Common Wealth: Economics for a Crowded Planet.

Meisenberg, Gerhard

Common Wealth: Economics for a Crowded Planet

Jeffrey D. Sachs

Penguin Press, New York 2008

The major challenges that the world economy is facing in the 21st century are obvious. First, there are vast economic inequalities between the rich and poor countries of the world. The average per-capita GDP, adjusted for purchasing power, is more than 30 times higher in the United States than in most countries of sub-Saharan Africa. The second set of challenges is posed by the unsustainability of today's economic trends. Mineral oil will become scarce in a few decades, other fossil fuels in a few centuries, and in the meantime we will get fried slowly thanks to greenhouse gas emissions and global warming.

As director of the Earth Institute at Columbia University and special adviser to UN Secretary-General Ban Ki-Moon on the Millennium Development Goals, Jeffrey Sachs is intimately familiar with all these problems. He is also a professional optimist who emphasizes that economic inequalities between countries can decline and actually have declined over the past two decades, reversing the divergence that had prevailed from the early 19th to the late 20th century. However, this recent trend reversal mainly reflects the ascent of China and India from the extremely poor towards the middling rungs of the wealth scale, not a decline in the disparities between the richest and the poorest countries.

The first chapters are devoted not to global inequality, but to energy technologies, global warming, biodiversity and related issues. The discussion of climate change is especially well informed. In non-technical terms, the author describes the feedbacks between anthropogenic greenhouse gases, reduced albedo due to reduced snow cover, increased atmospheric water vapor (also acting as a greenhouse gas), and the release of dissolved carbon dioxide from the warming oceans. Clearly, the author knows what he is writing about. To Sachs, global warming is overwhelmingly a threat to the future of humanity. There is, for example, no mention of the beneficial effects that increased atmospheric carbon dioxide has on agricultural yields simply because carbon dioxide is the limiting factor for photosynthesis by well-fertilized, sun-exposed plants. For Sachs, the solution of the problem is straightforward: "scientific consensus, public awareness, the development of alternative technologies, and a global framework for action." (p. 114)

But Sachs' major concerns are population growth and underdevelopment. His ideas on population are based on the dated model of the demographic transition as a transition from a stable population with high fertility and high mortality to an equally stable population with low levels of both. He does not seem to realize that the young cohorts of the native populations in most of the advanced countries are not stable, but declining at rates between 10% and 40% per generation (based on total fertility rates between 1.2 and 1.9). Nor does he realize that the birth rate in the less developed countries is not merely a matter of rational choice by people who assess the probability of having at least one surviving son. There is no appreciation of the "primitive" state of mind that unthinkingly treats one's reproduction as a matter of custom, chance and "God's will," rather than as being under one's own control (van de Walle, 1992). Sachs does not realize that people in the least developed countries have an approach to life that is very different from everything we know in the developed world. For him, it is sufficient that "households must be made aware of their legal rights (for example, to contraception) and technological options." (p. 177)

Sachs likes technology, because it is a great equalizer: "The fundamental reason for believing that prosperity can spread to all corners of the world is that the very science and technology that underpin prosperity in the rich world are potentially available to the rest of the world as well." (p. 205). Did it ever occur to him that the vast differences between countries developed in parallel with the technological advances since the time of the industrial revolution? Historically, technology has created rather than eliminated worldwide inequalities! Because the problems of underdevelopment are technological and economic in nature, Sachs prescribes an increased dose of development aid, investment, and technology transfer.

Most of the points that Sachs is making have merit. Yes, development aid can, in some cases, achieve a lot; family planning programs are needed to accelerate fertility decline; and it is easy to sympathize with the author's biting critique of the religious right in America, which has undermined American support for third-world family planning since the Reagan years. But there is something fundamentally amiss in the author's analysis.

For Sachs, pre-fabricated, container-shipped technology is the magic bullet: "The central solution to ending extreme poverty is to empower the poor with improved technology so that they can become productive members of the world economy." (p. 42) He fails to appreciate that technology needs above all people who are able to use, maintain, adapt and improve it. These can only be the people in the underdeveloped countries--and this is where Sachs has a huge blind spot in his central field of vision. He does not realize that economic development is limited first and foremost by the human capital available in the developing countries. He acknowledges that education is a necessary ingredient of development, but treats it as rather peripheral. Mostly, he discusses the introduction of primary and secondary education as part of the Millennium Goals of the United Nations and related development schemes.

The author is unaware of the disconnect between school attendance, educational degrees and school achievement in many underdeveloped countries. Scholastic assessment programs such as TIMSS (http://nces.ed.gov/timss/tables07.asp) and PISA (http://www.pisa.oecd.org/) consistently find large deficiencies in scholastic achievement in the underdeveloped countries. The results of IQ tests confirm these results, and indeed these two types of test measure essentially the same construct (Lynn et al., 2007). Declaring universal primary or secondary education a development goal is silly. What counts is not school attendance or educational degrees, but the cognitive skills that children develop (or fail to develop) in school. It's cognitive skills, not educational degrees that drive a modern economy! Higher intelligence is an achievable goal, although we cannot know where exactly the genetic limits of various human populations are. Intelligence has been rising in the advanced societies during most of the 20th century (Flynn, 1987) and is rising in many developing countries now (Colom et al., 2006; Khaleefa et al., 2008; Meisenberg et al., 2005), probably as a result of improved schooling, mass media exposure and nutrition.

Another human-resource issue that receives scant attention in this book is corruption. Most underdeveloped countries are rampantly corrupt (http://www.transparency.org/); and while a lack of cognitive skills can be remedied or at least mitigated by a better educational system, there seems to be no good recipe for the elimination of corruption. In the end, Sachs comes across as a UN technocrat who reveals to the skeptical reader the central problem of current thinking about development issues: the total neglect of human capital as the central requirement for development. With this blind spot, development policy cannot be efficient and money is bound to be wasted.

References

Colom, Roberto, C.E. Flores-Mendoza & F.J. Abad (2006). Generational changes on the draw-a-man test: A comparison of Brazilian urban and rural children tested in 1930, 2002 and 2004. Journal of Biosocial Science 35: 33-39.

Khaleefa, Omar, S.B. Abdelwahid, F. Abdulradi & R. Lynn (2008). The increase of intelligence in Sudan 1964-2006. Personality and Individual Differences 45: 412-413.

Flynn, James R. (1987). Massive IQ gains in 14 nations: What IQ tests really measure. Psychological Bulletin 101: 171-191.

Lynn, Richard, G. Meisenberg, J. Mikk & A. Williams (2007). National IQs predict differences in scholastic achievement in 67 countries. Journal of Biosocial Science 39: 861-874.

Meisenberg, Gerhard, E.C. Lawless, E. Lambert & A. Newton (2005). The Flynn effect in the Caribbean: Generational change of cognitive test performance in Dominica. Mankind Quarterly 46: 29-69.

van de Walle, Etienne (1992). Fertility transition, conscious choice, and numeracy. Demography 29: 487-502.