Business Insider: Here's What The Global Economy Looked Like In Year 1
Business Insider: Here's What The Global Economy Looked Like In Year 1
This is about a social enterprise on a mission to reinvent the coffee supply chain, giving farmers a bigger and more equitable piece of the action.
Aimed at growers producing specialty-grade, premium, Fair Trade certified coffee, Vega hopes to enable farmers to roast and package their beans and connect to customers directly via an online subscription marketplace. As a result, they can make a lot more money than they normally do.
... So, even though advocates of Fair Trade and organic coffee are trying their best, because they work within the usual supply chain, small-scale farmers end up with a paltry share of the pie, according to Ketabi. Each small scale farmer produces about 500 pounds of Fair Trade organic coffee a year and gets around $1.30 a pound, or $700 a year. The upshot: Farmers of specialty grade coffee beans earn $1 a pound for a product costing U .S. consumers maybe $20.
Vega’s aim is to cut out most of those other players. To that end, it would set up a processing, packaging and distribution center located 20 to 30 minutes from farmers. There the coffee would be loaded in pallets, shipped overseas via a U.S. carrier, then broken down and mailed to consumers. Farmers would be paid when the processing is done, so it’s not contingent on supply and demand fluctuations. The founders are still working out the details, but, ”We’ll match the Fair Trade price and pay for the value of the processing on top of that,” says Ketabi. The result would allow farmers to earn up to four times what they typically receive. ...
HT: Sarah Stanley
From MRUniversity, Everday Economics:
"We are pleased to announce a brand new course at MRUniversity, Everyday Economics. The new course will cover some of the big ideas in economics but applied to everyday questions. The first section, premiering now and rolling out over the next several weeks, features Don Boudreaux on trade. Tyler will appear in a future section on food. You can expect more from me as well. Indeed, you may spot both Tyler and I in some cameos (ala Stan Lee) in some of Don’s videos!
Here’s the first video on trade and the hockey stick of human prosperity."
Christian Science Monitor: How focusing on profit can help the poor
Water technology company Xylem makes a profit on its foot-operated irrigation pumps for poor farmers. But those profits allow it to stay around to service its products and develop new ones.
When leading water technology company Xylem started manufacturing simple pumps for smallholder farmers, it wasn't for charity: The company expected to profit.
The new Essence of Life line caters to the everyday water needs of farmers with small plots of land, among some of the world’s poorest customers. Like any of its customers, Xylem expects these farmers to pay for the right product at the right price.
“Many of us in the water business – Xylem and its peers – are engaging in a lot of the same strategies: premium products in premium markets,” said Keith Teichmann, vice president and director of innovative networks and marketing at Xylem in an interview with Global Envision.
The new Essence of Life line caters to the everyday water needs of farmers with small plots of land, among some of the world’s poorest customers. Like any of its customers, Xylem expects these farmers to pay for the right product at the right price.
“Many of us in the water business – Xylem and its peers – are engaging in a lot of the same strategies: premium products in premium markets,” said Keith Teichmann, vice president and director of innovative networks and marketing at Xylem in an interview with Global Envision.
So Xylem developed the Essence of Life program to focus on the water needs of the 1.5 billion smallholder farmers who live on less than $2.50 per day, said Teichmann.
By doing so, Xylem became one of the few original equipment manufacturers making water management products directly for the individual smallholder farmer. ...
Well, I think I might have met his match. She's called Deirdre McCloskey. ...
... McCloskey on the other hand, who is meant to be the conservative one, has the zeal of a revolutionary. She describes herself as an ex-Marxist, Christian libertarian. She is the most notable transgender economist in the world (I can’t recommend strongly enough Crossing, A Memoir, her moving account of her journey from Donald to Deirdre.) She is an entertainer and storyteller; one of the few serious economists who is as likely to quote the poetry of Robert Burns in support of an argument as she is to quote wheat prices in the 15th century.
But forget the characters. It is the intellectual contrast which gets to the heart of the debate between those who worry about in-equality and those who don’t. ...
... McCloskey, by contrast, has long argued that economists are far too preoccupied by capital and saving. She doesn’t even like the word capitalism, on the grounds that capital is not what got us where we are today. ‘If Scotland is trying to become Holland, then capital accumulation is how to do it. That will double your income, maybe triple it.’ But for her, that sort of accumulation is a scratch-card-sized prize — and the lottery jackpot beckons. She enthuses about the Great Enrichment of the 19th century. ‘What happened, understand, is not 100 per cent growth, but anywhere from 2,900 per cent growth to 9,900 per cent growth. A factor of either 30 or 100.’
That jump in incomes came about not through thrift, she says, but through a shift to liberal bourgeois values that put an emphasis on the business of innovation. In place of capitalism, she talks of ‘market-tested innovation and supply’ as the active ingredient of our economic system. It is incidentally a system ‘drenched’ in values and ethics overlooked by economists. ...
