Sachs - End of Poverty
 
10 October 2006
23:29
 
Chapter One - A Global Family Portrait
· Confidently speaks of rich-world poverty in past tense - extreme at least
         ? Eg p6 matriarchs
         
· Issues presented in intro chapters:
         ? Disease, inc aids
         ? Weather⁄old school drought
         ? Lack of plastic tarpaulin etc - comic relief stuff
· "democracy is bound to be fragile" p9
· Malawi AIDS neat example of under-funded aid-dependent well-planned project.
· Clear commitment to supporting low-wage globalisation - eg Bangladesh p11
         ? Sweatshops first rung of ladder
         ? Benefits country as well through remittances etc
         ? Microlending with group default rules - default low, but surely catastrophic?
· Remarkable speed of demographic transition - 1 generation in Bangladesh
· Hospital records- win-win outsourcing
· Massive division in Growth in india - and poverty overwhelmingly rural
· India 6% growth!!
· China's growth entirely due to opening up 17 - and economic and cultural⁄political vaguely conflated
· Clear industrialisation and urbanisation plan for poverty reduction
         ? Isn't this finite? Can every country do this?
· [Misses point on outsourcing - money goes to US for Dell PCs etc, but jobs don't.]
· World breaks down into:
         ? One billion destitute⁄extreme poverty (Malawi)
         ? 1.5bn "the poor," but above subsistence (Bangladesh)
         ? 2.5bn middle-income (Indian IT workers) (the new bourgeousie)
         ? 1bn rich world, inc richest of middle countries.
         ? [Doesn't mention rich Africans, dictators etc.]
· Bottom sixth  unique as not even on "the ladder"
· Extreme poverty only in developing countries
· Half of Africa's pop and rising in extreme pop.
· E Europe goes from neg to 4% expov cos of wall-fall upheaval
· Mod pov falling in Africa - but in bad way or good way??
· ExPov rising both in abso and prop in Africa and falling in both in Asia.
· So two goals:
         1. End extreme poverty
         2. Ensure modly poor can climb ladder - make sure rules don't disadvantage
· Sees MDGs as path to ending expov by 2025.
· Modest help from rich countries.
 
Chapter two - The spread of economic prosperity
· Five generations from poor or extreme poor to now!
· In 1820 Western Europe average income 90% of now African average
· In other words prosperity is brand new
· Pre 1800 growth in econ and pop minimal - less that 1bn people!! 27
· Since then modern economic growth.
         ? Pop up x6
         ? Econ (per capita income) up x9
         ? US up x25!
         ? Gap grows - 1820 UK 4x Africa PCI, now US x20 Africa
         ? Difference between 1.7% and 7% growth p.a. stretched over decades
         ? Africa up x3
· Hugeness of this - growth entirely product of IR - and by implication of trade…
· Disputes dependency- not transfer of wealth but different speeds of growth reason for gap.
· Technology the main spur of growth-  so everyone can do it
· Keynes - "remarkable" lack of tech innovation between ancient times and 1800s.
· 2 key - food yields through crop rotation and STEAM
· Steam "decisive turning point in modern history" 33
· In the "dark ages" China was the tech leader not the west-
         ?[ Unique global perspective unique to historians]
         ? But britain more open
         ? Political liberty aids
         ? After years of importing, Europe started to export scientific knowledge
         ? Principia Mathematica 1687 - "one of most important books"
         ? Britain's sea dominance and prox to america
         ? Remained sovereign and without invasion or revolution
         ? Coal
· Steam allows economies to grow faster than timber and food production for first time
         ? So start of environmental devastation
         ? [BIG IDEA - the challenge of our generation is to make the benfits of the industrial revolution ] available to everyone, and compatible with the earth - in order the very maturation of the  modern age
· 5 key effects:
         ? Urbanisation: from rural productivity and suitability of urban life for non-agri activity
         ? Social mobility: end of fixed orders, can't withstand speed etc of modernity
                  § [Underestimates key importance here of reduction in importance of land]
         ? Gender roles: urban environment = less kids = jobs (a cycle)
         ? Less kids - later marriage, and crucially choose less (doesn't say why)
         ? [There's a certain economic circularity to this, dem's effects aren't really explained, think  that's done later]
         ? Specialisation of labor -  increases efficiency
                  § [FOREver solves the problem of competition? Smith points to relationship between  specialisation and size of market, but misses cultural⁄consumer element of "enough?"]
· BUT! All this difficult and is accompanied with ([ducks question of cause again])- upheaval, war,  colonialism
· Diffusion:
         ? From Britain to colonies
         ? Within Europe south and east
         ? IR spread after (because of?) Napoleonic Wars
         ? Colonialism ("tumultuous")
· Living standards rise
         ?[ Ignores Manchester⁄Lowell effect]
· Poverty can end because Ideas are nonrival (not competive, shareable)
· Second wave in late 1800's - transport (rail, telegraph, suez & panama)
· Then third wave, 1890's, electric light bulb, power spread, ICE, Haber-Bosch process (!)
· Dismisses dem of russian rev 44
· [Sudden realisation - "is globaliser!"]
 
