The End of Poverty: Economic Possibilities for Our Time

by Jeffrey Sachs

This book seeks to lay out the facts — both historical and present — on the state of global poverty and with concrete recommendations about how to move forward.

Here are a few facts:

• world population — about 6.1 billion
• extreme poor (< $1 income/day) — 1 billion — live at subsistence without core basics
• poor ($1 – $2/day) — 1.5 billion — above subsistence (survival ok), but hard to meet ends meet
• middle-income (few $1,000′s/year) — 2.5 billion — most live in cities, have housing and maybe indoor plumbing, children go to school, nutrition and clothing are adequate — but not like USA middle-class
• high-income — 1 billion

He advocates two goals by 2025: (1) End extreme poverty; and (2) Enable all poor a place on the economic development ladder. He demonstrates how a modest 0.5% of GNP provided as as official development assistance (ODP) by the developed countries through 2015 would be adequate to achieve the UN Millenium Development Goals (MDG) which target reducing extreme poverty by 50% from 1990 levels. Since Sachs was one of the key contributors to MDG, he provides details into why these goals were chosen and how they can produce these (seemingly) dramatic results. He then declares a 2025 goal to extend MDG objectives for 10 more years at a decreasing % of rich country GDP investment level to finish off the task. Why a decreasing investment level? Because with fewer poor people, growing GNP in poor countries and continued growth of overall GDP in developed countries, the cost for ODP is simply lower.

One thing that stuck out to me is the lack of follow-through that the USA has had towards promised aid to developing nations. The US has publicly committed (signed multiple documents) that it will make “concrete efforts” to contribute 0.7% of GNP to ODA. Our current level is about 0.2%. We spend all told about $15B on aid per year (vs. $450B on military.) And of the $15B, more than half is on activities other than ODA (e.g. paying USA consultants.) For the USA to reach 0.7% of GNP as ODA here is what it would take … “With the U.S. per capita GNP rising by around 1.9% per year, the extra amount represents less than one third of a single year’s growth in GNP. So, if the U.S. were on track to reach a $40,000 disposable income by, say, January 1, 2010, it would instead reach the same income on May 1, 2010, one third of a year later.” (p. 304)

More blog postings based on this book and Sachs:

• Funding in-country designed and run programs
• The history of wealth
• Who can deliver aid?
• The truth about Africa