Ah, St. Paul’s Cathedral! Icon of old London, shrine to the survival of the human spirit, blah blah. What better place to hear Jeffrey Sachs, celebrity economist, brain of the Make Poverty History campaign, and all-round Bringer of Solutions to Difficult Problems (oh yes, and Chairman of Columbia University’s Earth Institute), explain to us the route to a sustainable future?

Except, of course, it’s actually a crap place. Because the same incredible size that gives it its majesty and overwhelming sense of solidity and timelessness also makes it a bloody echo chamber, and Jeffrey Sachs has a surprisingly booming voice.

Still, once I’d tuned my ears to pick out the words from the echoes, it made for an interesting evening. In addition to the surprising baritone, Sachs is taller than I expected, and generally less mild-looking. And his words, too, were surprisingly muscular.

Much of his 30-odd minute talk was taken up with recounting his polished summary of modern economic growth, with emphasis on the staggering increase in economic activity since the Industrial Revolution. In The End of Poverty, he talks about a 49-fold increase in total economic throughput since 1800. Tonight, he mentions 100-fold. I suspect that’s a slightly different measure, rather than new evidence having increased the figure. But who knows?

He quickly moves on to the central concern of, well, me, and I’m sure much of the audience. Is “sustainable development” really at all possible? Meeting the rich world’s current needs sustainably is looking nigh-impossible at the moment. Once Sach’s plans to plug the poorest countries into the engine of economic development takes off, surely there’s no hope?

Sachs tackles the issue with his tried and tested approach: just crunch the numbers. If the poor catch up to a large extent with us, in terms of economic throughput, and we stay roughly the same, that will mean a four-fold increase in total economic activity. Couple that with the predicted 50% increase in world population, and you’re looking at a six-fold increase in economic activity by mid-century - from a base that is already too high.

Well, that’s fairly depressing. But Sachs has no truck with the doom-and-gloom tone that tends to dominate debate about climate change. “It is possible,” he insists. “We’ve got to this point purely by absent-mindedness.” If we actually apply ourselves to the problem, he argues, there’s every chance of a solution. It’s clear he sees technology, rather than some of the lifestyle changes proposed by the traditional green movement, as the answer - he namechecks carbon sequestration and nuclear as two of twenty possible technological solutions currently being worked on.

What’s lacking, Sachs argues, is the political will. And it’s here that the muscular part comes in. Sachs rips into the War on Terror, calling it a distraction from the real issues at hand. “The War on Terror is about 27th on my list of international priorities,” he asserts, and argues that our response to 9/11 missed the opportunity to spur progress towards the Millennium Development Goals. He more than once calls the Iraq war “stupid,” and takes a potshot at George W. Bush, explaining,

right now we’re driving towards a cliff… but it’s not too late to grab the wheel and turn the car around. Right now, President Bush’s hand is on the steering wheel, so, yes, I’m worried. But we can turn the wheel around ourselves.¹

Some slightly off-topic questions from his debate partner, Nicholas Sagovsky, give us a chance to tease out some more of Sach’s politics. He expresses a strong disdain for the arms trade, and praises the reductions in military spending that took place in the Clinton Administration.

He’s then pressed to outline his views on inequality. This is a useful indicator of a person’s political instincts - liberals tend to say they don’t mind how rich the rich are, as long as the poor have a decent standard of living; social democrats tend to say excessive inequality is harmful for society, and extreme wealth should be heavily taxed and redistributed. Sachs offers a bit of a fudge: saying that fundamentally, his concern is just the living standards of the poor, but also noting the disadvantages and costs of excessive income gaps and condemning the quest for ever-greater wealth - “the desire of the man with a 300-ft yacht to get a 350-ft one” - for much of our sustainability problems. It may be this apparent confusion stems from his desire to stay “on topic” - while he probably does prefer inequality to be minimised, he’s aware that in areas where the poor are dying in their thousands, nothing can distract from the core task of raising their living standards. He goes on to endorse the “Nordic model” of rich-country economics, with its high taxation and top-class social services. But he observes that one enabling factor for that system is the ethnic homogeneity of those countries, and that ethnic and religious differences tend to undermine public support for heavy taxation, a deeply depressing thought that I don’t doubt is true.

More and more, it’s becoming obvious to me that Sachs’ politics are those of the honourable tradition of American liberalism. He’s unapologetic in his support for free markets, but also clear in the need for strong governmental action - both in rich and poor countries - to ensure the benefits of markets reach everyone, and do so safely. In his idealism, his combination of moral fervour with maximum information, and his giddy enthusiasm for technology, he could have stepped straight out of the Kennedy Administration. He’s probably also a blueprint for how the Democrats could reclaim the political impetus in America, if only they had the guts.

Permalink | No comments yet | Print this post

Email this | Add to del.icio.us | Digg this | Share this on Facebook
See other content filed under: Politics, Posts

Martin Wolf, “The elimination of poverty”

Here are two propositions: first, the elimination of destitution, disease and deprivation is taking too long; second, additional assistance to the world’s poorest countries is easily affordable. The important question is whether that aid can be well used.

