Italians do it better (the MBA)

Monday, November 06, 2006

Death Capital Markets

Once again one of the advantages of being in exchange is the fact that you broaden the faculty you can listen to. As I already said, in "Private Sector & Intl Develpoment", I have the pleasure to have Fisman which is a sort of super young guru of economics. On top of this, we have started an amazing series of guest speakers which is really impressive. From Bill Browder (read about him @ gazprom) to Jeffery Sachs. Jeffery Sachs is the head of The Earth Institute at columbia, a renowned macroeconomist and special adviser to United Nations Secretary General Kofi Annan, responsible of important successes in economic reforms in Poland and Bolivia. He is the author of many books like "The end of poverty" and you can see him talking with the presidents of many countries, the pope and Bono. Today he was talking to us. For the first time I heard an american speaker who didn't talk only about "let the free markets rule the world". He is the advocate of "yes to the market economy but no to the free-market ideology". Even if he doesn't criticise the idea of the free market his main theory revolves around the idea of the "poverty trap" in which some countries are locked in. For historical, rich-countries-behavior, geographical, environmental and other exogenous reasons some countries are now locked in a poverty status by which they won't be able to escape if left to themselves and let the "free markets" do its job. If you are in a poor country which is landlocked (no ports around which develop a trade) you are basically fucked up. If you have oil, drugs and diamonds you are exploited by rich countries and probably someone will drop troups once in a while to make some mess. If you don't, you are screwed as well. It's false the idea that countries like India and China rose on their legs and made the path towards growth. They received huge financial aid from foundations and governments and they had the luck of being able to develop special economics zones from which to start development. Look at bangalore for example. For a country like India it is impossible to develop from scratch good infrastructures for the whole country. It's easier to develop special zones in which concentrate the government spending and use them as highlights to attract internetional funds. Unfortunately not all that countries are that lucky to have the phisical possibility to such development. But still Jeffery Sachs sees as the only way to help poor countries to use huge financial aids from developed coutries. Many argue that high corruption will make this effort useless because probably money will flow to some swiss bank account. His idea is to provide funds straight to local government and plant a high control over spending by intenational observers. And while to help 1 billion people to escape death from malaria it would be enough that rich countries collect 3 bucks per person, it has more echo in the news the fact that saddam will be hanged rather then 20.000 children dying every day in sub-saharian countries.


Blogger Catalonic said...

Wow George, that is an awesome opportunity to hear Prof. Sachs speak. We are trying to convince him to come to IESE and be the keynote speaker for this year's Doing Good Doing Well, so make sure you leave a good impression.

And just for the record, its the "Earth Institute", not Hearth.

4:03 PM

Blogger George said...

ah that's why he had this puzzled face when i asked him what he thinks about the future of hearth surgery in the US.
Then he asked me from which school i was coming and i proudly said "IESE!"...
And the I heard him saying to the assistant "i'm not going to that event if the level of the audience is this one!".
What do you think it meant?

5:18 PM

Anonymous Anonymous said...

Bill Easterly proved him wrong ten times over. Sachs is a fool who refuses to change his tune, even when the real-world evidence shows his methods (throwing money at corrupt, poor countries) don't work.

10:34 PM


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