A preview of the unpublished book A CIVILIZATION WITHOUT A VISION WILL PERISH: AN INDEPENDENT SEARCH FOR THE TRUTH by David Willis. CHAPTER 1: INDIFFERENCE TO POVERTY (Part 51). This blog is a continuation of the review of The End of Poverty: How We Can Make it Happen in Our Life Time, by Jeffrey Sachs, published in 2005
WHERE ECONOMIC DEVELOPMENT PRACTICE HAS GONE WRONG
Clinical economics is needed to replace the past 20 years of development practice, known widely as the structural adjustment era. This era, ushered in by the conservative turn in the United States under President Ronald Reagan and in the United Kingdom under Prime Minister Margaret Thatcher, was based on a simplistic, even simpleminded, view of the challenge of poverty. The rich countries told the poor countries: “Poverty is your own fault. Be like us (or what we imagine ourselves to be – free market oriented, entrepreneurial, fiscally responsible) and you too, can enjoy the riches of private-sector-led economic development.”
Designed to address four maladies
The IMF-World Bank programs of the structural adjustment era were designed to address the four maladies assumed to underlie all economic ills: poor governance, excessive government intervention in the markets, excessive government spending, and too much state ownership. Belt tightening, privatization, liberalization, and good governance became the order of the day.
Foreign aid per person in the poor countries plummeted
There were some truths in the structural adjustment agenda. But the policy and governance problems in the poorest countries were only part of the story, and in many places not the central part. Sadly, there were self-serving and ideological aspects of the structural adjustment era’s failures of advice and insufficient help. Foreign aid per person in the poor countries plummeted during the 1980s and 1990s. Aid per person in sub-Saharan Africa expressed in constant 1992 dollars, fell from $32 per African in 1980 to just $22 per African, during a period in which Africa’s pandemic diseases ran rampant, and needs for increased public spending were stark.
DIFFERENTIAL DIAGNOSIS FOR POVERTY REDUCTION
The Millennium Development Goals (MDGs) offer the world a chance to do better vis-à-vis the poorest countries after 20 years of failed structural adjustment policies. The MDGs state real goals that provide not only benchmarks for aid but also milestones for assessing the advice of the international agencies as well. The failures to meet the MDGs are failures of the rich countries as well as the poor, since both are responsible for their success.
Many governments have shown boldness, integrity, and intelligence
The fact that the MDGs are not being met throughout Africa, the Andean region, and Central Asia tells us that the problems are more than simply those of governance. Many governments in these regions have shown boldness, integrity, and intelligence. Yet development continues to fail. A clinical economics approach will point the way to a better strategy.
A seven-part diagnostic checklist
The key to clinical economics is a thorough differential diagnosis, followed by an appropriate treatment regimen. In the course of a physical exam, the doctor runs through pages of questions. The clinical economist must do the same. In table 1, I describe a seven-part diagnostic checklist that should be part of the “physical exam” of any impoverished country: The extent of extreme poverty; Economic policy; The fiscal framework; Physical Geography and human ecology; Patterns of Governance; Cultural barriers to economic development; Geopolitics.
EDUCATION OF AN ECONOMIST
A differential diagnosis is the beginning, not the end, of the process. The next steps, of course, are to design programs and institutions to address the critical barriers to poverty reduction that are identified through the differential diagnosis. These were issues that, much to my surprise, I had not been truly trained to address.