Man with a Plan
In reviewing Jeffrey Sachs’s new book for a monthly magazine, one feels rather like the last bomber pilot over Yokohama. By the time one has arrived on the scene, the target has been so badly burned up that there is little left to aim at.
Sachs, who taught at Harvard for many years before becoming the director of the Earth Institute at Columbia, is an internationally renowned economist. In the 1980’s and early 90’s he advised the governments of Bolivia and Poland in their struggles with hyper-inflation and the government of the former Soviet Union in its transition to a market economy. Today he works closely with Kofi Annan and George Soros. His much-hyped new book (Time cover story, New York Times profile, Foreign Affairs excerpt) argues that a UN-managed global plan could end extreme poverty on this planet within two decades at a cost of between $135 and $195 billion per year.
There is much to be said in reply to this proposal. Indeed, much of it has already been said in scorching notices in the New York Times, Washington Post, and Wall Street Journal, to name just three. These early reviews struck similar notes. In the words of the Washington Post reviewer, William Easterly, who is himself a very distinguished expert on development:
[Sachs] seems unaware that his Big Plan is strikingly similar to the early ideas that inspired foreign aid in the 1950’s and 60’s. 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 UN 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.
Or, as Claudia Rossett put it pungently in the Wall Street Journal:
What [Sachs] basically proposes for the world’s poorest countries, and for the 1.1 billion people who live in them, is a world-wide central plan for the new millennium—as if many of the world’s most wrecked economies hadn’t had enough central planning in the past millennium.
Rossett was not exaggerating. Sachs envisions a future in which the governments of poor countries and the UN will together be granted authority to direct massive tides of capital to industries ranging from health care to energy. He believes, for example, that technology companies have invested insufficient funds in photovoltaic cells and improved battery technology. Under his plan, the UN would correct this and other errors by putting money where he believes it should go. A half-century of failure does not discourage him.
Sachs similarly shrugs off the threat posed by bureaucracy and corruption, two forces that have crippled plans like his in the past. This central plan, he pledges, will be carefully constructed so as to minimize such structural problems. How so? Pretty clearly, Sachs envisions that the big bold planner will be someone much like himself—and he is unshakably confident that this godlike figure will get right what so many lesser minds before him have gotten wrong.
Sach’s confidence on this score would be a little more infectious if he showed more awareness that his preferred methods had failed in the past. Unfortunately, on the evidence of this book, the history he knows best is his own autobiography. More than half its length is devoted to the story of Sach’s career, detailing his successes and explaining away the failures (none of which, one learns, was in any way his responsibility).
But there is not much point in rehearsing counterarguments to the surging faith of the central planner. The more interesting question raised by The End of Poverty is a personal one: how is it that Jeffrey Sachs, a supremely intelligent man and a very capable economist, should have arrived at a position that has been decisively refuted both in theory and in experience?
One of the reasons surely does Sachs credit. He has traveled extensively in some of the world’s poorest and most miserable places. Although his writing betrays little emotion, the suffering he has seen has clearly made a deep impression upon him. It has inspired in him that best and worst of all American impulses—the impulse to solve the problem now.
This same impulse undergirds Sachs’s entire intellectual career. As an international economic adviser, he participated in two great successes: halting Bolivia’s inflation in 1985 and freeing prices in Poland in 1989-90. In Russia, the results were much more mixed, though in fairness the circumstances he had to deal with there were uniquely intractable: decades of systematic misuse of human resources and capital across a vast continental state ruled by secretive elites whose highest priority was to transmute their political power into wealth.
In any event, it is clear that Sachs does best in addressing conditions—inflation, price de-control—that are amenable to abrupt, heroic action directed from a central point. Once he became interested in global poverty, it is therefore unsurprising that he would choose to define the problem as one to which his personal style would be well suited.
There is still another reason why Sachs would be attracted to so thoroughly discredited an approach to global poverty. He is a modern American liberal, deeply distrustful of nationalism and especially of American nationalism. “The richest and most powerful country in the world,” he writes,
long the leader and inspiration in democratic ideals, has become the most feared and divisive country in recent years. The self-professed quest by the United States for unchallenged supremacy and freedom of action has been a disaster, and it poses one of the greatest risks to global stability.
This ideological commitment has lured Sachs into an infatuation with the United Nations, obliging him thereby to subscribe to a debilitating series of illusions, evasions, and deceits. He is obliged, for example, to minimize and excuse corruption and misgovernment in Africa; to denounce the “depredations of colonialism” in harsh language even as he admits elsewhere that colonialism did not hurt African economies much, if at all; and to insist—despite Oil-for-Food—that the corruption and ineptitude of the UN are the fault not of the UN system, and certainly not of Secretary General Kofi Annan (“the world’s finest statesman”), but of “powerful countries” unaccountably “reluctant to cede more authority to international institutions.”
Like one of those unfortunate African countries Sachs yearns to help, he has ensnared himself in a poverty trap. But the poverty here is intellectual, the trap is of his own making—and external aid cannot save him.