browngeek

My first book on world economy…or rather lack of it. I decided to buy it after reading a fascinating cover story in TIME by the book’s author Jeffery Sachs.

There are a billion people in the world living in extreme poverty (under < $1/day) and another 1.6 billion in moderate poverty ($1- $2 /day). These numbers do not include the “relative poor”, people that have basic amenities (food, water, health-care) but still have to live by the day. This book is the how to elevate the 2.6 billion from poverty to “being poor”.

In the early chapters, Sachs talks about why certain countries have made it rich while others are still mired in poverty. Why the “new” countries of the west (UK, USA) have enjoyed economic prosperity while “old” civilizations (China, India) have been lagging. He then establishes his credibility by giving a chronological account of his economic deliverance to countries in dire straits. Bolivia, Poland, Russia, China and India are his case studies. Based on his accounts, the former three countries have benifited directly from his proposals. The economic boom in China and India, however, seem to have begun without his explicit advice. Nonetheless, he has a good handle on the diverse economies of the world and lays a good foundation of “clinical” economics through globalization.

Next, Sachs writes about his poignant experiences in Africa. AIDS, malaria, extended droughts, rampant corruption and civil wars - all together have created the “perfect storm” for the extreme poverty in sub-Saharan Africa. Sachs contends that corruption is not the key for poverty and notes that other more-corrupt nation like Indonesia and Bangladesh, seems to have climbed up the economic ladder. (Although I must note here that I spoke with a Ethiopian cab-driver when I was in D.C recently. When I asked about what he thought of the recent Bush-Blair aid package for Africa, he chortled saying “Man, they must first remove the corrupt goverments!”).

Sachs chides the IMF and World Bank (western countries) for their abstemious distribution of funds to Africa. These institutions ask the African governments to propose plans for economic amelioration. When the governments come back with realistic proposals to build infrastructure, provide water and health and bring jobs, the west asks them to trim their budgets. After many iterations and negotiations, the west finally says “Look, we can give you about $2 billion…do what you can with it”. Ridiculous!

Sachs contends that the west should give a lumpsum upfront for the basic infrastructure (roads, electricity, water) to be setup. Only then can sustained economic reforms materialise. He assails the Bush government with ridicule and censure for turning a blind-eye to Africa and choosing to start a unnecessary war instead.

Sachs concludes that if the west keeps the promise of giving 0.7% of their GDP to the poor nations (USA is the most notorious, giving < 0.2%), 2.6 billion people would get their three square meals a day.

“End of Poverty” is a hard read, but a must-read for anyone compassionate.