Introduction
Poverty can be visualized as the receipt of real incomes too small to enable people to live at minimum standards of health, education, and welfare (Stevenson, 1960). Every second, children die from AIDS and extreme poverty and more than one billion people could not afford their living. Six million children pass away from malnutrition every year (Cozay, 2009). Poverty (1) is one of the major obstacles for the developing world and needed to be settled in our generation. Therefore, Sachs has made news with a plan to end extreme poverty and hence, he wrote a book entitled ‘The End of Poverty’ which focuses on how to end poverty. The Goals are to halve extreme poverty by 2015 and end it by 2025. Jaffrey Sachs is a well-known economic adviser to the governments around the world. He is the Earth Institute Director at the Columbia University and also a Special Advisor to the United Nations on the Millennium Development Goals (MDG). He has been to more than 100 countries to help reduce disease, poverty, environmental damage and armed conflict, and offer advice on the national economies. Sachs’s main purpose is to end poverty by 2025. He addresses certain issues which are one of the most compelling plans to alleviate poverty that economists often underestimate. He tries to show a big picture of how the whole societies emerge from poverty by explaining his work in Bolivia, India, Russia, Africa, China, and other countries integrating the set of solutions for economic, environmental, social, political problems which challenge the poorest countries. Yet, there are some strength and weakness which he made in his book. Therefore, this critical paper will discuss and analyses some of his assertion in his book on how to end of poverty. I divide this paper into three parts: first, a summary of his book relating to poverty alleviation; second, I discuss some strength and weakness and analytical aspects of some of his arguments. And finally, I summarize this analytical aspect.
Summary:
The main thrust of Sachs’s book focuses on how to end extreme poverty (2) in our time. He has seen extreme poverty, disease, and malnutrition around the world and particularly, while he focuses on the sub-Saharan Africa. More than eight million people around the world die each year because they are too poor. Sachs’s main argument is our generation could help ending to halve extreme poverty by 2015 and end it by 2025, and ensure that all of poor countries could make reliable progress up the ladder of economic development. And it can be ended not in the time of our grandchildren, but in our time. The rich world could help to escape from poverty and make it a realistic possibility by 2025.
Sachs’s book covers 18 chapters which combines his practical experience with sharp professional analysis and clear exposition on its topic. Since I make a summary of his book at this point, a brief summary of his discussion and arguments should be entailed. Sachs focuses on the ladder of economic development which helps the poorest of the poor to escape the misery of extreme poverty. Thus, they might start their own ascent up the ladder of economic development (p. 18-20). He visits some countries such as Malawi, Bangladesh, China, and India.
During his visit to these countries, he finds that more than one million African children succumb to malaria each year. Roughly 900,000 Malawians infected with the HIV virus and died of AIDS because of lack of treatment and around140 million people are living in the flood plains of the deltas of the two great rivers in Bangladesh. Sachs realizes that the problem is simply that Malawians die this day as a result of their poverty because the world has overlooked impoverished people. Their incomes are around 50 cents per person per day or around 180 dollars per person per year. Sachs also focuses on the economic growth of some nations which is necessary to develop a better understanding of the forces shaping the productivity factors. This means that once the industrial revolution was under way, the same combination of modern technologies and social organizational could spread to other parts of the world which forces an increase in the global productions (p. 38-39).
Sachs emphasizes that due to the faults of the poor such as retrograde cultures and corrupt leadership impeding its country development. However, he also indicates that there are eight major categories of problems which can cause the economy to decline such as poverty trap, physical geography, fiscal trap, governance failures, cultural barriers, geopolitics, demographic trap, and lack of innovation. He then argues that the poorest countries could get out of the poverty trap unless their main economic development objectives aim to gain a foothold on the ladder (p. 56-73). In addition, Sachs proposes a new method for economic development called clinical economy which outlines the similarities between good clinical medicine and good development economics. Sachs indicates seven parts of the diagnostic checklist of any impoverished country such as the extent of extreme poverty, economic policy, fiscal framework, physical geography and human ecology, patterns of governance, cultural barriers to economics development, and geopolitics which a clinical economics approach will point the way to a better strategy (p. 74-89).
