(Week 9): Sachs and Moyo continued

Part I: The End of Poverty 

In the End of Poverty Jeffery Sachs’ discuses the idea that the development assistance he proposes might do more harm to the global community if the wealthy and able do not help the poor. He argues that it is not a question of being able to help, but a suggestion that if they don’t do anything the consequences of inaction will outweigh the costs of action.  He provides five reasons why the effort to help the poor will not be as taxing to the privileged as some people may believe:

1. the numbers of extreme poor have declined to a relatively small proportion of the world’s population

2. the goal is to end extreme poverty, not all poverty

3. success in ending poverty trap will be much easier than it appears:

-get practical investments in specific areas roads, power, water, sanitation

4. the rich world today is so vastly rich

-modest increase in taxation or a burst of large-scale philanthropy

5. our tools are more powerful than ever

In The End of Poverty Sachs calls on less than one percent of the rich-world income for foreign aid. Sachs’ proposes that a few of the bigger countries, such as Japan, Germany and the United States, would account for 90% of the increase.

Despite growing frustration about the widening wealth gap in the United States people are hesitant to give more to foreign aid

A 0.7 percent of GDP to foreign aid for the United States is not impossible, but economic stability and political strain could make this difficult to achieve despite an increasing number of Americans that are displeased with the widening gap between the rich and the poor. Sachs argues that the debate about whether the rich are doing enough to help the poor only concerns less than one percent of the “rich-world income” I think that this suggestion is reasonable, but I am not sure if this is a sustainable method.

Sachs is not arguing for a Robin Hoodesque, where money should be given from the rich to the poor automatically

In the short-run taxing the rich might be sustainable, but could be damaging in the long term. Sachs acknowledges that this method is not sustainable in the long term since the actual economic flow might be smaller than we think.  He argues that his suggestion does not mean that such large amount of money should “automatically be levied on the rich and turned over to the poor” (292). He argues that the actual transfer of funds must be based on country-specific plans that are rigorous and developed through consultative and open processes. He is assuming that high-income countries will meet their Millennium Development Goal commitments, increasing aid and gross official development assistance. Sachs also identifies future problems, highlighting the effects of climate change on developing countries, since they require substantial assistance. This might mean large expense as the countries adapt to changing climates.

Sachs wrote The End of Poverty in 2004 and it was then that he predicted that extreme poverty would have declined by 20% by this year.  He had predicted that by this year that most of the developing world would be free from the poverty trap, but that is not what has happened. Today, about 15% of the world lives in extreme poverty. Although extreme poverty has fallen many regions of the world such as Sub-Saharan Africa are still suffering under extreme poverty.

Poverty in Rwanda

Rwanda’s poverty rate:

2006: 56.7%

2011: 44.9%  (World Bank)

The End of Poverty brings up “myths” about Africa’s economic and social values, attempting to combat the incorrect assumptions about the continent’s inability to sustain development:

  • any aid would go right down the drain
  • Education levels are so low that even previously successful programs would fail
  • Africa lacks modern values and institutions of a free market
  • if our aid saves Africa’s children there will just be an increase in population and just more hungry people to feed.

I have heard of all of these myths in some capacity before, and while I agree that most of them are myths I think that there is some truth to the first myth listed above. If aid is not given responsibly I think that there is a risk that aid might not end up where it was supposed to go, and could potentially fuel corruption.  I think that the idea that Africa lacks modern values and institutions of a free market is ethnocentric and outdated in principle.

Part II: Dead Aid 

China’s strategy in Africa has been to use its “muscle of money” and implement no strings attached procedures in Africa.  Despite concerns and criticism by western individuals and organizations such as the European Investment Bank and China’s record of human rights violations and undercutting of social and environmental conditions by Chinese lenders, Moyo advocates for China’s presence in Africa.

China in Africa

She holds an overall positive view of China’s influence and argues that the average Africa is benefited by China’s work more so than America. China’s no strings attached procedure and attempt to tighten their financial grip on Africa is demonstrated by China’s involvement in rebuilding the Nigerian railroad.  This no strings attached strategy can be seen as overshadowing international forces such as the International Monetary Fund (IMF) and the World Bank.

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