>> Andrew Samwick: Ladies and
gentlemen, I'm Andrew Samwick, the director of the Nelson
A. Rockefeller Center here at Dartmouth College and it's
my pleasure to welcome you to this afternoon's
lecture Ending Poverty in Our Generation -
Still Time If We Try, by Professor Jeffrey Sacks. Professor Sacks is the
Rockefeller Center's Class of 1930 Fellow for
this academic year. The Class of 1930 Fellowship was
established by the membership of the class to continue
the tradition begun by President Ernest
Martin Hopkins of bringing distinguished
men and women to campus for brief visits. Professor Sacks is the 34th name
to join a distinguished list that includes Nobel Prize
winners, Supreme Court Justices, global statesmen and
leading academics and public intellectuals. In addition to this
afternoon's address, Professor Sacks visited
earlier today, with the students and Professor Marjorie
Rose's macro-economic class and spoke informally to
students from a number of online campus groups
focused on politics, public policy and leadership. I first met Professor Sacks
when I took macro-economic and international finance
from him as an undergraduate at Harvard, some 22 years ago. It was clear from even
the first few lectures that this guy had
a lot more going on than the typical
faculty member, even on such a distinguished
faculty. At the time, he was deeply
engaged in the problems of developing country debt and
in particular, the challenges in a number of Latin
American countries in which weak political
institutions and deep social divisions made
the usual remedies proposed by creditor nations
unsustainable. Professor Sacks became a highly
sought after policy advisor with his recommendations
consistently recognizing the challenges beyond the simply
economics and the need to push back against the
austere recommendations of the international
financial community to protect vulnerable
populations in developing countries from
falling further into poverty. As a 19 year old aspiring
economist, I cannot help but be inspired and I could only
marvel at the fascinating way that someone had chosen to
use his PhD in economics. In the intervening decades,
Professor Sacks has stayed true to these virtues, but expanded
the domains of his expertise and policy advising far
beyond these beginnings. During this time, he has been at
the forefront of the challenges of economic development, poverty
alleviation and globalization, promoting policies to help
all parts of the world benefit from expanding opportunities
and well being. He is also one of
the leading voices for combining economic
development with environmental
sustainability. Now, the director of
the Earth Institute at Columbia University, he
leads large scale efforts to promote the mitigation of
human induced climate change. Redistribution of resources
is a fact of human existence. In the area of climate change, the redistribution is
clear and unavoidable. There is very little
scope for mutual benefit when one party uses
up a resource or contaminates the resources
that others might seek to use during the course
of its economic activities. Without a restructuring of the
rules, there's very little hope of an equitable outcome,
but in the area of global poverty alleviation,
there should be room for mutual gains from trade. The challenges to balance
the decentralized activities of nascent private markets gets,
with some centralized design for reinvesting the
proceeds of those activities and socially useful goals that
lift everyone out of poverty. Views of how to meet that
challenge differ quite a bit in the economics and
policy advising communities. Professor Sacks has
been a leading advocate for the United Nations
millennium development goals, which were agreed
to in 2000 and aimed at dramatically reducing
extreme poverty, disease and hunger by the year 2015. From 2002 to 2006,
he was the Director of the UN Millennium
Project and special advisor to then UN Secretary, General
Kofi Annan on those goals. He continues to serve
as a special advisor to UN Secretary,
General Ban Ki-moon. He is also president
and co-founder of the Millennium
Promise Alliance, a non-profit organization aimed at ending extremd
global poverty. We look forward to hearing
Professor Sacks' views on how attainable such
ambitious goals are in 2010. In addition to his role
at the Earth Institute, Professor Sacks is the catalytic
[assumed spelling]professor of sustainable development
and professor of health policy and manage at Columbia
University. The list of honors he has
received for his academic and professional work is
long and distinguished. He is the author of two
New York Times bestsellers, Commonwealth - Economics for
a Crowded Planet and The End of Poverty - Economic
Possibilities for Our Time. I'm delighted to see so
many Dartmouth students in the audience today. Every Dartmouth student,
since the end of World War II has been
confronted by the timeless quote from President John
Sloan Dickey, "The world's troubles
are your troubles and there is nothing
wrong with the world that better human
beings cannot fix." Born just eight years after those famous words
were first uttered, there are very few
people that embody them as well as our guest today. Ladies and gentlemen,
please join me in welcoming Professor
Jeffrey Sacks. [ Applause ] >> Jeffrey Sacks:
Thank you so much. [ Applause ] >> Jeffrey Sacks:
Thank you very much. Andrew, it's nice to know what a
wonderful thing came out F-1430, you and it's a joy to be here. Thank you to Dartmouth
for the invitation and to the students
for a great day. All day, we've had some
fantastic discussion already and I'm looking forward to
more this evening so I'm very, very grateful and I
love that quotation of the Dartmouth president because that's exactly
the point. These are solvable problems
and they're actually not -- they're complicated, but
they're not that hard to solve and when it comes to poverty,
we actually have a lot of wind in the sails because it a little
weird to be in the year 2010 with all of the technology that
we have, all of the capability and skill to have places
in the world that are in extreme, extreme duress. In other words, if I were
giving this talk in 1810, it would be kind of dream talk, although there were some
dreamers of the enlightenment who believed that the
problems of human poverty, which had afflicted
human society forever and forever, could be solved. But here we are in 2010
and I find the question of ending poverty on the one
side, really not so surprising, I just find it weird that there
is still extreme poverty right now with all the
tools that we have to do something about
these scourges. And in fact, a lot of my
thinking has been to try to understand why it is that we
still have places on the planet, in a way and I use the
metaphor frequently, are trapped, in a poverty trap. It seems odd. It's not the normal
situation in the world to be in extreme poverty. It's the exception now. It's in fact, becoming more
and more of the exception. Thank goodness. Economic growth works. Markets work. Technology does lead to
human advance though, if it's used wrong it can also
lead to a lot of problems, but some parts of the world for
complex reasons have been stuck and I want to explain a
particular view of that that I've come to in my
30 years of work on this. It's not a view that was
automatic or obvious for me. In fact, generally, in my
life, until I saw things with my own eyes, I
didn't understand them. My imagination wasn't
good enough and economic theory has too
many theories, by the way. They're all very clever
and the hardest part about economic theory is
actually not making a new theory, it's choosing among
the hundred that exist to try to understand which
ones are applicable, at which times and
in which places. And when I saw more and more of
the world and saw more and more of the economic progress
and contrasted with places that were still stuck, that's
when I began to develop some of the thinking that
I have tried to employ and deploy during
this past decade of the Millennium
Development goals. Those are the ideas that I want
to share with you this evening. Why I think ending
poverty isn't a matter of fate on the one hand. It's not a matter of what
economists would call your differential equation system, which just tells you growth
is going to do this and that to you, or it's not
