The Time Magazine March 14, 2005 cover story featured economist Jeffrey Sachs’ new book, The End of Poverty: Economic Possibilities for Our Time, which lays out a program for ending poverty by 2025. He has a lot of company. There are two groups (www.globalmarshallplan.org and www.club-of-budapest.org) in Europe calling for a second Marshall Plan for the world’s poor as well as Great Britain’s Exchequer Gordon Brown and Cardinal Oscar Rodriguez of Honduras.
With the great wealth of the prosperous countries, telecommunications technology and a motivation to end poverty, it can be accomplished. Until relatively recent times, such an endeavor would have been impossible. From 1950 to 2001, the gross world product grew by more than 500%. Now, there are many rich people and rich countries that can afford to invest in the world’s poor. At the United Nations Millennium Declaration of September, 2000, rich nations pledged 0.7% of their gross domestic products to fight poverty. This is 7 cents of $10 income, something that would hardly be missed.
Why would rich countries help the poor ones? It is to their best interest to achieve political stability, increase markets (rich countries buy more product than poor ones), and, driven by religious or humanitarian sentiments, decrease misery. Rich countries have been doing this for a long time. In the 1948-1952 period, the United States assisted European recovery thorough the Marshall Plan. By an international effort, the world has seen the Green Revolution in higher yield seeds, the eradication of smallpox, malaria reduction and the eradiation of polio.
Ending poverty, a weapon of mass destruction, would enhance our anti-terrorists efforts, supplementing military operations. Terrorists thrive because of the abject poverty in the Muslim world and see the United States as a friend to corrupt dictatorial states. End poverty and terrorist support dries up. Some will point out that the terrorists that took over the aircraft on 9/11 were not poor, so how would ending poverty do anything about them? The answer is that revolutionary movements are seldom lead by the poor. Benjamin Franklin, George Washington, Thomas Jefferson and the signers of the Declaration of Independence were not poor. They sympathized with the entire society and not just their own fortunes. Dry up the core conditions, poverty, brutal dictatorships, vast income inequalities and the terrorist support will dry up too.
Sachs calls for a program that would have the magnitude of funding necessary, timing, predictability and harmonization of efforts. According to opinion polls, Americans think that non-military foreign aid composes 20% of the federal budget. In fact, the aid is about one twenty-fourth that amount. Americans may get the idea that their government does a lot in helping the poor countries when they see the headlines of the touted West Africa Water Initiative, designed by the United States Agency for International Development. It featured “a reliable supply of safe water, along with adequate sanitation and hygiene, are on the water front on the combat against water-related disease and death.” However, the actual funding was $4.4 million over three years. With a population of 250 million in West Africa, this works out to less than a penny per person per year.
Americans believe that non-governmental entities provide a significant amount. The Development Assistance Committee of the Organization for Economic Cooperation and Development performed a cross-county analysis on nongovernmental development assistance and estimated that the US contributes about $3 billion a year. This raises total US developmental assistance from 0.15% of gross national product to 0.18% of gross national product, still leaving the United States dead last in the list of donor countries.
Sachs advocates bankruptcy for nations as well as human beings and corporations. He found it ironic that Russia and R.H. Macy & Company, the famous department store, suspended debt servicing in February 1992. US bankruptcy laws gave Macy’s protection from their creditors and gave them a new start, which benefited both Macy’s and the creditors. Russia and the creditors would have been better off had bankruptcy negotiations taken place. A combination of rationality and mercy would be a major benefit to the destitute people in nations where people make less than a dollar a day.
Other than the magnitude and dependability of the effort what does Sachs offer that is different than business as usual? He calls for local participation in the planning and execution of the projects, training of the poor countries’ public sector measurable benchmarks, audits and monitoring.
To reduce corruption, Sachs would “…improve the functioning of public administration, not by moralizing and finger pointing but by the installation of computer systems, published accounts, job training and upgrading, higher pay for senior managers so they do not have to live off bribes and side payments, continued support for the government’s already major efforts to improve the judicial system, empowerment of local villages to oversee the provision of public services, and some humility on the part of the donors.” Remember Enron and those provisions in foreign aid that cater to powerful political interests in donor countries and not to raising living standards.
The US share of the worldwide effort could be financed by a five percent surcharge of incomes above $200,000, which would generate about $40 billion in 2004 dollars.
Houston based companies, which have or can hire people who know the language and culture of poor countries, make products or services that will raise living standards by using mostly local labor and material and produce environmentally friendly products, will do well in this endeavor. This will be a long haul operation spread over 20 years that will be remembered as a universal human achievement similar to the abolition of slavery, the establishment of the Bill of Rights and the fall of the Berlin Wall. Should one of the “social justice” Cardinals become our new Pope, the anti-poverty process will break loose at breathtaking speed.
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Copyright © 2005 Ed O'Rourke, P.C.
Last modified: 04/19/2007