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Critical Analysis of Jefferey Sachs’ The End of Poverty
Allison Smith Honors Inquiry: Voices of Development Professor Shaugnessy

Smith 2 From the Marshall Plan to the Millennium Development Goals, the debate of how aid should be distributed has persisted with much contention and deliberation in the 21st century. Today, more than ever, our globalized world recognizes the desperate situation in which so many impoverished people must live. The persistent question of how aid can best be used still remains unanswered. In The End of Poverty, Jefferey Sachs makes the declaration that with the proper resources, poverty can be eliminated by 2025. Sachs’s solution to the problem of world poverty and global economic development is inherently flawed in its structural organization of how poverty can be resolved. The construction of his plan to end poverty originates in the doctrine that more foreign monetary aid will undoubtedly yield positive results. Sachs underemphasizes the efficiency and accountability of aid distribution, the sustainability and reliability of governments, and does not place nearly enough emphasis on the vital element of community planning. The first and most straightforward argument against Sachs’ thesis is that he overstates the importance of capital in alleviating poverty. It has been suggested throughout history that allotting more money in aid does not create more success in the realm of economic development. The statistic that many critics of aid use is that in the last 50 years, the West has spent $2.3 trillion dollars on aid, and still billions are deprived of basic needs (Easterly). However, it would be inaccurate to generalize all aid as ineffective due to this one figure. There are an innumerable amount of complexities that have caused aid to fail in the last half century; Sachs discusses some of these complexities in his book, but fails in suggesting that the remedy is the one, allencompassing solution of increasing donations.

Smith 3 One problem with Sach’s thesis, according to Easterly, is that it puts the spotlight on the amount of money needed in donations, rather than the effect that money will have. In The End of Poverty, the statistic “.7% US GNP” is repeated so often that it is burned into the readers brain, yet there is little mention of precisely how that .7% US GNP will be disbursed and how projects will be monitored for success or failure in the future. Easterly notes that “it seems strange that bureaucrats and politicians would focus on the input—total aid dollars spent” instead of the long-term effects and accountability. The effectiveness of aid is another aspect on which Sachs does not place enough emphasis. Sachs’ plan requires billions of dollars, but it does not contain any revolutionary new armaments against the feared beast of inefficiency. History suggests that theories similar to Sachs’ have not worked in the past: ‘big pushes’, plans that proclaim their success lies in the massive expansion of funding, have been attempted in the past to no avail. Easterly has come to this conclusion based on data from 1970-1994 in which governments and private investors spent a total of $529 billion on aid, resulting in a “corresponding step increase in productivity” of zero (Kristof). Currently, the aid we do give is not being used effectively; According to Reinikka and Svensson (2004), 13 cents out of each dollar of the Ugandan government’s expenditure on schools actually reached those schools. Is adding larger numbers into the picture the best way to fix this broken system? Another complication with foreign aid, contended by Dambisa Moyo, is that large aid contributions reduce government accountability to citizens (Collier). The nature of governments is to protect and provide for their citizens. But when the resources for performing basic government actions come from foreign aid, a concrete divide between a

Smith 4 country’s leadership and its citizens forms. The citizens do not rely directly on their government for help, and they do not trust their leaders due to the countless instances of corruption and dishonesty in the developing world. This results in a problem that is even deeper than the tragedies of poverty and disease: when citizens cannot trust their governments, there is no future for developing long-terms solutions to any economic, social, or environmental adversities. Moyo makes the point that aid can be “easily embezzled” by corrupt governments, making it an ineffective and malignant resource (Collier). She instead offers that governments should seek funding through international and domestic financial markets, a process which demands transparency and prudence (Collier). Harvard economist Andrei Shleifer makes a similar argument, proposing that by disrupting a government’s ability to tax, foreign aid “undermine[s] the basic contract between the government and the governed.” Political institutions are crucial to long-term solutions of social development, and must be strong from the start if a country is ever going to thrive in our global economy. Similarly, many argue that the culture of aid allows governments to develop the harmful notion that aid will continue to be provided no matter how it is spent. There are several sickening examples of rulers misusing Western aid. For example, Emperor JeanBédel Bokassa of the Central African Republic used aid to buy a gold-plated bed, and Zaire's dictator, Mobutu Sese Seko, spent allotted aid on personal jaunts on the Concorde (Foreign Affairs). These are extreme examples, but they illustrate how easily foreign aid can find its way down ineffective or downright corrupt paths.

