Wednesday, May 04, 2005

In Pakistan, women lead final push to eradicate polio

Tuesday, May 03, 2005

Hard times come again no more

Renowned economist Jeffrey Sachs has a book called The End of Poverty: Economic Possibilities for Our Time currently at #69 on Amazon's top seller list. Finally! Somebody famous has come out and said it in public, and people are paying a little attention. Other lesser-known people such as this blogger have been saying so for years, with little obvious response.

If you care in the least about the welfare of other people, prospects for developing countries, global health (including its impact on your own health), global politics, the possibility of war or terrorist acts, or indeed much of anything outside your own pocketbook and your local entertainment media, you need to look into this book. If you have been following the discussion, you may not need to read it all the way through for your own edification, but you will need to know what arguments Sachs has made that are now part of the public discourse. You may also need to know what he has missed.

Sachs has defined the problem well, giving the reader a breathless world tour of poverty, misery, inequality and outright oppression, squalor, injustice, and so on, including the scourges of AIDS and other inexcusably global epidemics. He also lays out most of the goals, following the prescription of the UN's Millennium Development Goals. Where Sachs falls down is on methods. There is almost no mention of computers in the book, and the few mentions are not indexed. There is hardly any discussion of communications requirements, and none of the current technologies that are best suited for the villages. Microbanking is discussed, but not given the emphasis I would like to see. And there is no hint of a coordinated plan based on practice, experience, and evidence, for the appropriate ways to deliver health services, education, and economic opportunity. We are left with a "more of the same" sort of program, calling for greater funding of existing UN programs and international assistance, and more investment by the governments of developing countries. We can do better than this.

I don't know why Sachs doesn't mention ICT. He was certainly aware of the UN ICT Task Force and the World Summit on the Information Society even before UN Secretary-General Kofi Annan gave him responsibility for the Millennium Development Goals. He has friends in the business, being well-known to someone prominent who is well-known to me. Well, I am not going to pretend to figure out such a thing. Let's get down to cases.

The most important fact about global development is that a functioning economy depends on the flow of information, and a well-functioning free market depends on the freest possible flow of information. In academic economics, freedom of information is not a conclusion; not a theorem derived from more basic axioms; not a policy decision. It is the first fundamental axiom, without which nothing can be done. Without the presupposition of perfect information, economics fails to predict any of the benefits we associate with the theory of the free market. Indeed, in the absence of perfect information, it is clear that they will not happen. In general, the less information the public has, the less efficient the economy, the less effective that economy's employment of resources (especially people), and the more unequal and discriminatory the prices of goods and services. In economies that mandate a fair amount of disclosure, these ills are not as great as they are in highly secretive societies where the public cannot find out what their goverments or any of the local businesses are up to. The most secretive societies, notably North Korea and Burma, are also the worst off economically.

There are several kinds of information essential to a functioning economy. There must be information about the goods and services available, including such matters as price, availability, quality, warranty, and quality of service. More fundamentally, one must be able to tell who is supplying the goods and services, not just by name, but by past economic, political, and even criminal records, and conflicts of interest. There must also be the education that enables the effective use of products and services. In the field of health, there must be published, peer-reviewed, and verified research into the safety and efficacy of drugs, treatments, and surgical procedures, and reliable nutrition information. It should be possible for people to know what the law says, and what that means when you go into court, and it should be correctly known that what the law means will not change capriciously from one court to another ("the rule of law"). And so on.

In practical terms this means that the information and communications infrastructure of a country, including education and provision of health information, should be the prime focus of investment. Few governments and few aid agencies have drawn this conclusion, and fewer have acted on it. Sachs gets some of it, but doesn't seem to understand how much information can be made available to the poor at a cost that they can afford (given that they can make more money by using that information).

I have been laying out various components of such a plan on this blog, and I see that I need to draw them together and make their integration more explicit. Let me give you the short-short version again, and then I will think about how to elaborate on it so you can see the whole picture.

We need programs that integrate social development, health, education, economic opportunity, and so on. There are such programs in the Sarvodaya Shramadana Movement and the Fantsuam Foundation, and a particularly good model for health care in Partners in Health. Then we need the hardware and software for village computing and communications, such as the Simputer and the wireless technology put in nationwide by the government of Bhutan. Tying this together should be microfinance to deliver the equipment and fund the programs in the villages. With these elements, we can provide ICT to villages at a profit, we can create the training programs needed, and we can offer the services needed so that villagers can grow their own local economy and tackle the problems of poverty themselves. In addition, they get the chance to talk to each other and find ways of cooperating, and they get to talk to the rest of us. Without the information from them, the global economy cannot be free and open. Not only their part of the economy but ours as well suffers from the resulting inefficiencies, misallocation of resources, and unequal prices.

The limiting factor here is that the microbank projects in village computing have not resulted in suitable products with suitable training. This is a mystery to me, since I know of several successful training projects resulting in economic benefits to the poor. Perhaps the microbanks are suffering from the Not Invented Here syndrome? But I don't want to waste effort on diagnosing them either. I would rather get on with the work. I and my friends are pursuing trade in African Art, with most of the money going to the artists; fair trade purchasing and marketing of coffee, tea, and other commodities; satellite communications; localizing of Free Software by neglected language communities into their own languages; and a number of other facets of the program.

We are creating a new kind of organization, a hybrid of profit and non-profit, commercial and charitable. Our analysis says that we can end poverty at a profit, and our business plan says that we can raise the money to do it without waiting for anybody else to get the message. If we have to, we will start our own microbanks.

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