... The answer to that question determines what should be done about inequality. Piketty wants a progressive tax on wealth to prevent high returns entrenching the power of the richest. McCloskey, needless to say, is not keen on redistribution. Taking from today’s rich may give you a one-off uplift in the incomes of the poor of, say 30 per cent, she says; but that is nothing to the uplift from innovation and growth, which can double incomes every generation.
So much for the central disagreement between them. Here’s my problem. Many people with strong views on inequality consciously or unconsciously think of this as a binary choice: profits go to either a deserving or undeserving rich, depending on your view. It’s all about capital, or all about wealth creation. But I struggle to see it that clearly. I’d like to know how much of the return on capital that so concerns Piketty is actually income earned from entrepreneurial wealth creation. I’d also like to know how important that income is to innovation.
Piketty is well aware of this vulnerability in his argument. ...
She is admirably pure in her view, but is it as black and white as she portrays it?
Bill Gates or Liliane Bettencourt? They co-exist, of course, and have both had a pretty good time of it in recent decades. The question is which one better characterises the very rich. And also which risk you would rather take: taxing the Bills at the risk of deterring them from creating Microsofts? Or not taxing the Lilianes, at the risk of letting them become ever wealthier and more powerful while sitting at home doing nothing?
I know that the 99 per cent of the population have no difficulty coming to a view. I’m in the sad 1 per cent, who can see both sides.
Very interesting article! I lean more in McCloskey's direction. I think the impact of innovation is invisble to so many and it is radically underappreciated by others who acknowledge it. But I also share the ambivalence so well expressed by the author in this article. Here is a clip of McCloskey:
Wall Street Journal: The World's Resources Aren't Running Out
As I listen to conversations about our economic future, I hear two visions of the future being articulated and I think both are inaccurate. First, there are what I call the Malthusians. They see a world of imminent collapse, limits to growth, exhausted resources, and such. We are warned that if we keep going the way we are, X will run out, or Y will be destroyed. And they are right ... if there "if" stays true. And that is just the point. We don't keep going they way we are presently going when challenges emerge. We innovate. We substitute better models of doing things for the old ones. We substitute more plentiful materials for ones becoming more costly or scarce. The Malthusians have been singing their chorus of collapse for 200 years and they have always been wrong. And we still at the beginning, not the end, of learning how to address a multitude of problems that have continually plagued us.
I call the second group the Cornucopians. They see a world of unprecedented technological breakthroughs that will effortlessly make the world of 2100s like a utopia compared to our day. Now I will confess that I lean toward the Cornucopian side of this continuum and I believe the world will be a much better place. But I also look back over the last 200 years since the beginning of the Industrial Revolution, and while I see unquestionable improvement in the world's standard of living that is in accelerated upward movement, I also see great wars, injustices, and waste that happened along the way. The future is likely to hold more of the same.
As someone who works continuously at integerating faith and economics, I am deeply persuaded that growth is going to happen, that innovation and substitution is going to trip up the Malthusians once again. But that doesn't mean the process change is always going to painless and without injustice. And if the church is to have a meaningful impact on shaping our coming world, it has to live in this reality. Regretably, most of my Mainline Protestant tribe has succombed to Malthusian visions, and rather than working as a force to shape the new world, equates working against its emergence as a prophetic witness. Meanwhile, more conservative Christians seem to carry on as if just implementing free markets and making America strong is all we need. Unless this changes, the church, in America at least, will find itself swept along by these economic and technological changes, not shaping them.
Matt Ridely recently wrote a piece in the Wall Street Journal called The World's Resources Aren't Running Out. A very much resonate with what has written in this piece.
"Ecologists worry that the world's resources come in fixed amounts that will run out, but we have broken through such limits again and again.
"... But here's a peculiar feature of human history: We burst through such limits again and again. After all, as a Saudi oil minister once said, the Stone Age didn't end for lack of stone. Ecologists call this "niche construction"—that people (and indeed some other animals) can create new opportunities for themselves by making their habitats more productive in some way. Agriculture is the classic example of niche construction: We stopped relying on nature's bounty and substituted an artificial and much larger bounty.
Economists call the same phenomenon innovation. What frustrates them about ecologists is the latter's tendency to think in terms of static limits. Ecologists can't seem to see that when whale oil starts to run out, petroleum is discovered, or that when farm yields flatten, fertilizer comes along, or that when glass fiber is invented, demand for copper falls.
That frustration is heartily reciprocated. Ecologists think that economists espouse a sort of superstitious magic called "markets" or "prices" to avoid confronting the reality of limits to growth. The easiest way to raise a cheer in a conference of ecologists is to make a rude joke about economists. ..."
AEI - James Pethokoukis: World Bank: ‘The world has become more equal’
Lots of attention being given to a new World Bank study suggesting China may overtake the United States this year as the world’s largest economy, adjusted for living costs. But this other World Bank finding, noted by the Financial Times, is also interesting:
When looking at the actual consumption per head, the report found the new methodology as well as faster growth in poor countries have “greatly reduced” the gap between rich and poor, “suggesting that the world has become more equal”.