the inevitable result of a market economy. Though market economy is
necessary and it helps, but it is something
is within our grasp if we're clever about it. And from the point of view
of the United States, well, we actually have a
couple of paradoxes here. First, we have poverty in
our midst that's very serious and that's a social shame
and it's also unnecessary. And I'll come back to that
later because we better reflect about the U.S. reality, as
well as, the world's reality. The kind of poverty I'm talking
about though is more extreme than the very real poverty that
we have in the United States. I'm talking about the
poverty that's so extreme that it is a matter of life
and death survival for the poor and where millions of very
poor people die every year, not recognized by us. Nameless without headlines and
not even attributed to poverty, but really deaths from poverty,
from chronic undernourishment, from lack of access
to an $0.80 dose of anti-malaria medicine
and so forth. That's the kind of poverty that
I'm focused on, but the fact of the matter is, I don't
want to give away punch lines, but the fact of the
matter is we're not good in our own country at
facing our own poverty and it's not surprising
that we're even worse at facing the rest of the
world's poverty right now. We've kind of reached in
our society a blind spot where we don't understand
poverty and we don't want to think about it, our
politicians don't use the terms. If you listen to
President Obama or any of his political opponents, all we have in this
country is the middle class. We don't even want to mention
poverty and this is a barrier to our clear thinking
about these issues. And I want to try to
clarify a few things today. So this is the kind of
poverty I see very regularly. This is a place and I'm going
to describe this project in a little bit of detail. One of the Millennium
Villages, which I think some of you have probably
heard about -- these are parts and
places within Africa where we're testing the
proposition that I'm going to speak about this evening, which is the targeted
investments can break free -- can help communities to break
free from the poverty trap. And this particular community where you see these
men digging a whole is in Tigray Province, Ethiopia. So it's in the northern
province of Ethiopia on the Eritrean border. It's a dry land region, which is
the first giveaway because being in a dry land part of the world
is almost the ticket to poverty, except if you happen to
have oil under your dry land and then it's quite
different, but if is you're dry and just scrub, it's a pretty
tough life and not coincidental, but there would be poverty. This day really shocked
me because we were led out to this area where these men
were digging and I was asked, "Do you know what
they're doing?" And I did not know what they
were doing and I didn't know where we were exactly
in the village. It turned out that this is
a river bed in the village, but the river has run dry
and it's run dry partly because of climate change, it
seems because the short rains in Tigray Province had become
shorter or non-existent over the years -- in
recent years seeming to be because of long-term climate
change, though, of course, it's only after a much longer
statistical record that you say, "You nailed it," but it
seems to be climate change and population growth
at the same time. So more and more water
taken out of the smaller and smaller trickle upstream. So by the time you get to this
village, there is no water in the dry season for eight or
nine months out of the year. And the men were digging
the hole in the middle of the river bed to get to the
water and they had hired a pump out of the incredibly scarce
resources and they were going to pump the fields that day. But basically, this is a
drought proned, famine proned, impoverished community
and the legs are thin and everyone is undernourished
and many hunger months a year. And we're working in this
community among many places to try to end extreme poverty
through targeted investments. And I have to tell you that when
we drove here the first time, you go to the regional capital
and then you drive on a tarmac for about an hour and then
we turned off the tarmac into the bush and
drove for an hour. I didn't know that was
still the road, actually, because it didn't seem to be the
road, but there was a little bit of road and then we turned one
more time -- boom, boom, boom, just rock, not even level
and went for another hour and my colleague sitting next to me was a world
famous soil scientist, was looking out desperate
because there was no soil. It was sandy, it was
rock and he was just -- you could see the
sweat, you know, what are we going to do here. And we had given instructions
to all of our colleagues around Africa in finding
the Millennium Villages, we want hard places. This is to prove the hard stuff, not the easy stuff
near the road. And he looked at me and said, "This may be a village
-- one village too far." And yet, there's a tremendous
amount of progress here. What you're seeing there
is changing actually, through proper landscape
management and water harvesting at a landscape level and I'll
come back to talk about that in just a few minutes. This is another site that
greeted us in another of the Millennium Villages
when we starting working in 2005 in western Kenya. And it is a place that
I describe in the end of poverty was the first
talk I gave to a community when we launched this project. Talk with the community,
I should say. A high AIDS prevalence part
of Africa near Lake Victoria. A maze growing rural community,
hungry, impoverished, malarious, AIDS-ridden, really tough and this is Yala
Clinic six years ago. Two patients to a bed. Something I had never
seen in my life. In Malawi, I saw three
patients to a bed. These are not people
who know each other. These are strangers in an
overwhelmed health facility and they're infectious too. So one may have TB and
another may have AIDS. People are coming in a desperate
state of affairs to the clinic and the water bottle
that you see under -- the jerricans underneath,
are water brought by the patients'
families themselves because there's no running
water in these clinics. It's not like this
anymore, five years later, but this is a reality of
what extreme poverty means, that even in a health
facility there's no water, which by the way is --
cannot be a health facility in those conditions. If a nurse or a doctor
cannot wash hands between handling patients, the
damage that can be done simply by transmitting the
diseases is phenomenal. And you walk into a rural
clinic in a rural village in a poor part of the world,
especially in Sub Saharan Africa and the chance -- I always -- first thing I do is I go to
the tap and I turn it and 90% of the time no water comes out
and then there's a quick excuse by the director of
the facility, "Oh, we have water, but it's broken." It's been broken six years
maybe, but it's an example of what extreme poverty
is about. This is a puzzle and the
puzzle is a deep one. Why in a world where we have
now seven billion people living at an average output person
of $10,000 per capita, because that's what the world
produces is $70 trillion world product per year
and in which most of the world I would say
approximately, six sevenths of the world or maybe five and a
half sevenths, that 5.5 billion of the seven billion
people are in some sense out of the extreme poverty trap. Why are there places that
are stuck in extreme poverty. There is a mainstream view of
this is that in some sense, these places have themselves
to blame and typically, the way we say it today is that it's the fault
of their government. Governments, governments
are corrupt, mismanaged, that's why the people
are in poverty. It used to be because of
the color of their skin. It used to be because
of their culture, although that's a latent
view that is widely held. And I think that there is a
general kind of disdain and lack of seriousness, even within my
profession often on these issues that it's all blame, it's not
really deep enough understanding and frankly, I feel very
fortunate that I've had a chance to work closely in these
places now for 25 years and it changed my
understanding of everything as I got more and more engaged. So first piece of advice,
if I can share advice with you is go get
