Council on Foreign Relations
ELIZABETH H. BECKER: If you all have seen his book, "The End of Poverty: Economic Possibilities for our Times," I'm sure the first question you ask is why does a serious economist have a rock star write the forward. I mean, that's the first thing that we felt that you -- well, and if you know Professor Sachs it's because he wants the subject to be noticed. He wants the book to be noticed. He wants the subject to be noticed. He's the director of the Earth Institute at Columbia, professor of sustainable development. He's a special advisor to the UN Secretary General Kofi Annan and he's had a record working on -- as an advisor for governments in Latin America, Eastern Europe, the former Soviet Union, Asia, and Africa all on economic reforms and debt reduction and some way to end poverty.
He works with an extraordinary group of people in Columbia. He, however, earned his educational degrees from Harvard -- his B.A., M.A., and Ph.D. -- and now he's here to talk about ending poverty, which unfortunately is always a very timely subject.
Last year it was especially timely, if you all remember, from the 2005 campaign that sort of came to a crescendo in the summer with the Live 8 concerts to the public and the G-8 decisions on debt reduction and increasing aid. It sort of collapsed by the end of the year when the attempt to make trade a little more fair stumbled its way out of Hong Kong, but as I said, it's a very topical subject always. And I wanted Professor Sachs to sort of concentrate on some of the topics that are certainly important today. I've just noted a couple of them: right now in Geneva the next round of the Doha development is coming to a crunch time. By the end of April they're supposed to have their more precise outline done, which includes how to reform agriculture. They've pretty much decided what to do with drugs, which is a very important subject, as you know from his work.
There's also the question of the administration speeding up admission to the Millennial Challenge Account, which is another subject that you were very on top of for the last several years. And then the recent statements by Mr. Wolfowitz over at the World Bank that countries are going to have to be more accountable, especially in terms of corrupt leadership if they're going to expect more aid.
There continues to be a debate about whether or not the United States is increasing its aid, particularly vis-a-vis the Europeans and the percentage that they are, so I wanted just to start out asking you, what's the report card right now? Where are we?
JEFFREY D. SACHS: Well, thanks a lot for the chance for this conversation, Elizabeth and to the Council and to all of you, ladies and gentlemen.
I wrote the book because I think we have an opportunity; and because we have an opportunity, I think we have a necessity to dramatically increase our efforts to fight extreme poverty on the planet. I say in the book that I think extreme poverty can be ended within one generation and that's a technical statement about possibilities. It's not a forecast by any means. We are not on track to do that right now. In general, I think, we're way off track on this planet to address the most important issues of the planet, whether it's poverty or environmental sustainability. The war path is not only a disaster for what it itself has brought about in Iraq but it's a disaster for taking our attention away and our money and resources and time from much more important things. So we have kind of lost the melody and we have to find a way to get it back.
I think the report card is pretty grim actually. There were some achievements last year in diplomatic promises, mainly by Europe, to increase aid significantly. I applaud Europe for making the commitments. On the ground, they still don't show up in very many real ways. And in this country, I think we are completely asleep at the realities of the poor, at the risks that that poses for the world, at the neglect that we're paying, and while this administration has often said they have reversed the downturn of trend -- downturn of trend of aid, I regard what's happened so far as just a statistical wiggle, not a change of approach, not a change of policy, not a quantitative difference.
And I believe that as long as we're spending $550 billion a year on the military and for real development maybe $5 billion a year -- maybe a hundredth of the military spending -- were in a very dangerous situation in this country and I don't think that's changed at all yet. The amount that issues of poverty and its consequences, which are multiple, are discussed in our country and especially in this city are still have vanishingly small fraction of the amount of time we're talking about war and while what's been said about the war is increasingly right, which is that we better get out, we're not serious yet about a new and a more fruitful approach to the world. So my sense is that we're still way off course.
BECKER: Well, in -- even in the --
SACHS: Start with the cheery assessment. (Laughter.)
BECKER: But -- on think-tank alley here --
MS BECKER: -- the institute across the street, the Center for Global Development, the Institute for International Economics, they are starting to say what you just said and which sounds an awful lot like President James Wolfensohn when he was the head of the World Bank that if you're looking at failed states, if you're looking at the causes of war, you should be looking at the social and economic inequities. And that's -- that even in the Pentagon last year, I remember there was a big memo that said, "A-ha. We should be worried about those sorts of things and that's a major issue." Has that been exploited by people you're involved with?
SACHS: Oh, we don't -- I don't want to exploit it. I want to help turn it into policy and I was approached by a major general recently from the European command in Stuttgart who pulled out a PowerPoint to show me in New York that I'd might have written in one of my more radical moments because it basically said that while EUCOM has responsibility for American security vis-a-vis most of sub-Saharan Africa, there was no way that this can be successfully carried out with the continent of hunger. And so the general was basically saying that if we're at all serious, it's not a matter of military initiatives and counter-intelligence initiatives in the Sahel, it's a matter of seriously facing up to the underlying challenges. So I think that there is a little bit of discussion.
