Policy Prescriptions - Poverty

This post is a continuation of my last one, where I speak about my learnings about poverty from my Development Economics courses. This blog post is about Jeffrey Sach’s work, chapter 3 – ‘Why Some Countries Fail to Thrive’ from his book ‘The End of Poverty’.

Jeffrey Sachs writes that about the problem of poverty too. He writes in his book the four processes to development in short: Savings and Capital Accumalation, Increasing specialization through trade, technological progress and more green and natural resources per person. Using this he surmises that those countries not able to progress is an issue relating to lack of savings, minimal or no trade, lack of green resources, lack of technology and huge population to boot. Corrupt and poor leadership can also be a reason for poverty. The fact remains that there is a severe need for capital, but due to low savings rate there is very low capital. Innovation is low and people are not able to access technology. Lack of public goods, perhaps due to ineptness on the government’s side and an inability to tax the people can also be a contributing factor. With publicly funded infrastructure and social services missing, the economy and the people are invariably in a delicate and precarious position.

Sach’s take is a novel one. He likens analyzing this problem of poverty in a similar fashion to how a group of physicians might treat a puzzling medical case. The patient would present themselves in a clinic, present their symptoms, the physicians would then proceed to take history, routine blood tests etc. – not unlike scenes from a medical drama. What’s interesting is that the author suggests taking this approach to solve poverty – differentiating the problem, looking at the symptoms and history and then move on from there. He states that he’s been called upon many times to ‘prescribe’ a course of treatment for an ‘economics’ patient, not unlike how a physician might be called upon to do many times in their career.

However, he goes on to explain that very early on he realized that his training was not dependable and did not meet the levels of skill he would need to solve his ‘patient’s’ problems. His training was inadequate. This leads me to the singular most important point; keeping aside the training, the Global North, PhD alma mater, why do international multilateral institutions take the mantle of advising struggling nations to break out of the shackles of poverty? Their top – down policy recommendation approach cannot effectively treat the economic patient. He describes how in the past if a plan prescribed by the IMF would fail, rather than really take the failure to mean what it does mean (that the plan was bad), it was simply blamed upon the government, that the program failed in the implementation stage. In my opinion, this approach has elements of a sickening white savior trope, but I digress.

The economic system is complex, and while “d/dx – ing” any prescription plan made needs to be sensitive to the internal movements and causal loops within it. One must be familiar with the amount of inflation certainly, but we must also know the systems of education in place, the transport system, the healthcare system, how the judicial system works. The political economy of the country. Are women told to stay within the boundaries of the home? Do they have any say in the financial decisions of the household? Is domestic and child violence a problem this country faces? Who holds the power? This is indicative via this example: if you are looking to solve the issue of child malnutrition in a global south context, it is not just enough to provide the mother of the child education of how carbohydrates, proteins and fats are important for healthy development of a child when she doesn’t get to choose how her child eats. Interventions need to be made at a different level: by teaching and educating the mother in laws of the household – who decide what happens in the boundaries of the kitchen. This was a study done in Bangladesh actually but I can’t remember as of now the specific details. It is necessary to take into account the deprivation traps’ five features and keep this in mind.

One problem can lead to a dozen others, and an intervention at the first stage can also result in movements down the chain and one needs to be alive to the situation to prevent any shocks morphing into crises. Economists also forget very often that the economy is not merely statistics, not just data, but a reflection of people’s lives. Ethics should never be cast aside and should occupy as important a place in policy analysis and recommendation as statistics does. Once an intervention is made and put into motion, it is imperative that there is close monitoring. Speaking of interventions, the country must have the capacity to put it into action. Policy needs to be flexible and one must work through these challenges. Economists may not get these trainings in their studies but simply must make the effort to integrate these into their professional practice.

There are many living under the notion that poverty is homegrown, an indicator of the weaknesses of the governance style. Global north ‘treatments’ such as government spending and interventions; better, stricter governance and policies don’t seem to work to solve poverty in the global south. This is not an excuse by any means for actual economic mismanagement which has happened in the past, but policymakers need to broaden their minds and be willing to rethink their approaches to account for the system’s unique causal loops.

It is clear to me that we need to stop diagnosing and prescribing policy prescriptions without doing a thorough listing and mapping out of symptoms. Being sensitive to deprivation traps and leaving behind elitist views of the poor are poor because of bad decision making on their part. Moving on from this, it is clear that Millennium Development Goals and Sustainable Development Goals show that all countries are moving on from thinking that the Global North does better than the Global South, policy recommendations seem to be in the future for all now.