Going deeper...Sachs and Munk on the Millennium Villages

EconTalk Extra
by Amy Willis
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We're loving your responses so far! Let's keep the conversation going...Just a friendly reminder, for general comments on a particular episode, the best landing spot is still the original post (here in the case of Sachs). And for those of you commenting for the first time, you might want to check out Econlib's general comment policy.

In this "Extra," we're encouraging you to go a bit deeper with the ideas raised in the Sachs, episode as well as the Munk episode...So here are some new questions. Share your responses below, or let us know how you're using EconTalk Extras to start your own conversations offline.


1. One of Munk's most pointed criticisms of the MVP projects' sustainability is that they fail to create long-term opportunities for employment. Why does she believe the project fails to accomplish this? How does Sachs respond to this criticism? What evidence might settle their disagreement?

2. Sachs suggests Munk's story about villages attempts at growing and selling maize is an "urban legend." What did Munk find so troubling in this story? What does Sachs appreciate in Munk's recounting, and how does he respond to the elements with which he takes issue?

3. Roberts seems unconvinced of the effectiveness of what he calls a "top-down" approach. But does he have an alternative way to help poor people in Africa? How might someone who agrees with Roberts answer that challenge?

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COMMENTS (9 to date)
Andy writes:

Re:3... a lot of thoughts come to my head. First, I'm wondering if the poor in Africa are limited by the number of trading partners available to them.. i.e. they can't specialize as much as we can and thus aren't able to raise their standard of living. So, does a history of tribalism and isolation of rural villages hurt them more than say education and health?

Also, I'm not sure of the facts, I'd like to understand the notion of private property rights in Africa. Are governments set up to defend them? Does might make right there? Are marginal tax rates sky high? i.e. is the environment ready for the entrepreneur?

Doesn't India face similar issues? Can't we gain insight from the reforms there?

Amy Willis writes:

@Andy, Adam Smith makes a similar point in the "Wealth of Nations," that the division of labor is limited by the extent of the market. (The excerpt is here: http://www.econlib.org/library/Smith/smWN1.html#B.I,%20Ch.3,%20That%20the%20Division%20of%20Labour%20is%20Limited%20by%20the%20Extent%20of%20the%20Market)

As for property rights in Africa, you may be interested in this 2007 episode with Karol Boudreaux, who's done a great deal of field work in Africa. Here's the link: http://www.econtalk.org/archives/2007/12/karol_boudreaux.html

Matt Harmon writes:

1. Nina had long-term exposure to a couple villages that showed an initial boom from crop aid, and then a decline in trade and activity when there was no market demand to support the new supply. Sachs counters that she went to a war zone area that is not one of the "core" sites and has extremely harsh environmental conditions. He says, in effect, that she cherry-picked a bad example to show how crop aid is ineffective at creating development. Perhaps if there were people chronicling the story of each of Sachs' "core" sites we could get a better feel as to how much employment is, or is not, created.

3. Roberts seems to favor a more direct form of aid with less strings attached. He would likely favor giving locals more decision making power in their own industry and pursuits. It brings to mind the charity Give Directly that simply transfers money to Kenyan villagers via mobile payments. Although Roberts explicitly states this would not be his preferred method (Excerpt: "one of the alternative ways to fight poverty--and it's not necessarily my favorite, but it is a way--is simply to give people money"), it is closer to what he alludes to liking as a micro approach. There are a wide range of small scale interventions being carried out by charities. These often focus on very particular programs (i.e. providing free bed nets). The so called "randomistas" (Karlan, Duflo, etc.) who carry out randomized controlled trials to see what produces marginal improvements might do work that is more favored by "top-down" skeptics.

Virginia Alexander writes:

Re: #3

One of the goals of MVP is to increase efficiency in agriculture. Sachs mentioned that this will ultimately drive population movement into urban areas. He frames urbanization as an intended goal of the project.

This involves the huge assumption that these people would be better off trading their land and strong social nets within their communities for urban life and the types of problems that we, with our abundant resources, have made very little progress on: crime, drugs, human trafficking, education for the poor, unemployment, cities' unsustainable water and energy needs, transportation, pollution, and the cost and difficulty of caring for children and the elderly in an urban setting.

You could say that in America we've gone bankrupt trying to provide for needs that used to be met through strong communities (through welfare, social security, etc.)

I would like to see an approach that takes into account the assets these people do possess (land and social ties), and leverages those instead of taking them away.

In spending this money to try something new, let's try something really new. Let's see what the Africans have to teach us about solving our own (urban) problems.

What would it look like to assist these communities in living on and with the land, farming in a sustainable manner with a diversity of crops? Could we help these people farm with few outside inputs, soil improvement, and self-sufficiency?

I think Sach's approach to training health and education workers within the community is a fascinating one. I hope there will be enough data on this approach to be able to evaluate and refine this type of intervention.

Matt Harmon writes:

Virginia, see Ed Glaeser's work on cities as to why people prefer to live there. Note that most villagers move to cities of their own free will and not at the behest of development economists or politicians. He makes the case that cities are "greener" than suburban sprawl in the U.S. and uenmployment is lower in cities due to the ability to specialize (the extent of the market determines the division of labor - Adam Smith). It is not an open and shut case that cities are better than villages for those living in poverty, but there are certainly trade-offs.
See this article summarizing Glaeser's book:
http://www.economist.com/node/18111592
He also did an EconTalk episode awhile back.

Rajan Chopara writes:

#3
It would be better to give money directly to the farmer if it can also be asserted that they have the knowledge of the various alternatives. Based on my admittedly limited experience one of the biggest issues with this approach is the lack of literacy among the poor farmers. This means that they will not be any more effective is spending the money. And local experts could arguably do a better job.

Amy Willis writes:

@Virginia and @Matt, here's the link to the EconTalk episode w/ Glaeser: http://www.econtalk.org/archives/2013/04/glaeser_on_citi.html

Andrew Whicker writes:

#3

If you have this type of 'bottom up' thinking then your first reaction should be to simplify the political situation that currently exists.

Hurdles need to be removed. It seems that there are many reasons why some African countries have not moved forward economically. I postulate that many of these reasons must come from a lack of property rights, highly regulated and / or restricted business rights, high taxes, large barriers to entry due to corruption / gov't involvement, lack of consistent gov't rules to name a few.

Fixing the above can only help the people become who they want to be.

The following are not reasons (alone) for lack of economic growth: Stupidity, lack of innovative thinking, lack of resources, culture.

Iceland and Israel have few resources and do fine. No society can really be said to have stupidity or lack of innovative thinking, in my opinion. Culture has an effect on types of growth, hell, it may have an effect on the rate of growth. However, I sincerely believe that no one culture 'wants' to be poor. These people are obviously constrained and need to be freed up.

Removing the red tape would be the best thing you could do for anyone, in any country.

Cheers,

Sam writes:

I grew up in Africa and posted a long comment on the original podcast post page.

My knowledge is mostly based in Tanzania as that is where I lived from 1989-1995 during my growing up years to American parents that were involved in mission and development work. I think other than general corruption and ineptitude in government there is a cultural norm that if one family member or family does better than someone else the other members will leech off that person or family. It works well in that families tend to take care of each other, but it does not reward initiative and growing a business that could potentially provide employment etc. How this can be dealt with in a practical way is difficult. I know of a family that has been successful in many different businesses and as family members move in to their house they will allow them to stay there, but they have to work in one of the business no free ride. (as opposed to the norm that many extended family expect the richer one to support them without much input) The ones that aren't willing to work can't stay.

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