April 2, 2008
Jeffrey Sachs

Ipek Cem caught up with economist Jeffrey Sachs in the bustling city of Shanghai. In this interview, the world acclaimed Director of Columbia University's Earth Institute Sachs gives his opinions on various topics, including elimination of extreme poverty and sustainable development. Cem and Sachs also discussed the latest Jeffrey Sachs book, "Common Wealth".

Ipek Cem: My guest today is Jeffrey Sachs, one of the leading economists in the world today. Welcome to Global Leaders.

 

Jeffrey Sachs: Thank you very much. Great to be with you.

 

Ipek Cem: In your new book, "Common Wealth", you talk about several trends, and one of the trends that caught my attention is the fact that world population will continue to grow, but at the same time wealth per capita, excluding the extreme poverty component will also continue to grow. Are we going to be in this boom situation for a while?

 

Jeffrey Sachs: Well, right now it's... we're in a little bit of a down-turn, in the United States economy, pretty worrisome, but a lot of the rest of the world is growing rapidly, especially in Asia, of course, China and India, and South East Asia, and so I believe that we will continue to have economic growth, and population growth, and what I say in my book is that this is good news of course in a certain sense, but it also means environmental pressures even worse than we have them right now. So the whole book is about the question: how do we reconcile our desire to have higher living standards, and higher output, with what we are doing to the planet in climate change, and ruining the land, and over-fishing the seas. We have to reconcile how we manage the economy with how we manage the environment. We haven't done that yet.

 

Ipek Cem: You still seem to instil a certain hope in your reader's mind - in this book and in your previous book "The End of Poverty". In your previous book you were talking about a time period until 2025 whereby some of the Millennium Development goals, such as poverty eradication, or the reduction of infectious diseases which have cures, and other issues can be resolved to a certain degree. Are you still - that was in 2005 and we are in 2008, three years have passed - how do you see the progress on the Millennium Development goals in the past three years?

 

Jeffrey Sachs: My basic view is that we have the technology and the science to actually solve the big problems that we face: poverty; climate change; and too fast population growth, also. These things can be done if we cooperate with each other, if we recognise that these are common problems the world over, and that our attention to fighting each other is such a waste of effort. What we need to be doing is directing our attention to our common goals. So that's the good news: we can solve them. The bad news, if I could put it that way, is that we need cooperation to solve them, and we seem to be so bad at cooperating right now, because everybody is pointing the finger. It's you fault. It's your fault. Of course, we are spending hundreds of billions of dollars on war, right now, rather than on solving problems of energy, and water, and climate, and poverty. And if we can have our public understand that our worst problems are not "somebody else", but are actually common challenges that we should all work on, together. And if we could get our politicians to stop spending on war, and actually spending on these problems so that we get to the solutions, then we're going to find that actually, these problems as big as they look, are solvable. So that's the challenge. Am I optimistic? I believe that we can do this, and I believe we have to do this, but I don't believe it's a guarantee. That's the problem. There is no guarantee we're going to get this right. We just keep doing so many stupid things on this planet that we have to find a way to do it better.

 

Ipek Cem: In you new book you have a table whereby you come up with a figure, if I remember correctly, about 2.5%, 2.4% of the GNP of the 22 donor nations would actually be enough to solve the very pressing, the very difficult issues that we just mentioned. How does that work out?

 

Jeffrey Sachs: Basically, the rich countries are so rich that if they devoted even less than 1% of their income to the problem of extreme poverty, work together with the poorest countries, we could end extreme poverty. I'll just give one example, one issue that I am very much involved with and care a lot about, is Malaria which is a disease that's transmitted by mosquitoes in the tropics, kills between one and three million children every year. It would take about 3 billion dollars a year to provide the medicines and the anti-malaria bed nets, and the training for community health workers to get this disease decisively under control.

So I ask myself: three billion dollars, how big is that? Well, on the one hand it's a lot of money for us, but from the point of view of the US Government, for example, it's less than what the US Government spends in two days on the Pentagon. So for less than 2 days of spending on our military budget, we could actually fund a comprehensive control of malaria throughout Africa. So that's why I say the issue's a choice: where do we spend our money, and do we direct it at the right purposes, and more generally, if the rich countries took on the challenge of poverty and safe and clean energy systems, not the kind of systems that are creating all of the climate change, but renewable energy like solar power, wind power, and safer kinds of traditional coal burning power plants, that also wouldn't be more than 1% of our income.