engaged, see the world, get involved in problem solving. The books are great. What you learned is
tremendously important and it takes you maybe
halfway to a truth and don't let it ever pretend
to take you more than halfway because until you see
things with your own eyes, you simply can't get it. I had no idea what the
AIDS pandemic was like. I had no idea what
malaria was still doing in the late 20th century
or early 21st century and I really had no
idea about the nature of extreme poverty
also until seeing it. But one thing I can
tell you without -- I actually want to show you some
of the solutions so I don't want to talk at too much length
about all of the diagnosis, but I had the experience
pretty deeply over 25 years that the normal explanations that are given just
don't sit right when you're actually looking
at the problems close up. And the explanations are coming
from 10,000 miles away, usually, from Washington or even from
our own economics department and they're just too
far away from reality and we miss very basic features. And the thing that drove me
crazy is the basic premise of blame the victim
one way or another or blame the victim's government
because I found over time that I was working with
lots of governments. Most of them had
corruption in them and I would certainly include
the United States in that mix. Quite a bit of corruption
and yet, I couldn't find a moral ranking that these poor country
governments were so much worse that,
that really explained. In general, in poor countries,
governance is worse in the sense that you don't have
information systems, you don't have management
systems, you don't have managers with high training and so forth. So there is a problem of poverty because governance
cost money also. But the ranking of
governments in poor countries, the ones growing and not
growing are not a moral ranking as one would sometimes
pretend or imagine. And I had this funny experience when I was advising
the Bolivian government and the Vietnamese government. The Bolivian government, at the
time, was actually much cleaner and it was doing economic reform and the Vietnamese government
was incredibly corrupt -- one party state and
Vietnam was booming and Bolivia couldn't get an
investment if it gave it away. And it wasn't completely
a surprise. Bolivia was at 12,000 above
sea level in the Alto Plano, not so easy to get to among
the highest transport costs in the world. Not a great place to make
television sets or electronics. Whereas, Vietnam was right
there with this marvelous coast, where Taiwanese or the Koreans or the Japanese could make a
fortune with low cost labor in a coastal enterprise
near a port in the Asian trade sea lanes
for export to the United States. So factory after
factory was going up. And the commissars
were getting their cut. But it didn't matter, it
was highly profitable. So I said, you know,
it's not just the ranking of corruption, thank you. It actually matters if
you're landlocked high in the Andes Mountains, or if you're coastal near the
booming emerging economies. And so on and so on and so on. The main point is pay attention to the realities
of the economics. Look at the costs, look
at the possibilities, look at at the resources. If you're in a dry land and the
drought comes every three years, it's really tough to
have enough food to eat. And to have food security. And don't blame that
on governance. And if the rains fail more the
only governance that's really failing is our own because we're
creating the climate change that's causing more and
more of these crises. So it becomes a little bit
more complicated when you get from the blame stage to
the problem solving stage. And when you're assigned
the task, not of diagnosing the problem
only, or writing a good paper about it, but actually
trying to solve it. And then you say, oh God,
but the governance is okay, that can't be the problem,
what's happening here, why, oh there's no road. I forgot. Oh there's
no electricity. Oh there's drought. Hmm, now what are we
going to do about that? Well, we should build the road. Hmm, how are we going
to pay for that? No money. Why is
there now money? Well, because everyone's
impoverished. And you start to see
that you've got problems that are a little bit more
complicated and more engaged. So I came to a view 20 years
ago, that we had to crack a set of inter-connected
forces in very poor places that were quite complicated. Poverty trap, I believe
is a useful metaphor. What does it really mean? It means a place that's
in extreme impoverishment, as its initial condition. Typically, it can hardly
stay alive reliably, meaning that infant
mortality rates, child mortality rates are high, maternal mortality rates are
high, life expectancy is low, under nutrition is rampant. Children drop out
of school early. It's a lot of the poorest
parts of the world, especially, in Sub Saharan Africa
and South Asia. So saving is lower negative
because you can't even survive on your current income
much less save from it. Negative saving means
that you're running down your natural capital, for
example your local resources, you're cutting down
trees for charcoal, you're depleting soil nutrients,
you're mining the ground water because that's what you use
in pumping for your irrigation if you're lucky enough
to have that. So the saving isn't even
zero, it's negative. And typically, there are
many forces of disarray. Population growth is very high. Unless there's family planning
and contraceptive availability, in a poor place, population
fertility rates will be six or seven. And that means a population
doubling every generation and that's happening in
the poorest countries. Already in conditions of
environmental distress. Climate change. Environmental degradation
of deforestation, soil nutrient depletion,
land degradation. Inevitability, poor
governance but as an outcome, not as a primary cause. You can't govern
when you can't tax and you can't pay a
proper civil service. You can't pay your judges,
you can't pay your police, you can't invest in information
systems and so forth. And when you really reach the
end of the line, conflict. The probabilities of violence
and conflict are vastly higher in poor places than in
middle income places. And this is causal from
poverty to conflict. And recent papers have
shown, for example, that in very poor areas of
Africa when the rains fail, the probability of onset
of conflict rises three or four or five times. And so you have an instrumental
variable for the econometricians in the room and that is
the rainfall that's showing that causations running from
the poverty to the conflict, rather than the other
way around. Now, my thought has
been that the way to break the poverty trap
is through investment in a diversified set
of high return areas. Infrastructure, roads,
power, water and sanitation, internet connectivity,
mobile phone connectivity, all crucial for basic
business development now. Second, of course,
is human capital. And human capital means a
safe childbirth, in fact, safe intrauterine development
of the fetus, safe childbirth, nutrition and schooling. And so it's early childhood
development, giving a chance for a child to grow
to be a productive and a fully developed
member of this society. And, of course, there
is the social capital that needs development,
whether it's the trust or the political
institutions and so forth. But it is to invest, to build
a capital base that is adequate for self sustaining growth. What does self-sustaining
growth mean? Self-sustaining growth means,
like most of the world, that you have enough
income that you can save, invest in intellectual
capital and human capital and physical capital
and business capital and infrastructure capital, to keep an endogenous
growth dynamic going. And that's possible. What's happening in the U.S.? Ah, we forgot to save. We started consuming so
much that we actually ended up not saving even though
we're the richest major country in the world, we're pretty
miserable savers these days, and it finally hit the wall that our low saving creating
a financial crisis and so on. That's not intrinsic to us, it's just a little
too much consumerism and a little too little
saving for our future. And now, massive
budget deficients which is another
form of dis-saving. But once you have a kind of
income, even $2,000 per capita, not $46,000 like the U.S.
