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Ending Poverty: Harder Than It Sounds?

Well, it actually always sounded very hard to me. But Jeffrey Sachs made me think it might be relatively easy. Tyler Cowen strikes back and says it would be very hard after all and the $150 billion a year wouldn't accomplish nearly what Sachs is promising. Tyler suggests freer immigration rules, which I certainly do support, though because of the way American immigration law works, more immigrants within the current framework would mostly mean more Mexicans. I've got no problem with Mexicans -- some (well, okay, one) of my best friends are Mexican-American! But it's not a desperately poor country, which was the subject of conversation. For a lot of reasons, I think the US ought to consider a combination of measures designed to increase legal immigration and change the composition of the immigrant population, and we can add this to the mix. Tyler also suggests that starting the Sachs Plan with a demonstration project might be a good idea. I could get on board for that. My suggestion would be Chad, a nation who's dire poverty reserves are plentiful indeed, but which isn't especially riven by war, strife, and malgovernment by the standards of desperately poor countries. Also their embassy is right across the street from Teaism, so I often find myself pondering the situation over there while eating.

March 14, 2005 | Permalink

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Yeah, I like it. Remittances have helped a number of poor communities develop basic urban services -- roads, utilities, adequate housing -- and they have the advantage of a totally decentralized decision-making process.

What I don't like about Sachs's plan, or that new Africa initiative announced the other day by Tony Blair, is that foreign aid encourages dependency by externalizing decision making. Even under the best circumstances, aid money goes where the donors want it to go. Locals have to adapt their agenda to those of the foreign granting agencies.

Development is brought about by strong states and effective civil societies. Foreign aid is actually an obstacle to both of those things.

Posted by: litho | Mar 14, 2005 1:15:25 PM

I know that the New Deal didn't do a great deal to stimulate the economy--I think the best conclusion is that it helped some, mostly throught stopping or making the bleeding easier, although I'm no expert--but I've always thought that some of the ideas there could be applied to any economy in trouble. I'm pretty much talking about public works and infrastructure.

I'm basically asking, why don't we help these nations build some roads and some water pipes and things like that? Part of the problem with extreme poverty is sanitation, and as anyone who thinks about it for a few minutes could tell you, you need things like roads to get around and do business. It would be enormously difficult to accomplish, I imagine, particularly since there's only so much water to go around. There also might be political problems, here and at home. Still, assuming it was possible to make some considerable difference, I am not sure why it's not done, or at least being proposed.

At the very least, it'd pump some money into those economies. Even if it took many more years for things to really get going, it'd be a start.

Posted by: Brian | Mar 14, 2005 2:11:54 PM

I know that the New Deal didn't do a great deal to stimulate the economy--I think the best conclusion is that it helped some, mostly throught stopping or making the bleeding easier, although I'm no expert--but I've always thought that some of the ideas there could be applied to any economy in trouble. I'm pretty much talking about public works and infrastructure.

The big problem is dealing with the corruption and instability that frequently goes along with the poverty; building roads and infrastructure all too often aids whatever faction controls them, which often is more interested in using them as weapons than maintaining them for the common good.

Dealing with the "human infrastructure" is a more fundamental need, and its a lot harder to do.

Posted by: cmdicely | Mar 14, 2005 2:18:16 PM

I think Cowen should read the book. He's hasn't got the idea.

As for immigration -- reducing poverty would require the US to accept the poorest people from he poorest countries in the world (people who earn 1 dollar a day or less -- percapita income of $365 a year). Most of these people do not have great human capital. Many are not literate.

Is there a political constituency for mass immigration of ultra-unskilled Africans and Asians to the USA? Or is Cowen trying to derail a poltically possible plan that he doesn't really understand with a pie-in-the-sky proposal?

Posted by: Ikram | Mar 14, 2005 2:35:06 PM

It all sounds so easy when you live at a distance from it, and it's all theory for you. Do you know the top two cities in the world with Mexican populations? 1. Mexico City. 2. Los Angeles. And which city has the highest number of illegal alien residents? Santa Ana, eight miles south of me.