So you start looking step by step. What could we do on the problem? How much would it cost, and the conclusion I reach is we can afford this. In fact we can't afford to neglect it, because the consequences of ignoring these problems is so huge that we are going to end up spending many times more in war, in political conflict, in instability and disease than we would ever spend if we directed our money to the real solutions.

 

Ipek Cem: Now the US is going through a pre-election period, and a lot of the issues we are talking about are being talked about in the policy documents of the Presidential candidates. In terms of issues dear to your heart, your causes, that you believe in, which Presidential nominee do you see as feeling strongly about the resolution to these issues?

 

Jeffrey Sachs: On certain issues, like climate change, all of the major candidates are pretty clear that we need a new policy in the United States. So whether it's John McCain, or Hilary Clinton, or Barack Obama, they are all saying "We need to face up to the reality of climate change". The United States has to move to a cleaner energy system, and under their administration they say that will begin to happen. So that's good news. I think there is a big difference among the candidates on how they view the issues of war and peace, and the solutions to problems. So I believe, for example - not speaking about the individual candidates - that all of this spending, which is going to be trillions of dollars on the Iraq war, isn't going to solve problems for the United States, or for the regional stability in the Middle East, or elsewhere; that military approaches to these problems will not work, in my opinion, and we need to direct attention to helping develop jobs and industry and environmental protection, and facing problems of water stress throughout the Middle East, for example, rather than thinking that military approaches can solve these problems.

Well, the candidates, obviously, have a wide range of opinion on that, and I hope that we end up with the President that says, "Let's invest in peace", because that's the way to national security. That would be my opinion.

 

Ipek Cem: You are always... talking of using the wealth created by Market economics, by technological advances, and contributing some of that to some of the world's deep issues. Sometimes people criticise you saying that market dynamics are always the real way of progress. If we, let's say, eradicate less than $1 a day extreme poverty, then what is the next step? How can you empower those people to become, at some point, self-sufficient, because perhaps it's their environment, perhaps it's where they live and other causes that are causing that vicious circle?

 

Jeffrey Sachs: Right. I believe in a... what's called a mixed economy: Markets and also government taking responsibility for the environment, for the poor, for the infrastructure, and when I look at which parts of the world work best, I really like the economies for example in Scandinavia, Norway and Sweden, and Denmark where they have a private market economy, but the Government also takes responsibility for the health sector, for the basic infrastructure, for education, and it creates a more equal distribution of income, and it solves environmental problems better, and it's a bit fairer, I think... and also more stable than the kind of system that we have in the United States which leaves a lot of very poor people, leaves too many things to the Market.

So I am criticised, sometimes, by people that like a free market approach, only. They say... oh.... I believe too much that the Government should do this, or do that, but I think that the evidence is that we can't leave everything to the market. We will never solve environmental problems and we'll leave too many people suffering from poverty.

Now, you asked a question: what happens in a poor place if you help them to a certain place, will they be able to achieve another step, another step, another step, and the history is that if you have a society that is trapped in extreme poverty, and it doesn't have roads, and it doesn't have power, and the children aren't at school, and there is no electricity... if you just leave that alone it's going to get worse, not better. Market forces will not solve those problems. But... if you make investments together with that kind of society, building roads and power, helping to open up areas that were isolated from the economy, bringing in schools and clinics, spending the money to invest in people that once you reach a certain level of economic activity, then market forces can help to make that economy grow higher and higher. And I say that for people that are so poor that they are not on the ladder of development, if we help them to get on to the ladder of development, even the bottom rung of the ladder, then they'll be able to climb the ladder through saving and investment, and new business development, largely on their own.

So I am rather optimistic that there is a way forward with a market economy, and with some help. But if you are trapped in extreme poverty, just being left alone is not going to solve your problem: you need help. And that's what I think the world should give.

 

Ipek Cem: You travel extensively for your work. You travel to distressed areas on a regular basis, and... what are some of the examples, in terms of areas, where you have seen this transformation take place?

 

Jeffrey Sachs: We're speaking in China, right now, and you'd think about the fact that China had half it's population in extreme poverty forty years ago, and now we are in a booming city... one of the biggest booming cities in the world. This is an example of how economic development can work. there still are poor people in China, but no where near as many as there used to be, and there is a lot of economic progress.

I travel a lot to India, as well. India is a very poor country, but it's much less poor than it used to be and now there is a developing middle class. And so lots of parts of the world, Turkey, included, and South East Asia, and East Asia, and South Asia have experienced lots of economic development. In Brazil that's happening now.