· Chapter three - Why Some Countries Fail To Thrive
· 4.9bn people live in countries where average income 1980 and 2000
· Four ways to increase income:
         ? Saving - and buying better livestock etc
         ? Trade - get what you need from where it's cheaper, sell yours for more
         ? Technology - nutrient-enriching trees, or even just crop rotation
         ? Resource Boom - end of flies etc
         ? Growth usually comes from all of these interacting⁄enforcing
· But incomes can go down as well as up
         ? Lack of saving (plus tech breakdown)
         ? Technological reversal - if knowledge gone for example
         ? Natural res⁄env decline
         ? Adverse productivty - hit by flood or something
         ? Pop growth - ever-shrinking estates
· Poorer you are, harder it is to get richer, as you can't save etc
· Most poor countries geo disadvantage, eg mountains
         ?[ This a real Sachs motif]
         ? Africa perfectly suited to Malaria
· These conditions not fatal but require additional investment.
· Govt lack of tax base or debt can mean no investment
· Governance can threaten internal stability or discourage business
· Culture may block women, education, or leave some out of gowth
· International politics may prevent trade
· Lack of R&D - innovation - no endogenous growth
         ? Rich countries - 2% gdp in R&D
         ? Brain drain
         ? Top 20 countries in patenting do 98% of patents!
· BUT
         ? Diffusion - ideas spread through imports, FDI, reverse engineering
         ? BUT some too poor for even this
         ? And some invs designed just for west
         ? Even works in clothes - eventually manif own
         ? Process always starts next to a port - p65 chart
· Demographics - rich cournties, 2 children per couple, poor coutries, five
         ? Bangla rate 1⁄2 in 25 years
         ? Iranian revolution weird p65
         ? High births "undertstandable but disastrous"
         ? Education --> jobs --> increased cost of staying home
         ? Medicine etc --> less infant mort --> less children
· Countries have six categories
         ? Low-income (decline)
         ? Middle-income oil exporting (decline)
         ? Middle-income postcommunist (decline)
         ? Other middle-income (growth)
         ? High-income oil exporters (decline)(just Saud)
         ? Other high-income (growth)
· Even oil a shit basis for growth if not diversified.
· Of poor nonoil countries, higher the cereal yield at start, better performance
         ? This Asia-Africa difference - Asia densely popped and roaded, govt agri R&D support
         ? Also Asia better educated, literacy, lower infant mort - no dem trap
· Latin America a puzzle
         ? Geographical problems
         ? Social and ethnic divides (but US too!)
         ? Unstable politics
         ? Primary commodity dependent & prone to price shock
         ? Prone to nat disaster
· Extreme poverty continues in Asia amidst growth - India
         ? Geography - by region
         ? Women or minorities excluded - in-income distribution issues in counting
         ? Governance failure to spread wealth to poorest
                  § This quite lefty.
· When countries get on ladder,they progress; we have to invest to get everyone on the ladder.
 
