Jeffrey Sachs: Poverty must end

Jeffrey Sachs: Poverty must end

Most likely the most sought-after economic advisor in the world, Jeffrey David Sachs effused once again high-octane confidence that "poverty could and should be history" during the recent Regional Ministerial Meeting on Millennium Development Goals (MDGs) in the Asia Pacific from Aug. 3 to Aug. 5 in Jakarta.

Many naturally find it hard to resist his "trade and aid development" theory that has drawn both praise and skepticism. Particularly after he was elected director of the United Nations (UN) Millennium Project and special advisor to UN Secretary General Kofi Annan on the MDGs.

Sachs was born in Michigan in 1954. He earned his B.A. from Harvard College in 1976, and later his M.A. and Ph.D from Harvard University in 1978 and 1980 respectively. He was promoted to Full Professor in Harvard three years later.

Recently included on Time magazine's current list of the world's 100 most influential people, Sachs has a long and controversial track record in curing the world's economic woes.

Sachs became famous as a macroeconomic prodigy when he rescued Bolivia in 1985 from economic crises, and consecutively treated other "patients" from Latin America through Eastern Europe to Asia afterwards.

Along the way, he has garnered a degree of celebrity rare in his profession, held private sessions with popes and presidents, and joined rock stars in poverty alleviation campaigns.

The Jakarta Post had the entertaining chance to talk to Sachs recently, and below are highlights of the interview.

Question: You talk about poverty and your mission is to make it history. How did you first become interested to the issue?

Answer: First, it's so unnecessary and so ridiculous. Here we are in the 21st century; we've learned so much and figured out so much.

I live in a country that has so much wealth, it's sometimes unimaginable. The rich don't know what to do with their wealth, so they buy not hundred foot yachts, but two hundred.

And now, even middle-class Americans are driving bigger and bigger cars that they're not even cars anymore, the SUVs and everything else.

You have more than a billion people extremely under-nourished, and you have a billion people that are over-nourished. Somehow, we could do a better job on the planet to solve these problems of the poorest people.

In general, I don't believe it's a matter of simply taking away from the rich. I think it's mainly a matter of empowering the poor so that they too have the tools to be productive.

Because the essence of wealth is technology, and the essence of poverty is the lack of technology, the lack of tools. So in that sense, I see poverty as so unnecessary, and of course it's tragic because it means death actually. It's not just inconvenience. Are you witnessing an effective work of the international communities in resolving poverty, especially five years after the inception of the MDGs?

To me, it's a little bit mystifying that we're not solving these problems more effectively than we are. And then, as I've been saying earlier, I see a lot of the world's instability emanating from our failure to address these issues adequately.

And if there were more of a common spirit on the planet to solve the problems, I think there would be a lot more common cause and a lot less cause for conflict ... resolved with more sense of fairness and justice in the world, that the powerful and the rich are out to help the poor, not out to ignore them or turn their backs on them.

I think it's a matter of what we could accomplish and the reasons why we ought to do it. Yet despite the criticism and discouraging predictions, you seem to remain confident about the MDGs and that the goals are achievable.

Well, I do know that it's worth the fight. I don't know if all is going to work but I suspect we'll get something good things out of this. But I don't think you can predict, I think you can only choose to act and see how far you get. Do you have any particular view on Indonesia?

The Indonesian case here is an example where there is a lot of variation across the provinces of the country in levels of not only income and poverty, but all of these different aspects of poverty in the health outcomes, in the extent of hunger, in access to drinking water and sanitation.

So, a strategy here really requires not only national policy but also a pretty detailed program of investments across the different provinces, and what to do about the eastern part of the country which is poorer in many ways, that would be part of the strategy obviously.

We recommend not only the government makes specific plans but also to take into account in those plans the whole poverty map; where are the problems located geographically within the country; how to account for the differences within countries and so on.

As a long-standing critic of the Bretton Woods institutions, i.e., the International Monetary Fund (IMF) and the World Bank, how do you see these institutions now, especially with regard to the MDGs?

Basically, starting around the 1980s, the IMF and the World Bank together adopted the structural adjustment approach to development. This was when you had two very conservative leaders in the U.S. and Europe, Ronald Reagan and Margaret Thatcher, and they introduced a very conservative approach into those institutions, and that approach is based on a quite oversimplified model of the economy, a very free market model, and budget austerity, and telling countries to pay back all their debt. And I think the result of that structural adjustment is very bad.

By around the year 2000, more or less there was a consensus, a new consensus forming that it had not worked very well. And that's why all these initiatives on poverty reduction started to come around the time of the MDGs, because it was seen as a different approach to structural adjustment. I'm constantly looking at the IMF and the World Bank and asking them. "Do you want the old model or the new model." And sometimes, it goes in between, it's not so sure that they are in the new model a lot of time because I find circumstances that look to me as though they are doing old-style structural adjustments even though they are using the words of the MDGs, poverty reduction. So, to me, what counts is what they are financing, how much focuses there are, simply on privatization or instead on public investment in health, in infrastructure, in schools. If they're just talking about privatization, they're missing the point. If they're just talking about budget austerity, they are missing the point. So, I'm always asking, do you want the old model or the new model. and I don't think this is a settled issue yet.

Of course, it's important to understand that those institutions very heavily are directed by the rich countries. So, it's not just the technical people that choose what to do, it's a political institution. They have 184 members, Indonesia is a member, but it's not in the governing leadership because the leadership is the United States and Europe and Japan, but really the United States. It's also important to get the mental map of the world, that all these institutions are on Pennsylvania Avenue in Washington. At 15 Pennsylvania Avenue is the U.S. Treasury, at 16 is the White House, 17 is the Executive Office of the President of the United States, at 18 is the World Bank, and at 19 is the IMF. So, it's basically a stretch of five key blocks right along the Pennsylvania Avenue. So, this is not just international organizations, but this is heavy U.S. involvement.

That's why it's important to change the approach of the U.S. Now, one thing that's important is that those institutions pride themselves in saying that we work on consensus. I'm not so sure because really the powerful countries determine the agenda. But, they do have meetings of the Executive Board. Indonesia is represented on the Executive Board, all of the members are represented although they do not have as many votes as the rich countries do. But if all the board members are spending time on thinking about poverty, discussing whether poverty is being fought in the programs that they are signing; if they are spending more time working on the MDGs; if the board is asking their staff whether these programs really help Indonesia achieve the MDGs, whether these programs really help Ethiopia achieve the MDGs, or simply budget austerity, I think we could shift the approach from the old to the new a lot more effectively.

I meet regularly with the executive boards of both institutions. At least, I try to meet them once a year, if not more often. I'm telling them, advising them all the time, "Do your job, don't just listen to the rich countries, think about the MDGs. When the programs come to you for approval, you have to ask the question, is the program going to help this country or is it simply budget austerity because if it's just budget austerity, it's not truly the functions of the institutions. The institutions are representing not only the United States but representing the MDGs." You seem to have made Africa an essential focus in your discussions and you try to draw other people's attention to the continent as well.

In 1995, Africa showed me the most extreme poverty that I really hadn't felt before because the burden of AIDS, and malaria and other diseases are so great that you see not just poverty, but death on a lot larger scale and that shocked me.

It made me feel the urgency of this even more because when you see a child dying of malaria, and you know that two dollars would save that child, buy a few pills over the next few days, and yet the money's not there because the health system doesn't work at all.

The government is impoverished and it doesn't have enough money to keep the clinics stocked, and then you ask why aren't the donors doing it, and then it turns out they're not giving almost anything for that purpose.

Then it leads to a sense of urgency and frustration that's even bigger. And that is what really grew on me over the last decade. With the amount of aid that well-off countries are giving poor ones, do you think that their leaders haven't seen enough?

That's for sure. Because when people go and see with their own eyes, they really come back changed. We had an example of the U.S. Treasury Secretary Paul O'Neil (2001-2002). He is a very intelligent and a very nice man, and I knew him when he came into office. He was a bit skeptical of what could be done (in Africa). And then, he went (to Africa) with Bono. And when he came back, he really took on this cause, by then he was fired. He wasn't fired just because of that, maybe not even at all because of that, but here was somebody who had gone to see and then he was starting to say, "Yes, we can do this. We can bring water to the people," and then, he was thrown out of his job, just a few months later. This treasury secretary, as far as I know, I don't believe he'd gone to Africa before.

Seeing changes things. It helps people to understand. So my first view is people don't understand the issues.

Everybody has their stereotypes of what the problem is, but very few people know enough technically or by experience to really diagnose the problems.

I tell the aid officials also don't just sit in Jakarta, but go to Papua. Look, go to the villages. Don't just sit in Nairobi, go to the villages of western Kenya. And when they do, they really see a lot and learn a lot. Was there any specific moment in your life when you realized that this was something you want to be involved in?

I came into economics because I was interested in understanding what would make for a well-functioning, effective society that could address the needs of its people.

That was the first question I asked myself back in 33 years ago when I started studying economics. I didn't know much about it then, and I couldn't really formulate the questions very well, but I was interested right from the beginning.

But my life changed a lot when I began working in 1985 in Bolivia, which was the first time I took the things that I'd learned in school and was writing in articles, and tried to apply it in practice.

For example, I didn't understand the debt crisis until I started working on the ground in Bolivia because I thought, well, these debts should be paid, to be stretched out, or paid over time to ease the burden.

But I didn't realize how crushing this burden was politically and socially until I saw it face to face.

I learned in my life that I couldn't really understand these things without seeing them, and also comparing them in other parts of the world because, if you have in mind Jakarta, you can't really see Timbuktu.

I learned to see a whole range of places to understand the differences and similarities.

So I began to focus on this in 1985, but like everything else, it's taken me 20 years to understand more and more about this issue, and it is still continuing to learn about it. With the tight schedules you have and the time you spend visiting many parts of the world, how do you entertain yourself in your spare time?

I try to sleep once in a while (laughing).

But these past three years of being special advisor to Kofi Annan has certainly been the most intensive period of my life because first I've learned in practice there really are a lot of countries in the United Nations, and I've visited a lot of them, and met a lot of people and been to a lot of parts of the world as part of this job.

So, this summer I've been on extended travel.

It is now as much part of my life as career, so it's not separate. I feel very much at home and privileged to be visiting different places in the world and it's work but it's more general living to get to meet a lot of people and to see a lot of the world.

My family comes with me on these trips. My wife's a doctor, and she works on a lot of the public health issues, my children know a lot about these issues. It's very much a family venture, otherwise this would not be possible for me because of the amount of time, basically, around the clock is so much. Is there anything that you miss before all of these activities occupied your life? Something you used to do?

Well, I miss my sleep.

It's actually quite exhilarating and, this trip, even in the last few weeks I've been in villages in Tajikistan, Yemen, Mali, Timbuktu, Malawi. You meet remarkable people doing fantastic things. So many intelligent, well-directed people anywhere in the world. It's very exciting. Plus you get to work with Bono...

You get to work with Bono, that's not a bad thing.

That's a pretty good thing, cool thing.

We went to see the Pope John Paul II a few years ago. We went to his (Bono)'s summer residence. Then we left in a van and the gates opened. The van went out and then hundreds of fans started running behind the van. I turned to Bono and I said, you know, they always do that for macroeconomists.

He did not believe me (laughing). How are your children doing with your schedule and activities?

One of our three children is here with us in Jakarta. The three were a part of the trip in Africa, and another time, only two out of the three. So they travel a lot.

And our oldest two kids have been to about 80 countries together with me, and our 10-year-old child has been to 50 countries.

Our oldest daughter's studying international affairs, master's degree. And our son is taking sustainable development and environment.

Our youngest, who's in fifth grade is very interested in MDGs, and she gives talks to her class about foreign assistance.

On election day in the U.S, her teacher sent us an e-mail that said, "just wanted you to know that your daughter gave a little impromptu speech to the class about the importance of foreign assistance in this year's election" (laughing).

The above article was based on an interview by The Jakarta Post's journalists Riyadi Suparno, Ati Nurbaiti, Zakki P. Hakim, Tony Hotland and Anissa S. Febrina.