Monday, April 09, 2007

Jeff Sachs, poverty, philanthropy and culture change

For any of my readers who don't recollect this, Dr. Jeffrey Sachs is special adviser to the United Nations secretary-general.

He made an interesting series of statements to Financial Times (see the article titled "Philanthropy ‘can eclipse G8’ on poverty" by Leyla Boulton and James Lamont, published on April 8 2007, which you can reach by clicking on

Among other things, Sachs believes that wealthy philanthropists have the potential to do more than the Group of Eight leading nations (G8) to lift Africa out of poverty!

It is of course true that Dr Sachs was attempting to keep his chin up in view of flagging governmental initiatives in relation to the Millennium Development Goals: the Organisation for Economic Co-operation and Development reported last week that aid from rich countries to Africa remained static last year even though G8 leaders promised in 2005 to spend $50bn more each year to 2010 on aid, with half the rise going to sub-Saharan Africa.

So Dr Sachs hopes that the financial clout of the likes of Microsoft’s Bill Gates and international investor Warren Buffett, who have pledged billions of dollars to global health and education, could help matters.

Well, how does one respond to Mr Sachs proposal that even people who are less wealthy should contribute to a new private sector foundation that could help speed the elimination of diseases and tackle specific challenges? “There are 950 billionaires whose wealth is estimated at $3.5 trillion [$3,500bn]. An annual 5 per cent ‘foundation’ payout would be $175bn per year – that would do it. Then we don’t need the G8 but 950 people on the Forbes list,” said Mr Sachs. “Maybe private philanthropists will champion solutions to individual problems rather than the G8,” he said.

This is a wonderful hope, but we know from experience and from history that the rich, with a few exceptions such as Buffett and Gates, generally contribute far less than ordinary people as a proportion of their income (at least in the West, regarding which we have as usual plenty of facts and figures available). Most of these billionnaires are in the West, though an increasing number live in countries that are doing well at present, such as China and India.

So, if Sachs is serious about a 5% contribution from billionaires, the easiest will be for the UN to charge a 5% "Billionnaire's tax". That will not only get the money in pretty quickly and efficiently, but also make Sachs and Ban top favourites with billionnaires! I am being ironic, of course.

No, contrary to what Dr Sachs claims, the fact is that even if all the billionnaires gave away 100% of their money, that still would not solve the problem. The total wealth of this group, $3.5 trillion, is less than what is flashed around the world in one day by the world's financial trading systems, so each day the world's financial system increases the divide between the rich and the poor because of the was it functions.

A change in the global system is therefore the first essential to reducing global poverty. Such changes include reforms in the stock exchange system, the creation of a dual-share system for corporations, moving to complementary currencies, and so on.

In Africa itself, the problem is not one of lack of money or resources. The problem with Africa is African culture which is built on tribalism, and which in practice has few moral constraints in relation to matters of sex, violence or money.

The result is widespread corruption and abuse of power. So, no matter how much money flows into the continent, most of it ends up in the private pockets of the elite and the powerful.

Rather than more aid, whether from philanthropists or from government, what is needed is efforts to change African culture, at least at the points of attitudes to and arrangements in relation to sex, violence and money.

Money and violence, yes, I hear you say; but why sex?

Because one of Africa's biggest economic issues is the impact of AIDS - which has spread in Africa principally though not exclusively because of the sexual mores of Africa.

If Africans would only reform themselves in relation to tribalism, violence and corruption, then this resource-rich continent could show other parts of the world the way to live, rather than being one of the poorest parts of the world, from times immemorial to the present.

That is the sad truth of the matter. Sphere: Related Content

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