In Jeffrey Sach’s “The End of Poverty,” he argues that in order to meet the United States’ “share of the MDG needs,” they should impose a special 10 percent tax on the top 400 wealthiest individuals and impose increased taxes on anyone earning an income over $200,000.
While I am in favor of honoring all promises, such as the MDG funding requirements that our country and many others have made towards these goals, I don’t think this is as realistic or simple as he makes it sound. I don’t agree with his simplistic argument for taxation on Americans and I’m not sure who he is intending to address in his argument in Chapter 16. No one could impose these sweeping tax reforms as easily as he is suggesting. At the end of the chapter he then claims that he has found the solution… Now everyone else just has to implement it.
His solutions are flawed in its assumption that huge tax changes (especially for the purposes of foreign aid and investment) would be easy to implement. Does he think it is as simple as the Secretary of State filling out a form?
Even when a new city tax is being discussed, the City Council meeting is packed, journalists swarm and it makes the front page:
Where is the money going? Is it absolutely necessary? Who will it impact?
Taxes are controversial and I felt like he posed his solutions with a wave of a hand implying that they were no big deal.
I don’t take his proposal seriously because it isn’t practical unless he is also considering the breadth of work needed to implement the tax reform. It is also far from a sustainable solution if it can’t be implemented in the first place.
I looked at India and their need because Sach’s referenced it specifically in our reading. India’s aid package was relatively small and Sachs said it will diminish soon if we use his equation of accounting for the domestic revenue that should be spent internally on a nation’s own people.
Sach’s argued that if these costs were met (‘they have already been promised,’) there would be a 20 percent decline in extreme poverty. Malawi is in Sub Saharan Africa that has seen some reduction in their extreme poverty between 2004 and currently. However, when I looked at the World Bank’s Poverty Reduction Strategy Paper by the Malawi Growth and Development Strategy, it still reported 50.7 percent of the population in poverty in their last data check (2010). In 2004 this number was 52.4 percent. In fact, the country made much more progress in reducing poverty between 1998 and 2004.
Regarding Chapter 16, I have heard some of his “myths” used as arguments by classmates, friends and family. I think humanitarians, economists, governments and citizens who all have experience and expertise in the subject matter disagree. For a few of these “myths,” I found that it is just experts and stakeholders looking at the isse with different numbers, arguments and perspectives.
One of the arguments I am speaking of is the “Money Down the Drain” argument used in his chapter, which is also an argument made by economists like Moyo. While they both have the intentions to spur economic growth and reduce extreme poverty in the region, they concluded two very different solutions. Sach’s responds to this argument with a conclusion that we just have given enough aid and Moyo says to eliminate it all together.
Class Reflection: This video of a Ghanaian entrepreneur we watched in class I found extremely powerful. I am surprised that is has so few views. However, I wish they had also interviewed anyone involved in the selection of software providers. Was there any reason other than the provided foreign aid that they accepted the European bid? Would it have been possible to accept the European contract for locations where this existing, locally-run organization was not servicing. I wonder if that was proposed and shot down.
I wrote that in my notes immediately after the video and later in the class, I was surprised to hear Giorgi wondered some of the same questions. Dr. Fischer questioned whether it was a bias against Africans ability that he would automatically question if this Ghanaian was legitimate? I asked myself: Am I unintentionally being biased as well?
Regarding the question: ‘Is it a bias that we don’t take these claims as truth at first hand?’ I explored it a little.
1. Perhaps we are. There is a possibility that these questions come from biased notions of African entrepreneurship. I’d like to think as a journalist I would have wondered about these gaps no matter who was speaking but bias certainly affects us all and is something to consider.
2. Perhaps we are unfamiliar with the idea of a government doing something that does not help the interests of its citizens. I automatically thought, ‘Why would a government do this? Could it be that the European company was better and could provide better service to Ghanaians that would outweigh the harm done to this one company?’
I think this automatically because of my own context and upbringing of what a government could be. One of my arguments against Sach’s taxation of Americans was that it would not happen because of its huge breadth and impact to citizens without directly benefiting U.S. citizens. It would be extremely unpopular and wouldn’t get very far through legislation.
This idea that the Ghanaian government would deliberately drive a Ghanaian company to do more laborious work for less profit seems very foreign to me and has a surrounding context that is very different than what I might experience if I suddenly wanted to start a business myself.
I would not have to compete with an influx of aid and would likely be given the benefit of the doubt when speaking about business struggles. Something for me to think about and I’m glad Dr. Fisher shared it with the class.