Week 9: Sachs on Aid

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Chapter 15

Sachs talks about five different reasons why the level of required money and donations needed to help the poor is relatively modest.

The numbers of extreme poor have declined to a relatively small proportion of the world’s population
The goal is to end extreme poverty, not to end all poverty, and still less to equalize world incomes or to close the gap between the rich and the poor
Success in ending the poverty trap will be much easier than it appears
The rich world today is so vastly rich
Our tools are more powerful than ever

All of this sounds positive, right? Think about how far technology has come in the past decade. Ten years ago I was texting on my push-button flip phone and now I can post a photo to Instagram, Google where a restaurant is located, and receive step-by-step navigation instructions all on one device. In this blog post, I talk about how technology is helping increase neonatal health care in Ghana. Sachs also says how rich the rich world is. On page 289, he says that more responsibility should be assigned “to the richest of the rich, not the average taxpayers, but taxpayers with incomes at the very top of the charts. The rich can manage to pay for a significant proportion of what needs to be done, either through a modest increase in taxation or burst of large-scale philanthropy commensurate with their vast wealth”.

Although Sachs talks about taxing the rich and using that money to help end extreme poverty, he does not think that direct cash transfers are the way to go. He believes that investments in infrastructure and human capital empower “the poor to be more productive on their own account, and putting the poor countries on a path of self-sustaining growth” (page 291). This Ted Talk by Andrew Mwenda supports Sachs’ claim that aid should just not be given but investments should be mad instead.

On page 291, Sachs talks about a six-step approach that has been used by the WHO and has been proven extremely useful.

1. Identify the package of basic needs
2. Identify, for each country, the current unmet needs of the population
3. Calculate the costs of meeting the unmet needs through investment, taking into account future population growths
4. Calculate the part of the investments that can be financed by the country itself
5. Calculate the Millennium Development Goals Financing Gap that must be covered by donors
6. Asses the size of the donor contributions relative to donor income

 Chapter 16

Sachs talks about the myth that if we continue to give money to Africa then extreme poverty on that continent will be eradicated. The truth of the matter is that that money would go right down the drain, at least says Sachs on page 309. He says that because African education levels are so low that money and programs implemented in Africa, while they might work in other countries, would fail in Africa. I think this goes back to his point in Chapter 15 that money should not just be given but invested in order to fully help Africa succeed.

Sources: Ted Talk, Sachs

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