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The End of Poverty
The End of Poverty
How we can make it happen in our lifetime
Submitted by Francesca R
23rd March 2012
The End of Poverty

Sachs’ book is ostensibly the most liberal and left-leaning of its decade’s crop of mainstream discussions of development economics. Before this reviewer read it she was more aware of the criticisms of calls to "double aid" than she was of the arguments, and to some extent it stands alone where most other writers fear to venture. As if to compensate for other shortage of support, its title is by far the most positive too, tending to be surrounded by a number of other works that explain why either little, or nothing can be done to improve the plight of the sixth of the world’s population utterly left behind by two centuries of enrichment.

After a shortish textbook-style intro to international development, in which Sachs sketches out his own nuance of how to do it (via "clinical economics"—which seems to have strictures against the structural adjustment era that are held in common with all other writers this reviewer has encountered, and which she thinks need little additional review here) the first half of "End of Poverty" is more of a first-hand history of the author’s intimate engagement—usually at the request of a struggling or putative government—in sorting out the finances of countries such as Bolivia in the mid 1980s, Poland around Berlin Wall-falling time and Russia in the wake of the USSR passing. Such useful case examples are rounded out by quite scholarly discussions of China and India, with bits of memoir thrown in here as well. The clearest message to emerge out of Sachs’ experience with the first three though, is not so much one of gradualism and easy-does-it, as it is the shock therapy of the IMF doctrinaire approach that he (and everyone) derides—but with a crucial difference of debt cancellation and more donated aid. Sachs reasons that fixing a problem of acute capital deficiency is rendered rather more difficult if income is sucked out of the developing system by service payments. Some laudable victories in this regard are his, but there are not many, and one struggles to imagine it catching on even as it is one of the central planks of the recommendation.

With respect to extremely poor Africa, the author provides moral arguments first: After centuries of slave trade, followed by colonisation which then gave way to cold-war proxyism, the west owes far more to the continent than to lecture it about the bad governance it was left with. And lack of Marshall-Plan type assistance is not excused (and was recognised as necessary by the CIA four decades ago). Sachs also laments the derailing of the promisingly reassembled millennium consensus in the 1990s, by the following decade’s war on terror, and is evidently frustrated by widespread unwillingness of hearts/minds everywhere to adopt his own rationale that overseas development assistance reaps far greater rewards in altering the incentives to terrorism (leading to the expensive response).

Indeed it is hard to contest the logic of the poverty trap, whereby insufficient capital (healthy people and productive land) to generate subsistence income leads to depreciation in the face of rapid population growth and extensive suffering, as it is hard to oppose the very high returns that would accrue to highly affordable provision of basic public health inputs (anti-malaria bed nets and ARV medication), water and sanitation, agriculture-augmentation, then education and other public goods. And the virtuous cycle that has been demonstrated elsewhere that an initial injection of assistance can get going. The idea of hopelessness is countered by example—the green revolution in Asia, the end of smallpox and other diseases, and perhaps more novel recent developments of export processing zones and rural mobile phone penetration.

"Trade not aid"—the more popularly espoused remedy—is incapable of the large investments in public goods Sachs says is required. Although insufficient, it is however necessary (and this reviewer can count a full house in respect of agreement from all the economists she reads that protectionism is a growth killer all-round), and anyway rich countries have strong tendencies to not themselves practice the liberalisation they laud. “Bad governance” merely misses the point, and effectively tells starving nations that they should not start from where they are, to get to any better destination. Cultural impediments—the idea that the world’s poorest simply lack the stuff to do better—is rubbished (this reviewer can’t recall reading anything mainstream that said otherwise and she wonders why any pages are devoted to it).

Summing up—the long standing absence of bigger ODA (Sachs calculates 0.6% of rich world GNP as a down-payment) re-emerges as the missing link, albeit right after every other magic bullet is dispatched away. This much seems plausible, and public attitudes to the effectiveness of aid have rarely been massaged in a positive direction (and perceptions about the level of assistance have been misinformed upwards by politicians to boot). But it is a pity that an appeal to enlightened self-interest is rather spoiled by some simultaneous talking up of the post-1999 anti-globalisation movement as having its heart in the right place. This does Sachs analysis and message in respect of public policy responses a large disservice. After all, the same types of misguided misjudgements, and misapplication of remedies, is what most of "The End of Poverty" is about. And if wrong ideas—even for right reasons—were any good , then the book would not have needed to be written.
Jeffrey Sachs

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