As the above chart shows, high-income countries in 2005 had 16.4% of global population and 60.4% of global GDP vs. 16.8% of population and 50.3% of GDP in 2011. Although income inequality within nations may be on the rise, global economic inequality between nations is collapsing.
But here’s what is really amazing: Back in 2005, low-income countries represented 7.1% of global GDP vs. 1.5% today. Now it’s not as if these nations became poorer. Rather they moved up the income ladder. In 2005, 35.4% of global population lived in “low-income countries.” Now that number is just 11.1% as more than 1 billion humans “moved” into middle-income nations which now represent 72.1% of global population vs. 48.2% in 2005. ...
I've seen the graphy below but it points to aninteresting dynamic. It seems to suggest as economic growth happens in developing nation, the distance between the top and bottom of the income ladder widens considerably, leading to increased inequality in the nation. But economic growth also seems to move the very bottom of the distribution away from zero. It brings the income distribution more in line with developed nations, thus reducing the inequality between nations.
I have a deep suspicion, at times cynicism, about short-term mission trips. Some of you already know this about me. I say this with reservation because I know so many people who say a short-term mission trip was so transformative for them (though I do remember reading a study awhile back that said these trips have lasting impact on precious few people.) So while I can freely admit that these trips have positive merits there are two things that deeply disturb me. One is concern for the dignity and welfare of the poor who are supposedly being "helped" and the other is the all to frequent experiential consumerism I fear I hear in those who take these trips.
Rafia Zakaria has an excellent op ed piece in Aljeezra America, The white tourist’s burden. "Growing Western demand for altruistic vacations is feeding the white-savior industrial complex." She writes:
... If designer clothes and fancy cars signal material status, his story of a deliberate embrace of poverty and its discomforts signals superiority of character. As summer looms, many Americans — college students, retirees and others who stand at the cusp of life changes — will make similar choices in search of transformational experiences. An industry exists to make these easier to make: the voluntourism business.
A voluntourist is someone like Jack, who wishes to combine exotic vacation travel with volunteer work. For anyone interested in being one, a dizzying array of choices awaits, from building schools in Uganda or houses in Haiti to hugging orphans in Bali. In all of them, the operational equation is the same: wealthy Westerners can do a little good, experience something that their affluent lives do not offer, and, as in Jack’s case, have a story to tell that places them in the ranks of the kindhearted and worldly wise.
As admirably altruistic as it sounds, the problem with voluntourism is its singular focus on the volunteer’s quest for experience, as opposed to the recipient community’s actual needs....
It troubles me that the central aim is often not on discerning how to partner with others in order to authentically improve well-being. Rather the aim is for the volunteer to have a particular type of "experience" that is meaningful to him or her. That is not to say authentic partnership can't be meaningful but it is to say that true partnership is frequently frustrating, messy, and at times disappointing. Partnership is also long-term. The traveler is often actually a consumer, purchasing an experience for his or her own therapeutic purposes.
It troubles me further that for volunteers on these trips, the experience becomes a type of conspicuous consumption. Just like sporting my new iPhone shows off my techie style, talking about my noble experience working with the poor becomes a way of sporting my superior moral character and street smarts. And what really troubles me most is that I can identify these traits in my own life at times and I am deeply aware of how seductive this stuff is.
But the problem doesn't end here. As Zakaria shows, too often these trips are actually disruptive and destructive of the long-term welfare of the people being "helped." They can destroy jobs, break-up families, and foster dependence. This type of work needs to be carefully scrutinized but far too often good intentions are thought to be enough. Due diligence and serious introspection is needed.
Zakaria rightly concludes:
Despite its flaws, the educational aspect of voluntourism’s cross-cultural exchange must be saved, made better instead of being rejected completely. Natalie Jesionka, a columnist at the Daily Muse, offers future voluntourists some direction on making a real impact on their trips. ...
Two book length resources I would suggest are Corbett and Fikkert's When Helping Hurts: How to Alleviate Poverty Without Hurting the Poor . . . and Yourself, and Bob Lupton's, Toxic Charity: How Churches and Charities Hurt Those They Help, And How to Reverse It.
1. You Decide: Save the People or Save the Planet #StopTheMyth
2. New York Times: The End of the ‘Developing World’
BILL GATES, in his foundation’s annual letter, declared that “the terms ‘developing countries’ and ‘developed countries’ have outlived their usefulness.” He’s right. If we want to understand the modern global economy, we need a better vocabulary.
Mr. Gates was making a point about improvements in income and gross domestic product; unfortunately, these formal measures generate categories that tend to obscure obvious distinctions. Only when employing a crude “development” binary could anyone lump Mozambique and Mexico together.