has, you have enough to save. And that can lead to
self-sustaining growth. So the idea of breaking
the poverty, trap is to lay the base, to
raise productivity enough, to get out of the trap. In the end of poverty I call
it getting on the first rung of the ladder of development. Because once you're on
the ladder, you can climb. But if you can't reach the
ladder, you can't move forward. This concept I believe is
correct obviously, because I go on about it incessantly. But it's not so easily
understood apparently, or maybe it's not
right, but I think it is. Because I'm constantly
asked, well you know, what about dependency and
analyst aid and so forth. So you don't get it. The whole purpose of the aid
is to get off the dependency. Because if you give development
assistance, not as a hand out of food, that's a bad idea,
except if someone's starving, but it certainly allows
the long term answer. But if you give the development
assistance as investment and at a sufficient scale to
actually reach the threshold where self-sustaining
growth can take hold, you end the need for aid. I'm known as someone
who loves aid. I detest aid. I want to be done with it. But you can't be done
with it if you trickle it out in sub-therapeutic doses so that the country
never gets better. You actually have to
solve the problem, then you can be done with it. And then you can -- we
can graduate from this era where even those
transfers are needed. Now mind you, in --
when poverty is regional within your own country,
there are two things that normally happen
that are very important. One is migration. People leave the
impoverished area and go to the wealthier areas. Second, is regional policy,
investing from the richer areas to the poorer areas to
break the poverty trap. So generally, if
you're within a country and you have an impoverished
region, maybe geographically distressed,
and a booming region, the country will take care of
itself through these mechanisms of market forces, basically. But if you're just impoverished
all by yourself and you're stuck in the poverty trap, someone
better come to help you. That rankles a lot of
my fellow economists, because the game is you got to
get out of this on your own. I'm not sure why in a rich
world, that's the game when people are dying
by the millions. So I'd rather do the
little bit of help to break the poverty trap
than to try to figure out the absolutely ingenious
way for poor people to be able to survive on their own. And that's what I've
been trying to say. So at risk of taking us
a little bit of detour, I just want to give you the
flavor of the formalism, because this is an academic
engagement and I want to explain formally
just for a couple of minutes how this works. So imagine a millennium village. And it starts out that the
out subsistence, what you need to survive is 300 bucks. What you need to
survive reliably. But the community is
living at 200 bucks and you ask how can that be. And the answer is a
lot of people die. And that's how life really
is in impoverished places. Doesn't mean everybody
dies, it means that one out of every five children die
before their fifth birthday. Or it means that one out of every 100
childbirths the mother dies. So you're at $200. Sub-subsistence. Saving is zero because you
can't even reach subsistence. But let's assume that a poor
family will save a lot actually for its future, once
it's beyond subsistence, like Chinese households. Now, suppose also that
if you can get your hands on fertilizer, for example, each dollar of input
gives $2.50 of output. You say well that's crazy,
what kind of return is that? That's the actual return that
you can get in many parts of Africa for using fertilizer. Well, why don't they
use fertilizer? Because you can't afford it. You're starving. Poor people can't get it. Don't know it, they don't
constitute a market. And you say no, Sacks,
you must be crazy. But just look at
the actual results, not at what I'm telling you. Farm families in Africa
do not use fertilizer, except in the cash
crop plantation areas. Because they're too poor. And there's actually a thousand
papers on that point too. But it's surprising because
the returns are quite high. But there's no financing. So and there's no financing because the contracts are
also damn hard to enforce with impoverished people. So if you can save, because
you're above the $300 threshold, then you've devoted to
agriculture up to the maximum. And then after that you
devote it to other kinds of capital improvements on
your farm, beyond fertilizer. Maybe you buy a cow,
maybe you buy chickens, maybe buy a chicken coop, maybe you do more
irrigation and so on. What's the implication of
this kind of poverty trap? If no one comes to help you, you remain at $200
per capita forever. You can't buy the fertilizer. You can't invest in it. You just go along plotting and
that's how hundreds of millions of people live year
in, year out. Really shocking. If you are given targeted
aid for fertilizer, it raises your output. If you're given enough targeted
aid it raises your output above $300 and you
start to save. If you are given help long
enough, five years, four years, so that you're saving
becomes big enough that it can now buy fertilizer
at the beginning of the season, out of self-financing, get
the bigger yield, sell it, and may get an even
larger amount of income afterwards,
you've made it. And so the point is that
in this kind of setting, the following happens. Purely theoretical. Three scenarios. One is no one gives you help. Second, you get help
for two years, and third you get
help for four years. So in the no help
scenario, you're ODA, that's Official Development
Assistance. We don't know that
term in America because we don't do
any of it, almost. So here are the three models. The blue is no aid ever. The red is okay, one
year or two years of $75 of aid going down to zero. And then the third is three
years of $75 aid going down to $60 and then
going down to zero. That's just the little
illustration. What happens in these
three scenarios? Income in the no aid scenario
is trapped at zero forever. Income in the two years of
aid is that you jump up, you get a little bit of saving,
but it's not enough to get you out of the poverty trap. And when the aid is cut
off you come crashing back down to subsistence
after a couple of years. If aid is four years adequate,
the green line takes hold. And that is that after four
years you're on your own. You don't have to look back. You don't need any more
assistance, you've made it. You've broken free
of the poverty trap. Why is that? Because you've reached
a level of saving that you can self-finance
the inputs each year to be above subsistence to have a
surplus to save for the future to make more investments. You've gotten out of the trap. That's my point. If we do a little bit, but just
enough, it can't be too little because that's like giving
a sub-therapeutic dose of medicine. You don't solve the problem. If you give enough,
it's temporary and then real market growth. The stuff that applies
to six-sevenths of the world then applies to the
last one-seventh of the world. Let's help make that
last step out. And I've spent now, ten
years intensively trying to estimate the costs
of what's really needed. It's an unusual approach. It's so micro, it's
more micro than micro. Because it's really
asking what do you need for the health system? What does it cost for those
community health workers for that clinical officer,
for that medical officer, for the electricity
in the place? What is the unit cost? How much is the ambulance? I find that good
economics, by the way. My colleagues have
their doubts sometimes. Is so intricate. But actually that's how to
solve problems in my view is to be very specific, very
targeted, and to try to figure out what is that therapeutic
dose that is enough to break the poverty trap. And the way we're doing
this, specifically, is in the millennium villages. So the idea of the
millennium villages is to actually make these targeted
investments in what are now about 15 sites around Africa, in all of the major
agro-ecological zones. So what's it like
in the rain forest? What's it like in the
Ethiopian Highlands? What's it like in the dry
lands of Northeast Kenya? What's it like in the bimotal
[assumed spelling] maze growing area of Western Kenya? What's it like in the unimodal
