The End of Poverty: An Interview with Jeffrey Sachs

One of the world's top economists offers a blueprint for transforming the developing world.

| Fri May 6, 2005 3:00 AM EDT

In February of this year, UN Secretary General Kofi Annan remarked: "We will not defeat terrorism unless we also tackle the causes of conflict and misgovernment in developing countries. And we will not defeat poverty so long as trade and investment in any major part of the world are inhibited by fear of violence or instability." The point was that a broader global security strategy needed to go hand in hand with a poverty reduction strategy. To that end, the UN set about drawing up its Millennium Development Goals (MDGs). Adopted by all member countries in 2000, the MDGs aim to achieve everything from eradicating extreme poverty to ensuring universal primary education and basic health care access, all by the year 2015.

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In order to figure out how to reach these goals, Annan organized a panel of over 250 development experts to lay out practical strategies for promoting rapid development. Headed by economist Jeffrey Sachs, the panel published their final report in January of 2005. The report calls for both an increase in aid from Western countries and a reallocation of funding priorities in the developing countries themselves. The report also calls for more aid to be given on a local level. By bypassing governments, the UN hopes to spark more immediate and effective development. For instance, in one test case conducted in Kenya, UN funding went straight to the village of Sauri, where the schools were able to provide much-needed food for their students, and hence jumped in ranking from 68th to 7th in the district.

Shortly after the release of the UN report came the publication of Sachs' book, The End of Poverty, in which he laid out his own strategies for eradicating poverty by 2025. Sachs, who gained renown for advising Latin American and Asian governments on economic reform, has gained popularity as "can-do" economist amidst a cacophony of naysayers on development. But his optimistic attitude has also attracted quite a bit of skepticism. Why is it that decades of development economics haven't achieved the elimination of poverty? What makes Sachs' proposals so special? Is eradicating poverty a feasible goal to achieve in our lifetime? Sachs recently sat down with Mother Jones to discuss these issues.

Mother Jones: What makes your plan to end poverty so different from the development efforts that were tried in the 1950s and 60s? Why hasn't five decades worth of development work been very successful thus far?

Jeffrey Sachs: I think so far there's been a lack of appropriate effort, which includes many things. For development to work, rich countries need to help poor countries make certain practical investments that are often really very basic. Once you get your head around development issues and realize how solvable many of them are, there are tremendous things that can be done. But for decades we just haven't tried to do many of these basic things. For instance, one issue that has been tragically neglected for decades now is malaria. That's a disease that kills up to 3 million people every year. It's a disease that could be controlled quite dramatically and easily if we just put in the effort. It's truly hard for me to understand why we aren't.

MJ: What do you say to critics who argue that it's a waste to put more money into a development system that hasn't used that money very effectively thus far?

JS: Well, we have to be smart about whatever we're doing. But I'm quite convinced that, broadly speaking, economic development works. The main arguments of the Millennium Project Report, and the main argument of my book is that there are certain places on the planet that, because of various circumstances—geographical isolation, burden of disease, climate, or soil—these countries just can't quite get started. So it's a matter of helping them get started, whether to grow more food or to fight malaria or to handle recurring droughts. Then, once they're on the first rung of the ladder of development, they'll start climbing just like the rest of the world.

MJ: So do you believe that past efforts, to get these less-developed countries on the "first rung," haven't been pragmatic enough?

JS: Part of it is that many of these countries are invisible places, neglected by us politically, neglected by our business firms, by international markets, and by trade. We tend to focus on these countries only when they're in such extraordinary crises that they get shown on CNN because they're in a deep drought or a massive war, which is something that impoverished countries are much more prone to falling to. There haven't been too many stories in our press about Senegal, Ghana, Tanzania, Malawi, or Ethiopia, other than when the disasters hit. And yet these are places that are in very deep trouble all of the time, but with largely solvable problems. And those are the kinds of the places that I'm talking about as being stuck in extreme poverty.

MJ: If there's been no real effort to draw the world's attention to those places, is there any hope that funding will go there?

JS: The world got side-tracked from development issues during the post-9/11 crisis period. During the war in Iraq there were bitter divisions in the world community, and the idea of being able to focus on the problems of extreme poverty or malaria or drought and chronic hunger in Africa were just not at the top of the world's debate.

But I think the tsunami in the Indian Ocean last December, in which we could all see the scope of the devastation on our television screens, shifted discussion towards the plight of the world's poor. So now there are some positive signs. Tony Blair has pushed for an Africa Commission which just produced a report in March that focuses on poorest of the poor in Africa. There will be a UN poverty summit this September which is predicted to be the largest gathering of world leaders in history. And I'm traveling extensively around the world talking about these issues. So I think that even in our country, there is a growing discussion.

MJ: I know that former World Bank employee and economist William Easterly has criticized your proposals and called for what he terms a "piecemeal reform" approach in which development efforts are carried out one step at a time, with subsequent evaluation. What is your response to this?