It's actually part of our national security doctrine. If you read the 2002 doctrine, for example, it says we have three pillars of national security: diplomacy, defense and development. Defense turns out to be a little bit of a misnomer, I suppose, but it's offense and it's not working very well, but the development part is so completely under-invested -- you can't really imagine, ladies and gentlemen, until you've seen it how much we are bystanders to the fates of these countries and how many times ambassadors have pulled me -- I give pretty harsh, blunt critiques of American foreign policy wherever I am, including when we have donor meetings in Nairobi or in Bamako or in Dhaka, and very often, the U.S. ambassador will pull me aside and say, "God. You couldn't be more right. Can you help us to do something?" So this is not necessarily a minority opinion, but it's not somehow reaching -- it's not just the White House, it's not reaching Congress as well.
And what passes for -- people are very -- well, I don't know if they're very polite in this town, but they're very polite in terms of how this issue is approached because my friends across the street will spend a lot of time saying, "Well, there is this increase of $2 billion a year in aid and the administration should get patted on the back for this upturn." And $2 billion is one day and six hours of Pentagon spending, and there's no real metrics that people have right now. If you do a little bit, you get applause. Yes, you see it as being more balanced and so forth. We do not have a balanced foreign policy right now at all in terms of the real substance of how it hits the ground.
I'll give you one example if I could just to put this in quantitative terms. An issue that has concerned me a long time is malaria. It's not an issue that ever really concerned me before a decade ago, but when I started working in Africa like many people you don't realize things until you see it or you get bitten, and in both cases I didn't appreciate that probably at this point two to three million children every year are dying of malaria -- of a disease that is 100 percent treatable.
I came to that realization late -- around 1996 or 1997 -- and for almost a decade I've been trying to raise funding, awareness. I helped write a plan for this Global Fund to Fight AIDS, TB and Malaria. I've been trying to get U.S. engagement in this issue. For a long time, the U.S. has done almost nothing. That's not what you'll see on the books. What you'll see on the books is our USAID malaria program. Turns out when the Senate held hearings on that this summer that of a total program of, I don't know, maybe $50 million a year, which for a disease that causes about one billion clinical cases each year, ain't very much, that about 90 percent of what we are spending is consultants' fees. And the Senate started to go crazy -- you don't even get bed nets to people? Turns out we've been trying to sell bed nets to impoverished people for many years. It's called social marketing. It's one of the most misguided of American inventions because we have to make everything work by the market. So if you have people that have no money, they are not part of your system.
And I'm going to digress for one minute in this digression. I went to a clinic in Malawi -- in rural Malawi in January: everything by government policy was for free except one item in the whole place: the bed nets stamped USAID. Of course, that's the only thing sold. That's a great advertisement for our country also, I can assure you.
So in any event -- but I'm going to come to this -- I spent the year trying to get the White House in this year of aid to do something about malaria. They ended up announcing a new presidential initiative on malaria. Okay? I had suggested $1 billion a year for five years and that we'd work to get an extra $2 billion from our partners. What did the administration come up with? $1.2 billion over five years. Now, I want everyone to keep the metrics in place because this is important: we spend $1.4 billion a day on the Pentagon, so what we decided for our scaled-up malaria control program was about 21 hours of Pentagon spending over five years. This is what I mean. We're not making choices that have anything to do, in my view, with our real security right now.
BECKER: As you know this town, you go up on the Hill or you go over to the administration and they will say, "We're all want to end poverty, but I'm sorry, Dr. Sachs, you have not convinced us that you know how to do it."
BECKER: And --
SACHS: I suggest that they get on a plane out of Washington and I'm happy to take them to a village and they can see with their own eyes, because I came to realize that most of this criticism is made by people that have absolutely no professional training, understanding, or engagement in these issues. This is rhetoric that goes on here. And it's not -- I'm sorry -- it is not on-the-ground reality. The on-the-ground reality is local politics that this stuff doesn't cost anybody -- I mean, that nobody wants to ask for it, it seems, but the criticisms in my opinion are not -- not only are they not right -- obviously I disagree strongly with them -- I don't think they are seriously made. It's not like there are a lot of people in the State Department or in the White House running around saying, "God. What do we do about malaria? What do we do about malaria?" I don't -- can I ask from (Fogarty ?) have you had a lot of White House calls about how do we really get this under control? Shouldn't ask you. But the point is if you start engaging seriously in these questions, you come up with quite different answers.
BECKER: Right. But this is -- this is bipartisan. It's not just the administration.
BECKER: You go up the Hill and whether it's a Democratic or a Republican administration, whoever controls the Congress. So you have not -- the country has not been convinced, and I guess when as a reporter you walk through this with other people, they come up with very sophisticated particularly questioning about approaches through governments that are less than transparent, less than honest and --
SACHS: You mean ours? No? (Laughter.) Oh, you mean theirs? Sorry.
BECKER: On the receiving end.
SACHS: Sorry. Sorry. Okay.
BECKER: And as I just said, you know, first James Wolfensohn and now Paul Wolfowitz at the Bank are making corruption a big issue that aid can't -- is throwing money away if it's not going to the proper government.
SACHS: I think they're making a huge mistake. And I think this new -- I just read the press release, I haven't -- I hope I don't misconstrue it and say something unfair about what Paul or the Bank have said, but what I read on the press release may be wrong -- I just want to -- was that the aid freeze to Kenya will be continued until the government commits to a free press because we won't do aid without that. Okay?
Every day right now -- look, so here's my own view about this whole issue: we should give aid if the aid is going to work and the standard should be the success of the target of the aid. That's a tough standard. I'm not a soft guy. I don't want to give any money that goes missing. I actually don't even want to give money most of the time. I want to give bed nets to children, for example. And I want to give fertilizers to farmers and I want to give improved seeds to farmers. And I want to give antiretrovirals to mothers who will otherwise be dying. And I want to help sub-district hospitals get running water.