It’s tough to pick a satisfying replacement. Talk of first, second and third worlds is passé, and it’s hard to bear the Dickensian awkwardness of “industrialized nations.” Forget, too, the more recent jargon about the “global south” and “global north.” It makes little sense to counterpose poor countries with “the West” when many of the biggest economic success stories in the past few decades have come from the East.
All of these antiquated terms imply that any given country is “developing” toward something, and that there is only one way to get there.
It’s time that we start describing the world as “fat” or “lean.” ...
3. Huffington Post: The Paradox of Africa's Growth
... So why is Africa's job growth so weak while its economic growth outlook is just fine, even robust? The reasons are structural in nature and three-fold.
First, much of that 'robust' economic growth in the past decade in Africa has been driven by export of commodities or natural resources. ...
... Second, while Africa needs investments in sectors such as infrastructure, technology and education, much of its finances keep leaking out to the rest of the world. ...
... Third, there is no industrialization, not even in agricultural production, taking place when it should. ...
4. The World Post: Amartya Sen: What India Can Learn From China
The implication of your most recent book is that while democracy, as in India, prevents the worst man-made famine such as we've seen in China during the Great Leap Forward, it does not do well at all in building "human capability" -- literacy, rights of women, basic health care or effective public services and infrastructure.
Both China and India are characterized by rapid GDP growth, widespread corruption, inequality and the princeling problem -- 30 percent of India's parliament members are "princelings"
Yet, as you point out, "China made enormous progress -- even before market reforms -- towards universal access to elementary education, health care and social security." After dismantling and then starting to rebuild its safety net, 95 percent of Chinese today are covered by a publicly funded health care system."
And none of this is to speak of physical infrastructure -- the energy grid, bullet trains, roads, Internet access, sewage systems, etc.
You conclude quite decisively that "Indian democratic practice has failed."
What is the key differentiating factor between India and China with respect to building "human capability?" ...
... The family is integral to Indian culture and business. Nearly 85% of all companies in the country are family businesses - and these include big conglomerates such as Tata, Reliance and the Wadia Group.
"In other businesses, what is important is competence and profit. That is the measure of success. But in family businesses it's different," says Mr Bahl.
"What is important is that you are together, that you're working together and living together.
"You care for the reputation, you care for the principles of your forefathers and success or profit or that kind of yardstick is not paramount." ...
6. NewJersey.com: Opinion: Muhammad Yunus reaveals social business as powerful weapon against poverty
Muhammad Yunus pioneered microcredit loans to the poor without requiring collateral, empowered poor women worldwide and won the 2006 Nobel Peace Prize in recognition. Through his newest innovation, social business, Yunus has declared all-out war on the nefarious blight that is poverty.
The objective of social business is to augment healthcare, housing and financial services for the poor, education and nutrition for malnourished children and safe drinking water for all, and introduce renewable energy, such as solar power, to the poor.
Yunus realized that, like cancer, poverty is a multi-layered systemic malady whose cure requires a holistic approach. Microcredit loans alone are not the panacea. To obliterate poverty, microcredit must be bolstered with multi-pronged assaults against all of its components.
Existing business models focus on making a profit and have failed to mitigate poverty. Free-market capitalism is thriving worldwide, yet half of the world’s population lives on $2 a day or less. Centuries of experience have demonstrated that government alone cannot eliminate poverty. Trickle-down economics practiced by charities administered through aid agencies and non-governmental organizations fails when the money supply dries up. International agencies, such as the World Bank, set up to assist developing nations, focus solely on economic growth as the antidote for poverty.
Mixed models that conflate a non-profit model with some profit are inherently antithetical. To those who say, “Why can’t social business investors take some profit, such as a 1 percent dividend?” Yunus’ response is: This is like someone trying to quit smoking asking, ‘Can I take just one puff occasionally?’” Yunus argues that someone willing to take a small profit can be persuaded to take zero profit.
Yunus concluded that poverty cannot be eliminated through economic growth or philanthropy; it has to be targeted exclusively. ...
... As it turns out, soft power may be far more effective. In particular, educating future leaders here in the U.S. could be one of the most powerful and cost-effective ways to spread democracy that we have. In 2008, about one in five of the 3.3 million foreign students enrolled worldwide were studying in the U.S., and while that’s still a tiny share of the planet’s 7 billion population, foreign-educated students have an outsize impact on their home countries. Not least, a lot of them end up in very important positions. As many as two-thirds of developing country leaders in the middle of the last decade had studied abroad. A few years ago, a State Department list of senior government officials worldwide who had studied in the U.S. included more than 40 presidents and about 30 prime ministers. The full total may be more than 200. ...
8. Business Insider: Two Simple Charts Show Why China Is Losing Business To Its Emerging Market Neighbors
9. Conversable Economist: Latin America: Modest Progress on Inequality
10. Associated Press: Mexico to Trump Japan as NO. 2 Car Exporter to US
CELAYA, Mexico (AP) — Mexico is on track to become the United States' No. 1 source of imported cars by the end of next year, overtaking Japan and Canada in a manufacturing boom that's turning the auto industry into a bigger source of dollars than money sent home by migrants. ...
