Polish transformation story of 1989 - Jeffrey Sachs lecture - Part IV: One odd event

Łódź, Poland, 6th of June, 2014 - Jeffrey Sachs lecture
co-organizer of the event: Zbigniew Galar

Part IV: One odd event

Over time, after 1991, after 1990, I started to go to, I wasn’t so much involved after the first year and I came to a couple of times in 1991 and then Gorbatschow first asked me for help, through Gregory Jedliński and a 400 Day Plan and then when Gorbatschow fell, Jegor Gaidar asked me for help. And I just want to tell you one odd part, which is that, I’ve given good advice for Poland and I gave the same advice for Russia and I gave the same advice to the western governments about Russia: “Cancel the debts, don’t demand debt repayment, give a Rubel Stabilization Fund, give an early loan to help Russia get back on its feet”.
Every one of those ideas was rejected by The US government.
Not one was accepted. Not one. Not even: “Call me back in a week.” Much less: “Call me back in a day.”
And the Secretary of State of The United States told me: “Mr. Sachs – it’s not going to happen!”
And he actually said something to me which was doubly frustrating, triply frustrating.

This was a man named: Larry Eagleberger who was the acting Secretary of State in 1992, and he said to me: “You know, Leszek Balcerowicz gave to me the same advice about what to do with Russia last week, as you are giving now.”
And he said also: “Even if I agreed with you, am not saying I disagree with you, but I just want you to understand something Mr. Sachs – it’s not going to happen!”
“Why?” He gave me one hint but there were two.
He said: „You know what year this is?” That was not a tough question.
I said: “Yes, Mr. Eagleberger it’s 1992.”
He said: “You know what that means?”
I said: “You mean it’s a presidential election?”
He said: “Yes. It’s not going to happen!”

So the US couldn’t get its head around the idea of helping Russia. Maybe in Poland, it wouldn’t be so easy to have that idea. For me, it was as easy as helping Poland I have to tell you. Because as thrilled as I was for Poland I was equally thrilled for Russia in 1992.
I said: “This is the first time Russia could have a democracy since 1000 AD. This is historic. Not once in a century, maybe once in a millennium. Let’s help.”
But there was no readiness to help at all. And I think it was one of the reasons why things were so chaotic in Russia. There was no help at all. I’ve got blamed for all of that afterward in the US. Because I was the only face that people knew about Russia. They didn’t know Jelcyn necessarily, but they knew Sachs.
So whatever happened they said: “You see, that stupid economist did it.”
But the truth of the matter is it was the kind of irresponsible moment of history. Either you help or you don’t help. Fortunately, we helped Poland. And Poland needed the help, by the way, at the time. But Poland did great things.

I was just gone finish with Leszek. We became good friends but over the years I found that we didn’t actually agree on politics as much as I thought. Because in the heat of the battle in 1991… in 1989 and 1990 we never had a disagreement about anything. And that proved to me we were talking about basic things, not about long-term philosophy. I didn’t even know we had disagreements about long-term free market versus not. That only became more apparent later on. And he was surprised about my positions sometimes and I was surprised at his positions. It doesn’t diminish, by the way, my admiration for him. Because I think he did a great service for this country, really great service for this country. But we don’t have to share the same political philosophy within the narrow difference of central right and central left, I would say. Because am much more social democratic. He’s a much more free market then I am. But that wasn’t even apparent because when you’re talking about currency convertibility, stabilization, ending high inflation, supply and demand you don’t even notice those differences. The differences are more subtle, that’s the next 25 years, not the first year. And that’s what Poland’s experiencing now. For me I wasn’t there reflecting Ronald Reagan's strategy, certainly, I wasn’t an agent of an IMF or an agent of anybody else – ever.

In fact, I made… I’ll tell you one more story. Just because it’s funny. When I started advising in Poland and in Bolivia, suddenly I was being attacked in public, I’ve got used to that, I'm attacked in every day for helping. And I realized helping is a dangerous business. All of this. So I made a principle from the beginning that everything I did I would do just on my academic salary – never for money. Not on the contract, not as a consultant, not to make money. I would just do it because otherwise, everyone would attack me: “Oh, you are doing it for this!”
I said: “No, I am just doing it because that’s my job, that’s what I care about, that’s what I want to do.”
And also if I got fired it didn’t matter. It was just, I would give my best advice and I wasn’t depending on anybody. So that’s what I’ve done for 29 years. I’ve worked as I said in a hundred countries, I have never taken a penny, beyond my academic salary, for any of that work for 29 years. I could have but I did not. Because I don’t want, I want to be able to function also if as… I love what I do. And I love the fact that I am offered the chance to be at someone else’s home and to help. Which is a privilege in life and so I don’t want to lose the privilege.

So in 1991 when I, just before I started with Gaidar, I was actually invited… It was actually 1990, it was late 1990, I was asked to go to Gosplan[1] – right across the street from the Kremlin. This was also very unusual, you know, for me, I got goosebumps probably, not out of fear, just out of – how weird it is. And I went to the seventh floor of Gosplan, I was told: “No westerner ever come to this floor before.”
This was the top level of Gosplan. And my host was Mr. Maslokow who was Politburo – head of the military industrial complex. No joke. This is the Soviet Union. I was 33 then. And there was for me also quite interesting, of course. And so I sat on one side and there were 50 Russian apparatchiks on the other side. I gave them a lecture about the market economy for about three hours and they all took notes in the book.
And at the end of this Mr. Maslokow said: “We would like you to come back and we would like more guidance.”
And he said to me: “How much would you require financially for this?”
And I said: “No, no – Mr. Maslokow I want you to understand I'm an academic. I will be very happy to come here, you know, to do this.”
Suddenly they said: “OK, wait.”
And I was taken to another room and half of an hour went by and the interpreter came and said: “You have created a huge problem.”
And I said: “Why?”
And he said: “Well they don’t know what to do. They think you are probably on CIA parole if you don’t want money. They don’t understand the answer you gave. How can you not want money?”
So you never know how this is misunderstood so I had to explain to them: “No, am truly an academic. This is what I do.”
Somehow we overcame that and I came back a couple of times to Gosplan. History took its course and so that’s that.

[1] Central Planning Agency, responsible for managing the economy in the times of the Soviet Union.

End of part IV

To be continued...

Jeffrey Sachs

Transcript from the audio recording:
Zbigniew Galar

Lecture license: Creative Commons 2.0:
Jeffrey Sachs
Transcipt license: Creative Commons 2.0:
Zbigniew Galar

Audio and PDF transcript of the recording will be available under the last part.