So the kinds of things that ought to be done are very specific and they're tangible 95 percent of the time and we ought to be delivering real things to real people like we used to do, but we don't do anymore. Now we just deliver advice and talk and consultant salaries and we don't actually deliver anything.
Now, the difference of that kind of delivery -- and I believe very aggressively in conditionality, but not the kind of conditionality we have. My conditionality is if we're going to give bed nets, god damn it, they're going to reach the villages and we're going to send out auditors to check after three months that the bed nets are there. That's conditionality because you make a project that has inputs, milestones, outcomes and evaluation. That's serious business. But what we're doing on conditionality is we're going to cut off aid unless Hamas renounces violence, or we're going to cut off aid unless this election is according to the way we want this to be, or unless we construe that the Kenyan government is in favor of free press and so forth. This is a losing game, by the way. Even if you like all the outcomes, this is an impossible approach to the world.
And I've been counting in the last month, every day we're threatening someone else with an aid cut-off. And if you, you know, of course, it's also the International Court of Justice -- criminal courts and many other things. We have so many conditions on aid that have nothing to do with development that have only to do with our bilateral politics, we don't do development anymore. So there's no real conditionality on whether the bed nets reach the village. First, we don't give bed nets. Second, we don't do anything really programmatic. All we do is wave carrots and then we say -- and every one of these, I think is wrong, by the way; wrong for different reasons but wrong basically because they are bound to fear. Before Hamas takes a step in the door, we say we're in favor of free elections. Now, we're trying to topple the government before anything can happen. Come on. To me, this is ridiculous, frankly. But Kenya -- we add these conditions or we don't like how this goes. This is what we tried to do in Haiti for 20 years: put on the spigot, turn off the spigot. Put it on and turn it off. Put it on and turn it off until the place is so unbelievably desperate they're no jobs, no incomes, no nothing. We destroyed the little export processing zone that used to make baseballs, that used to make shirts, that used to do other things. All of that's gone because of how we turned on and off the aid over time -- scared the wits out of everybody.
And the big mistake is a general view that we believe we run these countries and we can't even run ourselves, much less run these countries' politics. But the point is, you should be very careful about delivery of aid but that's not what any of these conditions is about. That's not what this governance stuff is about. This governance stuff is about running your country, not running your aid project. So we should have tough conditions on the aid projects. I have no -- I have no sympathy for a bed net going missing. That's a child whose life is put in jeopardy. And there are ways to monitor that in a rigorous way. And those specific programs work: that's how small pox was eradicated not just, in quote, "well-governed countries" but in the Central African Republic, the Democratic Republic of the Congo, then Zaire. Small pox wasn't eradicated in three or four countries chosen by the Millennium Challenge Corporation. It was eradicated everywhere because it was targeted inputs, targeted outputs. And that's how we ought to do our conditionality: to run this like a proper business operation where we actually know what we're doing and we know what we're supposed to get out of it and we audit the hell out of it. But this is completely different from the kind of conditionality we're imposing right now, which is all about our political wants, not about development.
And one more thing if I could. I have no opinions on these matters.
SACHS: There is a view that cutting off aid accelerates political change in a favorable direction. And there's one case I know of where that worked and that's South Africa and apartheid and many other things were going on. I know 25 cases where it failed. And Aung San Suu Kyi is no closer to progress, but Myanmar is a hell of a lot poorer and a hell of a lot closer to China than it is after 15 years of these sanctions. They feel good but they accomplished nothing. Haiti is much farther behind today than it is had we not done the sanctions because real -- if you cut off aid, you can bring down a fragile country. That's for sure. But you don't necessarily bring down the regime.
It's absolutely fascinating to watch when you squeeze an impoverished place, you weaken the civil society at least as fast as you weaken the government, so the balance of power does not change necessarily. Often the government regime is entrenched and the civil society collapses. The best people flee. They leave because they're desperate. They're hungry. They got to get out because of their children. And all these sanctions are not leading to political change. All they're doing is -- what they do predictably with 100 percent predictably is undermine development because development is something that has to be every day, constant, steadfast investment because things get broken a lot faster than they get built, so if you're turning this on and off, you never get development but you don't get the political change you want, you just get instability. And I think it's a big mistake we're making constantly.
BECKER: Before we open it up, I'd like to just make a couple of comments generally. One, I'd like to see you in your radical phase. (Laughter.)
SACHS: Right. I'm trying to be calm today.
BECKER: The one thing when the -- anybody talks about improvements since the end of the Cold War with globalization always it's the number of poor people who have disappeared because of the improvements in India and China. In the aggregate it looks good, but when you break it down, we all know that there's greater inequity between countries and within countries. And I wondered from -- if you're a country -- an African country, is it fair to always be compared to India and China with their incredible thousands of years of growth where they were -- they're on top of the world before we were -- before Europe when the English came, so on and so forth? And whenever you go to these development issues and hear economists like you rather than the historians who understands that, it's almost -- is it fair to count all the great improvements in India and China since they have the base to begin with?
SACHS: Well, I actually think that the comparison with India is a very good and illuminating one, and very important because I believe that Africa can do what India did in essence, which is escape from this trap because with all of India's great civilization, India was considered almost a basket case in the mid-1960s and we were pouring in PL-480 like crazy because with failed monsoons, the line was India's going to have mass starvation and they're never going to get out of this. And of course, that's when the population bomb was written and the Malthusian worst predictions and that was about India and it didn't happen. And you can understand why it didn't happen. It's really important to understand why it didn't happen.