He argues that markets are powerful engines of development when the preconditions of basic infrastructure such as roads, power, human capital, education, and health are in place. He believes that it is encumbent upon successful market economies to bring the few areas of the world that still need help onto the ladder of development.
Sachs consults with countries in crisis such as in Bolivia in the mid 1980s and goes on to work with Russia in 1992, Poland in 1989, and other countries. He discusses the practical improvements in infrastructure, education, and health to eliminate extreme poverty by 2025 (3). Sachs distinguishes between three degrees of poverty: first, ‘extreme poverty’, representing one sixth of the world population or one billion people, who literally fight for survival every day; second, ‘moderate poverty’, representing 1.5 billion people, who live above the subsistence level but still struggle to make ends meet; third, ‘relative poverty’, representing 2.5 billion people, mostly in urban centers, who have access to housing, transportation, some education, and some nutrition. Sachs shows that the world economy has changed considerably since 1980, with over half the world experiencing economic progress in the past 25 years. Sachs also put some criticisms to the main institutions such as the International Monetary Fund (IMF) and the World Bank which he believes that these organizations have tended to represent the interests of creditor banks rather than the poor and so have often exacerbated the problem of global poverty.
Analysis:
The heart of Sachs’s book focuses on how to end global poverty. He raises how to eradicate poverty from the world and proposes some solutions on why his plan should be carried out. The globe is ensnared in a poverty trap - the combination of poor infrastructure, poor health care, and poor geography renders some societies to generate economic surplus for the future. Sachs states that extreme poverty (4) could be ended by 2025 if all the rich countries adhere to their previous funding declarations and contribute .7 percent of their GDP. Sachs criticizes the International Monetary Fund (IMF) and the Bush Administration for lacking concern for the poor instead of bullying approach to the world affairs. The United States (US) said it would contribute .7% of its GDP to help the poor countries. The rich countries including the US contributed to the Millennium Development Goals (MDG) for alleviating poverty, disease and hunger and improvement of education and the lives of children and women. I reckon Sachs’s argument might be true at some points. If all the rich countries in the world could commit to what Sachs set in the GDP, it might more or less help to eradicate poverty. There is a strong reason for the presence of government’s policy to focus on this issue but they do little to resolve the extent to which it should attempt to deal with these issues.
Sachs uses a ladder of economic development to describe extreme poverty. He explains that people who live in extreme poverty could not seize even the bottom rung of the ladder.
This means that they do not have the basic necessities to maintain life such as food, clean water, and shelter. It is impossible to pursue education without basic sustenance. For instance, Sachs raises Malawi as ‘the perfect storm’ of extreme poverty (5). Malaria epidemics and AIDS culminate into a horrific maelstrom and the world community has so far offered little help. China is also one of the technical and prosperous countries. However, at some point in history, they blocked themselves off from the rest of the world; they lost all the opportunities due to the free flow of information and relatively free trade in the rest of the world. Sachs argues that the market forces as powerful factor to help end extreme poverty. At this point, I think Sachs is right because more competitive market is seen as a necessary response to the new global economic forces (Beresford, 2000). This means that a country’s ability to improve its standard of living over time is highly dependent on its ability to raise its out put per workers and thus competitive free markets work perfectly because they distribute resources to the most productive areas of the economy which could bring about to raise the living standard of its people. For example, the combined impact of global free market between nations could open up many new opportunities for wealth creation which could also attract the foreign investment. And it would help to create more jobs or new employment opportunities for the countries. As Beresford states that a free market or trade is supposed to benefit all countries by creating opportunities to produce and trade on a larger scale than is possible in as system where trade within nation is protected from outside competition (p. 80-83). Therefore, the growth of free market or trade have resulted in a growth in competition between nations to attract and retain finance investment capital, which is the basis of growth in jobs and the uptake of new technology, contribute to the country’s development and poverty alleviation.