Some argue that aid merely allows bad governments to ignore the wishes of their populations and avoid necessary reforms. Others seem to believe that extra aid is sure to deliver improvements in desired outcomes. Neither of these extremes is right. Even in Africa much aid has delivered high rates of return, once one allows for adverse external shocks, conflict, the burden of disease and poor agro-climatic conditions.* But there are also many examples of great waste: Tanzania’s socialist experiment of the 1970s comes to mind. Mobutu Sese Seko’s Zaire is a far worse case.

Many of the world’s poorest countries offer extremely difficult environments for development. What are today called (somewhat euphemistically) “fragile states” are home to about 15 per cent of the world’s population and contain one-third of those living in extreme poverty. Prominent on any list of such states are Afghanistan, Angola, the Democratic Republic of Congo, Myanmar, Niger, Nigeria, Somalia and Sudan. Six of them are in sub-Saharan Africa.

Sub-Saharan Africa is also, not coincidentally, the region whose ability to achieve the Millennium Development Goals is most in doubt. On current trends, east Asia and Pacific will eliminate extreme poverty by 2015 and hit most other targets. But in sub-Saharan Africa as a whole conditions are getting worse, or at best barely improving, in almost every salient area.

Fortunately, there are success stories in sub-Saharan Africa. The World Bank lists Benin, Burkina Faso, Ethiopia, Madagascar, Mali, Mauritania, Mozambique, Tanzania and Uganda (with combined populations of 200m) as countries with relatively good policies that are capable of absorbing substantially more aid.** Mozambique has been receiving about one-quarter of gross domestic product in aid. Its real income per head also rose 4.3 per cent a year between 1990 and 2001. Uganda, another heavily aided country, achieved growth of income per head of 3.6 per cent over the same period.

So how, then, are we to ensure that increases in aid are to be reasonably well used to achieve the improvements in human well-being that we seek? I offer five rules and two dilemmas.

Rule one: give tolerably governed countries the aid needed to achieve the internationally agreed goals. Anything short of that is hypocrisy. If a desperately poor country has a reasonable government and tolerable policies, it should receive the assistance it needs to implement agreed investments and programmes.

Rule two: make open agreements that can be monitored. Detailed conditionality rarely works. That is today’s consensus. Although too stark, it has a great deal of truth. Governments cannot be forced to do what they do not wish to do. They will cheat. But they should do what they promise. So let them put down their promises in detail and then monitor them.

Rule three: use markets. One of the most innovative and effective approaches to delivery is “social marketing” - the use of market mechanisms to deliver subsidised goods, such as condoms, water treatment systems, anti-malaria bed nets. Population Services International, the leading organisation in this field, has had remarkable successes. In Malawi, for example, the proportion of children under five covered by nets jumped from 8 per cent in 2000 to 55 per cent in 2004. In Tanzania, nets have been sold, with similar success, through subsidised commercial channels.***

Rule four: make aid predictable, untied and, provided the recipient’s commitments are met, sustained. If countries are to engage in long-term spending, they need to know the aid will be there. The only qualification is the need to provide cushions against short-term economic instability, particularly shocks to the terms of trade.

Rule five: remember policy. Many campaigners view trade liberalisation, privatisation and budgetary discipline as anathema. They are wrong. It is more important, not less important, for the poorest countries to avoid the waste inherent in high and variable protection against imports, inefficient state monopolies and macroeconomic instability. It is particularly silly to combine greatly increased aid with higher protection against imports, since additional aid must mean a bigger trade deficit.

This, then, is the approach to be taken with reasonably well-governed countries that can absorb more aid. This leaves two dilemmas. One is that the quickest way to reduce poverty is to shift aid towards India and Bangladesh from other low-income countries. These countries receive low levels of aid per head, but have enormous numbers of people in poverty and reasonable administrative capacity. A better solution is to transfer aid from over-aided middle-income countries that need it far less.

The bigger dilemma is what to do about fragile or failing states. These are, by definition, the places where money is most likely to be ill-used. They are also, by definition, the places where the concentration of desperately poor people is set to rise over time. This is a huge challenge, to which we have few good answers, but it must not divert attention from what we can do: help those already prepared to help themselves. With luck, examples of success will themselves turn at least some of the failing states around.

What we must do is our best. We can not justify doing less. The aim is to eliminate the extremes of poverty and despair that continue to disfigure our world. Additional aid is certainly not the answer on its own. But it has to be part of the answer. Let us resolve to give aid, properly directed and monitored, a chance. Few can question the ends. We must will the means.

*Mick Foster, The Case for Increased Aid, December 2003, www.odi.org.uk; **Supporting Sound Policies with Adequate and Appropriate Financing, September 12 2003;***Rose Nathan et al, Mosquito Nets and the Poor: Can Social Marketing Redress Inequities in Access?, Tropical Medicine and International Health, October 2004.

martin.wolf@ft.com

Permalink | No comments yet | Print this post

Email this | Add to del.icio.us | Digg this | Share this on Facebook
See other content filed under: Politics