Global Policy Forum

Spend $150 Billion Per Year


Daphne Eviatar

New York Times
November 7, 2004

Jeffrey Sachs is standing on a dusty brown hillside in Nazareth. Not the Nazareth of biblical renown, but the Nazareth of ancient Abyssinia, now Ethiopia, one of the poorest and most godforsaken places in the world. Surrounded by skinny, dirt-caked children, Sachs looks awkward in a navy blazer, white dress shirt and tan slacks. Balanced carefully on a rock, he stands in brown loafers that offer just enough traction to keep him from sliding into the mounds of dirt that surround him. Although Sachs's eyelids droop, he seems to be listening intently. His brow furrows, he nods, he cups his chin as if deep in thought. An ash-colored woman with a creased face is mumbling in Amharic, Ethiopia's main language, pointing with a broken stick to rows of trenches, shrubs and stones. A translator offers a muddled explanation.

When the presentation is over, the odd mix of about 20 Ethiopian peasants, international aid workers and Columbia University academics respectfully applauds and starts back down the hill. Sachs scrambles after Lee Bollinger, Columbia's president and Sachs's boss. Blond and tanned, in jeans and sneakers, Bollinger shakes his head, looking perplexed. ''It's their G.I.S.,'' says Sachs without hesitation -- as in Geographical Information System, a sort of computerized 3-D map. ''She's showing how the community uses trees and builds terraces in the hills to stabilize the land and prevent soil erosion.'' Though Sachs has been in the countryside for less than half an hour, it takes him just minutes to place this scene in the larger story he has come to tell. ''Right now, these are just survival mechanisms,'' he says, referring to the puppet-size project. ''But small things on this scale get washed away. It's like giving subtherapeutic levels of drugs to a dying patient.'' He steps around the dried cow dung that litters the path toward the row of waiting Toyota Land Cruisers. A small boy in sweatpants lingering by the dirt road looks up at Sachs curiously, then stretches out a tiny cupped hand. Sachs looks over at me. ''We need something much bigger,'' he says.

Sachs is nothing if not a big thinker. And in July, the renowned macroeconomist and special adviser to United Nations Secretary General Kofi Annan was in Ethiopia on a world tour advancing his most ambitious project yet: the elimination of global poverty. While others tinker with incremental steps, Sachs has no patience for the small scale. Ethiopia and sub-Saharan Africa have slid deeper into poverty in the last 20 years, and whereas many economists stress the failures of local leadership, Sachs is telling a different story. In his version, Africa, through no fault of its own, is trapped. Held back by geographical impediments like climate, disease and isolation, it cannot lift itself out of poverty. What Africa needs, then, is not more scolding from the West. It needs a ''big push'' -- a flood of foreign aid -- to boost its prospects and carry it into the developed world.

It's a controversial claim that has made Sachs a lightning rod in the world of development policy, where experts are still fighting over whether foreign aid even works. In many ways, Sachs's ideas are a throwback to the 1950's and 60's, when economists believed chronic poverty resulted from a lack of savings and investment -- creating an obvious role for foreign assistance. John F. Kennedy increased aid by 25 percent; under Lyndon Johnson, American foreign assistance reached its apex in real dollars. But the 70's brought more market-oriented theories, and by the late 80's, most economists converged around the ''Washington Consensus'' -- a belief that free trade, low taxes, deregulation and privatization would make all boats rise. Sachs himself bolstered that orthodoxy when he co-wrote a highly influential paper in 1995 that largely blamed protectionist policies for the lack of economic growth in poor countries. The consensus has since broadened, adding the need for efficient, law-abiding governments to its concerns. But it has also blurred, as development economists debate the relative merits of large- and small-scale solutions, trade, aid and the promotion of micro-loans.