11. "Immigration Myths Debunked" | LearnLiberty
... This book is not an attack on aid from rich to poor. It is an attack on the unthinking philosophy that guides so much of that aid from poor taxpayers in rich countries to rich leaders in poor countries, via outsiders with supposed expertise. Easterly is a distinguished economist and he insists there is another way, a path not taken, in development economics, based on liberation and the encouragement of spontaneous development through exchange. Most development economists do not even know they are taking the technocratic, planning route, just as most fish do not know they swim in a sea. ...
13. Mashable: 5 Organizations to Support on World Water Day
In honor of this year’s World Water Day, a number of organizations are working on forward-looking clean-water initiatives.
These initiatives are helping protect our planet's water supply in a variety of ways, from providing water-filtration systems to inventing dynamic clean-water technology. ...
14. Atlantic Cities: Air Pollution Now Linked to 1 out of Every 8 Deaths in the World
According to a new report by the World Health Organization, air pollution is the cause of 7 million deaths a year worldwide, and is the single largest environmental health risk in the world today.
The staggering number — one in eight of all deaths, globally — is more than double previous WHO estimates of those killed by air pollution. WHO says that there is a stronger link between pollution and cardiovascular diseases like stroke and heart disease, and between air pollution and cancer, than previously thought. ...
15. USA Today: Blindness rates plummet in developed countries
Blindness is not a thing of the past, but rates have plummeted in developed countries in the past two decades, thanks largely to the spread of cataract surgery, a new study shows.
Visual impairment that falls short of blindness also has become less common in places such as the USA, Canada, Western Europe, Australia and Japan, says the report published Monday by the British medical journal BMJ.
The international research review, which includes Eastern and Central
Europe, shows rates of blindness dropped 50%, and rates of moderate to severe visual impairment fell 38% overall from 1990 to 2010 in 50 countries. Declines in the USA and Canada have not been that big, but rates already were low by international standards in 1990, the analysis shows. ...
16. Huffington Post: This Invention That Uses Aquarium Pumps Could Save 178,000 Babies Each Year
A new invention uses fish tank aquarium pumps to save the lives of babies in the developing world.
In an effort to battle the high cost of medical equipment, a group of Rice University students developed an affordable machine to help premature babies breathe. Machines called bubble Continuous Positive Airway Pressure (bCPAP) devices help struggling babies born prematurely by breathing for them, but the machines cost thousands of dollars and are, therefore, too expensive for many hospitals in developing countries, according to Rice News.
The design team at Rice invented new bCPAP machines by using affordable aquarium pumps -- making them a fraction of the cost and easier to maintain than the traditional machines. The device costs about $350 to make, while the cost of traditional bCPAP machines used throughout hospitals today is about $6,000, according to CNN. ...
The World Health Organization has declared its South East Asia region polio-free.
The certification is being hailed a "historic milestone" in the global fight to eradicate the deadly virus.
It comes after India officially recorded three years without a new case of polio.
The announcement means 80% of the world is now officially free of polio, although the disease is still endemic in Afghanistan, Nigeria and Pakistan. ...
18. Business Insider: Bill And Melinda Gates Think These Are The Most Important Charts In The World
19. Applied Methodology: Thoughts About Norm Borlaug on the 100th Anniversary of His Birth
Norman Borlaug would have been 100 years old today. He has been called "The Man Who Fed The World," and "The Father of The Green Revolution." Norm Borlaug was the first plant pathologist to be awarded a Nobel Prize (1970) - for contributions to world peace. For all of use who are fellow plant pathologists, his work has been particularly inspiring. ...
Christian Century: Economic Boom in Africa - Philip Jenkins
When I lecture on global Christianity, I am sometimes asked whether, in retrospect, I would revise what I wrote many years ago in books like The Next Christendom. Usually my answer is no.
But in one critical area conditions are changing so quickly as to demand rethinking. Whereas I (and others) once presented Africa as a region of extreme poverty and deprivation, we now have to take account of economic development that in some regions is so rapid as to amount to a boom. We can only begin to outline the religious consequences. ...
... The main impact on Christian churches will likely fall into the category of “more of the same.” For some years now, older independent churches have faded in the face of competition from new denominations rooted in global Pentecostalism that emphasize the blessings of material prosperity. Some tailor their message to aspiring professional and entrepreneurial groups, which will become much more numerous in the coming decade. Charismatic megachurches should boom.
Prosperity teachings never lack for critics. Nevertheless, such teachings usually include important practical lessons for coping with the new globalized world—lessons, for example, in the responsible use of debt and credit. Latin American precedents suggest that these churches also provide a vital organizational focus for campaigns for social and political reform and civic improvement. Expect more, rather than less, religious politics.
