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Saturday, April 07, 2007

Jeffrey Sachs: "The Difference between Mr. Easterly and Myself is that I'm Actually Trying to Get Something Done"

An Easterly lesson? A post not too long ago, "Africa's Poverty Trap" gave William Easterly's views on development in Africa, including negative comments about the work of Jeffery Sachs. In this interview, Jefferey Sachs responds to Easterly's general criticisms of his work, and he comments on the contributions of William Easterly to the African development effort:

Lunch with the FT: Jeffrey Sachs, by Chris Giles, Financial Times (free): I am due to meet Jeffrey Sachs in his choice of restaurant... Sachs is in London to deliver the first of five BBC Reith Lectures, a sought-after honour for academics. The lectures give a chance to talk to a worldwide radio audience. "[The lecture] is unique as a global discussion. It's hard to think of another way to reach such a wide audience," Sachs says... Referring to the BBC, he says: "They quote a 100 million audience - rather more than that, a 150 million audience." Then he asks me if I know how many people will listen. I haven't a clue, I admit, but tell him that the audience figure might need an "up to" added before the numbers. ...

Audience size clearly matters to Sachs. His website says he is "widely considered to be the leading international economic adviser of his generation", and his mission is to solve the problems of poverty, disease, global warming and globalisation. Although his current views are highly controversial, he knows that the bigger the audience, the bigger the impact. ... He campaigns for a better world, and is certain he knows how to get one. ...

I want to talk first about his role in advising governments on economic reforms in Latin America and eastern Europe. There was a time, particularly in the late 1980s and early 1990s, when no self-respecting government of a middle-income or ex-communist country would instigate a reform programme without Sachs's advice. So, ... I rather blunder into my first question: "Looking at the countries you advised in the early 1990s, those countries are not now doing very well, are they?"

"Oh, no. That's not right," he retorts. ... We embark on a tour of the world's economies, starting in Latin America. ... Latin America is doing much better than is often thought, he argues: "I'm optimistic about Brazil. And if you look at a map, being optimistic about Brazil takes you a long way to being optimistic about the whole of Latin America. I don't lose huge sleep over Latin America - it's at peace, it's not riven by terrorism, it's democratic and it has made huge strides in human development. What have been hugely unequal and divided societies are becoming slowly more equal, and even very deep ethnic and racial divisions are being ameliorated through democratic politics."

The same cannot be said about Russia, I say. Sachs replies by telling me how Poland was a case of successful reform, which has now led to a normal country embraced within the European Union. How did it achieve success? "The essence of what they wanted to do was right, it was based on sound fundamentals. What I tried to do was to add the economics to go around it." ...

I bring the subject round to Russia again. "I advised Russia for two years from December 1991 to January 1994," Sachs says defensively. "It was an extremely frustrating period for me." The problem, he says, was not that good ideas were tried and failed, but that neither the US nor the powerful elites in Russia wanted to try sensible economic reforms. The US, he says, failed because it wanted a weak Russia, while the Kremlin's corrupt efforts to stop the communists' re-emergence in the mid 1990s led to the transfer of the Russian state's assets into the hands of a tiny elite.

"When I watch all of this now," Sachs says, "it is the ... triumph of politics over economics." He is warming to a theme that forms the backbone of his thinking on almost every issue - good economic solutions will work if only politics doesn't get in the way...

The theme continues as we move on to talking about poverty in Africa. This has been the focus of his more recent work. Immediately, he shows his anger at those who claim aid fails because Africa remains desperately poor, even after some $2,300bn of aid - the figure comes from Professor William Easterly of New York University. Sachs manages a masterly dismissal; he calculates the amount as only $16 per poor person per year over the past 60 years. "I see the number and say, well, that's a pretty modest sum. The rest of the world sees the same number and says that's a horrendous failure that's nearly bankrupted us."

Worse, Sachs thinks that Easterly's criticisms of aid are having an impact on giving. "The difference between Mr Easterly and myself is that I'm actually trying to get something done practically... But I know that since he has launched this tirade, it makes it harder to do." He insists that for $16 a person a year, aid has "done extremely well". ...

"People are dying in large numbers. The triumph of politics over economics is not that money is being lost in Africa, it is that money is not going in." He vehemently denies that big aid has been tried before and not worked, and challenges me to name studies proving him wrong, knowing full well that I can't.

We move on to talk about a specific project Sachs is currently involved in, Millennium Villages, where his ideas on fertilisers, malarial bed-nets and the like are tried on the ground. My less-than-ecstatic reaction to his reports of their success is clearly the same as that of many aid agencies. It instantly raises his hackles. I suggest there are many examples where success in pilots does not translate into something that can be replicated on a large scale... "I'm sorry," he is almost shouting now. "That, I disagree with completely. That's preposterous."

I ... counter that it is equally preposterous to insist they will work. "I know," he says, "but how do you actually do something in life? Do you list all the things that may go wrong and then decide we won't do it, or do you actually try?"

We talk about global warming. It's easily solvable, Sachs insists, because the costs of doing something about carbon emissions are exaggerated - so people will soon realise that they can cut carbon emissions without much pain. We talk about global trade - all the US has to do is offer an aid, trade and climate change deal to the rest of the world and a solution is within reach. We talk about US healthcare - within a few years, people will see sense and the uninsured will be covered, he predicts. ...

I wonder aloud whether economics really can solve these big global challenges. In Sachs's world, ... there is always an easy solution. I suggest vested interests, national differences and the fact that reforms tend to [have] winners and losers make issues rather more intractable than he believes. Bringing the subject full circle back to his lectures, he says: "The key word of all of these lectures is 'choice'. A generation has a choice, and we have choices we make collectively... We have some absolutely terrific opportunities... but we miss opportunities all the time. That's why it is really important to understand what these choices are - and that is what I'm trying to explain in these lectures." ...

    Posted by on Saturday, April 7, 2007 at 09:00 PM in Economics | Permalink  TrackBack (0)  Comments (25)

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