"Whenever I go into a restaurant, I order both a chicken and an egg to see which comes first"

Monday, January 14, 2013

Jeffrey Sachs Is Wrong Again–“It’s the Politics, Stupid”

Jeffrey Sachs was once the uber-conservative financial and economic advisor to Russia and Poland, the architect of shock therapy, and a missionary believer in the power of markets.  Unless these former Communist countries bit the bullet, swallowed the bitter pill, tightened their belts, and took it like a man, they would be doomed to decades of muddling through, inadequate, piddling reforms, and a disgruntled populace.  So, do it all at once, said Sachs.  Bulldoze outmoded factories and inefficient state-owned enterprises.  Deploy the economic guillotine and wield the financial axe.  Although there might be some ‘dislocation’, things will be all right in the end.  A lot of people, high- and low-born in these countries revile Sachs for his draconian measures; and wish they had adopted a more progressive and humane course of action, but they all emerged quite nicely from the crises of the early 90s.  Russia is on its way to becoming an economic super-power, and Poland is one of the strongest economies in Europe.  How much of this progress is due to Sachs and his scorched earth policy is hard to determine; but there are many who think he was right.

Somewhere in the past decade or so, Sachs got religion, eschewed and rejected his former conservative principles, and became a true ‘Progressive’.  It was not the power of the market, nor macro-economic policies, nor major structural reform of corrupt and unresponsive governments that was the problem.  It was the lack of community participation – the engagement of village folk in an economic renaissance the likes of which the world had never seen.  Tens of thousands of small entrepreneurs would be joined in small-scale, highly productive enterprises.  At the same time, the international community would band together to eliminate disease, and his vigorous efforts for free distribution of drugs, malaria-preventing bed nets, and every other essential service, product, or device linked to positive health outcomes would become his hallmark.

An article in The Guardian (Armin Rosen, “It’s the Politics, Stupid”, 1.14.13) points out what are gently called Sachs’ ‘blind spots’ – actually glaring faults and fallacies of this development missionary:

But the Brookings event was a reminder of the great man's myriad blind spots. Last summer's controversy over an Millennium Village Project -authored paper in The Lancet, which made the now-debunked claim that the program was successful at lowering infant mortality rates, raised questions about the academic rigor of the project's self-monitoring -- which quickly morphed into questions about whether Sachs's concept of "integrated rural development" even worked at all. Sachs's problems go beyond just methodology. At Brookings, he revealed how his view towards development filters out one of the most difficult issues in the field: the relationship between lasting improvements in quality of life, and effective and representative governance.

It is the mark of a converted man to not only turn his back on what he considers to be his former, unenlightened, and profligate past; but to attack it, vilify it, and try to eliminate it.  Whereas he once espoused the view that only macro-economic policy reform and an accompanying structural reform of civil and public institutions could  provide the necessary architecture and framework for energized market activity, he now evangelizes for just the opposite. In so doing, he has ignored the role of persistently corrupt autocracies, military dictatorships, and destabilizing rebel movements whose purpose is to get their hands on natural resources - what else is going on in Eastern Congo if not for coltan, a rare element essential for all cell phones and computers? Or in the Nigerian Delta for oil?  Or to contribute to the establishment of an Islamic Caliphate?

Although evangelists like Sachs search for African heroes, they are few and far between and Hilary Clinton and Susan Rice are among the many out to lionize the Continent.  Sachs, for example was a fan of Meles Zenawi, a now discredited and corrupt dictator of Ethiopia:

Sachs has praised and cozied up to leaders like Paul Kagame of Rwanda (who, along with Sachs, is a member of the Millennium Development Goals advocacy group) and the late Meles Zenawi of Ethiopia, visionaries as far as African development is concerned -- but disasters in the area of human rights and, in Kagame's case, regional security .