It didn't happen because first of all, there was a green revolution and that was a constructed, brilliant U.S.-supported operation that realized that if you got higher-yield variety seeds, fertilizer, and small-scale water management to smallholder farmers, then they could get out of this seemingly Malthusian trap. And Rockefeller sent Norm Borlaug, and I recently read a wonderful speech that I just came across as I was surfing the net by -- in 1968 by William Dowd, the USAID administrator in 1968, who said the largest item in the USAID portfolio by far is fertilizer for India. God, we don't do any fertilizer right now for Africa at all, but in 1968 we helped to make the green revolution. Hundreds of millions of dollars, which now would be tens of billions of dollars probably, went into financing India's transformation in the early stages.
Forty years later, I hear all the time by ignorant people that: "Oh, well. India and China made it on its own, why doesn't Africa?" And that's complete nonsense. Nobody makes it on their own -- nobody in this world. Even the United States got help from the French in the -- by the French, it's important to remember, in the first two formative decades of this great republic of ours. And everybody needs help sometimes, but it's got to be practical to make a difference.
Now, India had the green revolution. Africa has not had a green revolution. It's my proposition number one because I'm taking the great ideas of all the agronomists starting with Norm Borlaug that Africa can have its green revolution right now. But you have to understand what happened. The green revolution came with subsidized fertilizer. We subsidized seed. India subsidized fertilizer. Indonesia, China, we helped these impoverished farmers get a foothold into development. Then came the World Bank's structural adjustment era starting around 1982 with the developing country debt crisis and this was market fundamentalism. It was the part where I just had come in into the profession myself and I watched the structural adjustment programs get developed. And one of the theories in 1985 was, African farmers are being exploited by the urban elites, so let's get government completely out of agriculture, privatize the parastatals, end all subsidies, and so forth.
Twenty years later, turns out that wasn't the right diagnosis. It just wasn't the right diagnosis. The smallholder farmers couldn't afford fertilizer and seed; they're too poor, and so they remain even poorer now than they were 25 years ago. The population's doubled. Farm sizes down by half. And for 25 years, the soils in Africa have been mined of nitrogen principally and also phosphorus and some potassium because when you take the crops out, you take out the nutrients, and if you don't put fertilizer back in, you just end up depleting the soils. And so they went down, down, down to the point where I showed a map this morning across the street of the current UN Emergency Appeal Map for Africa: the whole continent is shaded in with the exception of five countries. It's almost like the onion -- like a caricature except it's a tragedy, it's not a joke. Africa can't feed itself right now, but not because it's impossible but because the farmers don't use any fertilizer, they don't have small-scale water management, and they don't use improved seed variety because they can't afford any of them. And we're cutting off aid because the free press isn't up to our standard in Kenya. It will not be up to our standard by cutting off aid. This will change nothing except further impoverish a country.
That's a cut-off to a country, mind you, where five million people now are at the brink of starvation with the UN Alert because of an intense drought over the east and southern part of the country, maybe one that is anthropogenically-driven, by the way. In other words, that we have helped to cause through our long term energy use. That's another issue. But how can you cut off aid to a country where five million people at are risk of starvation? Are we losing the thread here? This is completely ineffective how we're operating because it's done very casually from 5,000 miles away.
BECKER: I feel ineffective as a moderator because we've now gone over -- (laughter, inaudible).
BECKER: And I know there are great questions out here. Please, your name and affiliation. And the microphone is right here.
QUESTIONER: My name is Eugene Marans, Cleary Gottlieb. Question: what you've described seems to be a contrast between top-down development and bottom-up development. Could you talk a little bit more about focus on direction?
SACHS: Yeah. So I believe that much of what needs to be done is bottom-up, but the people at the bottom need help in order to do it. What we're doing in our operational work is working with about 80 villages around Africa right now to show that if farmers get a little bit of seed and a little bit of fertilizer and a little bit of help with water, they can have a green revolution village by village. And we've shown in one planting season in Kenya that just with basic inputs -- no magic -- the yield went up -- the total production, both yield and farm plant -- arable planted went up 3.6 times in one year. That was from extreme hunger to food surplus in one year by providing $18 per household of value of seed and fertilizer -- the kind of thing we used to do.
So we're calling for bottom-up, community-driven development -- all-practical. Money plays almost no role in this. What plays a role is commodities: fertilizer, seed, bed nets, effective anti-malarias, antiretrovirals against AIDS, basically clinical services, I could say more broadly, a truck for a village because these places have no transport, a VSAT dish, you can even bring in Internet and that's not gilding the lily. Internet actually changes life in every way for a place by distance learning, by marketing commodities, by every other thing that's possible, and that costs a few thousand dollars and can service people at basically a dollar per capita of capital costs.
So we're saying let's get real in our aid programs. But I beg this administration's never done it and I -- it's not personal: they can't do it. It's called arithmetic. They don't do arithmetic. They don't do arithmetic on anything, whether it's troop levels, whether it's budget, whether it's taxes -- anything. But I beg them, do arithmetic on malaria control, for example. I can show you how much it costs for the bed nets, the anti-malarials, the diagnostics, the community health workers, you can get a very sound budget. And then you come up with this $1.2 billion over five years. Where did that come from? From out of thin air because OMB had to find -- you know, they had to squeeze some other program to make this work, not because they cared to actually solve the problem. So it needs to be bottom-up, empowered, and tightly monitored. Those would be my criteria.