JS: Basically, I don't think that we should be choosing between whether a young girl has immunizations or water, or between whether her mother and father are alive, because they have access of treatment for AIDS, or whether she has a meal at school, or whether her father and mother, who are farmers, are able to grow enough food to feed their family and earn some income. Those all strike me as quite doable and practical things that can be done at once.

I make the analogy that farmers, to grow their food, need good soil, sunshine, proper rain, and heat. If you don't one of those, even if you have the other three, your crop is still not going to grow. A lot of life in a poor village is like that. If you have a clinic but you don't have safe drinking water, or if you have safe drinking water and a clinic, but you don't have bed nets to fight malaria, you just don't get the kind of needs met and the basic quality of life that gives you a chance. I think that Bill Easterly misunderstands what I propose. I'm not proposing a single global plan dictated by some UN central command. Quite the opposite, I'm proposing that we help people help themselves. This can be done without legions of people rushing over to these countries to build houses and schools. This is what people in their own communities can do if we give them the resources to do it.

MJ: Part of Easterly's argument is that if you implement different strategies all at once, it will be difficult to isolate and understand which strategies worked effectively, and which did not. Do you share this concern?

JS: I have been working with over 250 of my colleagues on the Millennium Development Report. Everybody here is an expert on a different thing. The soil scientists really know a lot about how to improve soil nutrients and the doctors really know a lot about how to keep children alive. The malariologists really know how to control malaria and the hydrologists really know how to get safe drinking water in a community. One doesn't have to test whether it's good to have more food production, or malaria bed nets or doctors or teachers. These are proven technologies. If we were introducing something new, that would be different, but ours is not an approach based on new discoveries, this is an approach based on the best of proven technologies.

MJ: Some critics have expressed concern that the Millennium Goals may set unrealistic targets for certain countries. What if those countries fail to meet the specified level of development and then disillusioned donors decide to lower their funding?

JS: First, it should be understood that the goals in most cases are set proportionate to a given country's situation. So we'll reduce by 2/3 the child mortality rate, or by 3/4 the maternal mortality rate. We're not aiming at the same absolute standard in every country. I think that the other thing that is really important to understand is that as I have been working with the UN on this for the last 3 years and meeting leaders all over the world. What I've found is that their concern isn't that the goals are too high. Exactly the opposite: They actually want these UN goals, they want them to be ambitious, and they want to be held to account. And they want their development partners, the developed world, to be held to account on following through on commitments. Again, this all goes towards pressuring rich nations to set aside 0.7 percent of GNP for development aid. That is not a goal that I set, or that the UN set, this is a goal that was adopted 35 years ago by the world community and the goal that was set again in the Monterrey consensus signed by the U.S. in 2002.

MJ: What about aid being sent to countries that have a serious problem with corruption? Some have argued that large amounts of aid will merely prop up those regimes. Can poverty be eradicated while corrupt politicians are in office?

JS: My experience is that there's corruption everywhere: in the U.S., in Europe, in Asia, and in Africa. It's a bit like infectious disease—you can control it, but it's very hard to eradicate it. And yes, there are some cases where the corruption is so massive that unless you are really, really clever and come up with some radically new approach to the issue, you're going to have a hard time accomplishing many development goals. It's quite hard in a place like Zimbabwe, now, where the current government, in a quite despicable way, clings to power. Or, in a country where there is absolutely no transparency or where you have a family ruling violently to stay in power. It's very hard to do a lot of the things that really need to be done to build an effective school system, a health system, and so on. I don't have any magic solution for those situations.

But, let me note that the world successfully eradicated small pox, and not just in countries that scored high on a governance index but in all parts of the world. This was an international effort which targeted a specific outcome undertaken by professionals using a proven technology and a very extensive monitoring system. And that's the general model for our aid proposals. Nothing is done on trust. Everything should be done on a basis of measurement and monitoring. When you really focus, there are so many ways to be clever about how to do this to make it work better. Don't just send money; send bed nets, send in auditors, make targets quantitative. There are a lot of tricks, a lot of ways, that if one is practical about this, one can get results.

But what happens is that everyone's wringing their hands about corruption without trying to solve practical problems. And right now, we're not even helping the well-governed places, the places where we are capable of finding absolutely practical and effective approaches to turning help into real success on the ground. The basic issue is not to lecture about morality and governance. The basic issue is, is there a way for us to help to fight AIDS, TB, malaria, and other killers which are taking an incredible number of lives? I've seen these children dying, each time I visit these clinics. And these are absolutely preventable deaths.

MJ: Now you suggest in your book that we need to assess ailing economies just as doctors assess patients. You call it "clinical economics." Does the current academic curriculum for development economics provide a sufficient framework for educating people to ensure that the MDGs will be achieved by future economists?

