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“End of Poverty”?

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A while ago, Time Magazine ran a story called `The End of Poverty.’ It outlined celebrity economist Jeffrey Sachs’s plan to end extreme poverty. Ending extreme poverty is certainly a goal to be desired, but the centralized approach that Mr. Sachs advocates will never work.

Sachs is obviously a smart man. In his book he says that he has been all over the world, observing and helping people in poverty situations. He is charismatic, intelligent, and motivated, and under his supervision many villages have risen up from extreme poverty. But Sachs is only one man. In case he hasn’t noticed, not everyone in the world is as smart and motivated as him. And Sachs wants 150 billion dollars per year to fund his proposals. 150 billion dollars. 1.1 billion people that he wants to help, in one hundred countries, in thousands of villages. Sachs can’t be everywhere at once. The people that will actually be administering all of this wonderful aid will be the same people that are doing it now. In other words, bureaucrats. And we all know how great the UN bureaucracy is. Of course the thing that they need is more money. They could hardly use what they’ve got any better. Before we give the UN more money than they’ve ever dreamed, we need to examine the effectiveness of this organization.

Sachs says that his proposal is different, and that he knows about the fallacies of taking the `throw money at it’ approach to solving economic problems, but this is money-throwing to the max. From what I’ve read, Sachs is not proposing any particularly innovative new solutions. Just the same old: more food, more medical supplies, more aid workers, more, more, more. That certainly treats the symptoms of poverty, but it doesn’t really treat the causes. In Sachs’s diagnosis, there are no causes, or at least none that apply now. All of the poverty in the world is the result of unfortunate circumstances or those scummy capitalists over in money-land. But this simply isn’t true. However much Sachs tries to deny it, many of those countries are crime-ridden and corrupt. Sachs’s solution to that problem is for the UN to basically take over the country. In other words, a top-heavy, top down approach.

The way that the problem needs to be solved is a bottom up approach. You start with the national governments of the countries, put pressure on them to reduce economic unfairness in their own taxation systems, put pressure on them to introduce more democratic practices, and reduce the tyranny of crime and war lords. Once this has happened, the national governments can request aid themselves, and the local governments can request aide from the national government, to solve specific problems. This approach has several advantages.

For one, things are more adaptable. Sachs’s plan is 3,000 pages long because he’s trying desperately to account for every circumstance. Even with these 3,000 pages (which no one will ever read), he can’t possibly account for every circumstances. A bottom- up approach allows for better flexibility, and accountability at every level.

A bottom-up approach does not depend upon the ideas and resources of one man or a small group of men. I’m sure that Sachs would love to be The Man Who Ended Poverty, but it just is not going to happen. One man alone cannot end a global problem that’s been around since shortly after the hunter-gatherer days.

Sachs complains in his article about the administrative costs that take away so much money before it ever gets to the people who need it. Well, his plan is not going to cut these costs. It calls for the aide to be passed down from heaven (or the U.N. offices) right down into the slums. That’s a long trip, and there are bound to be lots of middle-men, lots of U.N. offices, lots of bureaucrats that want their cut.

Ending poverty would be nice, but Sachs’s plan simply won’t do it.

Cross-posted to Leoniceno’s Corner

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  • What would?

  • Philip, I believe that if you read the later parts of the article you’ll see what the author suggests as an alternative, and he sounds a lot more sensible than Sachs does.


  • But “putting pressure on national governments” doesn’t exactly sound like it will solve the problem either.

    When it comes down it, some problems are complex and some are easy. Poverty is (in theory) easy: it’s a lack of money. If someone is hungry, you give them food, and you’ve solved the hunger problem. If someone is poor, you give them money, and they aren’t poor any more.

    Yes, it’s more complex than that, but it’s not *less* complex than that. Putting pressure on governments to lower rates and remove restrictions is all well and good, but when you’re talking about countries with 80%+ unemployment rates and few natural resources, what you’ve got are free poor people. There has to be something more, a jump-start. So you’re still talking about external aid, which appears to be what the book’s author is saying too.