Based on the title of Sachs’s book and the pre-conceived notions of how this task is difficult to achieve in the near future, Sachs shows a straightforward strategy to end poverty. He indicates the differences in the levels of economic development across the various countries of the world to establish the reasons for slow or stagnant economic growth in the less developed countries which he intends to get them to reach the first rung of the ladder of economic development to eradicate extreme poverty (6) by the year 2025. He shows that the economic development is not a zero sum match. He believes that everyone could win and he refers to the vision of Keynes on the end of poverty by the twentieth century in Britain and other industrialized countries during the Great Depression. Similarly, he indicates that the developed world is of the resources to benefit from it by elaborating a strategy of collective action to show that extreme poverty could be ended in our time. I agree with Sachs that that the collective action which is supplemented by the effective government provision of education, health, foreign assistance, and infrastructure could bring about economic success.
Sachs argues that the United States should not focus more on the military option to eradicate global terrorism than on the option of economic development which instead undermines some of the fundamental factors that breed terrorism. Sachs argues if the rich countries offer 0.7 percent of the Gross National Product (GNP) to the poor countries as targeted, the extreme poverty could be eliminated as planned.
However, the United States currently offers only 0.15 percent of its Gross National Product in aid which is far below all other wealthy countries. I argue that in order to end extreme poverty, it is beneficial that all the industrialized countries around the world need to commit its commitments and help to contribute their aid to the poor countries as set in the Millennium Development Goal which aim to half extreme poverty by 2015 and end it by 2025. According to Kennedy, there are elements of choice in the process of adjusting to these challenges, but relatively few countries are well prepared to commit it given to their political and economic circumstances (p. 20-21).
Sachs has lots of experience in development and worked many countries in world. He details how he has applied his clinical economics around the world and emphasizes a clinical diagnosis of what each nation actually needs to eradicate extreme poverty. He thinks that the United Nations could carry out the assessments and to coordinate aid. However, Sachs finds that the United Nations is reluctant to invest in the United Nations’ Millennium Development Goals. Sachs claims that a 5 percent income tax on incomes over 200,000 dollars will suffice to bring the US foreign direct assistance up to the level needed to support the United Nations’ Millennium Development Goals. This means that if all the rich countries could contribute 0.7 percent of its Gross National Product to alleviate the global poverty, he is confident that we could end of the extreme poverty by 2025. I think it is beneficial that he uses it as a system approach to consider all aspects such as poverty, fiscal policy, geography, governance, culture, geopolitics, innovation, and demographics which enhance to contribute to end poverty.
Sachs also argues that extreme poverty could be ended with investment of capital by the developed world. The ending deep poverty was not only a moral necessity for the developed world but it works to their positive good. I think his central point is that poverty has specific causes which some of relevant problems involved such as bad infrastructure, bad health, bad geography, and poor education. All of these factors could lead to poverty. In addition, the growth of investment capital is the basis of growth in jobs and the uptake of new technology in the sense that it is linked to the real economy. It is one of the major driving forces to enhance economic development and it is also the engines of wealth and income generation in the global economy through their capacity to enhance the volume of investment. However, it could also be solved with specific types of aid programs and can eliminate the worst of extreme poverty in the world, and would be relatively inexpensive for the developed world.
Sachs indicates that extreme poverty has been being eliminated via free enterprise, trade, and investment in countries such as China, Bangladesh, and India. Sachs constructed a plan to improve education, local infrastructure, technology, and healthcare which are needed in the poor countries. For this reason, he argues that the long-term sustainable economic development can be fostered. Sachs aims to end extreme poverty as such action could expand the world economy. However, it could also eliminate the breeding grounds for disease, terrorism, and civil unrest. Sachs considers the creation of the preconditions for takeoff is a matter of building social overhead capital including railways, roads, ports, and shifting the economic setting from agriculture and trade to manufacture is beneficial. I also argue that by enhancing free enterprise, trade and investment could be one of important factors to contribute to end poverty. According to Smith argues that a freedom of trade and enterprise are considered as a means of increasing the real income of the country (pp. 698-699).