maze growing area of Tanzania? And so on. Because ecology matters a lot. What does it take in each
place to get out of the mess? It takes more in the dry lands,
I can tell you, because you have to pay per irrigation. You have to pay for other things
that you don't need necessarily in the other locations. So you want to find out
specifically, what's involved. Africa is a very,
very big continent. So doing this in one place or
another wouldn't be sufficient. Today somebody, sent me
this map by coincidence, stressing how big Africa is. You see China snuggles
in to southern Africa. The United States
into West Africa, India into the horn of Africa. This is a very big continent. That's drawn to proper scale. So you can fit China,
India, the United States, and Western Europe into Africa and still have a
little space left over. And the point is that's
why we're operating all over the continent in order
to be able to understand, of course, also cultural
and governance differences, but also mainly ecological
differences. The idea is to achieve the
millennium development goals in Africa. The eight goals, but mainly
the focus on health, nutrition, schooling and income which are
-- and basic infrastructure, which constitute the objectives of the millennium
development goals. And this will be -- I'll
leave the PowerPoint for Rockefeller Center,
so everybody can look at it afterwards in detail. The five main interventions are
agriculture, health, education, infrastructure, and
business development. The idea is to make that
base so that a few years of targeted investments can
create a capital platform on which self-sustaining
growth can take hold. It's actually a ten
year project. The first five years are devoted to the most basic
systems building. The second five years,
which are starting now, are devoted to the business
investment in agriculture. So we're bringing in loans
now rather than grants against the business
opportunities. And there are specific
interventions. That's the point. It's not just a general
idea, do nice things, it's actually target
the kinds of investments that have been shown through
decades of both experimentation and actual life to
yield high returns. Whether it's fertilizer, high
yield seeds, treadle pumps, agricultural extension services
in the upper left hand corner. Whether an infrastructure
of a cell phone coverage, internet connectivity in
schools, road grading, and so on in the lower
right hand corner. That's hard to see
but you'll see it when you look more closely. Again, a list of very
specific interventions in the health sector,
for example. We have a large health
team on the ground. No ex-patriots actually
doing anything. It's all village based. Though ex-patriots are part,
or not just ex-patriots. I mean it's an international
advisory group, but it's all locally implemented
because the idea is this is for village development
on their own. It's not for parachuting in
somebody in to do something, it's for the communities
to find their own way out. And the key is very
structured systems building. So you think about
in an organized way, what kinds of public
investments need to be made to get the roads
and the power built. What kinds of investments
need to be made to help farmers grow more food. How to build the schools, the
classrooms, and get the quality of education improved
through internet connectivity. And so on. And so there's a series
of timelines in key areas over the first five years
and a similar kind of series of timelines in the
second five years. And there's a specific budget. This is a hypothesis based on
the U.N. Millennium Project Work for Kofi Annan [assumed
spelling] which tried to identify the costs of the targeted investments
that would be needed. We came up with an
estimate of $120 per person, per year in the villages. And the theory of the
project is that if half of that can be brought
from the outside, then half can be
mobilized locally. And together a $120 per person,
per year investment carried out over five years will build
the basic capital structure of a self-sustaining community. The second five years, which
is less money, about $35 coming from the outside, is to build
the business infrastructure, the farmer cooperatives,
nurseries, storage facilities, transport hubs and so on. And that's the work
that's going on right now. So this is a, now,
where does $60 fit into the scheme of things? If the world were to give
$60 per capita in investment, not in handouts,
but in investment, to the billion impoverished
people, that would be $60
billion a year. The rich world GNP is about $35
trillion to $40 trillion a year, depending on the exchange rate and whether we're
having a good year. So 1% of $35 trillion is
$350 billion, actually. $60 billion's a tiny
fraction of that. It's, you could say, two-tenths
of 1% of the rich world GNP. And mind you, another
way to think about it is $60 billion a year, for covering $60 per
capita per billion people. We're spending $100 billion
this year in Afghanistan. Bombing people, by the way. Not helping anybody,
as far as I can see. So this is a modest amount of
money, compared to the wealth of the rich world and
the kinds of investments that we are making in other ways that I think are
less salubrious. That's a hard slide to read. That one's a little easier. This shows as an example
the change of crop yields. This is the decisive engine
of potential growth for -- I should say potential engine
of growth for rural Africa. It's raising agricultural
productivity. And there's a great
benefit to be had, because there's a high
return waiting to be taken that isn't taken because
capital markets don't work in this impoverished setting. And so there is a high
return to putting seed and fertilizer into the ground. And you get a move from about
one ton per hector yield of maze, for example corn,
to three tons per hector, even in the very
basic conditions. Mind you, in U.S. farms you
get ten tons per hector, and if you can bring
in irrigation, you get double cropping so you
could get 20 tons per hector. So we're just at the beginning of what's potentially the
large increase of productivity. But if you're impoverished
and doing traditional farming, you're stuck in hunger
at one ton per hector. And what this shows, the blue is
where we started, and the red is where we are right now. And basically there's
been a three to four fold improvement
of productivity. That means income, because
each ton is $200 per ton of income for the farmer. So it's another $600 per
farm family, for example, that has come for a hector farm. And many, many other
targeted improvements have the same dynamic. If you invest, you
get high returns. That's the basic point. If it's giving a bed
net to a household to protect the household
from malaria, the returns are phenomenal
because the bed net costs $5, it lasts five years, sleeps two
children, fifty cents per child. And it saves a lot of lives. And yet, poor families are two
poor to have it on their own. This an example of, well, this
is just another slide showing that the institution of
delivery, safe childbirth, go up of course when
you have a clinic that can provide safe delivery. This is the rate of
utilization of clinics. It's visit's per person,
per year, on average, in this Uganda Millennium
Village. What's the point? The point is they drop the user
charges for coming to the clinic and that allowed poor
people to go use services. And that's also shown
in this upper graph where this Ghana facility,
which was collecting something like fifty cents or a dollar
per visit to the clinic, we supplied a subsidy
to allow free access. And the use of the health
facilities essentially tripled. And for impoverished
people that's a difference of life and death. So many, many improvements
are possible in short order. In health you can bring down
mortality rates from 200 deaths of children under five per
thousand live births to, I believe, around 30 within
a period of a few years. That's what we're aiming for. We're probably down
from 150 to 200, down now to about
75 per thousand, because of the first five years. But the trend is sharply down. Just let me give
you one example. We just trained and
introduced a new method for neonatal resuscitation. About 35% of deaths now
are neonatal deaths, within the first 28 days. Most of those are within
the first day of birth. And a large proportion
