hard heads soft hearts
Wednesday, April 06, 2005
Comment in response to a Matthew Yglesias post on foreign aid:
A quick point on Sach's proposal. I haven't read it completely, but I've read enough of it to know that many people seem to be misunderstanding what Sachs means by the "End of Poverty". It sounds utopian, but it's really not. Sach's thesis is that once you are on the ladder of economic growth & development, the capitalist system starts to work and you can trust incomes to rise and poverty to drop more or less naturally. Some countries will rise fast due to good economic leadership, some countries more slowly due to mediocre leadership, but the system will still make progress. A country that Sachs identifies as on the upward spiral, where the capitalist system is working and will produce results over time, is Bangladesh, even though Bangladesh is still a very low-income country.
Sachs then states that there are countries of "Extreme Poverty" which are not even on the ladder of economic development, for a variety of reasons (malaria, lack of access to ports & cheap transportation, & AIDS among them). They need help from us just to get on the lowest rung on the ladder of development, and then we can more or less trust trade & the other engines of capitalism to take it from there. Rather than "trade, not aid", "trade & aid" is what Sachs says is necessary.
200 billion in order to End Poverty & Save the World can sound a bit Utopian and pie in the sky. 200 billion a year for 15 years in order to turn Extreme Poverty countries into Bangladesh sounds a lot more realistic and achievable. And that is in fact what Sachs is proposing.
A small point: no one is talking about massive redistribution of wealth. .5-1 percent of GDP, and 5 percent of the federal budget, is all that Sachs and others like him are proposing. Also, in 20-30 years, China's economy will be as large as ours. If the Chinese, when the time comes, manage to spend 1 or 2 or 3 percent of GDP on foreign aid, while we could have but didn't, won't we be really ashamed of ourselves? This is a golden opportunity for Americans and other wealthy liberal democracies to try to win hearts and minds. We should take it.
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