Other likely effects lie in the longer term. Increasingly, the demand for labor should draw more women into full-time paid employment, particularly in emerging service sectors. Expect to see more Western-style debates over issues of gender and sexuality, although framed strictly in terms of African traditions. What a pleasure it would be to see Africa’s churches enduring some of the familiar discontents of prosperity.
Marginal Revolution University: Does Fair Trade Help?
Economist Tyler Cowen gives his take on the impact of Fair Trade coffee. For a more detailed analysis I'd suggest Victor Claar's Fair Trade? Its Prospects as a Poverty Solution.
I know many activists are passionate about Fair Trade coffee but I don't see their certainty about the benefits reflected by economists who study the practice. I suspect that same could be said for most commodities. (It may different with non-commodity efforts like hand-crafted goods.) But generally speaking I think the advice to buy coffee at the best price and give the excess you would have paid for Fair Trade coffee to a good charity is good advice.
2014 Gates Annual Letter: 3 Myths the Block Progress for the Poor
"By almost any measure, the world is better than it has ever been. People are living longer, healthier lives. Many nations that were aid recipients are now self-sufficient. You might think that such striking progress would be widely celebrated, but in fact, Melinda and I are struck by how many people think the world is getting worse. The belief that the world can’t solve extreme poverty and disease isn’t just mistaken. It is harmful. That’s why in this year’s letter we take apart some of the myths that slow down the work. The next time you hear these myths, we hope you will do the same." - Bill Gates
I sometimes have issues with Gates' optimism about aid but I think he does a fairly balanced job in this piece. There were also two graphs that I really liked. They demonstrate once again how misugided so many doomsayers are. There is reason for hope. How can we get more of this good stuff to happen better and faster, in sustainable ways is the big question.
"The developed world holds up the ideals of capitalism, democracy and political rights for all. Those in emerging markets often don't have that luxury. In this powerful talk, economist Dambisa Moyo makes the case that the west can't afford to rest on its laurels and imagine others will blindly follow. Instead, a different model, embodied by China, is increasingly appealing. A call for open-minded political and economic cooperation in the name of transforming the world."
Below is a presentation by Bjorn Lomborg at Creative Innovation 2013: Asia Pacific. I think this is a remarkable presentation. First a few remarks.
How much can the global economy grow? That is a big issue in economics and in environmentalism. Clearly the earth has a fixed quantity of resources. If the economy grows exponentially, then one day we run out of resources and the world system collapses. We must limit growth if we are to survive. It seems so plainly obvious. Limits to Growth was an attempt to quantify just how this all played out and to advocate for changes.
My Dad was a professor and research chemist during my childhood. He was intensely focused on energy. Limits to growth conversations were in the ether all around me during my junior high, high school, and college years in the 1970s. I volunteered in the 1980 John Anderson presidential campaign, in part because he wanted to impose a $.50 a gallon gas tax that would get us off of petroleum and move toward nuclear and renewable fuels. Limits to Growth (LTG) was very much a product of the thinking of the 1970s mindset but its influence is still very strong today.
But the problem is that the LTG framing is spectacularly wrong! In the video below, Bjorn Lomborg unpacks why this is so. LTG focused on five factors:
Each of these was believed to be growing exponentially. Population was growing exponentially. It requires a certain amount of acreage to generate enough food to feed each person. Feeding this growing number of people will mean cultivating evermore acreage. Supplying basic goods to these people will mean exponential growth in industrial production, with an attendant rise in resource consumption and pollution.
What the scenario spectacularly overlooks is human innovation and substitution. For example, population is growth is slowing and will likely stop at between 10 and 11 billion in the second half of this century. The growth was a direct result of the life enhancing technology that caused a sharp decline in death rates. But birth rates took far more years to adjust. Thus, millions of children that would have died young in past eras were now becoming adults and having children. But overtime, the fertility appears to drop back down to the replacement rate and even lower in some places. People innovated.
Another example. The amount of agricultural land to feed one American stayed constant until about 1910, when 310 million acres were in production. Now if you went back in time and told Americans that the population would triple during the next century and asked them how much agricultural land would be needed they could easily tell you? An additional 600 million acres, or most of the land area east of the Mississippi. How many acres are in production today? 310 million acres, the same as 1910. Innovation and technology allowed us to become magnitudes more efficient in agriculture to the point that not only are we able to feed the additional Americans but we export food. This is called decoupling because the two variables of population and agricultural land use no longer move in tandem. Americans innovated.
Here is one chart from the video below that shows a similar development in world agriculture.
Even with population growth, the land needed for agricultural is projected to remain about the same, or a little higher by other estimates. More decoupling through innovation.
Then there is this recent chart. It suggests that energy consumption may be decoupling from economic output:
As Lomborg notes, innovation is the missing element in LTG. Through recycling of some non-renewable resources, using nanotechnology to redesign materials at the molecular level, and eventually substituting renewable materials for non-renewables, the possibilities for growth are inestimable.
There is a caveat here. As we innovate it is possible that we may not find it possible to innovate quickly enough on a particular challenge to avoid creating considerable hardship for segments of the human race at a particular time. I’m not suggesting we should be without caution, just that the limits idea is very flawed.
Here is the video. Enjoy:
MRUniversity. "What do we know about how extremely poor families earn their money? This video focuses on families earning $2 a day or less."
The video notes that most poor people earn their money with undercapitalized small enterprises. To get a cycle of prosperity going, capital investment is needed. Very small capital improvements can add significant productivity. This leads to greater specialization by labor, ultimately increasing productivity even more and enabling labor to get higher wages. A cycle begins.
However, this also inevitably leads to creative destruction. Should one of these businesses begin to realize great increases in productivity, it will begin to knock other less productive enterprises out to the market. But with rising productivity and living standards comes more demand for other types of goods and services (and thus workers.) Productivity cycles higher, which causes more creative destruction, and so on. It is chaotic and can be disorienting. Some people end up with hardships for a time. Some will experience reversals from which they may not recover. But no economy has risen to broad prosperity without this dynamic.
For prosperity to take hold, there must an abundance of small-to-medium enterprises (SME). If you plot an economy’s firms by employment size, in prosperous countries you will find some very small firms, same very large firms, with a huge bulge of SMEs in the middle. Developing nations have a huge number of very small firms (as noted in the video), some very large firms, and almost nothing in the middle.
A big challenge in developing nations is that so much of the economy (often between 70-90%) operates outside of the official economy. People in the unofficial economy have no access to credit and always risk losing capital investments because they can't demonstrate official claim to their real estate and equipment. This discourages them from capitalizing in the first place.
This is usually not accidental. The official economy is usually dominated by an interconnected elite, with its members cycling in and out of business, government, and military institutions. They operate the locally-owned large enterprises and they use government to block the emergence of any competitors. They use government to take land held informally by the by the poor and to suppress worker rights. The USA was an active participant in supporting this behavior in Latin America throughout the Twentieth Century, to the point of sending troops in many cases. It was all done on the pretense of protecting "capitalism" and "markets" when what was being practiced was anything but capitalism and markets. Capitalism and markets are grounded in well-defined and well-protected property rights and the various players being able to make choices free from coercion.
The ideological right trots out “free markets” as the solution to poverty but too often without attention (and I think intentionally so at times) to the challenge informal economies bring to opening up trade with an emerging nation. That is why some multi-country free trade agreements can be challenging. There need not be perfection in dealing with unofficial economies in emerging nations but trade agreements should be contingent upon continuous improvement in improving property rights and breaking the stranglehold of elites. Some on the right are too quick to jump on a deal just because it has “free trade” in the name.
But the ideological left goes off in another unhelpful direction. Rightly concerned about the injustices that have been visited on the poor in emerging nations through these alleged “free market” episodes, they frame things in terms of the poor keeping their small family farm and small enterprise, and being sustained to stay in those economic modes. They correctly see the need for just systems that help the poor garner and protect property rights but then they actively work against the emergence of SMEs, seemingly grounded in romantic notions of bucolic bliss on a family farm and labor intensive artisan work, often connected with a desire to protect “local culture.” This framing is especially strong in my Presbyterian Church, USA, tribe.
If we are truly going to bring justice and prosperity to the poor, SMEs are critical and the ideological right and left, as they exist today, aren’t going to get us there.
This is just fantastic! Hans Rosling pulls together many of his various presentations over recent years and melds them into a one hour long presentation about the astonishing way our world is improving while pointing to challenges that lie ahead. I know this long but if you watch this closely and learn, you will be well positioned to accurately reflect on the alarmist claims of environmentalists, neo-cons, and a host of other ideologies. If I were teaching a class on demography or economic development, this video would be the first hour of the first class of the semester.
"I was only four years old when I saw my mother load a washing machine for the first time ever. That was a great day for my mother," Hans Rosling, a professor of global health at Sweden's Karolinska Institutet, said in one of his many TED talks.
Unfortunately, about five billion people around the world still heat water and scrub their clothes by hand. And because of growing energy concerns, some (the few with washing machines) don't mind the inequality.
Rosling, however, believes washing machines foster education and democracy. He doesn't think the "haves" should tell the "have-nots" how to spend their days either.
This is a good summary of Rosling's TED presentation about the impact of the washing machine. But as good as it is you need to see the full 10 minute presentation.
Washington Post: Can we sever the link between energy and economic growth?
This is a very important story that is easily overlooked. Why?
