Friday, July 4, 2008

The End of Poverty: Economic Possibilities of Our Time / Jeffery Sachs -- NY: Penguin, 2005.

Jeffery Sachs's book The End of Poverty makes a convincing case that extreme poverty worldwide can be eliminated within decades. His arguments appear in the last (and most valuable) half of the book. In the first half, Sachs recounts his involvement with various governments as an economic adviser. Chapters are devoted to his work with Bolivia, Poland, and Russia, and while I'm sure he can be credited with successes in in Bolivia and some in Poland, I am left with the impression that there is more to these stories than he is telling. Before turning to his main thesis, he provides interesting chapters on China, India, and Africa.

His argument for how to end poverty is superb. While some (e.g., Bill McKibben) have criticized Sachs for his enthusiasm for globalization and free markets, Sachs's actual views on these issues are nuanced and at least defensible. Sachs embraces globalization as the context in which countries with extremely poor population can escape "the poverty trap" by gaining access to investment and markets. Sachs's history of championing debt cancellation for poor countries gives credibility to his claims. Presumably they would be even stronger if he were more explicit about making the World Trade Organization less an instrument of rich counties.

Sachs's support for free markets is also very qualified. While he supports free markets in some goods and services, he recognizes that markets cannot be relied upon to distribute necessary goods and services to the extremely poor. Consequently, other arrangements must be put in place to guarantee that the poor are not left without these. Sachs recognizes that there is no single prescription for ending extreme poverty, but that many factors are involved and differently so in different places in the world. In general, however, he argues that if the rich contries of the world would fulfill their past promise to provide .07% of their income to alleviating poverty then the human capital, infrastructure development, natural capital, knowledge capital, and public institutional capital could be developed in the poorest countries. With these resources, their economies would be sufficently stable to allow them to participate productively in the global economy and see their economies grow.

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