income – to say nothing of questions regarding social and political power – are ignored.25 26
The Sachs Report’s basic approach to economic growth is to argue that the poor are poor because they are caught in a “poverty trap.” Because poor people and poor countries have such low incomes, they cannot save and invest sufficiently to raise themselves out of their poverty: “We can now see the essence of the poverty trap. The poorest countries save too little to achieve economic growth, and aid is too low to compensate for the low domestic savings rate.” (p. 34).27 Following from this diagnosis of the problem and from the focus on economic growth, much of the Report is taken up with questions of how to mobilize sufficient capital so that investment rates can rise in low-income countries. The answer is a combination of larger amounts of foreign aid, larger amounts of domestic saving, and macroeconomic policies that will induce “huge
25 It should be noted that the Report does speak of “empowerment,” titling chapter 5 “Public Investments to Empower Poor People.” It seems, however, that empowerment here is identical to raising people’s absolute economic well-being: increasing food output, creating jobs, providing health care, expanding schooling, and so on. These are all good things. Power, however, is a relative concept and deals with a relationship among people. We cannot assess how improvements in the economic well-being of one group affect its members’ power unless we consider what is happening to the economic position of other groups; and this would require an examination of distributional issues, something that the Report does not address. Moreover, while economic well-being is an important part of power, it is not the whole story. See below, Section IV.E. for more on this issue.
26 There is in one place a use of the term “distribution of wealth,” but only in a box on “the poverty-conflict nexus,” discussing the factors that tend to create a connection between political/social violence and poverty. Neither the word “redistribution” nor the term “land reform” appears in the Report. As best I can tell, the closest that the Report comes to addressing the distributional issues is in Chapter 6, “Key elements for rapid scale-up,” in a section on “Infrastructure,” where the following appears: “To prepare draft investment plans, many countries use population-to-facility ratios as guidelines for determining how many of a given facility they need to build for their population. This is a good start. But in the final strategy, countries will obviously need to conduct a more detailed analysis of where their facilities are located, and where and how many they need to build or rehabilitate. When building more facilities, countries also need to pay attention to equity of access. For example, many developing countries have first-rate hospitals and modern schools in their capital cities, but dilapidated facilities in their rural districts. A much more equitable distribution of resources is vital to achieving the [Millennium] Goals. Countries thus need to create investment plans that explicitly aim to increase the percentage of the population that has access to high quality facilities, such as the percentage of the rural population with access to a functioning clinic within 10 kilometers.” [emphasis added] (pp. 105-106). This is a very limited substitute, to say the least, for addressing issues of income or wealth distribution.
27 Actually, the Sachs Report (chapter 3) lists four reasons for shortfalls in countries’ achievement of the Millennium Development Goals. In addition to the poverty trap, the Report lists “governance failures,” “pockets of poverty,” and “areas of specific policy neglect,” the last of these developing because “policymakers are unaware of the challenges, unaware of what to do, or neglectful of core public issues.” (p. 45) Yet the poverty trap issue is at the core of the argument, and it is the foundation on which many of the policy prescriptions are based.