Chapter four - Clinical Economics
· Here "Sachsism" begins to take shape
· Slams IMF austerity programs
· Describes "standard tools" believed to be universally applicable
· Should strive for medical model
         ? Keep all basic systems running as you work on one
         ? Go through long diagnostic checklist
         ? Diagnosis shouldn't delay treatment too long
         ? Think about most likely problems first
         ? Understand the social⁄political setting - trade barriers etc
         ? Monitor and evaluate as you go  - even careful diagnosis is just a hypothesis
         ? Strong ethical etc codes needed
· Instead we have:
         ? Actual first hand knowledge of Africa or whatever generally seen as unnecessary
         ? IMF has ignored many most likely causes for narrow obsession with corruption and trade  barriers
         ? Hasn't responded to range of systems, transport, power, comms, law
         ? Ignores trade barriers etc
         ? Makes excuses or blames patient for treatment failure
         ? Treatment assessed on whether prescriptions followed, not the results
         ? General lack of commitment to deep understanding
· Clinical economics required to replace structural adjustment
         ? Four things blamed for everything:
                  § Governance
                  § Excessive spending
                  § Excessive intervention
                  § Excessive state ownership
· Not wrong but simplistic and prescriptive
· Some self-serving and ideological elements
         ? aid plummets in 90's
         ? Conservative govts pushed agendas abroad they couldn't at home
· MDGs meet these criteria, with clear tests etc
· It's not just governance - good governance now in much of poor areas but still no dev
· DIAGNOSIS
         ? Poverty maps - using household surveys and income accounts and whatever else
                  § Distributions, geo and social, of poverty, precise type, etc. demographics.
                  § Shift from fruitless search for "big idea" to recognition of complexity of problem
                  § TABLE p84
         ? Economic policy - cost of business, coverage of infrastructure, trade policy, incentives
         ? Fiscal framework - share of public spending in certain areas, adequacy of spending, debt
         ? Physical geography - roads, rivers, airports; agri conditions; deforestation, disease
         ? Governance - democracy? Rule of law? Effective public systems? Corruption? Regular succession?
                  [§ Doesn't give a shit about democracy, basically. P87]
         ? Cultural barriers - racial division, etc.
                  § Women's rights ([again!])
         ? Geopolitics - sanctions, security threats, regional trade,
· Answers must be systematic, updated, in framework, cooperative, UN involved in diagnosis
 
Chapter five - Bolivia
 
Chapter six - Poland
called in to plan post- USSR transition
Chapter seven - Russia
 
Chapter eight - China
"QUO" "More the result of geography etc than policies... 147"
 
Chapter nine - India
 
Chapter ten - Africa
Goes in 95 at start of real HIVfest 
West pat blames curruption 
Slams SA of 80s and 90s 
Accepts left crit of CIA mobutu etc 189 
1960's us rejects mars-style mass aid. Sachs says they thought would work but politics prevents. Would it have worked? 
Politics doesn't explain it 
  well gov'd africa fail, poor gov'd corrupt asia suceed 
BUT it's not all colonialism's fault either 
  savannah diseases, drought and distance 
193 nice analysis of importance of local exp 
AIDS coincides with financial crises 
Malaria just as bad, esp kids 
Mauritius shows eff of free trade zones --) africa growth and opp act 
  The good governance list: 
        botswana 
        ethiopia 
        ghana 
        malawi 
        mozambique 
        nigeria 
        senegal 
        tanzania 
        uganda 
But FTZs wouldn't fix their troubles. 
  !LONGER historical view a strength - sees asia growth not just since 60's. 
  Malaria kills 3mn⁄yr - 5bn! Infections - basically all africa has it all the time 
malaria --) poverty --) malaria  
Prevents infra projects etc 
prevents dem trans  
warm weather increases malaria and african mozis bite more humans 
  'too busy arguing for budget cuts' 200 - malaria esentially ignored  
!coniinced reviews didn't read - ignore grand-narrative stuff and say all about aids 
  we don't know why AIDS is worse in africa (!)  
Nice examples of technically-correct imf bull 202 
  Takes credit for discovery of AIDS and Malaria in 2000 - innovation is to describe in econ terms  
8 core africa health burdens: 
        aids 
        malaria 
        TB 
        diahrhrea 
        resp infection 
        vaccine preventable disease (?) 
        Unsafe childbirth 
        Malnutrition  
  Malaria Commission calls for $27bn⁄yr aid, up from $6bn.  
ART for africa seen as expensive and africans too thick to use them   Harvard Concensus introduces idea of prod cost and generic treatments. 
  GFTFATBM launched 2001  
209 summarises idea- that practical improvements can kick-start rural econ growth.
 
 
 

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