Smith 5 Sachs’ plan to alleviate poverty does not insist on governmental stability or transparency from the start, but instead projects that economic prosperity will naturally materialize in the future after aid is distributed. Government sustainability must come earlier in development if a country is to make real progress in poverty alleviation, and most importantly, governments must be transparent and be forced to use the minimal aid given in the best interests of their citizens. The combination of seeking funding through the international market, essential amounts of foreign aid, and increased efficiency should combat many of the complications associated with aid. Both Easterly and Sachs agree that in evaluating how a country or community can make its way out of poverty, there is more to consider than simply the fiscal situation. Sachs proclaims the “clinical economics” approach will “point the way to better strateg[ies]” in economic development (Sachs). The ‘differential diagnosis’ process described by Sachs is a brilliant, comprehensive method of understanding the many aspects that contribute to poverty; his mistake is what he proposes be done with this synthesis of information. In Easterly’s terms, Sachs and other economists are “Planners” who use this information to create complicated policies that must pass through bureaucracy, often strangled by restrictions, corruption, and special interests, until they actually reach impoverished communities. Easterly presents the theory that “Searchers”— locals, or those who use the knowledge of locals, to devise economic solutions—are the key aspect in alleviating poverty (McNicoll). Not only are Searchers armed with invaluable community-specific wisdom, they are also more economically efficient; coming from a situation in which capital is limited, they are likely to use their few resources more cost-effectively

Smith 6 compared to their counterparts, the comparatively affluent Planners. Generally speaking, the further an economic development project is from bureaucracy, the better chance of survival and success it has. “Homegrown” efforts to resolve economic problems, rather than all-embracing proposals developed by hundreds of economists and aid workers at conferences, will end poverty. Easterly also stresses the idea of replicating successful local economic ventures in communities with similar problems; this spread of innovation at the grassroots level will create a new web of connections and bring additional populations out of poverty. In his chapter focusing on ‘on-the-ground solutions for ending poverty’, Sachs does make note of the positive aspects of community development. His discussion of the importance of cooperation between national governments and villagers is fitting, though his strategies do not directly align with this claim; of the $200 billion dollars his plan requires, where is there a guarantee that citizens with indispensable local knowledge will be considered in the process for distributing those funds? Sachs recognizes that “we need to be more creative” in this sense, though he does not offer concrete suggestions on how to do so (Sachs). Some may argue that though local solutions are valuable, highly trained economists and politicians are the most important players in constructing solutions to alleviate poverty. However, when considering the lack of success in the last few decades in which the policies and theories of the ‘Planners’ have dominated the scene, the shift only seems natural; different systems should be tested when the one we currently have is failing.

Smith 7 The debate about if, how, when, and where aid should be used could be expatiated on for thousands of pages. One of the most difficult parts of discussing how the world should approach aid is that while the West is deliberating and ruminating, thousands in the developing world die. It is against our human nature to deny the starving food and the sick healthcare—but what if the most effective method of alleviating poverty in the long run required suffering concurrently? It is this admirable quality embedded in all people— to save those in need—which has for so long kept society from questioning the current methods of aid giving. While Jefferey Sachs’ intentions are undoubtedly admirable, there are shortcomings in his thesis that will only put off the long-term alleviation of poverty. Sachs overstates the need for capital; as his critic William Easterly scathingly points out, “with Sachs, it’s always been about the money” (Big Think). Foreign aid, or rather Jefferey-Sachs-amounts of foreign aid, and governments dissociated from the needs of their people, do not promote the necessary entrepreneurship in the developing world. Sachs’ thesis lacks emphasis in the important areas of community development, and promotes grandiose solutions rather than solutions developed by locally-minded people. What the impoverished world needs is not a plan that emphasizes an inundation of capital, but instead one which places primary emphasis on providing minimal, but efficient aid to governments. In addition to my criticisms, presented are concrete solutions that align with my argument:

Smith 8 Hold individuals responsible for all aid money that is sent to impoverished governments; responsibility for the continued starvation and infection of millions will hasten the process of alleviating poverty. Continue to provide aid in the healthcare sector, including the fight to eliminate widespread disease; these causes should not be abandoned since there has already been such significant progress thus far. These projects should continue to be funded by international organizations and private investors. There should, however, be an increase in documentation of the results of the various treatment methods so that successes may be replicated and failures analyzed. Stop counting on bureaucracies for end-all solutions; the real solutions to the poverty problem will come from locally developed resolutions. Phase out strategies such as the Millennium Development Goals that encourages bureaucratic plans and do not hold individuals accountable for failure. Similarly, bolster support for growth from the “bottom-up”; learn from programs like Yunus’ microfinance programs, and evaluate and replicate other “homegrown”, community-based solutions to poverty. Promote discussion between governments and locals by allotting more funds to be delivered in grants to local peoples. These grants should encourage entrepreneurship and innovation, and their successes and failures should be monitored after grants are given. Do not cut foreign aid off completely, but combine aid with incentives for governments to seek funding through domestic and international markets. In general, monitor the flow of what aid is given to developing countries with more vigilance. This is one of the greatest failures of the current aid system.

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The sources from which I drew my information were mostly book reviews, scholarly articles, and of course The End of Poverty. To better understand the arguments of Sachs’ critics, I read reviews of their books and articles that they themselves had written in journals and newspapers. I also greatly enjoyed reading the back and forth between Sachs and Easterly on the Huffington Post, which portrayed not only both of their personalities, but the differences in their views. I also discovered articles from other scholars, such as Nicholas Kristof, Paul Collier, and Andrei Sheifer which elaborated on the issue of foreign aid. My research was conducted solely online. Attached is a complete works cited with all of the sources I used. Works Cited Bahn, Niti. "The White Man's Burden by William Easterly." Semacraft Blog. Web. <http://semacraft.com/blog/2011/09/the-white-mans-burden-by-william-easterlya-user-centered-approach-to-aid-programmes/>. Bhagwati, Jagdish. "Banned Aid." Foreign Affairs. Web. <http://www.foreignaffairs.com/articles/65905/jagdish-bhagwati/banned-aid>. Collier Paul. "Dead Aid, By Dambisa Moyo." The Independent | News | UK and Worldwide News | Newspaper. Web. 18 Sept. 2011. <http://www.independent.co.uk/arts-entertainment/books/reviews/dead-aid-bydambisa-moyo-1519875.html>. Easterly, William. "The Effectiveness of Foreign Aid." Council on Foreign Relations. Web. <http://www.cfr.org/foreign-aid/effectiveness-foreign-aid/p12077>. Gardner, Eric. "Microfinance: An Interview with Jeffrey Sachs." A Brief History of Something. Web. 18 Sept. 2011. <http://www.ericgardner.net/microfinance-aninterview-with-jeffrey-sachs/>. Kristof, Nicholas D. "Aid: Can It Work?" New York Times. Web. <http://www.nybooks.com/articles/archives/2006/oct/05/aid-can-itwork/?pagination=false>. McNicoll, Geoffery. "The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good." Penguin Press. Web. Moyo, Dambisa. "Dambisa Moyo: When the Markets Recover, Africa Must Be Ready | Comment Is Free | Guardian.co.uk." The Guaridan. Web. 18 Sept. 2011. <http://www.guardian.co.uk/commentisfree/2009/feb/26/international-aidcapitalism>. Moyo, Dambisa. "Why Foreign Aid Is Hurting Afric." The Wall Street Journal. Web. <http://relooney.info/0_NS4053_1536.pdf>. Postrel, Virginia. "The Poverty Puzzle." The New York Times. Web. Shleifer, Andrei. "Peter Bauer and the Failure of Foreign Aid." Web. Whitney, Jake. "Guernica / Aiding Is Abetting." Guernica / A Magazine of Art & Politics. Web. 18 Sept. 2011. <http://www.guernicamag.com/interviews/953/aiding_is_abetting/>.

Smith 10 "William Easterly: Sachs Ironies: Why Critics Are Better for Foreign Aid than Apologists." The Huffington Post. Web. 18 Sept. 2011. <http://www.huffingtonpost.com/william-easterly/sachs-ironies-whycritics_b_207331.html>.