But I am very concerned about places that are trapped in poverty. Much of Africa: trapped. Much of Central Asia: places like Afghanistan, with so much trouble, and so much violence, and so much conflict - but a lot of it has to do with Afghanistan being land-locked, and tremendously poor, and therefore very unstable and unable to find a national consensus. And war isn't solving the problem, unfortunately: it's another example. And usually communities up in the mountains, farther away from the ports and the big cities, and the trade routes are left poorer than the places - Istanbul, or other places - in the market economy, and in the midst of international trade.

And so we have to be thinking always, not only the favoured locations of the world - like Shanghai, or like Istanbul, or like New York City, where I live - where there are lots of advantages, naturally because it's part of trade, and it's part of commerce, and it's part of finance, and so there's a lot going on, but places that are more remote, in the desert, or in the mountains, or in the interior of Asia, like Afghanistan, or Kazakhstan, or Uzbekistan, where it is so remote that the economic forces are very weak, and the poverty is very, very great. And we have to be thinking: how do we help people living in those circumstances, also.

 

Ipek Cem: Another issue you bring up in your book is about population control and right now about 6.6 billion people on the planet, and about one billion, I believe in extreme poverty. It's a huge percentage. What to do about population control? How to... because it has an element of necessity, and an element of restricting rights... so how to balance that?

 

Jeffrey Sachs: It's an excellent question, and obviously very sensitive question because it goes to the most private decisions of people, and with lots of different cultures having different points of view. We have a lot of people on the planet, and 200 years ago - which maybe seems like a long time ago, but is a short time in human history - we had about one tenth the number of people that we have today. So the world got very crowded, and all that crowding is putting tremendous pressure on the air, and on the oceans, and on the land, and it's making it very hard for us to find the energy that we need - the food supply, and so forth - and it's causing many species to be hunted to extinction, or to be fished to extinction.

The population is continuing to rise, not at the same proportionate rate that it did 30 years ago, because that growth rate has slower down, but with such a large number of people on the planet, we are still adding in net terms about 75 million people each year to the increase of population. And if you project that out into the middle of the century, as the United Nation has done, we could be adding another two and a half billion people to the planet. Now, that's a very crowded planet, and if you look at where the population growth is fastest, it tends to be in the poorest places. Places that don't have access to family planning services, and contraception, places where girls are married often by their fathers very young, and they start having children at age 14, or 15, or 16... they have no choice, and that's the culture. And they have six, or seven, or eight children, and then they can't raise those children with proper nutrition and education, and a chance for the future, because it's a poor family, and so many children.

And so we see this in many places, and I am worried about the consequences of that, because when there are so many unemployed young people, and they don't have hope, and they haven't been able to have proper nutrition, and proper schooling, And they don't have a job: what happens? They are in despair, and often things get violent, or they are easily aroused by a political leader who says, "Your problem is some... Your poverty is caused by that person, or this society...". It leads to a lot of conflict.

So I believe from an environmental point of view, and an economic development point of view, and a social stability and security point of view, we should help places that still have very high population growth, have a transition - it is called a demographic transition - to lower fertility. Now, I do believe that this can be done on a voluntary basis. China made a law to have fewer children, but I believe that if family planning is available for everybody, if women really have their choice, if girls are encouraged to stay in school, and have a secondary school education at least, if there are jobs available, if children are surviving so the family can say, "OK. We'll have two children, or three children, because we know that they will survive". All of that will lead husbands and wives to choose to have fewer children. And that can happen quite quickly, and I think we should encourage that.

If we end up with nine, ten, eleven, twelve billion on this planet, we are going to end up with a lot of strife, because we will find that the resources are really scarce, and that the environmental dangers are very great, and that the number of unemployed young people trying to move, migrate, or join gangs or whatever, will also be a huge problem for the world.

 

Ipek Cem: That could be cause for new conflicts and wars. This resource scarcity is already one of the causes of conflicts in the world, and that could just compound...

 

Jeffrey Sachs: This is to me one of the most important points right now, which is that there are different views about what causes conflict. Some people say, "Well, the conflict is because they are fundamentalists", or, "They believe in a different religion", or, "They are evil", or whatever idea. I think most of that is pretty dumb. I believe that most of the conflict that we face comes from people who don't have hope, that don't have dignity, and that are living in poverty. And if we can help people to have a brighter future, then the chance for reducing the conflict also becomes much greater.