I strongly agree with Sachs that the unspecific aid programs and lacking of clear goals will tend to fail. That is why some of the Western assistance has not produced the necessary effects for the poor countries. However, this failure does not mean that the Western aid fails but the more specific aid programs, the greater the capacity needed for execution. Thus, the greater need for robust and competent governance should be fostered. It is not clear how to make the aid programs in the absence of such governance that Sachs intends. Although, I reckon that the objectives of foreign aid have been many, the core of its program aims to promote the economic recovery and help encourage the growth of the underdeveloped countries. It is conceivable that the international situation confronting the nation in the future will realign the order of the importance of these objectives. Still other objectives have been present in the minds of the sponsors and of the administrators of the many foreign aid programs. For instance, there have been many foreign aid programs in many countries for many years which they have been aimed at several political and economic objectives, both short term and long term. However, it is hopeless to look for any single clear standard of these aid programs. More or less, I reckon that the foreign aid could contribute to the economic growth of other nations but specific goals and programs are required to effectively achieve its goal. But I still acknowledge that the judgment of the success of foreign aid programs is difficult. Therefore, the aid programs he was setting forth should be tailored to the specific countries and conditions which are based on the needs of those countries.
In addition, Sachs argues that the foreign aid (7) should be increased in order offer a greater return to private investment. I agree with Sachs that when these investments are made, the private entrepreneurs will earn a greater rate of return on their businesses which could trigger market-led economic growth. The market economics involve human capital, business capital, public institutional capital, infrastructure, and knowledge capital could challenge in the market and thus, the extreme poverty can be met.
He also argues that the extreme global poverty (8) could be eliminated by 2025 if the world rich countries intend to increase their combined foreign aid budgets between 135 billion and 195 billion dollar for the next decade and properly allocate that money. Sachs might be persuasive that the political, economic and ethical returns to improving the plight of 1.1 billion people would be enormous and thus, he brings a unique background to this issue.
He also argues that the extreme global poverty (8) could be eliminated by 2025 if the world rich countries intend to increase their combined foreign aid budgets between 135 billion and 195 billion dollar for the next decade and properly allocate that money. Sachs might be persuasive that the political, economic and ethical returns to improving the plight of 1.1 billion people would be enormous and thus, he brings a unique background to this issue.
In this context, foreign aid is as an important ingredient in fighting poverty and accelerating economic growth in developing country, especially in the very poorest countries, where people may not be able to generate the resources needed to finance investment or health and education program. However, Sachs’s experiences in Russia did not turn out so well. I think what Sachs is proposing is that he aims to provide aid to countries to remove the barriers for them to become self sufficient. However, some barriers would be highly involved such as disease, lack of access to education, poverty traps, geography traps, and fiscal traps, among others. Poverty itself will take a bit longer although the huge amount of assistances and help from the rich countries for the poor countries. I also argue that although, aid has not always worked well, it has been critical for poverty reduction and growth in many countries and helped prevent event worse performance in many other countries. This means that many of the weaknesses of aid have more to do with the donors than with the recipients’ countries. For instance, a range of successful aid recipient’s countries such Korea, Botswana, Indonesia, Mozambique, and Uganda (Perkins, 2006).
Sachs argues that corruption and poor governance are one of the root causes of poverty and stresses that untreated diseases, like HIV/AIDS and malaria, climate change, and geographical factors play the major role. Sachs sees the issue of poverty from the point of view of real impoverished people due to the fact of his experiences. The present aid situation is not adequate. While the rich countries pretend to help the poor, many poor countries pretend to reform (p. 266). Thus, the direct assistance from the rich countries to poor countries should increase dramatically but the funds should be used in six categories of key investments such as first, human capital to improve health, nutrition, and skills; second, business capital to improve technology in agriculture, industry, and services; third, infrastructure to improve roads, power, sanitation, transportation, and communications; fourth, natural capital to improve soils and ecology; fifth, public institutional capital to improve legal, governmental, and police systems; sixth, knowledge capital to improve scientific and technological expertise. Instead, if there is strong governance and institutions, it could help improve the environment for investment by reducing risk and increasing profitability. For instance, investors are more likely to make long term investments where they feel property rights are secure and their properties will not be confiscated. While low levels of corruption help reduce the costs of investment, reduce risks, and increase productivity.
