Don’t send Sachs to the World Bank

By Felix Salmon
March 2, 2012

In 2002, Jeff Sachs took the top job at one of the most ambitious university departments in the world: the Earth Institute at Columbia University. And he’s done that job very well, judging by the main metric that universities care about. When he re-upped his contract last April, the press release gushed about all the multi-million-dollar donations that the Earth Institute has received, including $20 million from the Gates Foundation and $28 million from the Lenfest Foundation to endow climate change research.

Now, however, Sachs wants to leave: he’s got his eye on a job where the sums of money involved make those numbers seem positively puny.

My quest to help end poverty has taken me to more than 125 countries, from mega-city capitals to mountaintop villages, from rain forest settlements to nomadic desert camps. Now I hope it will take me to 18th and Pennsylvania, to the presidency of the World Bank. I am eager for this challenge.

To a certain extent, Sachs’s job application reads almost like self-parody: “the president of the World Bank spends a lot of time travelling in first class to poor countries. I have been doing that for years, so I’m obviously highly qualified for the job.”

And of course Sachs has one crucial thing going for him: he’s American. The next World Bank president will, sadly, be an American, a fact which takes a lot of highly-qualified potential candidates, including many former heads of state, out of the running.

But even if the next president of the World Bank is an American, we can still do better than Sachs. The reason that Sachs shouldn’t get the job is basically the same as the reason why Larry Summers shouldn’t get the job: he’s an arrogant economist who nearly always thinks he’s the smartest guy in the room. The presidency of the World Bank is a diplomatic position: if you want to do it effectively, you need to be able to wrangle not only the vast staff working for you, but also the various executive directors who are your superiors and who have a tendency to want to micromanage your decisions. Insofar as Jim Wolfensohn, say, was a successful World Bank president, he was successful because he was a smooth-talking investment banker who was expert at schmoozing important people.

Sachs, by contrast, is angry; he’s one of life’s natural campaigners. That’s great when you’re hanging out with Bono, or even Bill Gates. But it’s less likely to get you very far when you’re trying to persuade the Nigerian president to revolutionize his domestic policy.

Which is one reason why Hillary Clinton would be much better than Sachs for the job: she knows the international diplomatic back-channels, while also knowing how to tactically assert power when necessary.

Besides, Sachs has two big strikes against him. One is the “shock therapy” he administered to Eastern European countries, especially Russia, in the wake of the fall of the Berlin Wall. It was a complete disaster, and Sachs has never accepted his share of the blame for it. He still thinks, as far as I know, that his ideas were good ones, and were just poorly implemented. But they weren’t good ideas, not least because the political institutions in the countries he was dealing with were obviously not up to the task of effectively and honestly implementing his drastic prescriptions.

More recently, Sachs has been investing an enormous amount of personal and financial capital in his Millennium Villages project — a well-intentioned project which attempts to demonstrate the power of investment to turn around poor villages, but which virtually nobody outside the project thinks is capable of demonstrating any such thing. Before even thinking about nominating Sachs to the World Bank, Obama should take a straw poll of Bank employees. Most of them have pretty strong opinions about the Millennium Villages, and it would be very useful to know if he would be entering an institution whose employees in large part consider him to be much better at public relations than at wrestling with messy empirical truths.

Sachs’s worldview, boiled down, is that development is easy, we know how to do it, and that given enough money, it’s relatively trivial to spend that money in an effective way to reduce poverty around the world. When World Bank presidents come in with that attitude, the results can be wasteful at best and downright counterproductive at worst. I’m not, in general, a fan of politicians. But in this case, we’d be better off with a smart politician in charge of the Bank — someone able to build consensus and approach tough problems with modesty — than we would with an arrogant economist.


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Great thoughts

Here’s a related post on “arrogant economists”, including guys like Sachs, whom I like 2/03/economists-dont-understand-financia l.html

Posted by EconMaverick | Report as abusive

You nailed it, Felix! Just say no to all pompous American economists in their 50s with a last name starting with S.

The only difference between Summers and Sachs is that one cares soooo deeply about the world’s poor and the other clearly doesn’t give a rat’s *ss about anyone but himself. Well, at least Summers isn’t a hypocrite.

I like the Clinton idea, but isn’t she already doing something? Is the Dem talent pool so shallow that it’s always someone from Goldman OR Hillary? How about the retiring senator from Maine, Olympia Snowe? Sure she’s a Republican, but lightly so, and the Dems could get a good team-player and poke a finger in the Republican Party’s eye at the same time. And I say this as a part-time Republican.

Posted by LadyGodiva | Report as abusive

Reading Bill Easterly on economic development and how it is done properly, should make almost anyone tremble at the thought of Sachs at the World Bank.

Posted by Nick_Gogerty | Report as abusive

Here is an explanation of all that is wrong with much of big central planning as it relates to development. den-Efforts/dp/1594200378/ref=sr_1_2?ie= UTF8&qid=1330712644&sr=8-2

The World Bank does a lot of good, but there is a lot badly executed stuff there. Sachs is the wrong man. Send William Easterly instead.

Posted by Nick_Gogerty | Report as abusive

I feel bad for the third world if Sachs or Summers get in. Their ego-based, top-down, “lets send our toxic waste to the third world since they won’t live long enough to get cancer anyway ( mo)” view of development will mean disaster for the poor of the world.

Posted by Bjolly | Report as abusive

The Bank’s critique of his work with the Millenium Villages doesn’t bode well: rkingpaper/10.1596/1813-9450-5477

Posted by JonJonFaull | Report as abusive

Great column, except that Hillary should become Vice President.

She is not a development economist, but Christine Romer did a very credible job at the Council of Economic Advisors, where she was right more than wrong and diplomatic in the extreme.

