By Peter Macmillan
TOKYO -- Jeffrey Sachs is a world-renowned economics professor, bestselling author and global leader in sustainable development. He has a many-decade connection to Japan and has often spoken about how his research on Japanese economics in the period after the Meiji era, which had lasted from 1868 to 1912, shaped his own thought on developmental economics.
He spoke with Nikkei Asia in a recent interview that focused on success stories in eliminating world poverty, the present state of global and Asian economics, how contemporary world economics and politics are not aligned and the ensuing tragic consequences. Excerpts from the interview in Tokyo are below:
Your 2005 book "The End of Poverty" established you as one of the world's leading economists of poverty. How do you see changes in the world since that time?
We're in a very positive period when it comes to the economic development of this part of the world, which has been the most successful period of economic development in history, actually lifting hundreds of millions of people out of poverty, making great advances of living standards. And that has been true over a very, very wide range of countries, starting with Japan with its post-war reconstruction. These days the ASEAN region, which is [home to] 700 million people, is also broadly experiencing rapid economic development.
Can the Asian model first pioneered by Japan be instructive for other parts of the world?
Yes, of course. I continue to try to propagate this framework in my own work. My message to African countries and the African leaders with whom I spoke in the African Union Summit in February was look to Asia, look at how rapid the development has been. That's Africa's future. If you invest systematically, as Japan and China and the other success stories of this region have done, then Africa, too, can achieve economic development with growth of 7% to 10% per year.
And if that gets done, then we really achieve a basic goal that humanity set itself at the United Nations and that is inscribed as SDG (sustainable development goal) No. 1, and that is the end of poverty. We're not so far from ending extreme poverty in the world. We are actually at a rate of extreme poverty, as the World Bank measures it, of only around 6% or 7% at the global level now. It used to be 25% back in 1990 and 35% in 1970, but the poverty rate is now coming down to zero.
So the news is excellent for economics, but I know you think that politics can also interfere in a negative way to impede the development of economics.
We're not in a good place in the world, because we're not learning those lessons of economics. We're not thinking very clearly at the political level right now internationally. And it's getting worse.
What is the best role for Asia and for Japan at this time?
We're in a paradoxical time because this is a very positive time for Asia because Asia has once again become the center of the world economy. More than half of world output is produced in Asia, and that share will continue to rise. There's a tremendous technological dynamism in Asia and RCEP -- the Regional Comprehensive Economic Partnership -- which includes China, the ASEAN countries, Japan, [South] Korea, Australia and New Zealand.
If RCEP would become not only a trading area, but a highly cooperative political area as well, where security concerns were solved, where demilitarization and arms limitations were carried out, and where the region became really the core of world innovation in the green and digital technologies, this would be a fantastic time for Japan, for China, for the ASEAN countries and so on.
Is that likely to happen?
Well, the downside is that we're also in an age of conflict. And my thesis is that those conflicts are unnecessary, that they derive from a wrong mindset. The economic mindset that I am proposing is a win-win mindset, where everybody can gain from innovation and trade and international finance. But the political mindset is often a zerosum mindset where winners in one place are taken to mean that there must be losers elsewhere.
What is the origin of this mindset?
This mindset is strongest in the United States where, from the Washington point of view, China's advance is viewed as a threat to the world. And the reason is that the U.S. thinks in terms of who's most powerful, not in terms of shared prosperity. So, from the American strategic point of view, China's advance is seen as a threat rather than as the very good news that it in fact is. It's good news because it's raised living standards in China and reduced poverty and produced a range of technological advances that benefit the whole world.
Do you think that Asia has a lesson to learn from that?
I think the right approach is that China, Japan, [South] Korea, ASEAN, and other neighbors work out diplomatically a set of security arrangements so that everybody feels secure and that the positive cooperation in trade, in finance, in technology, in green transformation, in protecting the oceans and so forth can go forward positively in a wholly win-win way. I hope that they can come to think strategically so that security in East Asia isn't based on the fact that the U.S. is facing off against China.
Finally, may I ask your view on the current situation in Iran?
The Israel-U.S. war on Iran is engulfing the entire Middle East. The economic consequences are already severe and could become catastrophic. The Strait of Hormuz carries approximately one-fifth of all oil traded globally, and 30% of the world's LNG (liquefied natural gas). A sustained closure of the strait would trigger an energy shock without modern precedent.
The conflict is likely to spiral out of control because the U.S. and Israel are dead set on hegemony in the Arab world and West Asia -- one that combines Israeli territorial expansion with American-backed regime control across the region. The ultimate goal is a Greater Israel that absorbs all historic Palestine, combined with compliant Arab and Islamic governments stripped of genuine sovereignty, including on choices as to how and where they export their oil and gas.
This is delusional. No country across the region wants Israel to run wild as it is doing, murdering civilians across the entire region, destroying Gaza and the West Bank, invading Lebanon, striking Iraq and Yemen, and carpet-bombing Tehran. No country wants its hydrocarbon exports under effective U.S. control. The war will end if and only if global revulsion at U.S. and Israeli aggression forces these countries to stop. Short of that, we are likely to see the Middle East in flames and the world in an energy and economic crisis unprecedented in modern history. The war could easily turn into a global conflagration, effectively into World War III.