Misrule in Africa is common (http://www.uncleguidosfacts.com/2012/08/time-to-reevaluate-africa.html), and Western observers ignore it:

Zenawi, who either just died or was murdered was a dictator, and despite years of misrule, was the beneficiary of billions.  Idriss Deby, the dictator of Chad played the US and the World Bank for fools, duplicitously agreeing to a gas-for-reform agenda and then reneging completely and continuing his despotic rule over one of the poorest countries in Africa. The lionized Kagame presides with a repressive regime which muzzles opposition.  He has lied or distorted reports about his support of anti-government clandestine military operations in the Congo.  There are many more examples.

Helen Epstein recently described in these pages the support that aid donors give to Ethiopia’s tyrant Meles Zenawi, who has roughly matched Biya [President of Cameroon]  in aid receipts in a shorter period of time. Peter Gill in his excellent recent book Famine and Foreigners: Ethiopia Since Live Aid (2010) documents Meles’s misdeeds further, which rise to the level of war crimes in his counterinsurgency in Ethiopia’s Somali region. Other long-serving aid-receiving dictators include Idriss Déby in Chad ($6 billion in aid between 1990 and the present), Lansana Conté in Guinea ($11 billion between 1984 and his death in 2008), Paul Kagame in Rwanda ($10 billion between 1994 and the present), and Yoweri Museveni in Uganda ($31 billion between 1986 and the present) William Easterly, NY Review of Books, 11.2010

The current crisis in Mali is partly due to the US State Department’s refusal to see the corruption in the old regime, recently toppled by the army.  Hilary Clinton steadfastly held on to the theory that the coup was just a blip in an orderly development of a modern democracy.  Nothing could have been farther from the truth.  The Malian government was rotten to the core (http://www.uncleguidosfacts.com/2012/08/us-foreign-policymaintaining-illusion.html).  Rosen in The Guardian article echoes the same sentiments – Sachs was duped:

Sachs's "drylands belt" theory also sidesteps issues of governance. No one would dispute that Mali is dry, landlocked and poor. But surely the country's misery has something to do with the failures of leadership in Bamako -- with both the corrupt, ineffectual and widely-despised government of Amadou Toumani Toure, which was forced out in a military coup in March of 2012, and the incompetent junta that followed it, a cadre that continues to try the patience of all of the country's potential partners while allowing much of the north to fall under Islamist control. Mali is in its current mess not because of where or what it is, but because it's the kind of country that could be taken over by a small gang of junior officers and a television signal. And what's to blame for that? Is it the stagnation of the country's institutions during Toure's rule? Is it an imbalance in civilian-military relations, possibly though unintentionally exacerbated by the American training that some of the coup's leaders received? Is it through the Bamako's government's failure to deal with the Touareg issue in the north, and with long-standing grievances that erupted when small arms and mercenaries returning from Libya poured into northern Mali after the fall of Muammar Gaddafi's regime?

In short, there is no way for any kind of development to occur – whether airy-fairy ‘Integrated Rural Development’ schemes like those of Sachs, or the more macro-focused financial, political, and economic reforms proposed by others – unless governments are representative, accountable, and transparent.  In most countries in Africa, this is a pipe dream.

Sachs is misguided not only in his idealistic belief in the transformative power of individuals and their communities, but in his idea that the international community must provide – free of charge – drugs and health products and services.  The problem is so serious and so immediate, he says, that to save lives now we in the West must act. This conviction totally destroyed the emerging private market for Insecticide-Treated Nets, simple mosquito nets impregnated with an insecticide.  After years of building a private market for this successful product, the Sachs-generated program to flood the market with free nets eliminated private, sustainable competition in one fell swoop.  Now that international agencies are suffering financially because of the world economic downturn, donor countries are turning off the aid spigots – i.e. fewer free nets.  Since there is no private market anymore, people get bitten, get malaria, and die.

I worked for years in international development companies with a ‘mission’ similar to that of Jeffrey Sachs – the people are always right; community participation is the only way; and the macro-economists of the World Bank are crypto-capitalists ignoring ‘the people’. None of their bottom-up, cockamamie programs ever worked; and yet they were tried and applied again and again.  The theory was right, they argued, and it only took some tweaks and reconfigurations to show results.   Guess again.

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