of those are within the first
minutes of birth. Babies sometimes don't start
breathing on their own. Turns out a little plastic
squeegee and a little bit of training is enough
to get a huge rate of neonatal resuscitation. That's all it takes. Clear the airways, and
a few other protocols. And this is a, something
developed and now being spread by the American Pediatrics
Association. And it's program is called
Helping Babies Breathe. It's not done anywhere. So we started this in
one of the villages, just as a trial,
about six months ago. I don't remember
which one it is, but we just got the
report yesterday. An incredible number
of lives being saved, of neonates being saved
in the first six months, start out zero, then there
were seven resuscitations, then 20 resuscitations, and
the curve went like this, and now like a sigmoidal
curve it's leveled off. So we've really been able to
reach, with almost no expense at all, a huge improvement
and we talked today how to strategize to make sure that it now reaches all
the millennium villages across the continent because
the health ministers come and then they see and then
they say, "Oh, I get it. We can do that." So there's so many
of these things that can be done at low cost. The problem, the damn problem is
they can't be done at zero cost. I don't know if someone
will be ingenious to get it from $60 to $20, I can't. This is already squeezing
to the bone for us. But that's such a little amount
of money in the scheme of things that our governments
ought to be running to produce massive
yields like here in Malawi or this is now training
community, health workers a new concept,
not new the barefoot doctors in China they did
this 40 years ago. But trained, properly trained and salaried community
health workers is a boom in the millennium villages
and in parts of Africa that can afford this right now. These are my favorite bed nets, in distribution in,
in Western Kenya. This is simply now
with wireless broadband available increasingly. You're able to get schools that couldn't even
imagine this online now. You put up a couple
solar panels. These computers are
down to $150 or $200. Costs, of course, you need
local management and protection that they're not stolen and
fixing things, and so on. So it's not zero cost, but it's
absolutely feasible at low cost. And, of course, safe drinking
water with protected springs or piped water, as we're doing. And another wonderful
basic intervention, school feeding programs. Changes life, because if
the children are eating in the midday, they're
attentive, they're coming to school, their parents
are sending them to school. They're healthier, and the
benefits for education, for attendance, for
nutrition, are tremendous. And we, we've introduced
this, of course, across all of the
millennium villages. So remember the goals. I didn't remember but
that that slide did that. These are all targetable
through basic investments. And for middle income
countries they're all affordable out of their own resources. I do not lobby for aid. I don't lobby anyway. But I don't advocate for
aid for Brazil or for Mexico or for Malaysia, they can do
it on their own, thank you. It's for the poor countries
that can't do it on their own that we need to be giving help. It's not distribution,
redistribution for redistribution sake in my
mind, it's to build the base of self-sustaining communities. Since about seven out of
the nine million children who die every year before their
fifth birthday are in south Asia and Sub Saharan Africa,
that's where we need to target the development
assistance. And there has been some
good news, this is the curve of showing the development aid for health during the
past decade and that's in constant inflation
corrected prices. But the estimates of need
are not 10, but closer to 35. So we started out at a tenth
of where we needed to be, now we're probably
close to half, if you were to extend
this to 2010. There's been real
progress in getting closer. President Bush made a major
advance with three things. With Kevlar for Aids with the
President's malaria initiative, and with supporting
the global fund to fight Aids, TB and malaria. Unfortunately, we stopped
there and didn't invest enough in other kinds of
interventions, and very little, basically nothing new has
happened during the Obama presidency so far. Now here is the truth and
the kind of the crying shame. This is aid as a share of
gross national product. It's the aid relative
to the capacity. And there is an international
norm UN target established 40 years ago, that countries
should get, give 0.7 of of 1% of their national income
in development assistance. That means 70 cents
per $100 of GNP. And five wonderful
countries do it. The Nordic countries basically,
Denmark, Norway, Sweden, Netherlands, Luxenberg. They're the ones on the far
left above the top line. Then there's a middle group. Average effort is about
0.47 of 1% of GNP. And whoa where do we
find the United States? Ouch. We are the lowest, actually we're no
longer the lowest, Greece slipped below us this
past year, in the middle of their financial crisis. That's the U.S. $0.20
out of $100. We're a country spending $5
out of $100 for the military. And $0.20 out of $100 for
development assistance. In my view, it's fool hearty. Fool hearty. It can't make foreign
policy work. And if you read, as I
just did, Woodward's book on the Afghanistan war,
you'll go 300 pages and not see one cent
in so maybe I missed it about development
in Afghanistan. It's all generals talking. Who to bomb and how
many soldiers. It's completely reckless
and naive. Because Afghanistan's one of those landlocked
impoverished countries that doesn't have roads, doesn't
have power, doesn't have water, doesn't have irrigation. It's trapped in extreme poverty. It's war ravaged. It lacks infrastructure,
lacks transport. When that happens the only thing that moves is high
value per unit weight, also known as poppy and heroin. That's the nature of trade in a
place that doesn't have roads. The stuff that you can afford
to take out, but try taking out fruits that need to be
properly refrigerated and stored and depots and quality
for -- it's impossible, unless we do some development. So I don't know what they're
thinking when they talk about the hearts and minds of
winning the hearts and minds in this counter insurgency. It's fantasy land. They don't know anything
about the hearts and minds of the Afghan people. Nor do they even think to ask. And they call that the strategy. And that's $100 billion
of our money. And then we turn around and we can't find one
extra billion dollars for the global fund to
fight Aids, TB and malaria, at last week's Replenishment
Conference. So this is what I call
our choices for America. This is how it stands right now. This is defense,
definitely a euphemism because we also do offense. This is development aid,
and that's diplomacy. Those are what's
called the pre-killers of U.S. foreign policy. And God if you are an
architect trying to put a roof over those three pillars,
it's preposterous. So don't let anyone tell
you we can't afford it. We can't afford not to do this. This is completely
misguided American policy. This is a little out-of-date
because it comes from the end. I don't know, I guess
it was updated. Two days Pentagon spending,
then it would now be higher. Let's see 700, yeah, it'd
be nearly $4 billion, it's now nearly $2
billion a day. So it'd be $4 billion. All of malaria control
for all of Africa, for a year is $3 billion. So it's less that two
days military spending. That's all the bed nets needed
for Africa for five years. And that's the malaria budget. And that part hasn't changed. So this is really,
really messed up. And I have a campaign
going to get the Pentagon to take off next
Thursday and Friday. Just two days, nothing's
going to happen. And then we could actually
control malaria all through Africa comprehensively,
just on that alone. And it turns out, where we're
fighting is impoverished dry lands, because the yellow
areas are the dry lands and the red cones are
the violent places, and the overlap is very
-- marked and very clear. And I can tell you
it's no accident. When I was in Yemen five years
ago, I came back from the trip. I was invited by President
Saleh to see the huge challenges in Yemen, and came back shocked. Went to Washington, said
