisdom Sachs charts is intensely personal. It is illuminated by the experience of his monumental advisory work, from Bolivia to Poland to Russia to Africa, with firsthand observations also on India, China, and Bangladesh. After his debut as a Harvard wunderkind, Sachs has now spent more than a quarter-century on the road, traveling more than perhaps any economist in all history; his authority rests heavily on the fact that he was there and you were not. From this perspective, The End of Poverty is a thoroughly intimidating book.

Sachs' conceptual inspiration is also partly personal: It comes from his wife's pediatric practice. He devotes a chapter to "Clinical Economics," suggesting (very sensibly) that an economist should be prepared to accept complexity, to diagnose differentially, to adapt the treatment to the setting, and to monitor the patient's progress. The problem of extreme poverty is that some countries "fail to thrive." Consciously or otherwise, the metaphor colors his approach. Thus we have Sachs as the traveling doctor: The governments he deals with are anxious parents; the economy is the patient, frightened and hurting, yet capable of recovery if only the proper treatment can be devised and the right medicines delivered on time.

Bolivia's 1986 hyperinflation was the first medical adventure; the cure was found in debt default and in raising the price of fuel, on which the government's tax revenues were based. In Poland in 1989, Sachs championed a fast transition to market prices and again, cancellation of debts. These steps took audacity, and, on the whole, they worked out. (To be clear, Bolivia remained poor, but the hyperinflation stopped in a week.)

Russia was a different story, though. Sachs places the blame on the first Bush administration and on Bill Clinton's unnamed advisers (Strobe Talbot, Lawrence Summers) who supported the corrupt "loans for shares" privatization, in 1995–96. Sachs does name his Harvard colleague Andrei Shleifer, whose self-dealing while a United States Agency for International Development contractor in Russia was "unquestionably a breach of basic professional ethics," but doesn't mention the induced ecological calamity of Mongolia that followed livestock privatization there. In Mongolia, the patient unfortunately died.

As the discussion moves on to China and India, an essential problem surfaces: The doctor doesn't follow his own advice. Differential diagnosis and treatment are forgotten. Sachs's formula worked a few times, and now he wants to apply it everywhere, and to see its controlling hand in every successful case. Thus, he describes the Chinese agricultural reforms of 1979 as "shock therapy par excellence," unaware that these were largely a return to practices instituted by Deng Xiaoping in 1961–62, and repressed by Mao Tse-tung at the start of the Cultural Revolution. The real shock therapies in China were the Cultural Revolution and earlier the Great Leap Forward, both disasters.

In India, Sachs cheers for the "reform" process initiated in 1991–92, which has led to a decade of continued growth but also to sharply rising inequalities in one of the world's most unequal countries. Facts that assail the senses of any visitor to modern India -- the vast disparities; the catastrophic neglect of roads, rails, and airports; the filth and human chaos of the cities; the power outages and dirty water -- all seem secondary in these pages. Like many Indians, Sachs sees salvation in a Great Leap Up to information technology, made possible by communications links that do not require costly physical investments. He does not linger over the thought that cyberdevelopment may be a lousy substitute for the real thing.

This brings us to Africa, to which Sachs turned his attention in 1995. Sachs endorses the "Millennium Development Goals," but as a down payment on an even grander compact to end extreme poverty by 2025. In Africa, this would work mainly by channeling aid and basic technical assistance to villages.

Here, medical and economic considerations merge. As Sachs sees it, Africa's problem lies first of all in the need for capacity to deal with diseases, the most important being malaria and aids. And here, in his eyes, the failures of the international donor community are paramount. Of a Malawian proposal to save 300,000 from aids, he writes:

Yet international processes are cruel. The donor governments ... told Malawi to scale back its proposal sharply ... the draft was cut back to a mere hundred thousand on treatment at the end of five years. Even that was too much. ... After a long struggle, Malawi received funding to save just twenty-five thousand at the end of five years -- a death warrant from the international community for the people of this country.

It's maddening, it's heartrending. But it also raises a question: Is Jeff Sachs on a fool's errand? Does the path toward human development really lie through Davos, the boardrooms of the international financial institutions, and the legislative halls? Is it really, mainly, a problem of charity, a few affordable offerings leaving the structures of global finance undisturbed? And if that were so, why, then, has inequality worsened and the plight of the poor grown worse in so many countries that opened themselves to international capital? Can it be that charity has a price, which is playing the game by the global rules? And can it be that these rules -- which force poor countries to open markets, cut social and health budgets, privatize power and water, and starve their public investment -- in general create more poverty than charity can cure?

One has to ask: Are the problems really so simple, especially in the most unstable, conflict-ridden, desperate continent on earth? Or does development require not only resources but also organization, security, discipline, and the determined use of power? What if, just for example, the armies of "barefoot doctors" Sachs would like to create don't stick around? Absenteeism is a big problem in rural development; successful experiences -- in China, in Cuba -- teach that the window for "exit" must somehow be closed. Yet Albert Hirschman, who eloquently addressed such issues years ago, isn't in the index to Sachs' book.

Critics of Jeff Sachs fall into two broad groups. Some, like Janine Wedel, whose powerful book, Collision and Collusion, documents the Harvard scandals in Russia, doubt his sincerity. Many others see in him a false-flag neoliberal, a good-cop front man for the International Monetary Fund (IMF). As one who admired the young Sachs for scourging the creditors during the Latin debt crisis in the 1980s and the IMF during the Asian crisis of the 1990s, I take a third view: There's a tough Sachs, who sides with debtors against their bankers and with the sick against the drug companies, and he's here in these pages; there's also a soft Sachs, who sells to celebrities, and he's here, too. I believe he did well in Bolivia and Poland, fell into dark company in Russia, and that he does not understand China because it does not fit his theory. As for Africa, I'd judge that the soft Sachs wrote most of that part of the book.

One can only admire The End to Poverty for its energy and high aspirations. There is a fine optimism here. There is a powerful appeal to generosity. But to persuade, a book on this scale requires more than faith in the dedication of the traveling doctor. It requires also confidence in his judgments, a careful treatment of the medical theory to which he subscribes, and serious consideration of critics, of skeptics, and of people who really are expert on the economies and histories of each region. It requires a confidence that, in the end, the personal stories, sweeping generalizations, and soaring exhortations of this book do not inspire.

from http://www.prospect.org/web/printfriendly-view.ww?id=11329 -- Jim Devine / "There can be no real individual freedom in the presence of economic insecurity." -- Chester Bowles



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