The eradication of poverty has been discussed for many years, with many different opinions emerging on the best methods to help improve the lives of the poor. In Poor Economics, Banerjee and Duflo present the ideas argued by two leading economists. The first is Jeffrey Sachs, who believes that poverty can be addressed by focusing on concrete, measurable programs which address certain poverty traps and aim to give the poor a hand up and out of these traps. Sachs was the mastermind behind the Millennium Villages Project, discussed in my Post 2.
William Easterly, on the other hand, believes that aid money is mostly wasted by corrupt African governments or used for the interests of the rich world, rather than for the poor. He argues that the tremendous amount of aid already provided to African countries, totaling about $2.3 trillion, proves that it has done almost nothing in helping to improve the situation in many countries. Easterly has a “laissez faire” outlook on helping the poor countries in Africa, believing that these countries will eventually figure it out on their own, and rich countries trying to provide aid are only hindering their progress.
After having investigated both sides of this argument for several weeks, I have to agree with Sachs on his policy to eradicate poverty. While some aid programs may not use donations efficiently or can be easily hindered by corrupt governments, I believe that it is possible to create impactful, change-inducing programs that do not provide a hand out but a hand up for the world’s poorest people. In order for these types of programs to be created, those implementing them must intentionally design each program for its beneficiaries and be open to trial-and-error to determine the best type of program for each community.
Nick Parle, the author of PovertyEducation.org, also backs Sach’s argument and notes flaws in that of Easterly. Parle writes that “Easterly also argued that aid is not a successful means of promoting development because enormous amounts of aid…have already gone to developing countries without successfully eradicating extreme poverty. But this assertion is undermined by Easterly’s argument that much aid has been spent on destructive activities.” Parle makes the point that, had this aid money not been squandered by corrupt governments or by western countries determined to have their way in Africa, it could have made a huge impact on the lives of the poor.
Here, we can see a convergence of these two arguments. While Easterly is correct that a majority of the aid money that has been given to Africa has done nothing, it is because the money has not actually been used in situations where it could have made a difference. Sachs agrees that when aid money is provided in the correct capacity and towards the right programs, it can make a world of difference, even for small communities.
Now that I have read almost the entirety of Poor Economics, I am able to reflect on its discussion of the Sustainable Development Goals, or SDGs. The first two specifically, aim to “end poverty in all forms” and to “end hunger, achieve food security, and improve nutrition and promote sustainable agriculture.”
The authors address the first issue in detail, providing many studies and theories to back up their recommended policies. Education is one example that is consistently cited as a method to rise out of poverty and increase a person’s earning power over their lifetime. Banerjee and Duflo discuss PROGRESA as a successful program that has provided an incentive for parents in Mexico to send their children to school, while helping to meet the family’s monetary needs.
Microfinancing is another huge topic discussed. Poor families that receive microcredits are often more likely to cut regular spending, as their goals suddenly become achievable and their stress is lowered. Many other issues, like improving involvement in government, decreasing the prevalence of preventable diseases, and
However, it seems that less decisive policies were suggested for the second issue of hunger and food security. While the authors did investigate this issue thoroughly, it seemed that they were only able to identify problems leading to food insecurity. For example, in chapter 2, they find that most of the poor would prefer to spend more money on better-tasting calories, rather than maximize their calorie intake. Additionally, the authors found that when a poor family sees an increase in income, they do not spend this extra money solely on food – behavior that would be expected of those experiencing food insecurity. Overall, I felt even more unsure about how to eradicate hunger after finishing these chapters in the book.
There is a long way to go before first-world countries will realize the best methods to provide aid to the poorest countries of the world; therefore, it will be even longer before poverty can be eradicated. Poverty is caused by a multitude of complex and intertwined problems, ranging from low education to irresponsibly allocated aid to a lack of political accountability. Though huge, drastic changes will not happen overnight to improve the situation of these third world countries, small changes can build on themselves and become “the start of a quiet revolution.”
Banerjee and Duflo. Poor Economics.
Parle. Chapter 5: The Foreign Aid Debate. PovertyEducation.org. http://www.povertyeducation.org/the-foreign-aid-debate.html