BECKER: To be bipartisan, I have to say that the last person who was sending commodities to farmers was Ronald Reagan.
There is a question way in the back -- the young fellow. Yeah. Way in the back, with the white tie.
QUESTIONER: Hi. My name is Manelisi Dubase from the South African Broadcasting Corporation. Mr. Sachs touched on a number of themes, but I was wondering that if all these themes you just touched on, particularly the conditions that being put for granting aid or so on, would you say these are the issues that stand the -- in fact, on the path of the achievement of the Millennium Development Goals for instance? That's firstly.
And secondly, I just want to move you back nearer home. The argument you're making about cutting aid to governments that are seen to be doing bad -- just across our border we have Zimbabwe and – (inaudible) – for opposition party in South Africa and other people are saying, "Put sanctions. Cut electricity. Stop the South African Airways from going there," and all that. The government of South Africa has been saying, "But that will achieve exactly the opposite." Let us strengthen them, let us strengthen the opposition. Let them talk. It does look like you agree with the path of the South African government that the solution is not to sanction, but it is to help. I don't know whether I understood you correctly.
SACHS: Yes. So I agree Zimbabwe's got enough problems without cutting off electricity and that will do no favor and it also won't put Mr. Mugabe out of power. I am no fan of Mr. Mugabe, I have to say. I think he has done -- he's one of those cases and I don't think it's a general principle, but he's one of those cases where one leader and a lot of cronies have really made a macroeconomic effect on their country in a pretty disastrous way. So don't misunderstand me in praising him or agreeing or anything else. I just think adding sanctions in this circumstance makes no sense at all and it doesn't accelerate political change. All it does predictably is make aids unaddressed, is make hunger worse without political results. So -- I'm sorry, the first part of the question?
BECKER: I think you --
SACHS: Oh, that this stands in the way? Yeah, basically -- look, the country really doesn't -- it's not even the country because I actually do not believe at all that it reflects the understanding of the public, but our political system in Washington has not liked to give money to Africa ever, but it's -- and it's not liked foreign aid ever, but it used to give a lot more of it and it -- as a share of GNP and it's come down to shockingly low and dangerously low levels. And we built up a whole ideology in this country about how the poor have only themselves to blame, how it's all corruption, it has nothing to do with malaria, it has nothing to do with soil nutrients, it has nothing to do with other things; how every country that ever made it, made it on their own.
I got an e-mail -- now, I'm in favor of aid to Israel, but I got an e-mail from somebody that said, you know, "Why do you promote aid to Africa? Why not take a case like Israel that made it on its own?" (Laughter.) Now, aid to Israel has -- aid to Israel probably equaled aid to Africa for many decades, and I don't -- it's not one versus the other: we've got plenty to go around. We really do. But we have such a misunderstanding in this country. We have such a misunderstanding about real life of impoverished people and about the risks that it poses and where conflicts come from.
Even Nick Kristof, who I admire very much for taking on Darfur, is missing a major point, which is that ten times more people are dying of natural causes -- a hundred times more people of hunger and malaria than are dying in the conflicts that he's writing about. And just writing about the conflicts is giving the wrong impression that: "Oh. That's all about tyrants and murderers and thugs, and we ought to do something about peacekeeping." But we've got 10 million children dying because they are too poor to stay alive and not because of the corruption of their leaders but because there's no safe drinking water, there are no anti-malaria bed nets, the soils that their mothers are farming do not have nutrients in them and they can't grow a decent crop.
And if we really took a moment to understand this, we'd understand what the major general told me which is: "This is really unsafe." And instead of having our counterinsurgency effort going on in the Sahel, we'd actually have a counter-hunger effort going on in the Sahel because that place is hungry. And instead of cutting off the aid to Chad over this World Bank deal, we ought to understand that Chad's been invaded. It is so poor -- you can't even imagine how poor it is because I can barely imagine. I spend my life in these places. These places have nothing and so they need help to have a little bit. And we are not doing anything realistic -- I'm sorry -- right now at scale to address it.
BECKER: Okay. Here.
QUESTIONER: I'm Jim Moody, Merrill Lynch. Jeffrey, thanks again. Good to see you. You described the -- one of the key lacks is the U.S. understanding, and particularly on Capitol Hill where it could make a real difference. And one of the issues is members of Congress get roundly criticized, I can tell you firsthand, for traveling overseas. The press loves to take potshots at so-called junkets even it's not just to Paris. That's one issue we might want to address someday. I don't know how you get a handle on that, but it's desperately important for members of Congress to travel to Africa and other places. That hardly ever happens.
If I can just add a question, you've critiqued in searing terms USAID's policy and I agree with everything you've said. What about the UN structure? There's UNICEF, there's FAO, there's UNDP, there's IFAD where I once worked. What's your critique -- you know, what is your grade mark that you would give this collectivity of activities and do they suffer from the same problems that USAID suffers; that is, excessive use of expensive consultants without much delivery on the ground?
SACHS: Thanks, Jim. How do -- how do I answer this? First, everybody is cash-starved in this business including USAID, and the high proportion of consultants, it's much too high even for the little that they have but if the USAID budget were appropriate that level of consultants might make sense with the massive scale-up of the actual commodities. So you do need a mix, but we get this really funny situation where it's all consultants and no real help.