Even as the experts quarrel, the war on terrorism and the backlash against economic globalization have induced wealthy nations to begin putting more in the collection plate. That has created an unusual opportunity for an impassioned advocate like Sachs to barrel along, spurred on by complete confidence in his own convictions. Although his advocacy of huge increases in foreign aid has won him both admirers and critics, all agree he now occupies an enviable position of enormous influence. He is the leading strategist on the United Nations' Millennium Development Goals -- an ambitious initiative that aims to eradicate extreme poverty and hunger, as well as achieve universal primary education and significantly reduce child mortality, by 2015. He is also director of the Columbia University Earth Institute -- a $90 million think tank that joins the natural and social sciences with the explicit aim of helping the poor while preserving the planet. George Soros calls him ''a great proselytizer.'' Sachs advises governments across Asia, Latin America, Eastern Europe and Africa. That he's always ready to offer strong views on matters seemingly beyond his expertise -- assailing American policy toward Iraq or Haiti, for example -- has only raised his global profile.

It's an image Sachs has been shaping, in various forms, for decades. Sachs, now 50, first attracted attention in the 1980's as a budding Harvard academic proposing to heal troubled economies through ''shock therapy'' -- a quick jolt of market-oriented reforms. After early successes, he stumbled badly when he sought to apply the formula to Russia, an experience that tarred his reputation and battered his ego. It also sparked Sachs's conversion from a believer that free trade can help deliver all from poverty to an advocate of the view that Adam Smith's ''invisible hand'' isn't nearly strong enough. In what could be seen as an act of atonement for his market-oriented years, he is committed to convincing the world that only a direct transfer of alms from the rich can possibly save the poor -- and ward off an apocalyptic, terror-filled future. Sachs makes no pretense at modesty. ''To the extent that there are any international goals, they are the Millennium Development Goals,'' he told me over breakfast at the Sheraton Hotel in Addis Ababa, a palatial structure of archways and fountains perched on a hill rising up from the center of Ethiopia's decrepit and polluted capital. ''And I've helped put them much higher on the agenda.''

I met Sachs at his hotel just hours after he arrived from Bangkok -- one stop on a nine-nation, five-week journey. A small, lean man with a large head that looks bigger because of his thick waves of brown hair, Sachs is famous for his boundless energy. This morning, though, he looked tired; his suit was rumpled, and he had missed some spots shaving. Still, Sachs was on message. ''Africa's challenges are enormous,'' he told me over a bowl of corn flakes, citing statistics on the frequency of drought and the failures of rain-fed agriculture. ''But we have powerful tools of science and technology. And we're here to say, 'Here are the things that can and should be done.'''

Ever the macroeconomist, Sachs is in the process of calculating exactly what it will require to do them. Adding the costs of basic infrastructure, health care and primary education, among other things, he estimates that it will take about $100 per beneficiary per year for Africa to meet the Millennium Development Goals in the next 10 years. He figures African governments and households can kick in about $45, and donors already contribute about $10, so that leaves $45 more per person. On a global scale, meeting the goals would require about $150 billion of development assistance per year. If that sounds like a lot, it's still less than the 0.7 percent of G.N.P. a year that donor countries have repeatedly promised, most recently in Mexico, where in 2002 they signed the Monterrey Consensus pledging ''concrete efforts'' toward that goal. (Despite recent increases, the United States still spends under 0.2 percent of its G.N.P. on foreign aid -- less than any other wealthy industrialized country.) ''You can't have a civilized world in which the rich aren't even willing to live up to this tiny commitment,'' Sachs says. ''We're talking about less than 1 percent,'' he adds, a statistic that seems to astound him. ''It's stunning.''