this place is sliding into absolute violence. Of course, no one cared,
Yemen, what's that? That's one of 192
countries on the list. And five years later we've got a
massive military effort chasing Al Quaida all around Yemen,
which is another fool's errand, because if we chase them out of Yemen they'll
go some place else. If you want to secure a
place to be safe it has to have basic governance
and it has to have a basic means of life. And Yemen already five
years ago clearly didn't. Somalia doesn't. The dry lands in the
Horn of Africa do not. Afghanistan does not. And yet we pose these
problems as military problems, not as development problems. We're just not good at
thinking this through right now. I think the economics is
part of it and I think that close diagnosis
and detailed analysis and deploying the models
and theories that we have because poverty traps
are a core part of economic development
thinking. But like many things
they're one of 20 models so they work it sometimes and
they don't work other times. And so proper model choice is -- needs absolute rigorous
engagement with reality. But we have another problem
which is even when we know it, we don't want to know it,
we don't want to face it. We're missing a lot of truths
in our own country right now. We haven't saved for years. We borrowed like crazy. As soon as we stopped borrowing, we started borrowing
again through stimulus. Wrong idea in my opinion,
after you have over consumed for 20 years to just amplify that through budget deficits
didn't make sense to me, because we're not thinking
for the longer term. And we're not investing for
the longer term right now. And economic progress depends
fundamentally on saving and investment, and on a
rich saving and investment. Saving on an investment
not only in fiscal capital, but in infrastructure, in
securing the environment, in breaking poverty traps,
in creating social trust, in building new technologies,
you have to think ahead. And if we don't think
ahead we can't make it. And we have to think like a
community and we're not good at thinking like a community. Our country almost doesn't
have a society right now. It's just pulling itself apart. Anti-immigrant, racial
divisions again, it's quite striking
and shocking. And it's all being, I
think, amplified by a lot of propaganda, by a lot of high
income campaign contributors and corporations who just want
nothing except their taxes cut. Damn the future, damn the
country, damn the budget, they just want their taxes low and everybody else
can be damned. And it's a disaster. And at a global level we're, of
course, sliding into more hate. Now, China's our bugaboo. That's going to be with us for
a while, because they're going to keep gaining on
us, believe me. But that's okay. That's progress. If we treat it right it's
only neurosis and angst if we misunderstand it. And we're not good at
that, and we're not good at understanding the
nature of society. The places where I'm
working I want to tell you, they're racially different,
ethnically different, religious difference,
everything. I've never for once had a
moment of less than hospitality, partnership, collegiality,
problem solving, mutual respect in all the work. It transcends every line,
because once you get down to the business of working
together it's just a pleasure, first of all. It's exciting, it's
exhilarating. And all of these divisions of
Muslim this and Christian that and so forth are meaningless and they go away
immediately actually. And we're just not good at
understanding that either. And if we took a
different approach so many of these problems
would melt away. Not everyone, and I'm not
saying to dissolve the army and that we don't need defense,
I'm saying pay attention to human beings on
the other side. Because they want their
children to survive, they want their children
to be in school, they want to have
water that isn't going to kill them with pathogens. They don't want to die
from a misquote bite. They don't want their wives
and mothers and daughters dying in childbirth because
there isn't an ability to deliver the placenta,
or to stop hemorrhaging, which is as low cost as can be. It's just human beings
on the other side. And it's not that everybody's
so corrupt that they're out to kill their own people
and so you can't get bed nets to populations, or you can't
get emergency obstetrical care, it's just nothing like that. That's just convenient things
for people in Washington to say, who know nothing. And that nothing is, that's a
real line I'm talking about, because they've got
power and they have, they're irresponsible. And they're not trying
to find out. They're talking to
the wrong people. Maybe they've lost the
ability to find out. But they're not really
finding out. So we need a global
ethic to understand that we have a united society. And I just about
always close by pointing out maybe a deep pang
of my upbringing. John Kennedy who, in
1963, used the philosophy of a common approach to solve
the greatest problem of his era. And that was to put some
break on the madness of the nuclear arms
race that had almost led to complete destruction in the
October 1962 missile crisis. And Kennedy said, this is
madness, it's actually people on both sides, and we've got to
find a way back from the brink. And his last year of presidency
before he was assassinated, in my view, was the finest year of an American president's
leadership in the certainly
the post-War world, because he campaigned for peace. And he gave a great speech in June 1963 called
the Peace Speech. Now, it was the American
University Commencement Address, June 10, 1963. It's online, you
should listen to it, it's absolutely beautiful. It's magnificent. And it was a speech about making
peace with the Soviet Union. And I love it because it
would be as hard as, you know, Obama talking about making peace with our biggest
enemies right now. And Kennedy was scared
politically. He didn't even show it
to many of his advisers because he thought they would
stop him from making the speech. But it wasn't a speech telling
the Soviets, you do this, you do this, you do
this, you do this, and then we can have peace. It was a speech telling
the Americans, we got to rethink what we're
doing because our attitudes are as essential as their attitudes
if we're going to have peace. Absolutely a remarkable
insight, crucial. It's called empathy. And we don't have it very often. But he had it and he gave
this marvelous speech and when he gave it,
Kruschev heard it, said that is the finest speech
by an American president since FDR was, exactly what
Kruschev told Abral Haramin [assumed spelling], the
U.S. Envoy in Moscow. And five weeks later they signed
the partial Nuclear Test Ban Treaty which was the first stop
of the Cold War escalation. And I think it changed
the direction of history. And it was an act of ethical
imagination, in my opinion, as much as state craft. It was ethics, because ethics
is basically elaborated empathy. It's the ability to see things
through somebody else's eyes and take seriously the
implications of that. And Kennedy said in the speech,
my favorite words which I like to end on because I
think they capture the essence of what we're after. "So let us not be blind
to our differences, but let us also direct attention
to our common interests and the means by which those
differences can be resolved. And if we cannot end
now our differences, at least we can help make
the world safe for diversity. For in the final analysis,
our most basic common link is that we all inhabit
this small planet. We all breathe the same air. We all cherish our
children's futures. And we are all mortal. Thank you very much. [ Applause ] >> I filibustered a long-time
and you were very, very patient. Why don't we take a few
questions and -- or comments. By the way, I welcome
comments as much as questions, as long as they're
relatively brief. If there are questions, please. >> I was wondering
how much the... >> Oh sorry, we have a
-- we have roving mics. Why don't we start here and then
a mike will come to you next. Yeah. >> Kate Patoski [assumed
spelling]: Thank you so much. My name's Kate Patoski, I'm
the volunteer coordinator here at the Tucker Foundation. You spoke a lot about
agricultural investments and investing in high, kind
of high input agriculture. And I wonder how you respond -- I imagine you've received
