Thursday, February 7, 2008

Ivey Business Journal interviews Jeffrey Sachs

I can get a little glib and dismissive about Jeffrey Sachs, who I feel is turning into the modern-day Carl Sagan, a guy who felt a Phd in one area of study gave him carte blanche to be a know-it-all in every other field. (A prototypical blogger, if you will.)

However, Sachs a well versed economist and when he’s talking about his field, you can feel his knowledge. Here’s a quick excerpt of an interview with him by the Ivey Business Journal.

Ivey Business Journal: In The End of Poverty, you write that “clinical economics,” as you call it, is one solution to leading people out of the poverty trap. Describe clinical economics?

Jeffrey Sachs: Clinical economics means doing economic development with the same precision and attention to science -- and I'd also add ethical standards -- as does the practice of good clinical medicine. Having been married to a clinical pediatrician now for 27 years, I’ve observed the essence of good clinical medicine, which is of course having a rigorous science base and then being able to provide a good differential diagnosis, as the doctors call it, to any particular patient and the patient's conditions.

So when you see the problem of extreme poverty, just as when you see a fever, one has to understand that there are many possible underlying causes. Treating the symptoms is almost never sufficient. There is almost never a single possible cause for a specific economic syndrome. And just as with clinical medicine, the key is to make a good diagnosis from the various possibilities and then make a good regimen in response. Part of the problem with economics as it's practised now is its very glib attitude, where people often try to peddle their single magic bullets or believe what has worked in one place automatically works the same way in another, rather than understand that since the underlying conditions are different, we need specific approaches that are well-tailored to the specific problems. In the case of Africa, where I have directed a lot of my attention in the past dozen years, I put a lot of stress on Africa's unique geographical burdens of disease, tropical agriculture in a savannah climate, and the problems of isolation, with the lack of basic infrastructure needed for high levels of productivity. This combination of disease, flagging agricultural productivity and chronic food shortages, and the problems of economic isolation need to be addressed specifically in an African context to break the poverty trap and enable Africa to get on a path of development.

IBJ: In The End of Poverty, you say that governments in Africa need to create an environment conducive to business coming in. You also believe that corruption and misrule are not the problem. How do you create an environment that's conducive to business coming in while ignoring the corruption and misrule?

JS: There is certainly corruption in Africa but there's corruption everywhere, including in our own country, of course. The point I'm making is that there is not only corruption in many parts of Africa, but that the situation is no worse and often considerably better than it is in much faster growing parts of the world, particularly in Asia. The point is really a diagnostic point that we absolutely, simplistically I would say, rush to the Big C, corruption, as the explanation for Africa's problems, ignoring the challenges that I mentioned before which I think are the much bigger ones, and therefore we fail to keep problems of corruption in perspective. It has become both an excuse for inaction and a kind of paralyzing factor in discussion, a kind of showstopper. “Well, we can't do anything, there's so much corruption.” The fact of the matter is that it's simply not true and it's not really a sound or full explanation. It's a misunderstanding to think that I somehow condone this or condone corruption or feel that it isn't a problem. I don't mean to say that. I just mean to say that we have exaggerated this one problem to the neglect of many other programs designed to promote economic development. We're not helpless in simply thinking that our option is to hand money over to corrupt officials and that's the end of it. Either we do it or we don't do it. No, the fact is that we can design the delivery mechanisms of assistance programs in ways that keep the corruption in check, that are designed for, according to transparent performance standards with milestones, audits, regular monitoring, the kinds of things that one does to account for what is often a relatively weak management environment. Of course we have to respond to the realities, but we aren't helpless in the face of these problems.

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