 

Ipek Cem: In your new book you talk also about Asia becoming the centre of gravity of the world, and just projecting into the future into 2030 and 2050 the... almost half of the world's income is going to be produced by Asia, and I believe you include Turkey in that, right?

 

Jeffrey Sachs: Of course.

 

Ipek Cem: How do you see this transformation, this economic transformation and its repercussions on the world scene in general?

 

Jeffrey Sachs: For the last two or three hundred years, the North Atlantic region - meaning England, and the United States, Western Europe - was the dominant economic force. It was the place where the industrial revolution took off, and it had the coal resources. It ended up conquering a lot of the world during the colonial era. But I think there's a shift under way that is quite basic, and that is that not that those regions are losing, but that the other regions of the world are gaining. And so in China, or in India, or in North Africa, or in Brazil, or in other places, technologies that once were only the preserve of the rich countries are now everybody's access, and because the technology is spreading, the literacy is spreading, the education is spreading, the living standards in other parts of the world are catching up with the living standards in today's rich world. And so the gap is narrowing, and since Asia is home to more than half of the world's population, as the living standards per person in Asia rise, that means the total size of the Asian economy becomes the dominant part of the world economy.

Now, that's a projection that's based on the idea that we'll continue with peace, which I certainly hope and think we need to do, and that the environmental damage won't upset the Asian progress. If those two things are true, then I think Asia will continue to catch up, and it will become the centre of gravity of the world economy, and that means that the markets of China and India, South East Asia, West Asia - including Turkey - with peace can be a very dynamic, very important part of the world economy.

 

Ipek Cem: You are an advisor to the UN, and to many governments around the world, and Turkey has had many changes in its economy over the past decade. We were fighting with inflation - something that you have done in many countries - and we are much more stable now. How do you see the Turkish economy as it connects with the world economy?

 

Jeffrey Sachs: I think Turkey is geographically in the middle, and it literally in the middle between Europe and Asia. And in times of peace, that's a great place to be. And of course Istanbul, and its role in history has often put it at the very centre of the world economy, because it links Europe and Asia. But Turkey has also suffered a lot of the shocks of the region of the Middle East, of the Iraq... two Iraq wars, of the unsettled situation in Israel, Palestine, and so forth.. So the Middle East has been an unstable area at times. It's often been a major trading area and cultural centre, as well. And of course I hope that in the future it's the latter one, in other words that we find peace, and that the Middle East can play its role as being in the middle of trade, and not only of Europe and Asia, but also of Africa, because I would like to see a dynamic Africa, dynamic Europe, dynamic Asia, and then you'd find Turkey is geographically right in the sweet spot as a great centre that brings together all of those civilisations, and brings together the knowledge and the trading.

So I see, of course, great potential. What do I worry about? I worry about conflict in the region, and I worry about environment, because the whole Middle East and Mediterranean are very vulnerable to global climate change: to water stress, especially; and to the agricultural effects; and so forth. So the book is not simply a celebration of all the good things that could happen, it's a warning that we have the means to solve our problems, but we're not solving them right now because we are investing in war, not peace; because we are not paying attention to the global population; we're not paying attention to solving the climate change.

And so for the good things to happen, we've got to invest in our future. Choose to do it, not simply say that it's an automatic state of progress.

 

Ipek Cem: You mentioned at the beginning of our conversation the difficulty to coordinate policy on a global level. However, to work on these very complex issues you really need contribution and collaboration. We have the United Nations. It has been criticised many times for various issues, for lack of coercion, actually, on individual countries which have a lot of power, like the United States. What kind of mechanism can bring around this sort of cooperation?

 

Jeffrey Sachs: Well, I am a big believer in the United Nations. I of course work with Secretary General Ban Ki-Moon, and worked closely with the Secretary General Kofi Annan, and have worked with the many, many of the UN agencies, like the World Health Organisation, the Food and Agriculture organisation, and UNICEF, and many others, and United Nations Development Programme. I believe in these organisations, and I believe in these international processes, but they are not easy right now. Often the big powers don't like them. Many people in the United States said, "Why should we cooperate with the UN, we're the United States, we can do what we want". This, I think is not a smart idea, because our problems are global, and they cannot be solved by one country alone, and even less by war. So we need global cooperation to address these problems. The United Nations is the natural place to cooperate.