Or, if you really like former heads of state, I hear that Hillary’s husband has some time on his hands.

Posted by MManley | Report as abusive

Professor Sachs has actually been advising Nigerian Presidents for quite some years now, and has in fact been asked by the current Nigerian President, Goodluck Jonathan, GCFR, to act as a primary advisor for achieving the Millennium Development Goals. There is a major Earth Institute team working in the office of the President’s MDG office, and has been for more than two years now.
Best to fact check such matters, particularly in this instance, as the error is quite egregious.

Posted by elizabethsara | Report as abusive

From Wikipedia:

Jeffrey David Sachs (pronounced /ˈsæks/; born November 5, 1954, in Detroit, Michigan) is an American economist and Director of The Earth Institute at Columbia University.


Lawrence Henry Summers (born November 30, 1954) is an American economist. He served as the 71st United States Secretary of the Treasury from 1999 to 2001 under President Bill Clinton.

Send William Easterly to the World Bank.

I guess they will both be turning 58 in November of this year.

LadyGodiva is correct. They are pompous American economists in their ["late"] 50s.

I strongly agree with Nick_Gogerty. The appointment of Bill Easterly to head the World Bank would be fantastically good news.

Same gender, same profession, same age, same nationality — sigh.

But at least he has his head in the right place and his brilliant mind is not just media management and public relations — or friends on Wall Street opening doors for him.

Posted by carambas | Report as abusive

Sachs’ ‘shock therapy’ was introduced in only one East European country more less as he had proposed – Poland, then a highly indebted basket case of communist economy. Since 1990 it has been one of the fastest growing European countries and in the last 3 years the only European Community country not plunged into recession. Calling his reforms “complete disaster” shows only how ignorant Mr. Salmon is.

Posted by Grzegorz55 | Report as abusive

Grzegorz55 said:

“Sachs’ ‘shock therapy’ was introduced in only one East European country more less as he had proposed – Poland, then a highly indebted basket case of communist economy. Since 1990 it has been one of the fastest growing European countries and in the last 3 years the only European Community country not plunged into recession. Calling his reforms “complete disaster” shows only how ignorant Mr. Salmon is.”

Mr. Salmon has made a career out of saying ignorant, disingenuous and just plain wrong things with supreme confidence and arrogance for years. It’s his schtick.

Posted by EconomistDuNord | Report as abusive

No! Not Jeffrey Sachs. Have you ever checked his background at all? Undergrad, grad, PhD at Harvard. Straight to professor at Harvard. How common is THAT? And recently, those Millenium Village infomercials with Madonna and Angelina Jolie.

Larry Summers isn’t too suitable at this point either. But at least he had work experience in academia, industry, government AND I believe he even did a stint at the World Bank in the past.

There are many more suitable candidates than Jeffrey Sachs though. Felix is correct that the position has a significant diplomatic aspect. William Easterly would be a better choice. Plenty of others too.

Posted by EllieK | Report as abusive

Thank for that URL, JonJonFaull! Much appreciated!

Posted by EllieK | Report as abusive

Bill Easterly would be the heroic choice, a beautiful comeback story on a par with that of Steve Jobs, from a much more modest, decent human being who deserves it and who would do an excellent job.

Bill Clinton is an interesting choice – if he would take it, I could imagine him being extremely effective. He’s got such a positive reputation globally at this point that he would be motivated to do a great job, and he is smart enough in all of the right ways that might actually do a great job.

The article in which “Sachs” lobbies to work at the World Bank must surely have been a witty plant by The Onion. Sachs himself is not THAT stupid, is he?

On the other hand, my wife (Senegalese entrepreneur Magatte Wade) told me this morning that the anecdotes she wrote about in the article below are only part of the story, that there were additional incidents she had with Sachs & Co. before the incidents described here, de/ ml

If Sachs was actually appointed head of the World Bank, he could probably manage to anoint himself as the most hated World Bank president in history.

Posted by MichaelStrong | Report as abusive

” nearly always thinks he’s the smartest person in the room” ? “nearly”?!?!?

Posted by robertwaldmann | Report as abusive

I see this guy frequently on Morning Joe.
He is a jerk.

Posted by emm305 | Report as abusive

Mr. Sachs indeed understands developmental economics and is very passionate about it (not “angry”). The average american politician, on the other hand, knows practically nothing leave alone developmental economics. No comparison at all between Sachs and American politicians.

As for World Bank employees not liking Sachs, that will certainly be a problem. If he is going to shake up the Bank’s standard approach, surely there will be a lot of resistance and not just because of the Millenium Village project. Such friction will be most productive.

It will certainly be good for the World Bank to be led by a guy who truly believes that dire poverty can be entirely eliminated from the face of the earth.

Posted by Kishore62 | Report as abusive

This is a poorly cited, ad hominem attack.
What him here, make your own assessment: 3w
The snarky claim that he is at the Earth Institute to raise wads of cash is downright low. My girlfriend’s work for the Red Cross relies heavily on the work of the Earth Institute, which Sachs founded.
Substantiate the “shock therapy” label that gets pinned on Sachs. In particular, research Sachs key proposition during his work in Easter Europe: having the international community inject large amounts of foreign currency into Stabilization Funds to help quickly stabilize currencies of post soviet nations. He succeeded in doing this in Poland (see Zloti Stabilization fund). He was blocked from doing the same for the Ukraine/Russia. Does that sound like shock therapy? Or is it painting of a whole profession with a single brush? Your claims about Millennium Villages are equally unfounded. Please do your homework next time. I’d be happy to see Sachs at the helm.

Posted by santiago_socbiz | Report as abusive

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