Am I "pro" or "con" on various immigration proposals? At the risk of sounding Kerry-esque, it's too complex for a cute sound-byte answer.

The best beginning is Dianne Feinstein's proposal that if the federal government isn't going to enforce the borders, at least it can reimburse the state for billions spent in education, health services, driving services and more on illegal alien residents.

I think the best first step is to raise the minimum wage paid to everyone, including illegal aliens. And require employers to provide to illegal alien workers all the same employment safety, discrimination and benefit protections given to all other workers.

That would kill many proverbial birds with one legal stone. And...it's the right and moral thing to do.

Posted by: Deborah White | Mar 14, 2005 2:38:34 PM

As for immigration -- reducing poverty would require the US to accept the poorest people from he poorest countries in the world

No, it would require the US to accept people from countries poorer than the US who also accept immigrants from countries poorer than themselves.

Further, if we really wanted to have "free trade" as something other than a tool for capital to use to segment and labor and consumption markets to its advantage, it would involve free movement of people as well as capital and goods.

Posted by: cmdicely | Mar 14, 2005 2:45:02 PM

As I've been reading over this stuff, I've felt like there's a big piece of information missing from Sach's prescription--maybe it's just that one needs to read the book to see it filled in, I don't know. His big picture arguments about what needs to happen can make sense (though there seemed to be some numerical contradictions in the Time article), but where is the micro stuff about where to get the incentives for individuals on the ground to make things actually work. It feels like high school debate when you had to assume things could be imposed by fiat.

Two other things bugged me: One is the cultural piece. I think he's trying to ignore it because of the legacy of rich countries blaming the culture of poor countries for their problems. But culture--particularly rights for women--matters. He's concerned about AIDS in Africa, but you can't solve the problems around AIDS in Africa, regardless of drugs, until women in many parts of the continent are allowed greater control over their own bodies--young women not being forced to have sex with infected older men and women being able to demand their partners use condoms, for starters. It's not a coincidence that oppression of women goes hand-in-hand with poverty; it's a mutually reinforcing pathology.

Also, if geography plays such a role in condemning some people to poverty, why doesn't it make more sense to simply help people remove themselves from those areas than trying to make those areas more affluent? I suppose immigration changes would partially accompish that.

Posted by: flip | Mar 14, 2005 2:49:19 PM


cmdicley says.."further, if we really wanted to have "free trade" as something other than a tool for capital to use to segment and labor and consumption markets to its advantage, it would involve free movement of people as well as capital and goods."

In the race around the world for one's best interest capital can fly much faster than people, who have to separate themselves from family, or move families to other lands. Equalizing, ultraliberalizing labor, people is not the answer, capital controls might be one.

Posted by: lc | Mar 14, 2005 2:51:59 PM

In the race around the world for one's best interest capital can fly much faster than people, who have to separate themselves from family, or move families to other lands.

Oh, sure, look, I'm not saying it would be enough to liberalize rules on movement of people, I'm saying that without it, its pretty clear that "free trade" is just a buzzword for empowering holders of capital. Hence why I am a fair trader that believes trade liberalization should (1) be based on common standards of consumer, labor, environmental, etc., protections and (2) include liberalization on the movement of people, and (3) include mechanisms of ameliorating dislocations it produces.

Posted by: cmdicely | Mar 14, 2005 3:07:44 PM

It is my understanding that mass immigration has, in the past, been great for immigrants, but bad for the places that they left, which are drained of their most ambitious citizens of all classes. Remittances to families, spent reasonably enough, on consumption (adding another room to the house, etc) also, according to this theory, retarded economic development. Didn't Italian immigration of the late 19th and early 20th century help to hold back the economic development of southern Italy and Sicily?

Posted by: catfish | Mar 14, 2005 4:35:31 PM

There is no "capital crisis" in Africa.

If there were companies to invest in there, investment will come (and it does to some countries, in the amount that those governments allow effective economies to occur).

If there are governments which are safe investments (say they float bonds to build roads, etc., and won't default on them), investment will come.

When you have places like Zimbabwe, Rwanda, and Sudan, investment will not come, and foreign aid will be taken by the autocrats, often to slaughter people.

Ending poverty starts with ending government corruption. It is a necessary component.

Posted by: Mr. Econotarian | Mar 14, 2005 4:48:57 PM

Compared to the costs of other infrastructure, improved sanitation and clean water are relatively modest expenses. One big problem is that typically, governments in poor countries place price controls on food to buy off the urbanized masses. The market distortions and disincentives of this help impoverish peasant farmers who drift into cities in search of work. Which augments the original problem of impoverished urban masses demanding cheap food. (and rioting when governments experiment with lifting price controls, e.g., Egypt) How to solve this? I dunno. Conceivably, farmers could switch to a more renumerative cash crop and staples could be purchased on the the world market, but this means having the proper roads (rails instead?) and port facilities to transport cash crops to market and bring food in. Not to mention brokers, bankers, and other middlemen typical of a more advanced economy.

Starting in 1978 when Deng Xiao-Ping began to liberalize the Chinese economy, the farmers were included in the deal, which helped market reforms to succeed in China. But even there, they have a terrific problem with uprooted peasants migrating to the cities (Some estimates place this 'floating population' at 500 million!)

Are there any examples of market liberalization where some of the extreme social (and physical) dislocations were avoided?

Posted by: Diogenes | Mar 14, 2005 4:58:58 PM

It is my understanding that mass immigration has, in the past, been great for immigrants, but bad for the places that they left, which are drained of their most ambitious citizens of all classes.

So should policy favor improving conditions for people or places? Seems like a no-brainer to me.

Posted by: cmdicely | Mar 14, 2005 5:24:48 PM

If we're into the small-scale experiment idea, it might be better to start with a country where

- It's in our neighborhood
- Events there affect us
- It's got well-defined borders so immigration and border wars won't mess up the experiment
- European and American civilization bears partial responsibility for the situation

I nominate Haiti.

Posted by: Raymond | Mar 14, 2005 6:26:26 PM

Chad's a bad choice, Matt. It's got oil, which is about to bring massive amounts of cash into the hands of, oh, 4 people.

Under the radar screen is that Africa will soon supply 25% of the oil the US imports. Let's see how serious the US is about democracy in Equatorial Guinea, where you can fly direct from Malabo to Houston.

Chad's a bad choice on all sorts of levels; it has never been a safe place to live. But they beat Kadafi with Toyota pickups. One Libyan tank, two Chadian pickups positioned on either side of the tank. Guy with a tank buster in the back of each pickup. Gutsy manoever, aim high and your buddy sleeps with virgins tonight. But Libya withdrew.

Posted by: Peter | Mar 14, 2005 7:15:25 PM

There is no "capital crisis" in Africa...Ending poverty starts with ending government corruption. It is a necessary component.

Interesting thing about Sachs analysis is that his regression essentially demonstrates that bad government vs good government in Africa has little bearing on growth and development. Contagion could certainly have something to do with it, and intutively Mr Econotarian is right to say that corruption can't be a good thing. But it does show that Africa's problems aren't reducible to "its a rat hole."

However, i'd also say it's idealistic to expect an end to poverty. There is nothing that i see in the Sachs plan to suggest that increased aid would make development SUSTAINABLE (the buzz word for all of us who work in dev...). It's not money down a rat hole, but without systematic responses to disease (malaria, AIDS), climate problems (drought, locust), economic problems (no infrastructure, an agrarian economy tied to the vagaries of global markets, the weather, and the law of diminshing marginal returns), unfair terms of trade (see the West's protectionism of its textile industry, for instance), lack of education, cultural norms that dictate that labor is woman's work, and (of course) warfare, you still will have poverty...

Posted by: FreeMan | Mar 14, 2005 11:51:12 PM

um, to clarify, because i realize that the first paragraph above didn't make any sense (such is life): by "its a rat hole" i meant to address the pervailing common sentiment in the West that all aid to Africa is a waste because all governments are corrupt, clientelist, profligate & c. the fact that even the ones "doing the right thing" are struggling suggests that new strategies need to be developed, that there's something truly systemic about this poverty that goes beyond "it aint nice for capital."

Posted by: FreeMan | Mar 15, 2005 12:04:01 AM

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