Now, the UN -- every agency is cash-starved also and they basically do projects for donors, and those projects are often very successful. So I go to countries as part of my work and bring the UN agencies around the table and I say, "So what's going on in Ghana?" And UNICEF says we have this wonderful project in the northeast region where we show that if you freely distribute bed nets and you do this and this, you can get the child mortality rate down by half in three years. Said, "That's fantastic. Well, let's scale it up." "Oh, no, no, no. We can't. We have a grant from the Dutch government. It's for the northeast district." And it's really interesting. It's wonderful. Then I go to the next place: World Food Program. "We have this great school meals program here, you know. You put a school meal and using locally produced food and all the children go to school. And their health is better and their learning is better." "Great. Let's scale it up." "No, sorry. That's -- the Norwegian government has paid for that district." So this is why I'm so frustrated.
I come back to Washington and I'm told aid doesn't work by people that do not actually know -- sorry -- and they don't go to the field and they don't work on the practical issues and they don't see these practical results. And we live in the world especially in this city of these mantras, you know: "Aid doesn't work, money down the drain, Africa suffers from corruption," whatever it is. These become the defining realities. Whereas I see 150 programs that are great, but they are a district here, they are a village here, there are a specific project there and they're not held back by administrative limitations; they are held back because that's the resources that you have to actually carry out the job. So it's not so hard to get great results. Now, that's the number one problem.
Would I reform the UN to make it much more operational? Yes, definitely. It's, you know, 30 agencies all fighting for turf. All these partnerships, so how do we sit around the table and so forth. And I don't necessarily admire it, although I admire a lot of the expertise in this system. But the UN is not designed to be operational, starting with us designing it to be non-operational. The UN is not a kind of self-standing organization in the grips of the G-77 as it's portrayed in the Post or in the New York Times. The UN is mainly run by its lead paymasters, starting with the U.S. We don't like what's said about us in the General Assembly or the Security Council, but organizationally we really have a lot of ability to affect things. But we haven't wanted the UN to be operational except when we have defined exactly the mission. And so so much of what happens at the UN is if you start to take a step, the U.S. tells you, "No, no, no, no. That's not what you're supposed to be doing." And I think it's a huge mistake for us.
This is a unilateralist administration. They claim not, but it's hard to justify the denial it seems to me. And what they never understood is that if you go multilateral, you'll leverage everyone else's efforts. They never got that and so we do everything the expensive way and we get much less than one-third of the results we would because we should be basically a third of all the efforts. And we end up being the whole part of minuscule efforts.
BECKER: Okay. Sally?
QUESTIONER: Thank you. I'm Sally Cole from PSI and I am surprised to hear your denunciation of social marketing. In the interest of full disclosure, PSI is a social marketing organization.
SACHS: The social marketing organization.
QUESTIONER: The social marketing organization but it does deliver real things to real people. It does run like a proper business. It can be easily scaled up because it runs through the commercial sector. It delivers practical things at a subsidized price. We don't sell a bed net for what the bed net costs, we sell the bed net for what the poor people -- a poor person can afford. That may be 50 cents for a bed net, 30 cents for a month's worth of water treatment; providing clean water where it didn't exist before. I might also say that the revolution in India was about the green revolution, but it was also about socially marketed contraception.
QUESTIONER: So I'm sort of surprised that such a practical person, why you find this an impractical approach?
SACHS: Yeah. So Sally, let me explain and first, I think PSI could do a phenomenal amount and it already does a phenomenal amount, but you could do a phenomenal amount more if you had an improved mission from USAID, and I get a lot of back channel from your colleagues in PSI who agree with me. USAID wants to sell the bed nets. You spend a tremendous amount of effort to sell the bed nets. People have no cash, so you end up selling them at 50 cents and the administrative costs of making such a system are pretty damn high, but even at 50 cents, the coverage is abysmal in most of Africa because you can't work in all of the aggressive social marketing as you did in Malawi, for example.
I follow day by day what you do, by the way. So -- not you personally, I mean. I am absolutely a detailed student of PSI. If your mission from USAID was with your expertise on the ground to go and give the nets away and train people how to use them and make it part of the vaccine campaigns and go into the villages, there's nobody better than PSI at getting into the villages. But I've watched closely for many years how you try to sell the nets and the people that we're dealing with -- you and I -- most of them, the poorest do not have the money. Sixty percent of Malawians, it's estimated, have $35 of cash per year or less. Yeah, that's why you're down to 50 cents. All I'm saying is make it down to zero.
BECKER: Okay, Sally?
SACHS: And Sally, no it doesn't need the commercial. This is where you go so wrong in this country. If you're selling it for 50 cents and you're going into a village and giving it to these impoverished people so their children can stay alive, believe me, you could do so much more and I'd be the first to champion PSI to take the lead. You have more experience than anybody. Go out there and give these nets away because waiting in antenatal clinics to sell them at 50 cents, waiting until the mother's pregnant while there are tens of millions of children that need them now and don't get them is a huge mistake. I will champion --
BECKER: Okay. How could --
SACHS: I just -- I just want to conclude. Sally, people at PSI write to me all the time agreeing, but they say our mission is from USAID. I just want to be on the record: I will champion PSI as our delivery mechanism, but we've got to get a mass distribution of these nets out there and you could do it.
