Jeffrey Sachs is the macroeconomist to the stars. He gets himself photographed with Bono, Angelina Jolie and Sharon Stone. How does he manage this? Well, when you write a book called The End of Poverty, A-listers will indeed beat a path to your door. The more extravagant the promise, the better class of celebrity you will attract. However, reality can be cruel. Sachs’s results do not match up to his rhetorical skills and extravagant promises. The shock therapy he recommended for Bolivia in the mid 1980s and Russia in the early 1990s did not lead to positive results. What we got was destructive Latin American economic populism in the former, and the rise of the oligarchs – and then Vladimir Putin – in the latter. After these successes, he then set out about righting Africa. All in a day’s work for our Jeffrey:
“There’s absolutely nothing wrong with African agriculture that can’t be quickly improved…you can improve yields by a factor of two or three…from one growing season to the next…Easy!”
In 2005, he launched what he called the Millennium Villages Project, which sought to implement Sachs’s theories on sustainable development in 14 desperately poor, isolated villages in ten countries across sub-Saharan Africa. How do you connect these rural African villages to the global economy of the 21st century? Sachs dubbed it “MTV Extreme Village Makeover.” It is this experiment that forms the basis of a book by Nina Munk, a Vanity Fair journalist. The Idealist charts the results of Sachs’s project. As well as Munk travelling around with Sachs for a number of years, she also followed up the results of the experiments. I haven’t read the book, but I did hear this interview with Munk on EconTalk.
After the crony capitalist debacle in Russia, Sachs decided to go for a more top-down approach including a Soviet-style five-year plan. The 147-page Millennium Villages handbook, written by 29 academics, is in Munk’s words, crammed with “dozens of flow charts, protocols, organizational tables, benchmarks, timelines, and hopeful objectives.”
In the interview Munk and host Russ Roberts focus extensively on one of the fourteen villages – Ruhiira in Uganda. 32 tons of a high-yield seed, maize and 220 tons of fertilizer were distributed to 7000 households at a cost of about $300,000, which was paid for by the Project. A few dozen demonstration farms were set up to teach the farmers proper planting methods. They were pushed to grow maize, which wasn’t their traditional crop. Nevertheless, the results were extraordinary. There was a bumper maize crop, with yields jumping from 1.3 tons per hectare to 3.7 tons. And the villagers suddenly found themselves with a surplus. There was just one snag – they had nowhere to store it to keep it safe from vermin, pests and disease. Tumushabe Boneconcila, a widow and the mother of nine, summed up the situation:
Maize is everywhere! Under the beds, in the living rooms, in the kitchens—everywhere! And the rats are everywhere too”
Even then they had too much maize. There weren’t any roads in this in this remote landlocked region of Uganda. Even if they could have found a buyer for the surplus maize, the cost of transportation would have wiped out any profits. And there wasn’t really that much demand for maize. Mutoke, the local cooking banana, is what people really want. In the end they did what poor farmers in isolated regions tend to do – they sold their excess crop all at once, causing prices to plummet. Most failed to recover even their inputs; others, unable to find buyers any price, simply left the maize to rot. Naturally the farmers were not well pleased. They felt they had been duped. Maize was harder work than matoke, which grew naturally there. What’s more matoke can be harvested every month, whereas maize takes four months. It wasn’t quite as easy as Sachs had imagined.
This is just one example of what happened. Every intervention had unintended consequences. Time and again they were able to solve one problem, but ended up creating another one. Munk compares it to a game of Whac-A-Mole. How should we judge the experiment? It cannot be considered an absolute failure. Many people’s lives were indeed made better. Foreign aid does a lot of good. But we are talking about charity. This is not the same as economic development. And we need to judge Sachs on the basis of what he promised, which was not simply to help a few thousand or even tens of thousands of people in isolated villages in Africa. He claimed he could end poverty in a sustainable way. This was supposed to be a blueprint that could then be scaled up in other underdeveloped areas of the world.
The result of all these experiments is sobering. I favour markets, but what happened in Russia was a bad idea. How could it have been done differently? I don’t know. Markets work well but they are embedded in institutions and behaviours that cannot be imposed from the top down. Indeed, we have a number of problems with the functioning of our markets here in the West. Similarly how can we fix education problems in Africa when we are incapable of doing the same thing in our own countries?
Sachs’s failure reflects a number of themes of this blog. I am critical of the role of experts and their plans. Humans are not chess pieces to be moved around at whim. The pieces like to move themselves. Markets work well because they use the particular knowledge of time and place possessed only by individuals. Sachs did exactly the opposite – he neglected the locals’ knowledge and culture.
You feel wary about criticising a man who is well-intentioned. Those who criticise aid are seen as heartless baby-killers. But we need to have accountability. I wish I had easy answers, but I don’t. I will finish with a quote from one of Sachs’s leading critics, William Easterly, the author of The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good:
“Remember, aid cannot achieve the end of poverty. Only home-grown development base on the dynamism of individuals and firms in free markets can do that.”