A call to share the global wealth

Jeffrey Sachs, a prominent Harvard University economist, has never been a member of the foreign-aid establishment and has recently become an outspoken critic of the World Bank and the International Monetary Fund. Instead, Sachs has spent his career jetting from country to country conferring with top government officials about their broad macroeconomic policies.

So when Sachs opened Gustavus Adolphus College’s 36th Nobel Conference on Tuesday by calling for greater and more effective assistance to the world’s poorest inhabitants, it was a clear shift in emphasis for the economist and served as a stern warning that ignoring the world’s poor will lead to greater international instability.

Sachs, who has advised Third World and ex-communist governments for 20 years, argued that globalization has been broadly beneficial to citizens of the United States and other wealthy nations. The trend also has been generally positive for nations such as Mexico, Brazil, Korea, Taiwan, Poland and Hungary, which are successfully engaging in what he terms “catching-up growth.”

But there are some 1.5 billion people, largely in tropical countries in Asia and Africa, who are not benefiting from the increasing economic integration of nations around the world, Sachs says.

Unlike opponents of globalization, whose sentiments were expressed politely in placards posted outside Gustavus’ Lund Arena in St. Peter, MN, or chalked on sidewalks around the campus, Sachs does not see globalization as the cause of poverty in poor nations. Rather, sub-Saharan Africa and parts of Asia are being left behind by a generally positive historical process.

Residents of these countries are caught in a “Malthusian trap” in which their population grows faster than their output of goods and services.

Sachs said that many such countries are handicapped by endemic diseases such as malaria, schistosomiasis, and measles. Poor transportation and communication infrastructure are additional handicaps.

“For our common humanity, as well as for the long-term stability of the world, we have to help the poorest countries.” he argued. “If we use just some of the wealth we realize from globalization, we could save millions of lives.

New Classical economists, along with many of the political right, argue that foreign aid is counterproductive and only delays the adoption of the correct free-market policies. Liberal economists, together with many on the left, call for greater transfers from rich to poor countries. Most economists occupy some middle position agreeing that poor countries should follow prudent macro policies but also accepting a role for sound foreign aid programs.

Sachs noted that malaria takes about 2 million lives per year in the tropics but that multinational pharmaceutical companies have little incentive to develop vaccines or more effective treatments because most victims do not have purchasing power to pay for such products.

He has suggested a program in which wealthy countries would give tax incentives to firms for directing research efforts to meet the health needs of the poor.

One questioner noted a lack of public support for foreign aid. Said Sachs: “People are willing to help, but they want to know that their money is having an effect. If you go to Congress and say you want more money for the World Bank, people think it will just be wasted. But if you tell people that a few dollars per taxpayer will keep a million children from dying of measles every year, they are willing to give.”

He noted that Microsoft founder Bill Gates was willing to commit about $1 billion to just such an effort, one that no wealthy nation has been willing to support even though an effective vaccine has long been available.

As an example of how not to carry out foreign aid, Sachs cited President Clinton’s recent trip to Africa. “He went to Nigeria and said `I feel your pain’ and promised $9 million for AIDS programs. That is less than 10 cents per person in Nigeria. It would have been better if he had just stayed in Washington, saved the cost of the trip and given Nigeria 20 million bucks instead.”

In contrast to most of Gustavus Adolphus’ Nobel Conferences, which generally focus on pure sciences, this year’s theme is “Globalization 2000: Economic Prospects and Challenges.” It continues through today. The session Tuesday was attended by 4,500 people.

Other speakers included: 1999 Nobel Laureate and Columbia University professor, Robert Mundell; noted trade economist and Columbia Professor Jagdish Bhagwati; Claremont theologian John Cobb; and Michael Sohlman, the executive director of The Nobel Foundation in Stockholm, which sanctions the Gustavus Nobel Conferences.

© 2000 Edward Lotterman
Chanarambie Consulting, Inc.