QUESTIONER: Well, as an African, it's always a great pleasure to listen to you. I want to ask once someone --
BECKER: Could you identify yourself, please?
QUESTIONER: Francis Deng at SAIS and Library of Congress. I once asked someone why with such an effective way of conveying such a persuasive case, why you're not being very effective? (Laughter.) And I was told because you're not in politics. You have not joined -- anyway --
SACHS: Because I what?
BECKER: You're not in politics.
QUESTIONER: Because you're not a politician.
SACHS: Oh, no, no, no. Good. That would add to the effectiveness. (Laughter.)
QUESTIONER: I entirely, of course, agree with all you've said, but I have a dilemma. I think of poverty in two ways: there's a subjective element and an objective element. Much of what you've said deals with the objective factors. Coming from Africa, I know many people in Africa who maybe with the minimums of maybe herds of cattles, hundreds of cows, land and all of that and natural resources, do not perceive themselves as poor.
I once talked to an ambassador of an African country about this issue and he said, "You know, when I came to the United States to study economics, that's when I first realized my god, I've been poor all my life and I didn't know it." (Laughter.) The question really is how do we deal with objective aspects of poverty as you have so brilliant outlined them while at the same time building on the subjective poverty factor of people's self esteem, people's sense of their worth?
My fear is when we begin to convince people that they are poor, we may actually create a situation where therefore they will ask for help, but are we also destroying something in them -- that sense of self esteem -- so that you actually build from within using what people have, their resources, and again it goes to what you are saying about development from within. I am just wondering whether it is possible to use that human resource as a positive while dealing with the negatives of poverty.
SACHS: What an eloquent question and I agree completely with you. And I want to tell you a story. The village where -- it's a set of villages called a sub-location in Western Kenya where we got started on some of the demonstration work, we helped them with fertilizer and seed and the crop yields went up spectacularly. The people are so thrilled, they're so empowered first by the physical ability to eat enough by the fact that the children are much healthier with the bed nets around. There were no bed nets anywhere in this village and now every child is covered by a bed net and it took one day to bring about and that's how it should be done all over Africa. And now, they're talking about business and this and getting started in a hundred different areas. The excitement is thrilling to see. Rather than feeling disempowered or somehow dependent, which is what you would do if you were giving food aid, they don't feel disempowered. They planted those crops, every one of them. We didn't touch one bag of fertilizer, one tin of seed. That's everything the community did on their own. They did the farming. They did the weeding. They built the clinics. They hung the bed nets. This is not outsiders doing one thing. There's not one expatriate in my model of this. The communities have to do everything on their own.
But I saw something so beautiful that I -- and it's a constant surprise. We came -- I was there in January and they -- the woman who's the chief executive of the village, she's the master farmer of the village, said, "We got to show you." So we walked through a path. We got to a clearing and there was a very basic house under construction: wood poles, adobe walls and a corrugated roof. And we had our group with us and she said, "This is our low-income housing." (Laughter.) She didn't quite put it that way. "This is our housing for the poor people in the village." They are all poor. I have never seen more poverty. But they decided as a community after this first big harvest that they would build 40 houses for the widows in the community. They made a low-income housing program, not by anything we recommended but by the sense that we're not poor but these widows who were too poor and don't own land -- we have to help them to live. It's the most beautiful thing. I mean, it was tears in our eyes actually, and I think it goes to exactly what you're saying.
First of all, they don't feel poor. We don't want to make them feel poor. We want to partner with them and help empower them. And I believe that's not just rhetoric because what we're doing now all over Africa in these 80 villages, every single stitch of work, and it's hard back-breaking work, is done by the villagers themselves. But now they have tools for the first time. It changes life for them.
BECKER: Okay. The young woman right there. I'm going to try to -- let's keep the answers short, so we can give some more answers.
SACHS: Yeah. Sorry.
QUESTIONER: Hi. My name is Holly Wise and I'm a former USAID person, so in the interest of full disclosure. I guess a comment would be you perhaps ascribe more power to USAID folks in terms of being able to make these villainous decisions that you suggest they're making than they have because they are very constraint by what the members of Congress suggest that they should do in terms of resource allocation.
And while it's very amusing to talk about things that haven't worked, you're suggesting a way forward, but I'd like to hear you talk a little bit more crisply about beyond the 80 villages and bringing commodities in. How do you scale that up? What does it cost for all of those things to make the kind of difference that you want to make in Africa and who does that?
SACHS: Right. Good. First, I also -- just like with PSI, this is not a critique of USAID or certainly not USAID staff, but I had a funny encounter with Andrew Natsios on the other side of this room a couple of years ago where I said, "aid works." Not only little A but big A aid works, and we need a much bigger for USAID." And he said, "No. We don't." I said, "Of course, we need a much bigger budget." He said, "No, we don't." And I finally stopped and said, "Andrew, are you really saying to everyone that you have really enough or is that, you know, what you're supposed to do in the administration." And he laughed and he said, "Well, yeah. That's the point, isn't it?"
But the point is that USAID has been hamstrung for 20 years with an insufficient budget. It's been gutted unfortunately of a lot of the conceptual parts of the organization because it's just been downsized or people have been pushed or they didn't like all of the ear marks, and I believe -- and then I think MCC was a big mistake not to put it through -- with the USAID that would have -- that was not my way of starting yet another organization and dividing all of this up, so that's just on the bureaucratic side of this. I'm not trying to make blame. I actually -- it's not even blame, I just think we can do much better in our foreign policy than we're doing that's the real point I'm making.