However, corruption and poor governance are not the only problems, some factors are involved. For example, Bolivia got the critical handicaps on the international economic stage. The Bolivia’s exports demand a very high price due to the transportation difficulties. Thus, Bolivia could not build development on agricultural products’ exports or the low level manufactures which the developing countries often use as stepping stones. For this reason, it seems to me that Bolivia could not develop the export of services to increase its development but they need a certain economic foundation. In addition, he argues that the primary problems of development stem from poor governance in the developing world. However, I argue that although some of the well governed countries which have better resource, infrastructure, and health could hardly to produce significant, reliable economic growth.
Sachs also emphasizes the Keynes’ theory about the scientific and technological innovation to maintain a long-term economics growth. Sachs predicts the growth during the throws of the Great Depression in America and his predictions become correct. This means that the technological and scientific innovation play major roles in alleviating extreme poverty in America, and the rest of the world. The scientific and technological enhancements permit goods and services to be traded freely which are impediments to the economic stability and growth in the underdeveloped countries in Sub-Saharan Africa and Asia. However, there is no one-size-fits-most panacea; I agree with Sachs that the importance of grassroots programs tailored to demographics, and specific needs. The rest of the world often thinks that the Africans are as one ethnicity which faces similar challenges. When this area considers as one of the neediest, it is no surprise that the small-scale operations aimed at specific countries. Therefore, when knowledge is shared, the world can take real steps toward the end of poverty.
Sachs says that help would be required not just for a few years but for most of the period until 2025. Then, Sachs raises the question whether the developed world could afford to help the poor countries given the technological progress; the question is whether they could afford not to. The central strategy of Sachs aims to address the issue of how much the total official development assistances are required to achieve the goal of ending extreme poverty by 2025. Sachs also acknowledges that the governments should not invest in business capital. Particularly, when the governments manage businesses, they tend to do so for political rather than economic reasons. However, I think Sachs fails to consider the case of the government of Nigeria and Kenya which they allocate health and education investments in a nonpolitical manner. The assumption that Sachs made is that the governments are corrupt.
In addition, Sachs focuses on the economic development such as Bolivia, Poland and Russia by highlighting on geography, climate, disease and level of infrastructure which he believes it has a significant impact on the speed of economic growth. For instance, roads are important not only to connect urban commercial facilities but to connect remote villages to markets so they can by goods more cheaply and sell their products at better prices to a larger market. In this way, it is true that better infrastructure such as building roads could be an important ingredient in the alleviation of rural poverty. I agree with Sachs that by ending the global poverty by 2025 does need the resolute efforts from both the rich countries and the poor countries. And thus, they could start a global compact between them. It is true that this strategy is required not only for scaling up the investments which could end poverty but also for a system of governance that could empower the poor. Hence, this approach could offer the tools to the impoverished countries across the world for sustainable development by indicating the plans and financing mechanisms which are needed to achieve this goal.
Conclusion:
Finally, Sachs’s aim is to tackle the issues of underdevelopment and global poverty and how to end poverty by 2025 set in the Millennium Development Goal. He addresses certain issues which are one of the most compelling plans to alleviate poverty that economists often underestimate. He tries to show a big picture of how the whole societies emerge from poverty by explaining his work in Bolivia, India, Russia, Africa, China, and other countries integrating the set of solutions for economic, environmental, social, political problems which challenge the poorest countries. I come to several conclusions: First, Sachs might be right that poverty can be eradicated by 2025. Second, more needs to be done. Third, the current system is not properly focused. Fourth, we can all play a role to eradicate poverty. Although, there have been efforts made in the past but they were not well-planned and put in place as they should have been. I am strongly confident that Sachs’s book is a road map to end poverty and what I find most encouraging, useful, interesting, that the concepts and plans that he discusses could surely bring real tangible benefit to the poor areas. Although, many argue that lot of money has been offered to solve the problem. However, I agree with Sachs that the right amount of money must be allocated to the right things and with specific goals. I am confident that one time that this understanding might become the centre piece of the industrialized countries. However, despite the potential shortcomings of the specifics of his plan, I think that Sachs starts the conversation at the right spot that the poverty could end in our generations. And, I think his book is quite challenging and ambitious and it is necessity to serve as a useful tool for the future academic research.
(By Bong Angkeara)
