Teaching Comparative

Testing Hypotheses

Jeffrey D. Sachs is the Director of The Earth Institute, a professor at Columbia University, Director of the UN Millennium Project, Special Advisor to United Nations Secretary-General on the Millennium Development Goals. Sachs is also President and Co-Founder of Millennium Promise Alliance, a nonprofit organization aimed at ending extreme global poverty. He was named among the 100 most influential leaders in the world by Time Magazine, and he is author of The End of Poverty (Penguin, 2005).

Sachs is perhaps most famous as an advocate of shock therapy (economic restructuring) for Russia and other countries attempting to reform their economic systems and join the developed world's trade network.

He writes a monthly column in Scientific American. Interesting ideas come from many places. Interesting people write things in interesting places. In the August issue of Scientific American, Sachs wrote a little op-ed piece. It contains some interesting hypotheses that students could evaluate by doing some research on case studies. Sachs mentions Liberia and Haiti, but I think students could use Nigeria, Russia, or Iran to test his ideas as well. You don't have to be a PhD economist to use the historical record to test the basic hypotheses that Sachs suggests.


Virtuous Circles and Fragile States
Want to promote stable democracy in struggling nations? Send timely packages of food, seeds and medicine

"For nations in a deep crisis, the greatest danger is a self-fulfilling prophecy of disaster...

"When the public thinks that a newly elected national government will succeed, local leaders throw their support behind it. Expectations of the government's longevity rise. Individuals and companies become much more likely to pay their taxes, because they assume that the government will have the police power to enforce the tax laws.

"A virtuous circle is created. Rising tax revenues strengthen not only the budget but also political authority and enable key investments--in police, teachers, roads, electricity--that promote public order and economic development. They also bolster confidence in the currency. Money flows into the commercial banks, easing the specter of banking crises.

"When the public believes that a government will fail, the same process runs in reverse. Pessimism splinters political forces. Tax payments and budget revenues wane. The police and other public officials go unpaid. The currency weakens. Banks face a withdrawal of deposits and the risk of banking panics. Disaster feeds more pessimism.

"...if each impoverished farm family is given a bag of fertilizer and a tin of high-yield seeds, a good harvest with ample food output can be promoted within a single growing season. A nationwide campaign to spread immunizations, antimalaria bed nets and medicines, vitamin supplements and deworming agents can improve the health of the population even without longer-term fixes of the public health system. Electric power can be restored quickly in key regions. And safe water outlets, including boreholes [at right below] and protected natural springs, can be constructed by the thousands within a year.

"All these initiatives require financial aid, but the costs are small. Far too often, however... the rich countries and international agencies send an endless stream of consultants to design projects that arrive too late, if ever... After a few months, the hungry, divided, disease-burdened public begins to murmur that "nothing has changed," and the downward spiral recommences. Pessimism breeds pessimism. Eventually the government falls, and the nascent democracy is often extinguished.

"By thinking through the underlying ecological challenges facing a country--drought, poor crops, disease, physical isolation--and raising the lot of the average household through quick-disbursing and well-targeted assistance... policy makers would provide an invaluable investment in democracy [and] development..."

posted by Ken Wedding @ 4:20 PM