Sachs isn't just expecting rich nations to fork over the cash, though. He's traveling the world to rally poor countries to draft plans showing what they need and how they'll spend it. Hunger, for example, can be eliminated with the right science and technology, he says, which can be purchased with foreign aid. So in July, Sachs convened in Ethiopia a United Nations conference on hunger to persuade African leaders to see it that way. Ambitious as ever, Sachs aimed to start an African ''green revolution.'' On the morning of the revolution's scheduled kickoff, Sachs hovered in the vast lobby of the United Nations conference center in Addis Ababa. ''What if no one shows up?'' he said, laughing. Some nervousness around this hunger conference was warranted. For weeks beforehand, Sachs frequently wondered aloud whether calling his campaign a green revolution was such a good idea. The first green revolution, financed by private foundations, began in the 1940's and introduced hybrid seeds, chemical fertilizers and powerful pesticides to the developing world. Although countries like Mexico, India and China vastly increased food production, the means by which they did it were later criticized for destroying biodiversity, creating dependence on expensive polluting chemicals and driving small farmers out of business. Meanwhile, economists grew skeptical that even the best technology would help countries whose own economic policies seemed to be stunting their growth.

Such controversy does not deter Sachs, however. He strategically timed the hunger conference for the day before the start of the African Union summit, an annual meeting of African leaders, so that heads of state would attend. (Sachs said he also hoped to address the summit.) Judging from the hundreds who filled the conference hall and the long row of African leaders who took their places at the dais, including Kofi Annan and Prime Minister Meles Zenawi of Ethiopia, it was clear by 9:30 a.m. that Sachs had a good turnout. (Unexpectedly, President Omar Hassan al-Bashir of Sudan also showed up -- a stark reminder that not all heads of state are especially deserving aid recipients.) Sachs was the only non-African on the stage. When the Africans spoke, they stressed the importance of ending the continent's conflicts and applying African solutions to Africa's problems. Then Sachs took the podium. Leaning forward, his gaze spanned the audience. ''This is a moment of historic opportunity,'' he began. ''You are here to launch a 21st-century green revolution.''

He went on, his voice rising: ''The poor are blamed for their problems. We say the poor are poor because they're corrupt or because they don't manage themselves. But in the past two years I've seen exactly the opposite.'' Hunger can be eliminated, he told them. ''My country spends nearly $450 billion on its military and only $15 billion on development aid per year. We have so much money we don't know what to do with it.'' Like a preacher rapt by his own evangelical zeal, Sachs was soon transformed from one of the rich himself to one of the Africans in the audience. ''They need to hear from us that this is not wishful thinking, this is not money down the drain,'' he declared. ''They need to hear from us.'' Sachs went on to suggest that the rich countries should cancel all of Africa's debts. ''If they won't cancel the debt -- and I'm stretching here -- I would suggest that you do it yourselves,'' he announced, eliciting murmurs of surprise and then growing applause. His voice rising, he said, ''The time has come to end this charade.''

Dick Beahrs, retired president of Court TV, and Hans Eenhoorn, a retired senior vice president of the food giant Unilever, hardly seem like revolutionaries. Yet as we bumped along potholed dirt roads in the Tigray region of northern Ethiopia on the day before Sachs's arrival in the country, they certainly sounded like converts to his cause. Alongside our air-conditioned white Land Cruiser, tiny children led miniature donkeys loaded with yellow plastic water buckets. Bony cows with calves so skinny they looked like stray cats grazed on barely perceptible shrubs. But as we wound through the arid mountainous terrain, the eroded and abandoned soil gave way to small plots of freshly plowed dirt. "I love those living fences!'' Beahrs exclaimed as we passed a row of cactuses that had been placed around newly planted trees to keep cattle from eating them. From the front seat, Eenhoorn spouted statistics: ''The amount of soil lost in one year in Ethiopia could fill a string of three-ton trucks circling the equator twice.''

Beahrs and Eenhoorn are members of the United Nations Millennium Project Hunger Task Force, one of 10 groups that Sachs has created that combine scientists, aid specialists, economists and philanthropists to draft ''business plans'' for meeting each of the Millennium Development Goals. Notwithstanding his relentless attack on wealthy governments, Sachs maintains strong ties with wealthy corporations and individuals. He has dined with the C.E.O. of General Electric, for example, and publicly touts Monsanto's latest research on drought-resistant seeds as a panacea for Africa, as he did at the United Nations hunger conference -- to an African audience strongly suspicious of genetically modified crops. To all his antipoverty work, Sachs takes a businesslike approach, with detailed plans, needs assessments and cost analyses, as if to make what many see as nebulous and unrealistic goals seem less so. The members of the hunger task force returned to the capital just in time for a meeting on how Ethiopia could meet the Millennium Development Goals. ''We had a really exciting trip yesterday,'' Beahrs told Sachs. ''A picture is worth a thousand words. It really shows that scaling up on a mass scale is possible.'' ''That's a great op-ed,'' Sachs said, laying out the headline in the air. '''Scaling Up Is Possible.' I'll have to write that.''

Addressing about 200 Ethiopian officials and United Nations functionaries 20 minutes later, Sachs emphasized the ''on-the-ground realities'' his colleagues had just seen, he said. ''Clearly, the Millennium Development Goals can be achieved. A huge scale of development can take place.'' But can the problems of a country like Ethiopia be solved so readily by money and technology? It's unlikely that there are enough skilled administrators, teachers, engineers and health and agricultural workers to implement the programs Sachs says are needed. The projects in Tigray are a good example: 70,000 water-harvesting ponds and tanks were built hastily under government orders last year, but many were designed so poorly they don't actually hold water. And the region lacks the necessary workers and materials to fix them. What's more, although Ethiopia's communist rulers were overthrown more than a decade ago, private land ownership is still forbidden, destroying farmers' incentives to improve the soil. At the Council on Foreign Relations last January, the head of USAID, Andrew Natsios, said in a public debate with Sachs that Ethiopia has ''the worst economic policies next to Zimbabwe in Africa,'' citing it as an example of wasted foreign aid.

But travels through the country suggest Ethiopia does benefit from the aid it receives -- and could use far more. After Sachs left town, I drove with a local priest to Wonji, a dusty village of dry hills and grass huts a few hours east of Addis Ababa. When we arrived, a little girl in a bright yellow dress and neat rows of braids ran up to greet us. A year ago, the priest said, she was so skinny and her belly so swollen from hunger he assumed she would die. Now, she looked relatively healthy -- thanks to food aid trucked in by the United States. And with the help of Catholic Relief Services, financed by USAID, the villagers built a system bringing water from the nearest town to a bank of modern faucets in the village center. Still, the project is only a Band-Aid covering deeper wounds. If the rains don't come soon, said Almaz Tafara, a weary-looking 35-year-old mother of seven balancing a large clay jug as she screwed shut a shiny new water tap, ''we are lost.''

To Sachs, such developments support his argument for a big infusion of immediate cash. But to others, such aid projects are beside the point. The government isn't meeting its larger responsibility to develop the country. How much can foreign assistance change that? The debate had been crystallized three months earlier, when I accompanied Sachs to the World Bank headquarters in Washington. Sachs and Arye Hillman, an economist from Bar-Ilan University in Israel, had been invited to discuss the question: ''How and Why Do States Fail?'' ''The idea that African failure is due to African poor governance is one of the great myths of our time,'' Sachs began, addressing a packed hall. ''They can't get out of the hole on their own. If we don't take a different approach, we will not only see certain collapse; we will see a catastrophic downward spiral of violence.''

He continued, his voice rising: ''If you go to rural Ethiopia, Burkina Faso or Mozambique and try to figure out how to solve the problems of crushing disease burden, lack of cooking fuel -- they're living on dung as their cooking fuel. They lack access to basic medical care. We have not begun to take this problem seriously. What will it take for villages with no access to anti-malarials, where 10 percent of the adult population is H.I.V.-positive and has depleted soils because they can't afford fertilizer? If you have another idea of how they're supposed to do this all by themselves,'' he said, his voice shaking now, ''let me know.''