Now, how to do this? The most successful programs are programs where you have technical inputs and technical outputs and you can measure what you're doing. And almost all health programs have that feature. That's why they tended to work: small pox, the immunization campaigns, the -- (inaudible) -- campaign. Pfizer has gotten -- GSK, sorry, has gotten lymphatic (psoriasis ?) way down because you know what needs to go in, you know what then Jimmy Carter has gotten dracunculiasis, the African guinea worm, way down and I know that malaria could be -- we could really win the fight against malaria if we took it on, and that's really the great battle that needs to be made because that is such a mass crippler and killer, and it's utterly controllable. Those are utterly scaleable programs. There's no big question.
Agriculture is the same way. The green revolution proposition is a scaleable program because it's inputs and outputs, all measurable. You go district by district. You have accountability. You create mechanisms the same way we do immunization campaigns. In our villages now, we delivered, just as an example -- it's small, I admit, but it's an example. We scrambled because of the Malawi drought to get bags of fertilizer to 13,000 households and it took us one week to do it. A donor came forward, gave $1 million to the effort and we bought some fertilizer and smoothly those trucks went it and just like an immunization campaign, each household came up, they got one bag of urea and off they went, and they were checked off the list. And that's how Red Cross has done immunization campaigns, how I imagine PSI to get bed nets to 300 million children that need it, how we can get fertilizer and seed to everybody that needs it, and I would focus our efforts on those things: measurable, quantifiable, scaleable; and on very specific cash issues: hiring nurses, doctors, community health workers, agricultural extension officers and so forth. I would not write any blank checks for this process.
BECKER: We have time -- we really don't have a lot of time but here --
QUESTIONER: Thank you, Professor Sachs. I'm Nimisha Madhvani with the Uganda embassy in Washington. I'd like endorse many of the comments you've made, Professor, especially as I come from there and we experience these things. On malaria, I would just like to say that we've taken a stand on DDT because we really have to use it. We're meeting a lot of opposition, but malaria really is a killer and I think people can't afford bed nets, DDT treatment. I think if it can be given because people are really poor.
But to strengthen all those suggestions that you've made, we really need power in Africa -- electricity to get clean water, to get light, to get schooling, to get, in fact, all these things that you have suggested. We have met a lot of opposition to develop power in Africa from the firm of African energy ministers, the World Bank was allocating a billion dollars for the whole Africa to develop power. A billion dollars goes just into one country most probably, especially Uganda. So really like to know from you what you can do to help these environmentalists, these NGOs, the people who oppose development of the power sector to really lift people out of poverty so that we can have trade and not aid and move on with our lives because the opportunity is there in Africa. We're only 800 million people and we can really develop and as my colleague from Africa -- Library of Congress said, Africans, we are proud of what we have and we'd like to realize that further.
SACHS: Yeah. Great. The kind of investments that I have been talking mostly about I consider to be about 40 percent of what's needed. Those things that can take place at the village level -- maybe 50 percent. But then in addition is basic infrastructure: roads, power, effective port facilities, and telecommunications and Internet connectivity. Those are essential. Without electricity, there's no development. Without roads, there's no development. For Uganda as a landlocked country, that road from Mombassa through Nairobi to Kampala to Kigali and then on to Bujumbura and the Eastern Congo -- that is a two-way road, half-washed-out most of the year, semi-paved and probably 200 million people depend on it.
There's a new wonderful study that's just come out from the World Bank using sophisticated GIS modeling that shows if you have a road network that was proper in Africa, annual trade -- intra-African annual trade would go up $30 to $50 billion per year, not to mention the ability to get trade internationally. That's a sound analysis. It's actually quite an ingenious technical paper from a methodological point of view using -- you know, putting the roads on using the GIS, using trade equations to calculate the kind of increase trade that could be developed. So I agree with you. That's the other 50 to 60 percent of where the help is: project financing for major power and for the road network.
And, again, in my view that is measurable, monitorable aid where you can see what's supposed to happen, what the project is supposed to do, what the outcomes are supposed to do.
I won't comment on any particular dam project and so on. There -- each is controversial, each does require an environmental look. Maybe you need thermal plants. Maybe geothermal in the Rift Valley can be expanded considerably. There are many options but electricity has to be top of the list. It is a critical component and I am very happy to say that Paul Wolfowitz is taking a big interest in large-scale infrastructure for Africa, as is Donald Kaberuka at the African Development Bank, and I would really keep pressing that theme and I'll be pressing it as well.
There is a problem with Lake Victoria because of the -- because of climate change, because of the population densities. So there are environmental issues. I'm not a master of them. But if it isn't hydro, it should be thermal. And somebody needs to help pay for because a billion dollars for all of Africa is not -- it's exactly the non-arithmetic that we do where we feel so good that we're doing something but we don't feel good unless you solve the problem. That, I think, is the main point.
BECKER: I'm -- we're now 10 minutes past our closing time, so I'm going to have to call an end to this conversation. If nothing, you've proved a point that it's very hard to talk about poverty without running into feel-goodism. Is he really on the mark? Oh, Professor Sachs could say this, that, and the other. And I could see people saying, "No, no, no, no. But he doesn't know this, that, and the other," but I think you've got people's minds working --
BECKER: -- and I thank you very much for coming and spending this time with the Council.
SACHS: Great. Thank you. (Applause.)
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