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TIME  Embraces Bad Economics That Blame America for World Poverty

By Amy Menefee
March 16, 2005

     TIME Magazines March 14 issue devoted its cover and 11 pages to an economist who says the United States owes the world big time to fight world poverty. The magazine offered no opposing argument to spending billions of additional tax dollars.

     Those 11 pages are an excerpt from economist Jeffrey Sachs new book, The End of Poverty, in which he indicts the United States for supposedly lagging behind other countries in aid for the poor. He works from the assumption that billions of dollars in aid should be publicly financed.

     Although they didnt appear in TIME, its easy to find economists who see flaws in Sachs logic.

     Walter Williams, a prominent economist and a member of the Board of Advisers for the Business & Media Institute, was blunt in his reply to the Sachs excerpt.

     Did we become rich by foreign aid? The answers no, said Williams, a professor of economics at George Mason University. Noting that all rich countries were once poor, Williams said that rich countries thrive because of property rights, limited government and the rule of law.

     Dan Mitchell, a senior fellow in political economy at The Heritage Foundation, agreed that Sachs assertions had no basis in fact.

     He assumes that more foreign aid will translate into better economic performance, Mitchell, also a member of the BMI advisory board, explained. There is no evidence for this assumption.

Wheres the Critical Eye?

     Sachs is head of the United Nations Millennium Development Project, which states as its goal cutting world poverty in half by 2015. He advocates huge increases in government spending from rich nations to developing countries to achieve this goal. After letting him state his position in depth without question, TIME included a sidebar describing Sachs as a rock star in the field of economics.

     In his letter to readers, TIME Managing Editor James Kelly wrote of Sachs, You may not agree with all his prescriptions, but it is impossible to deny that the needless deaths of so many people every year call for action on a global scale.

     Who would deny that? TIME is not wrong to say its responsibility is to cast the spotlight on problems that transcend borders, as Kelly put it. But offering only one viewpoint on such a weighty subject is irresponsible journalism. To give it the heft of a 11-page TIME cover story is wildly unbalanced.

     Star Parker, founder of the Coalition on Urban Renewal and Education (CURE), was incredulous at the glowing coverage.

     Tax and spend to end our problems? A new method? Parker asked in a March 11 column distributed by Scripps Howard. The real question is what is this guy peddling to reporters to induce their amnesia.

     CURE works to end poverty with faith, freedom and responsibility, according to its Web site. Parker emphasized that free people are of utmost importance when it comes to creating prosperity and only prosperity can lead to generosity and helping others.

     Listening to Sachs, you would think that the United States, the worlds greatest engine of prosperity, is the most guilty for current levels of global poverty, Parker said.

Theory vs. Reality

     The Washington Post is to be commended for looking at The End of Poverty with a critical eye. Its March 13 review of Sachs book relied on New York Universitys William Easterly, a professor of economics, provided a realists voice to counter Sachs utopian politics.

     To Sachs, poverty reduction is mostly a scientific and technological issue, Easterly wrote, in which aid dollars can buy cheap interventions to fix development problems. But thats too neat. Easterly warned that Sachs plan could backfire: The danger is that when the utopian dreams fail (as they will again), the rich-country public will get even more disillusioned about foreign aid.

     That disillusionment is already present, according to Dan Mitchell.

     Foreign aid has tended to promote bad economic policy because of the left-wing biases at international aid organizations, Mitchell said. Poor societies are poor and stay poor because they have high tax rates, excessive regulation, bloated government sectors and plenty of corruption.

     Walter Williams said free markets, human rights and per capita income are intertwined and pointed to divided postwar countries as examples.

     People in South Korea are much, much richer than people in North Korea, though both were devastated at the end of the Korean War, he said. Likewise, he applied that principle to East and West Germany following World War II.
Any of these economists could have added some balance to TIMEs presentation.

Faulty Analysis

     Other articles about Sachs and his ideas, such as an extensive November 2004 New York Times Magazine piece, usually hammer home the fact that the United States spends only about 0.15 percent of its Gross National Product on foreign aid. The underlying bias in all this coverage is that forced government spending is the best way to alleviate poverty.

     Carol Adelman, a senior fellow at the Hudson Institute who has worked in foreign aid and development, addressed the 0.15 percent figure in a January 2005 article. She emphasized that the aid/GNP ratio is government spending and does not include billions in private donations also flowing from Americans.

     Hudson Institute research tallied over $35 billion in private foreign aid for 2000 (the last year such figures were tabulated), Adelman wrote. That's three and one-half times U.S. government aid for that year. And even this large amount low-balls American contributions abroad, as it does not include giving by local U.S. churches or donations by overseas affiliates of U.S. corporations.

     Sachs of course encourages giving from all sectors, but his repeated use of U.S. aid/GNP numbers doesnt tell the whole story of U.S. generosity.

     The media should not rely on unbalanced coverage that blames the United States for world poverty. The comparisons journalists use must be tested. For example, contrasting the U.S. governments foreign aid with military spending condemning Americans for not sending as much to other countries as we spend to protect our own simply props up Sachs numbers and utopian assumptions. Instead, journalists should look for the agenda behind the numbers and take a critical look at the economic principles involved.

Here are some additional resources on this topic:

  • Philanthropy is the best foreign aid, Star Parkers column on Sachs book:

  • The Heritage Foundations 2005 Index of Economic Freedom worldwide:

  • A Modest Proposal by William Easterly review of The End of Poverty in The Washington Post:

  • How the U.S. Shares Its Bounty with Those In Need by Carol Adelman, senior fellow at the Hudson Institute: