Lessons I Learned

“But that wouldn’t really happen in real life,” said one of the students in my economics class as our professor was reviewing game theory and the economics of auctions. “People wouldn’t act in that way, and it wouldn’t work like that.”

Our professor turned around and smiled and looked at us all like he’d just realized that we had come to the theatre to see Jaws and brought our bathing suits thinking we’d get to swim. “Don’t try this at home, people,” he said. “This is E-CON-OMICS. It’s not real life! Did you think I was going to tell you how to make day-to-day business decisions? You do have strategy class, right?” and he went back to eagerly scribbling away his mathematical proof about what might happen if there was perfect information, if all people were rational, and if we were interested in the average collective behavior of a bunch of unaverage people.*

That night, after memorizing a bit more about Nash equilibrium theories, I decided to try to go see Jeffrey Sachs speak as he was giving a “sold out” lecture at Oxford. I figured it would give me fuel for my economics fire and give me a further look into an economic perspective I have been turning over for the last few years.

It would be the third time I had seen him speak. The first was at Notre Dame a few years ago, just after I had started PEPY. I was on campus as part of a guest session on “alternative careers” and Sachs was speaking at the university’s biggest annual lecture series. I rushed out of my little workshop to see Sachs’ presentation and I didn’t understand the professor’s confusion about my excitement to see “the rockstar economist” speak.  “I’m not sure you agree with him,” the professor said, looking at me with that same confused expression.  “What, was this guy mad? Of course I agreed with him!” I thought.  “Sachs was calling for more people to work towards livelihood improvements in ‘developing’ countries. How could I not agree with him?”

It wasn’t until the second time I saw Sachs speak, at Conde Nast’s “World Saver Awards” ceremony in NYC, that I realized that the ND professor’s look was likely due to my level of ignorance about development economics. By that time, I had fortunately spent a little more time to educate myself and had read more of Sach’s work and those of “competing” economic thinkers. I had also come to some of my own conclusions about what might “work”, or not, in the development sector based on my own failures and experiences. That time, (along with being a bit shocked that Disney Cruise Lines was up for a “World Saver” award for having painted their cruise ships with a more environmentally friendly sealant?!), I noticed that his prescription for how we should move forward didn’t fully jive with my own.

So I went to the lecture at Oxford reminding myself on the whole bike ride there to be open to listening to his perspective and to seek to understand where he was coming from. I was so conscious of WHO was speaking that I hadn’t bothered to read WHAT it was he was speaking about. I arrived expecting a millennium development goals debate and was presented with a diagnosis of the American political and economic decline that I couldn’t help but agree with. Sachs’ talk focused on his new book, The Price of Civilization: Reawakening American Virtue and Prosperity with nearly the entirety of the talk, and the larger part of the book, focusing on defining the problem and its causes. To my surprise, here I was listening to Jeffrey Sachs and I was agreeing with so much of what he was saying. But then, at the very end, he touched on the “How to fix it” ideas which the second par of his book focuses on.

And then I heard it in my head: Sachs, this is E-CON-OMICS. Don’t try this at home!

I recognize that people would be very upset if they were presented with a book that analyzed the problems of the economy or the development sector and were not then presented with solutions for how to go about talking these problems, but my economics professor was right. This is economics, not strategy!

We can learn a lot from economic theory and, when looking at averages and analyzing trends, it is an essential tool. But when looking at exactly what to then do in a certain instance, especially instances that involve real human beings who are not all rational, who certainly don’t all have perfect information, and who don’t always act in alignment with their own best interests, simply applying economic theories of averages of what is supposed to happen when A and B meet can be more like hiring a professional conductor to generate beautiful music out of singing seals. It’s gonna take a lot more work than just giving them sheet music.

From this point in the lecture, my typical Sach-ian reactions kicked in. I didn’t agree with the global solution theories he touched on and see problems with taking any “proven” solution here and plopping it down there and there and there and scaling it as if one could mass produce solutions as easily as Band-aids. Sach’s model examples of economic role models were the northern European countries (notably, some of them oil-rich, like Norway), and when a few audience members from or referring to those countries noted that they too were having economic problems, Sachs practically put his fingers in his ears.

