Rational Action

The Time magazine from March 14 flaunts excerpts of Jeffrey Sachs’ latest book, The End of Poverty. Sachs believes that if the rich nations of the world donate $150 billion every year to a wide range of developmental projects, the UN could meet its goal of halving world poverty by 2015. $150 billion may sound like a lot, but it only represents .7% of the output of the countries which would be doing the donating. In other words, ending world poverty would be an insanely cheap endeavor.

I stumbled across a scathing review of the book in yesterday’s Washington Post. It’s written by Bill Easterly, an econ prof at NYU who believes in taking a less ambitious approach…

Bill Easterly: A Modest Proposal [Sachs] seems unaware that his Big Plan is strikingly similar to the early ideas that inspired foreign aid in the 1950s and ’60s. Just like Sachs, development planners then identified countries caught in a “poverty trap,” did an assessment of how much they would need to make a “big push” out of poverty and into growth, and called upon foreign aid to fill the “financing gap” between countries’ own resources and needs. This legacy has influenced the bureaucratic approach to economic development that’s been followed ever since — albeit with some lip service to free markets — by the World Bank, regional development banks, national aid agencies like USAID and the U.N. development agencies. Spending $2.3 trillion (measured in today’s dollars) in aid over the past five decades has left the most aid-intensive regions, like Africa, wallowing in continued stagnation; it’s fair to say this approach has not been a great success.

I saw Easterly speak last semester because Xavier was off in Africa or something. He advocated identifying specific objectives which would help to reduce poverty, then trying to achieve those objectives through methods whose success could be easily quantified (Think vaccinations against certain diseases, then measuring the incidence of those diseases in the population.) Sachs, on the other hand, wants to tackle the whole problem in one fell swoop. I’m tempted by Easterly’s position, but it seems like Sachs’ book would be a good read — if only to get me thinking about the problem of world poverty, prior to its solutions.

For some other commentary on the book, see Tyler Cowen (at Marginal Revolution) and Daniel Drezner. And on a side note, the book’s introduction is written by Bono!

This entry was posted on Tuesday, March 15th, 2005 at 12:04 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.