Professor Jeffrey D. Sachs : 2. Examining Countries

2. Examining Countries

A turning point - invitation to Bolivia

After finishing graduate school with top grades, Jeff started teaching at Harvard University. The focus of his research, however, was not poverty but the global flow of money with an emphasis on the United States and European countries. He achieved good results in his research and became the youngest full professor in the history of Harvard University at the age of 28. Professor Sachs continued his research and teaching until 1985, when a life-changing event occurred.

A group of visitors from Bolivia, a land-locked country in the high Andes of South America, came to Harvard University. They told Professor Sachs about the extreme hyperinflation in Bolivia. Professor Sachs was familiar with the mechanisms of hyperinflation, and he confidently explained the mechanism.

Then, one of the group members said, "You know so much. Please come to Bolivia and help us." So he went to Bolivia to help the economy of the country to recover.

La Paz, Capital of Bolivia

The economic conditions in Bolivia were extremely bad, but he was able to identify potential solutions. Professor Sachs first instituted measures that succeeded in stopping hyperinflation.

Bolivia continued to experience serious financial deficits; however, in response to the end of hyperinflation, the IMF asked Bolivia to pay its debts. Professor Sachs, though, thought that doing so would put Bolivia back in the same financial difficulties it had started with and continued to insist that the IMF was wrong in its thinking that debts should be paid back immediately when the country continued to suffer poverty, and the IMF finally agreed with him. Professor Sachs believed strongly that rich countries were obliged to help poor countries.

Active role as an economic adviser

After this experience, Professor Sachs was invited to many countries that had economic issues and asked to help revive their economies.

In 1989, he was invited to Poland in Eastern Europe. First, a member of the staff at the Polish Embassy in Washington who got to know Professor Sachs contacted him to ask his help in solving Poland's debt problems.

Warsaw, Capital of Poland

The year 1989 was a historically important year in which countries in Eastern Europe were democratized one after another after half a century Soviet control. Poland was in the midst of shifting from socialism to democracy, and the country's economy was in turmoil due to the significant changes that were taking place. Professor Sachs became involved in a project designed to shift the country from a socialist to a market economy, a project that was larger than he initially expected. During the project, he made proposals for bold reforms, one of which is called "Shock Therapy." This was a good opportunity for Poland to start moving forward in its economic transition ahead of other countries in Eastern Europe.

Following this, Professor Sachs gained professional experiences in Russia, China, India, and so forth and grew steadily as an economic adviser.

Clinical economics - different problems in different countries

Professor Sachs' wife, Sonia, is a pediatrician. She often receives phone calls at night from mothers with young children who have fever or other symptoms. She asks the mothers questions to determine the cause of the problem, and whether the child should be brought to the hospital for immediate treatment or could wait until morning.

A doctor cannot start treatment without determining the cause of the patient's symptoms. However, it was often true that economic problems in each country were not usually examined well enough before solutions were considered. Professor Sachs felt that this was strange.

While serving as an economic adviser, he came to understand that the causes of problems differed in each country, and that it was necessary, therefore, to consider measures after determining the causes. He also felt that his work was very similar to that of a doctor. He examined countries as a doctor examines patients.

Poverty and hyperinflation are to a country's economy what a high fever is to a person. Professor Sachs first visits the country, observes conditions, and asks questions to identify the cause of its troubles. When did the country's trouble start? What are the geographical characteristics of the country? What type of work are the people engaged in? How do they want to solve the problem?

Then, after examining the situation of the country, Professor Sachs considers solutions. He named this process "Clinical Economics" imitating the examination of patients by doctors in a clinical setting.

3. Fighting Against Poverty