Understandably, Hillman began on the defensive. ''We all have the same objective,'' he said steadily, as if he'd just been accused of killing small children. ''We all want to help the poor. But billions of dollars have been spent in Africa over the course of two decades. Someone has to show us that throwing more money at the problem will solve it.'' Turning to Sachs, Hillman said: ''All the problems you pointed to are the responsibility of the government. Most of these problems are resolved in civil societies. It's a problem with culture here. We all know there are political elites in poor countries that do very well.''

It's an argument Sachs confronts repeatedly. He agrees that foreign aid should be focused on countries with good governments: don't give money to Zimbabwe, for example. But how many good governments exist in Africa? In a recent article, Sachs argues that, controlling for income levels, African governments are no worse than others around the world. But ''the question is not whether governance is good relative to income,'' says Stephen O'Connell, a Swarthmore College economist who wrote a response to Sachs's paper, ''but whether it is good enough in absolute terms to avoid sharply diminishing returns or even outright institutional deterioration when managing a massive scaling-up of public services.''

Indeed, for all the research that has been conducted since the Marshall Plan first inspired American foreign aid to the developing world, there's little agreement on when or whether aid works. Many studies show that more spending fails to improve services like health or education in the long term; others say those studies measure the wrong things -- counting aid given for political or humanitarian purposes rather than development. The World Bank's latest world development report reflects the growing view that money alone is not the answer. Even when governments spend large sums on health and education, for example, the bank's study finds they spend little of it on poor people: In Nepal, for instance, 46 percent of education funds are spent on the richest fifth; only 11 percent are allocated to the poorest. Even when the spending makes it to the local level, qualified staff members still have to show up for work; yet a survey of health clinics in Bangladesh found an absentee rate among doctors of 74 percent.

But Sachs is no longer fighting numbers with numbers. The economist has effectively bowed out of the debate, shedding his academic robes for a new cloth. He's become a believer, a preacher for the ''Big Push'' theory. His book, ''The End of Poverty: Economic Possibilities for Our Time,'' which will be published next spring, is a personal plea to heed the call. Ultimately, Sachs is convinced that we've never really pushed hard enough. ''It's like trying to put out a forest fire with one hose,'' he likes to say. ''If the fire continues to spread, it doesn't mean firefighting doesn't work. It means we need more firefighters.''

Although he is the son of a prominent labor and constitutional rights lawyer in Michigan, Sachs did not always have an especially progressive outlook. In fact, the ''shock therapy'' he engineered imposed austerity on nations in distress and earned him a reputation as a heartless market advocate. In 1985, he successfully advised the Bolivian government on its recovery from a bout of 25,000 percent inflation. A few years later, he turned to Poland, where the fledgling Solidarity government wanted to create a market economy. Then only 35, Sachs boldly advised slashing government subsidies, abolishing price controls, liberalizing trade and devaluing the Polish currency. He also helped persuade Western nations to finance currency stabilization and cancel much of Poland's debt. Inflation dropped, new businesses started and government coffers grew, securing Sachs's reputation as an economic savior.

Not long after, the new Russian Federation was teetering. Central planning had collapsed; inflation was rising; shops were empty. In December 1991, Sachs arrived to advise the government with a team of Harvard economists. But the Polish prescription had markedly different results in Russia, which was rent by political infighting and lacked markets or a strong civil society. Many proposed reforms stalled in Parliament. Those implemented, like elimination of price controls, led to spiraling inflation that wiped out Russians' savings and thwarted investment. Privatization led to looting of the country's most valuable assets by its leading businessmen and organized criminals. Fairly or not, many still hold Sachs responsible. Whenever I asked Sachs about Russia, he bristled, the only times in months I saw him lose his composure or stray off message. When it first came up, we were standing outside his four-story town house off Central Park West at the end of a long workday. Sachs launched into his standard defense: he gave the right advice, but the Russians didn't follow it. It was the United States' fault, too, for refusing to give enough money to stabilize the currency and create a safety net for the unemployed.

There was a clap of thunder. Then raindrops. Sachs's words seemed to race ahead of him. ''You try your best and do what you can do, but you couldn't imagine all of the blame that came afterward,'' he said. ''Say that malaria aid didn't work. It would be like being blamed for malaria for the next 10 years. Am I going to be blamed for AIDS too?'' The rain started coming down harder, and his wife, Sonia, rushed out with an umbrella and reminded him that the guests for a fund-raising dinner were already there. He paused for a moment and his voice lowered, cracking slightly. ''Frankly, the Russia thing was a very painful period.'' Instead of wallowing in the pain, however, Sachs has set out to redeem himself. It's as if having failed at the second-greatest challenge of modern history -- the transition from communism to capitalism -- he is intent on solving the first: the persistence of global poverty.

Sachs has many of the necessary talents. ''Jeff has been extremely successful at putting ideas on the policy agenda of governments,'' says Dani Rodrik, an economist at Harvard's Kennedy School of Government. ''All of these organizations and institutions he has criticized, such as the World Bank and the International Monetary Fund, are very much aware of him.'' But Sachs's supreme self-confidence also rubs many the wrong way. ''I would criticize his lack of humility,'' Rodrik says. ''Whatever he's focused on, he has this evangelical attitude that it's obviously the right thing to do, that people who disagree either have an ax to grind or are simply not thinking straight.'' In fact, some experts, like the Harvard economist Michael Kremer, are highly skeptical of Sachs's current focus on the Millennium Development Goals. ''Focusing aid and development planning on the M.D.G.'s may distort how funds are spent,'' he says. Developing an AIDS vaccine, for example, could get short shrift because it isn't likely to yield results by the 2015 deadline.

Wealthy nations' attitudes toward foreign aid do appear to be shifting, however. Two years ago, the United States pledged a 50 percent increase in foreign aid by 2006 as it announced a new ''Millennium Challenge Account'' that aims to support ''the poorest nations that rule justly, invest in their people and encourage economic freedom.'' (Sachs accepts the idea but says it's not ambitious enough.) That's on top of the $15 billion the United States has pledged to fight AIDS in Africa and the Caribbean. Britain, meanwhile, has promised to double development spending by 2010, and this summer pledged to reach the developed countries' long-stated goal of donating 0.7 percent of G.D.P. by 2013. Five European countries have already met that goal, and five more, including France and Spain, recently promised to reach it by specific dates.

Sachs, for his part, realizes he's standing at a critical juncture in the history of foreign assistance and intends to use his clout to create an international clamor for its expansion. But he also realizes that to convert the world, he needs to win the faith of aid's intended recipients. That goal was evident up until his last hours in Ethiopia. For months, Sachs was angling for an invitation to address the African Union during its summit meeting. By Tuesday night, his third day there, he still hadn't received one. Discouraged, he'd moved up his departing flight from Wednesday evening to early that afternoon. I waited for Sachs to arrive at the United Nations conference center Wednesday morning. African leaders surrounded by bodyguards swept in, but Jeffrey Sachs was nowhere to be found. Then, around 10 a.m., I saw him hurrying across the hallway. ''I did it!'' he said, a smile filling his face. He had the triumphant look of a schoolboy who'd just beaten his greatest rival in the chess finals. ''I addressed the African Union!'' After slipping in late to a closed-door session, Sachs had whispered his request to President Olusegun Obasanjo of Nigeria, the new African Union chairman. When Obasanjo opened the meeting, he invited Sachs to speak. Mission accomplished, Sachs was now running late. He had to catch a flight to Paris for a meeting of international donor agencies. Still grinning, he strode quickly across the convention hall, his head bobbing above his oversize suit -- an unlikely-looking revolutionary sweeping through the thick crowd of African dignitaries and out the front door.



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