Jeffrey Sachs: China’s Model For Africa — IMF Model’s Failure

Full transcript available here: Mike Billington: I watched an interview with you this morning. It was very interesting. You focused on the arrogance and hubris of the West, of being “out of date.” You referred to the UK this way: “It still thinks it is an empire which is long since gone.” I appreciated those sentiments. But you also said that there’s nothing stopping the US and Europe from changing, from joining with the BRICs and the Global South in development instead of the threats and war policies against them. I think there’s a huge irony in the fact that the Chinese are actually, in a very real sense, using the American system approach of economics, the policy of Alexander Hamilton, which focused on government directed credit for basic infrastructure and the general welfare, while the US has given up on the American System altogether in favor of adopting the British model of Hobbesian one against all and unregulated free market anarchy. The Belt and Road infrastructure you focused on — you indicated that the three aspects of the Belt and Road are: infrastructure; energy; and digital, and that China actually leads in all three of those areas. Would you agree that China is using this Hamiltonian approach to economics, perhaps coming from Sun Yat Sen, who was highly influenced by Hamilton? Prof. Jeffrey Sachs: China has what I would simply call a mixed economy, which means it’s partly state directed, partly market directed. I think all successful economies are mixed economies and the US, even when it uses free market rhetoric, has a large role of the government, not necessarily an accurate role, but a large role of government in the economy. Different countries come down differently on how they carve up the relative weights and responsibilities of public, private and civil society sectors. It’s true that the UK and US approach is relatively more on the laissez faire side. I’d say relatively more, with lower taxes, certainly as a share of national income, and much lower social outlays. The UK more than the United States, even though it started with laissez faire in the 19th century, the UK adopted a National Health Service, of course, after World War Two. The United States never did that. China’s a very pragmatic and economically well-governed country, very impressive during the past 40 years, because they’ve had a planning model with a major role of state finance, combined with a very dynamic and competitive market sector and very entrepreneurial lead in many sectors as well. I was just in China and noted a huge rise of electric vehicles, and there are hundreds of electric vehicle companies right now, start ups. It’s expected that the number will whittle down quickly to perhaps between 5 and 10 such companies, but right now it’s named to be in the hundreds of companies producing electric vehicles, and it’s a fiercely competitive market inside China. Now, when it comes to the international side, China’s just doing a lot of things that the United States did for a while after World War II, which was to help finance infrastructure abroad, make the way for us multinational companies, in fact. And China right now is doing that. The United States doesn’t do much internationally at all other than war, but it doesn’t do peaceful economic development activities. You could see in the rhetoric of American leaders, politicians, their resentment that China dares to help other countries to build infrastructure. The Belt and Road Initiative, which is a very valid and quite beneficial win-win program of China, together with more than 150 other countries, by the way, is badmouthed every day by the United States, mainly out of resentment and jealousy because the US doesn’t have that kind of spirit to make connections with other countries. China is making massive investments and working with other countries to help them with developing an electric power grid, basic renewable energy sources, fast rail, 5G technologies, paved roads and highways, and many other desirable things that those counterpart countries really need. Now Biden is talking about a road project from India to the Mideast, and he’s so proud of this one road. It doesn’t exist. It’s not financed. It may may be a good idea, but it’s a little pathetic, actually, to to tell you the truth, because China has dozens of projects like this all over the world. The United States has thought about one literally. I guess they took the the “One Belt, One Road” idea, but they took One Road, one! Whereas China is doing dozens of these projects. So the US is kind of looking on.