It was the most disappointing part of a very interesting discussion when Sachs responded to a student who was questioning why we should model an economic improvement plan on situation’s like Iceland’s with a response that started with “Don’t tell me bad things about the economies of Northern Europe. I don’t want to hear that.” He might have been joking a little bit, but he didn’t really respond to the question nor did he seem interested in discussing an issue that might challenge some of his assumptions. Kenyan economist Bernadette Wanjala recently published what was deemed the first independent audit of the Millennium Villages Project, a project trying out Sach’s theories in African communities as a partnership between Columbia University and the UN. If Sachs and all those of us who have “theories” about how to improve the world aren’t seeking out and harnessing contradictions to these ideas, we’re not going to find viable remedies to the problems we continue to face. Instead, we’ll counter our cognitive dissonance by seeking out “proof” to fuel our egos rather than our world. I believe that we need to be asking people TO tell us where we are wrong and then seeking out ways to work with them to find solutions which are more viable through constantly iterating our ideas based on new information.

Sachs’ speech was followed by a panel of Oxonians who had been asked to provide comments and critiques of Sach’s talk and his book. Side note: I love panels like this one, which unfortunately are very rare, as they each dug right in and were not afraid to speak their minds about where they disagreed or had more questions. There was none of the usual chest puffing that comes with panelists each trying to put their business resume on the table by spending the majority of their allotted time talking themselves up – they got straight to the debate and academic questioning– gotta love the Brits! The American on the panel, Peter Turfano, Dean of Oxford’s Said Business School, also highlighted the areas he had questioned about the book touching on a need for more strategic thought in the “what” to do after the thorough economic analysis of the “why”. His comments made me realize that we should leave the economics to the economists and then use their findings to fuel strategy designed by those who are experts in implementing projects involving real human beings.

Another question worth noting was from an audience member who asked if Sachs had shared these ideas with the US government. “They wouldn’t take my calls,” jokes Sachs on two occasions. Funny, the US government doesn’t let Sachs or any one of with a good idea us experiment with the US economy and people’s lives. (Well, to fit in with what Sachs and I both think is wrong with the US, they MIGHT have let him try out his theories, if he had enough money to make it worth their time to listen to him.) Yet, when it comes to international development, the barriers to entry are much lower. Sachs, and many of us (myself included), are guilty of thinking it’s ok to experiment by taking the lives and economies of others in our own hands. We think we can all play strategist, politician, and hero. The US government wouldn’t take his calls, yet communities in Africa are living out his theories. Unfortunately for the world, there is no checks and balances systems set up in global development, no bi-partisan senate debates forcing Sachs to stop, change, or improve. It seems the system is so lacking that even when others take time to do monitoring and evaluation of our projects for us, we can write it off and ignore it. Hmm…. maybe it’s not so different than the current US government after all… but back to the lecture.

I got to meet Sachs afterwards and asked him a few questions related to how his books are written and with regards to the split between economic analysis and improvement strategies. He noted that the majority of his time and expertise is spent in the problem analysis and that I’d see when I read his new book that the “solutions” parts were incomplete and intended more as suggestions/shoves in the right direction. I forgot to ask if he felt the same way about his solution suggestions from the “End of Poverty”, but when standing in front of rockstars or rockstar economists, the right questions sometimes fail to formulate. (Sachs? You reading? Want to share some insights?)

I walked out of the lecture realizing that I had thought I didn’t agree with Sachs, but it turns out I do. I agree that there are big problems in how development work is being administered and how the impacts are not what they could/should be. I also agree that the political, economic, and corporate sector of the US is out of balance and that we are on a high-speed downward path. I just don’t want Sachs or any economist conducting our choir of seals.

The value I see is that Sachs has spent time detailing the WHAT, but we need to do a better job of figuring out the HOW. Sachs, and all those with theories of HOW should hopeful marry themselves to the goals rather than the solutions so that we can all freely debate and improve these imperfect solutions. Because they are ALL imperfect. That was my biking mantra on my way home to my economics studies where I had to go back to channeling the mind of an economist, pretending the world was full of rational ego-less creatures who care more about improving their lives and the world than their reputation. And now, economics makes a little more sense. Just don’ try it at home (or in Africa for that matter).

* Note: Those are not direct quotes, but my general summary. Also note that I LOVE our economics professor and his love for all things econ. It’s fabulous to be around people who are passionate about their subject and he often jumped with excitement when talking about economic theories he thought we should know, even if they were outside the scope of the course, which was either the most interesting part of the lecture, of the part where he totally lost me! I also loved that he was honest with us that this was NOT a representation of how things “would” work, but measures of averages and possibilities based within constraints. That recognition, that theory and reality are not directly interchangeable and require reworking of ideas to fit into the specifics of each new scenario should be a hallmark of formal education – from international development frameworks to MBA business planning. If it’s not, we’ll head out into the world and think we can apply these cookie cutter ideas to real human beings. And that would be just as silly as wearing a snorkel to Jaws.