Summers, Sen agree (mostly) on globalization

Spreading the wealth of the industrialized world to developing nations will certainly ease poverty, but the problems leading to international terrorism are too complex to be solved by economic programs alone, Harvard President Lawrence H. Summers and Nobel Laureate Amartya Sen said Saturday, April 13.

Summers and Sen, both economists, discussed the problems of terrorism and globalization in the post-Sept. 11 world during a two-person panel discussion dubbed a “conversation on globalization” that closed the two-day 2002 Harvard Colloquium on International Affairs “Globalization after September 11: Has Anything Changed?”

While the events of Sept. 11 have certainly directed more attention to the problems of the developing world, those problems are still drawn from the same dismal list as before Sept. 11: poverty, low education levels, poor health care, environmental degradation, and overpopulation.

In their hour-and-a-half talk, held before a packed Ames Courtroom at Harvard Law School, and videoconferenced to two additional, standing-room-only overflow rooms (a combined audience of more than 800), Summers and Sen discussed these topics and others, including third world debt, and foreign aid programs.

Summers, former U.S. treasury secretary and Harvard economics professor, and Sen, Lamont University Professor Emeritus, winner of the 1998 Nobel Prize in Economics, and Master of Trinity College, Cambridge, agreed on several points but disagreed most widely over whether economic development comes before or after improvements to health care and education.

Summers argued that market reforms allow economic growth that lifts a whole society, spurring greater development of health care systems and levels of education. Sen, on the other hand, pointed to rapid development in China after 1979 and in one Indian province, where both had invested to raise the levels of education and improve health care in the absence of a free market, and then grew rapidly later when market-style reforms were adopted.

Moving to another current hot topic, Summers said the debate over whether America should pursue a narrow national self-interest or a broader, more idealistic agenda is nothing new. In fact, he said, such a tension has existed as long as the nation itself. Though globalization has come under fire from some quarters as a polarizing force in the world, both Summers and Sen firmly agreed that globalization – with its access to a wide variety of markets, labor pools, and resources, is an essential ingredient of global development.

“I would caution that in our urge to be moral, right, and contributing – and there is no question that we must do more – that we not lose sight of the fact that more people are poor because of the lack of globalization than they are because of globalization,” Summers said. “A more open, more market-oriented economy is of overwhelming importance to any global development objective.”

Summers said the world’s industrialized nations have to do more to help the developing nations, but said much of the onus lies on the developing nations themselves. In some countries, he said, wealthier citizens invest their money outside the nation’s borders because they don’t trust the investment environment there. That capital flight, he argued, does more damage than the flow of foreign aid dollars to such nations can assuage.

While Sen agreed that policies and conditions have to improve within developing nations in order for them to take advantage of aid programs, he said that some nations – those with good health care and strong education systems – are prepared for growth. The construction of a school or hospital in a poor nation, in itself, alters the economic market in the area in which it was built by providing healthier and smarter workers.

“It’s important to recognize,” said Sen, “that every time a hospital is established, a school is established, the market has changed.”

On terrorism, Sen pointed out that terrorist leaders are often quite wealthy, though he said poverty may be a tool that allows the recruitment of foot soldiers. Summers questioned that assertion, saying that there has really been little study done on the links between poverty and terrorism. Historically, Summers said, terrorists were often disaffected people from the upper middle class.

“It is important to fight global poverty, but people to my taste have been a bit quick to invoke terrorism [and link it to] global poverty,” Summers said.

Sen agreed that the objective evidence linking poverty and terrorism is unclear and pointed to the fact that, during the Irish Potato Famine, shiploads of produce grown in Ireland were transported to England without ever being interfered with by the hungry Irish.

“It really may not be as simple as it seems,” Sen said.

The two also tackled the issue of whether the industrialized world should make canceling the debt of developing nations a high priority.

Summers argued that with a finite amount of aid dollars available, using current debt levels to allocate scarce resources may reward those who’ve proven unable to manage their budgets and incapable of instituting societal gains from borrowed dollars. While he agreed that reducing the debt levels of developing nations is important, he said the question of debt relief needs to be carefully thought through with attention given to perhaps tying debt forgiveness to specific reforms.

Sen agreed that debt alone is not the best measure for distribution of aid, saying that some of the poorest nations don’t have debt, since no one would lend to them, and thus would lose out on an allocation of money based on debt levels.

Summers also addressed a student question on what Harvard’s role in combating world poverty should be and whether the University could use a portion of its endowment in that battle.

The University’s resources, Summers said, are best directed at Harvard’s academic mission – the creation of new knowledge, the dissemination of knowledge and the teaching of students from around the world. The development of a new malaria vaccine or new techniques to ensure clean water supplies would benefit millions of people in the world, most likely far more than any direct anti-poverty program funded by the University. Summers pointed to the recent publication of “A Problem from Hell: America and the Age of Genocide,” by Carr Center for Human Rights Policy Executive Director Samantha Power, as an example of the impact scholarship can have, saying he believes nations will respond much more promptly to future indications of genocide because of that book.

Summers said he hopes the number of students from developing countries will increase at Harvard in the future and those students, through their knowledge and leadership, will carry on the fight against poverty and other ills affecting their countries. Summers said there are already many examples of leaders who have been taught at Harvard having an impact on their home countries.

“I believe, over time, it is new knowledge, new ideas and their dissemination that will have the biggest impact,” Summers said. “It is knowledge and the people who we’ve taught that are the most powerful force for [helping] the developing world.”

Summers closed the session by thanking the colloquium’s organizer, J.Sinclair Armstrong Professor of International, Foreign and Comparative Law Anne-Marie Slaughter, saying the issues addressed at the two-day event are just the sort that ought to be addressed by institutions like Harvard.

“This has been an exciting two days,” Summers said. “This year [Slaughter] exceeded herself and showed what the resources of a great university can do as far as stimulating discussion of important topics.”