The core to getting there is not a specific process, or a specific way to vote or something like that. The core to getting there is for people to understand this, and for the United States' leaders to understand this. But for them to understand it, the American people have to understand it. Now, I believe that they've seen in recent years that the unilateral approach that has been taken didn't work, because for the last few years this Government often said, "We are doing it on our own, we don't have to do it with anybody else, and certainly not with the UN".

Now, even this Government is changing its voice and its statements because they've recognised that we need global cooperation, and I think the next administration, even more, needs to say we need to go to the UN to solve our problems and find ways to work together. It's often frustrating. There are 192 countries, they are not all very well governed, and there are a lot of nasty people around, there is no doubt about it. But I think choosing the path of working cooperatively through the UN organisations is by far the most promising path that we have.

 

Ipek Cem: How does the fact that countries like China and India now in addition to economic power will clearly have more political clout, and more political power, and they will need to be convinced to become part of this environmental debate, to be more respectful of issues that perhaps the developed world was not so respectful of when they were developing. How do you see these countries' attitudes toward these issues?

 

Jeffrey Sachs: On the whole, I think we can expect a lot of China and India in terms of their leadership. They are in a very key position, of course, with a lot of power and influence, but also they are a big stake in the continued stability of the international system as well as in the environment. From an environment or point of view both India and China are deeply environmentally threatened because they are very crowded countries. They have a lot of people compared to their land area. A lot of people compared to their water. So they are very vulnerable to climate change. That's one part. But second, if you think about the vision of the Chinese leadership, or the Indian leadership to the world economy, what they want is calm and peace so that the next few decades can be devoted to catching up economically. They know if there is a lot of turmoil internationally, that their economic hopes will also be frustrated.

So I think that they have a big stake in solving global problems cooperatively, and I am encouraged that they will be active participants, and constructive ones. But of course they ask another question: if the United States - the world's richest country - doesn't join in on climate control, why should we much poorer countries, where the per person emissions are much lower than the US: and I think they have a point, of course. If we don't have leadership from the most powerful, the richest country, then of course everyone else is saying, "Well... why should we pay the bill in the end?". The truth is everybody has to participate in this. It can't just be left to the rich countries, but it can't be somehow pushed down and away from the rich countries: everyone is going to have to join together on this.

 

Ipek Cem: What is the impact of celebrities like Bono, like Angelina Jolie, like Bono wrote the foreword in your previous book, that they actually work towards certain causes. Is this impacting policy makers? Is this inspiring people to volunteer? What do you think about this trend?

 

Jeffrey Sachs: I think that the role of these world leading artists, rock stars, actresses and actors, is very, very positive because they bring to the world's attention issues that otherwise they might... the public might not see. These are people - people like Bono or Madonna, or Angelina Jolie - have vast followings and millions and millions of fans, and when they speak people are listening. And they are leading right now, and they are very knowledgeable about these issues and they are telling the public, "Pay attention", and the public is paying attention, and they are learning about this. I am the biggest fan of all because I think we need this kind of public understanding in a very big way. These are not issues to be left to a few technical experts, or to believe that our Presidents and Prime Ministers are going to have such wisdom that they're going to solve these problems without us. And so we need the public to understand and to get engaged in the broadest possible way, and I think that having these world-known leaders in the arts, and in the films, and in the rock concert stage playing this role is extremely positive.

 

Ipek Cem: One last question about the US subprime crisis. There is a still many differing views. People accept that this is a very significant issue, with repercussions. Some people are arguing global markets will not be affected because of such globalisation. Others are saying it's only a matter of time and the impact may be devastating, for some. What is your personal view, looking at the numbers and the predictions?

 

Jeffrey Sachs: First, we can't know for sure. That's obvious. Second I think the US situation's pretty bad, and that we'll have a recession in the United States. That's because we overspent, over-borrowed, had irresponsible policies in recent years, and we're going to pay a price for that. Now I personally tend to believe that the rest of the world will be able to get away from this without heavy damage, because I think that there is a lot of economic dynamism in Asia, and in other places in the world, and even if the US goes into recession it won't cause a global crisis. Other people disagree because they say the banks around the world are more affected. I am still optimistic. Now I am not so optimistic about the US in the short term, but I am more optimistic about the rest of the world, that we can avoid a global crisis, and I think we certainly need to work towards that.

 

Ipek Cem: Well, on that note I'd like to thank you very much for this interview.

 

Jeffrey Sachs: Well, thanks so much for having me on your show.

 

This transcript was typed from a transcription unit recording and not copied from an original script. Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, NTV networks and Ipek Cem cannot vouch for its accuracy.