JS: No it doesn't. I realized 10 or 15 years ago that the students in economics departments write dissertations about countries that they never stepped foot in because their advisor gives them a database from Nigeria or Kenya or some place else, and they do their thesis that way. That's like becoming a doctor without ever seeing a patient. We don't do case studies. We don't train students to understand the differences across countries. There are a tremendous number of loose generalizations made all the time

Similarly, people aren't trained in the practical experiences of being operational. Sometimes people say, "We teach academic things, we don't teach operational things." But, frankly, to do development right, you have to do something that's more like going through medical school and having a clinical hospital where you actually learn about different cases, and do case analyses. When something goes wrong, you study it. There are what are called "M&M rounds" in hospitals—morbidity and mortality rounds. When something doesn't work, when a patient dies or doesn't get better, the doctors get together to discuss the case. We don't do that in academic economics. For me, the field is not properly organized right now to really take on these challenges adequately and I'm hoping that the field will become more like a clinical science.

MJ: In your book, you recount some of your experiences in developing countries. In one passage you note, "One day in Goni's office we were brainstorming and hit on the idea of establishing an emergency social fund that would direct money to the poorest communities to help finance local infrastructure like water harvesting, or irrigation, or road improvements. I picked up the phone and called the World Bank. Katherine Marshall, the head of the Bolivia team at the Bank immediately responded, "You're right, let's do this." Why is it that a whole World Bank team specializing in Bolivia hadn't come up with the idea that you had?

JS: Well, sometimes they have ideas, sometimes I have ideas. It just so happened in this case that the idea came from me. But I do feel that in Washington over the last 25 years, especially during this era called "the structural adjustment era," there hasn't been a lot of actual problem-solving. There has been a lot of concern about budget-saving on the part of the rich countries. A lot of what was really happening in Washington had a subtext: "Keep poor people away from our taxpayers, tell them to tighten their belts, tell them to solve their own problems, tell them to keep sending their debt payments to us."

It was, in my view, a very unhappy and unsatisfactory period and there were, no doubt, a lot of creative people that were prepared to do a lot of things but they weren't given assignments to do that. I was absolutely shocked and aghast when I learned that in the late 1990s the World Bank and other donors weren't paying a penny to help treat people dying of AIDS.

Rarely do rich countries say, "Look, we're just not prepared to spend money to save poor people's lives." Instead, you get a lot of skepticism. "You can't do this, this is impossible. We're doing everything we can after all. We've tried everything. Let's go slowly. Let's do one thing at a time." I don't buy those arguments. I think that they all essentially stem from a vision that has been forced on the professional staff of these agencies because they have no money to spend. And they have no money to spend because in the end, the United States and other rich countries aren't giving them the resources to enable them to think ambitiously enough. One of the reasons why that is, is because the American people think we're doing everything we can be doing and frankly because they're told that there's nothing more we can do.

MJ: Do you think the U.S. will ever agree to dedicate 0.7 percent of its GNP to development aid?

JS: I don't think that any leading politician believes we're going to do that right now. It's not the conventional wisdom. The way it's going to happen is if the public tells the politicians, "Yes, we want to do this, we want to follow through on our word, it's good for us, and it's good for the world."

I've found in talks and discussion about the Millennium Project that people are very surprised to find out what the U.S. is and is not doing vis-à-vis the world's poor. Opinion surveys show, and I find this verified in audiences, e-mails, and discussion groups, that people tend to overestimate U.S. assistance efforts, usually by a factor of about 25 or 30. People think that we give several percent of our annual income and several percent, maybe even a quarter of budget to foreign aid and they're shocked to find out that it's actually much less than 1 percent of our budget. They're shocked to find that throughout Africa, the kind of practical investments that I'm talking about run to about 1 penny out of every $100 of our GNP. They can't believe it, but that's the unfortunate situation. When they find that out, and they see that we're spending $500 billion on the military and only about $1 to $2 billion on investments in Africa, they're concerned because I think that they feel this is probably not the best choice for America.

MJ: What do you think of two recent proposed strategies—President Bush's Millennium Challenge Accounts (MCA), and Britain's International Financing Fund (IFF), proposed by Tony Blair and Gordon Brown—as means of promoting global development?

JS: They're both good ideas. But by now, the MCA was supposed to have dispersed $1.7 billion dollars, $3.3 billion in the second year, and $5 billion in the third year. It has missed all its targets. In three years, it's only committed about $100 million dollars to one project. It has not yet been turned into a reality.

Brown's is also a very good idea. Unfortunately the U.S. basically said "no" to participation in that. I think the European countries will undertake the IFF, but not with any U.S. support. But the IFF is a very good concept—the idea is that Britain and six other countries have announced a timetable to reach a goal of dedicating 0.7 percent of their GNP to development by the year 2015. So what this would do is allow them actually to borrow against the rising trend so that they could frontload some of the money.

What the Africa Commission, the Millennium Development Report, the World Bank and IMF have all found is that right now poor countries could usefully absorb a tremendous increase of money and use it properly. The IMF and World Bank recently released a report called the Global Monitoring Report which said that aid should be doubled. There is a professional understanding that the money is needed to break the poverty trap and save lives and that the money can be effectively used.

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