    So is the beef that the book doesn’t adequately address problems in local government? In 3000 pages?

  • Pressuring national governments is not a “bottom-up” approach to the problem, either. Even in the poorest nations, the national government is nowhere near the bottom of the social order.

    We can get much closer to a bottom-up approach by expanding the efforts of microlending institutions like the Grameen Bank in Bangladesh. This approach has a proven track record of success. For decades now, Grameen has battled poverty by stimulating the talents and creativity of the human beings who happen to be poor.

    The money used in microlending is not simply given away. It is loaned at reasonable rates of interest, encouraging the recipients to start up successful businesses and repay the loans. Their repayment rate generally stays above 90%, making the process self-sustaining and allowing it to expand its base and bring more recipients out of hopeless poverty.

    In some cases, national governments must be persuaded to get out of the way to let microlending and other development projects succeed. Still, if pressuring national governments is the only thing being done, that is no guarantee a project will have any real “bottom-up” effect on poverty.

  • The Duke

    Good Gravy! Another Economist chimes in. Haven’t Economists done enough. They’re reminisant of philosophers, only their theories actually effect peoples lives and livlihood, in some cases very negativily (Marx/Engles). Go AWAY.

  • Joey D

    How about letting the U.N. take over the poverty striken countries. Move there, set up infrastucture, communications etc… live there, eat there, reside there, get out of NYC, and run the country. After 10 or so years, the U.N. can take over another poverty stricken country, move there, set up infrastructure, communications… a never ending repeating cycle.

  • To respond to Mr. Winn: I don’t pretend to have a solution to the poverty problem. I’m not an economist or an expert of any sort.

    What my problem with Sachs’s approach is is that it depends on a great number of people having a huge amount of information. Mr. Sachs may have all this information, but it will certainly be a problem to convey it to everybody else.

    What I don’t like about it is that Sachs and the UN are trying to do the thinking for aide workers. What then, do they do when some unexpected circumstance comes up? The huge bureaucracy that this entails is bound to be costly and inefficient.

    And I also know that people can’t eat freedom. I certainly agree that aide is necessary to, as Sachs said, get them up on the ‘first rung of the ladder’ towards economic success.

    But before we do that, we have to get local governments in place that have knowledge of specific situations and can knowledgeably dispense funds. To do otherwise is like pooring water into a sieve.

    To Mr. Plenty: You have some good points. My idea was more to work with local governments, get people interested and involved with determining their own fate. Persuading national governments to, as you said, ‘get out of the way’ is only a first state.

    Micro-loans are also a good idea. I’ve read lots of good things about it, and I think that that should be party of any economic recovery plan.

    Thanks for the feed-back, everyone.

  • Jennifer

    I find Jeffrey Sachs approach, as an economist, very refreshing. He is saying things that aid workers, public health professionals, and advocates for the poor have been saying for years. Namely, that geography, disease, etc. play a huge role in causing poverty and are conversely reinforced by poverty. But why hasn’t the IMF and the World Bank paid attention to these factors, instead of minimizing poverty to a set of structural adjustments that haven’t seemed to work in a lot of places and have also caused a whole lot of political strife. Jeffrey Sachs might seem overly-idealistic, but his approach is a challenge for the international community to live up to prior commitments, to look at their system of aid allocation in a more economically diagnostic way and not so politically.

  • Here’s a variation on Joey’s idea. Why not send the UN to a poor country, let them move their headquarters there, then build a big wall around the country and never let their corrupt, self-serving asses out.


  • I find Jeffrey Sachs approach, as an economist, very refreshing. He is saying things that aid workers, public health professionals…have been saying for years.

    So, you’re refreshed that he’s saying the things that people have been saying for year?

    As a ‘spur’ to dredge a few more dollars out of the developed world, Sachs is just fine, but taken by itself his economic plan is unrealistic. And you’re asking people to look at things unpolitically? Not a chance.