criticisms from people that champion sustainable
agriculture. And how do you respond
to them when they say, high input agriculture not only
is an ecological degradation of some sort and how do
you respond when they talk about kind of the
cyclical trap of investing and high yield seeds and
fertilizers when you're kind of indebted to a Monsanto,
for example, for so long? I would love to hear
you speak about that. >> Yeah. So basically,
everything has its proportions and being at one ton per
hector where Africa is, which is the ultimate organic
farming if I could put it that way, because there is, it's not the high
productivity organic farming, but it's all organic
because there's nothing, no chemical fertilizer
used, has left the continent in the deepest hunger. All the rest of the world
uses chemical fertilizers because there's a basic budget
of nitrogen that is fundamental for life, for us,
and for the plants. And the basic budget is that
if the nitrogen is not adequate in the soil, the
plant can't grow. And if the plant
can't grow, of course, you get a hungry population. And think about it that
most soils in nature start out with an adequate
level of nitrogen, but then each crop you take,
takes the nitrogen out. It has to be replenished. There are basically two
kinds of replenishment. One is inorganic fertilizer and the other is organics,
compost and so forth. Both can do because
it's the same nitrogen. The yield from organic
is much lower if you take into account all the
land you need to get the, either the composting, the
green crop, or the manure of the animal that you've been
feeding to provide the manure. If you graze a cow in a nitrogen
deficient area in Africa by the way, it's manure
is nitrogen deficient also by the way, so you don't get
very much fertilizer out of it. So there is a basic
nitrogen budget. It's also the case
not well understood that if you put compost and
green manure and so forth in a heavy investment in organic
farming you get nitrogen run off the same way, even more. So the utrification problems
and the nitrates and so forth, this isn't just from chemical
fertilizer, it is actually from organics as well. We have a basic problem, which is that seven billion
people is really a tough load to feed on the planet. And the only way we're
even coming close to doing it right
now, and actually, you could say ironically,
the only way we got to seven billion also,
is by the discovery of fixing atmospheric nitrogen
in urea based fertilizer which happened around 1910. That brought us to
where we are today. If you don't replenish the
soils in Africa, you can't, you can't escape from poverty,
from hunger and from disease. So you need to get massive
amounts of nitrogen in the soil. The chemical fertilizer
approach by the way has to be combined with
organics anyway. You have to leave crop
residues and build up a natural carbon
richness in the soil as part of good farming, period, but you
can't do it without that dosing of chemical fertilizer. What's important to
understand though also is that if you started a
nitrogen deficient environment, adding nitrogen at the doses
we're doing, say 50 kilo or 100 kilo per hector,
is not an overload. In fact it basically
is replenishment of what's missing right now. If you do it with micro
dosing and techniques, use a little coke bottle cap
and put it in to each seed hole, you can actually get
more for the minimum. You get a big response and you
get less run off and so forth. So that's also good farm
practices are important. But simply trying
to do without this or thinking somehow I'm going to
do it organically doesn't work. So you need the boost,
that's number one. Second the income advantage is
enormous and so it really pays, it helps people lift
out of poverty. Third, it's not pesticides and long lasting herbicides
and other chemicals. We're not doing that by the way, we're using integrated
pest management in organic approaches,
because the management of those chemicals is quite
dangerous and it leads to a lot of toxicity for the farmers. That's completely different from
a diamonium phosphate fertilizer for example, or a bag of urea. So there's a big,
make a big difference between the pesticides, especially the persistent
pesticides and fertilizer, totally different in their
ecological consequences. Finally is the seed issue. The seed issue is very basic, which is if you can't
get a high yield on a, on the farmer's own seed,
you need seed breeding. You need to buy the
seed from some place. And all high yield, yields
around the world, three tons, four tons, five tons,
ten tons, 20 tons, are improved commercial seeds. That's okay, if you
can afford it. And it's not just
Monsanto by the way. There's Western Seed Company,
and many, many seed produces that are producing
high yield seeds. But there's a huge difference of
using your own seed which even with fertilizer won't
have a response in using these high
yield varieties, the kind that brought the green
revolution in the first place. Nothing is for free though. There are ecological risks to
any place humans are acting, and intensification raises
those risks, for sure. Because in Indian we're
seeing water problems, now ground water
depletion for example. So you have to go into
this in a methodical way to understand what
is sustainable. But the low input, low intensification is what
is already there right now. This is organic. And it's a disaster, a
human disaster right now. And it's the highest
hunger on the planet. So I'm not so worried
about these things compared to the current situation. But I have to say, we haven't
cracked the major agricultural problems on the planet because
our whole global food system is not sustainable right now. But the worst is people dying
of chronic under nourishment. And I want to stop that because
it can be stopped right now. >> [Inaudible]. >> Okay. Right over here. >> As a farm kid I especially
appreciate your comments on that issue. I was just wondering, how big of an issue you think Dutch
disease is with respect to foreign aid and what donor
countries can possibly do to reduce that kind of issue. >> So the question is
about the Dutch disease which is a non-communicable
disease. So named because when the
Netherlands discovered natural gas in the North Sea, it caused
the currency to strengthen and that squeezed the
traditional Netherlands exports. And that became called
the Dutch disease. And when it's applied
to the question of aid, the idea is that you give
aid and that leads to a kind of a consumption boom. And that squeezes out
traditional exports. And I think that the, it's not
a concern at all to me, zero, for the following reason. It's not aid for consumption,
it's aid for investment. And if you give the aid to
double the food production, that's the opposite
of the Dutch disease. You actually lower
non-tradable's prices. If you give the aid
to help build roads, or to extend the
power lines and so on, you empower the export sector. So Africa exports almost
nothing except a few high value commodities right now. Diamonds, gold, copper,
coal from Mozambique and hydrocarbons and so on. Because there isn't really
a manufacturing sector of service sector exports. And the main reason is not
barriers to their exports abroad because they face a market
that's, for them, even more open than market that China faces
which exports everything. The problem is they are not
competitive on the supply side. So they don't have even the
most basic ports, roads, rail and other infrastructure
to be able to compete at world prices compared
to say Asian, Southeast Asian producers. Aid, aid for trade so called,
should be devoted to building that kind of infrastructure. There's nothing really
to squeeze out of the traditional exports. You won't squeeze out diamonds, you won't cause the exchange
rate to appreciate so much that Botswana stops
exporting diamonds. It can't be done. There is no exchange rate
that will stop Exxon Mobile from knocking down as many trees
into the rain forest to get to the oil reserve, believe me. There is nothing that will
stop these traditional -- not that I recommend
it doing that way. There's nothing that will
stop the traditional exports. The name of the game is building
a diversified export base. That requires aid
invested in infrastructure. Thank you very much
ladies and gentlemen. [ Applause ]