People genuinely concerned about global economic growth frequently default into a Malthusian thought process. It goes something like this. We have X amount of economic activity today and that economic activity requires Y amount of energy and resources. If the whole world grows to our level of economic activity, then there must also be proportional growth in the amount of energy and resources consumed. (Economic growth and resource use are perfectly coupled.) It will exhaust the earth's reserves of energy and resources. The global economy will collapse. We must stop growth and embrace natural limits. Now this is true only given one very huge assumption that most people make without thought. The assumption? GDP (economic output) and the rate of energy/resource consumption are inextricably linked. Is this true?
Economic records for the United States show that food production and acreage of land devoted to food production were strongly linked prior to 1910. There were 310 million acres in production in that year. The United States population would triple over the next century. If you took Dr. Who's Tardis back to 1910 and told them this tripling was coming, they could easily tell you how much land would be needed to feed the extra mouths: 300 million multiplied by 3 equals 900 million acres … equivalent to all the land area east of the Mississippi. How many acres were in production 2010? There were 310 acres, just as in 1910. Food production and acreage usage decoupled. Improvements in farming techniques and technology not only fed the extra mouths with the same amount of land but created surpluses that could be shipped abroad.
What this chart suggests is that the same thing is happening with energy usage. The things we use are becoming more energy efficient. For instance, appliances use half the electricity of their counterparts from thirty years ago. Energy used in manufacturing and distribution just keeps getting more energy efficient. As shown in the graph, GDP and energy use were coupled until about the 1980s. Since that time, it appears they are decoupling. It is conceivable that in the next century or so that we could have a growing economy while actually having stabilization, even decline, in energy usage. (I don’t totally dismiss the objections by environmental economist like those mentioned in the article but I am skeptical that the limitations are as severe as they claim.)
I suspect that before very long we will see a similar decoupling of GDP from natural resources. Technology like 3-D printing, still in its infancy, holds the promise of reducing waste in the manufacturing and construction processes. Nanotechnology, using robots about 15 times bigger than an atom, is capable of breaking down substances and recombining the pieces into new substances at the molecular level. It is possible to imagine a day when almost everything we use comes from renewable substances or from nonrenewable substances that are endlessly reconfigured. Furthermore, it is likely that more of the global economy will be about services and digital products instead of physical products.
Now here the growth opponents will raise concerns about the impact these changes will have on the nature of work and on our communities. There are questions about endless consumerism, attempting to fill our lives with stuff and evermore exhilarating experiences. These are important questions but they are questions apart from the question of unsustainability, the idea that accelerated growth will of necessity lead to exhaustion of energy and material resources, as well as destruction of the environment. The latter is true only if you assume no innovation and creativity, the very traits that have been the hallmark of the global economy in recent generations. Moralists may be right that we should reign in our desires and change our relationship to possessions but we need not do so because of inevitable collapse. Appreciating this is critical to useful reflection on what it means to be the church in the twenty-first century.
Atlantic: The Story of Globalization in 1 Graph
... Globalization has winners and losers. The winners—particularly the upwardly mobile middle classes of China, India, Indonesia,Brazil, and Egypt—occupy the long hump of this elephant-like line. They have seen their inflation-adjusted incomes grow by 70 percent or more. The world's "1%" (which works out to the top 12 percent of the U.S., or households making more than $130,000) is also racing away with income, particularly at the tippy-top.
But the story for world's poorest percentiles has been the same as for the developed world's lower-middle class: No growth or worse. ...
... In the chart, left of zero mean fewer jobs in those income groups, while right of zero mean more jobs. So in sub-Saharan Africa and South Asia, the share of jobs for the poorest workers will contract while jobs for people with more income will expand. ...
Christianity Today: Why Am I Not Poor? Dale Hanson Bourke
For many years I sat in a pew on Sundays, listening to occasional sermons about the poor, giving to special offerings and looking appropriately sympathetic and concerned about poverty. But I did not truly—in evangelical speak—have a heart for the poor.
For much of the rest of the week I was consumed with not being poor. I was working to build my business, increase profits, and move up the wealth ladder. I reasoned that the more money I made, the more I could help my church and other worthy organizations. While I heard Christian concern expressed about poverty, the stronger message was that I was rewarded for accumulating wealth. The farther I moved away from poverty, the more I was asked to join church committees and nonprofit boards. The poor may be "blessed," but the wealthy are popular, especially in Christian circles.
As a woman business owner, I was sometimes asked to speak about my experience. I usually gave a nod to good timing, luck, and being blessed. But I mostly talked about hard work, determination, and focus. My upbeat message was aimed at helping others realize that they, too, could succeed. In retrospect, the subtext was a not so subtle "God helps those who help themselves" theme.
My worldview began to change when I joined the World Vision board and traveled to the developing world. There I met men and women who were remarkably hard working, determined, and focused. I spent time with women who cared for their families and also worked at other jobs from before sun up until dark. I encountered people who were intelligent, entrepreneurial, and absolutely ingenious at overcoming obstacles. And despite all of these attributes, they were still numbingly poor.
For the first time in my life, I actually knew desperately poor people. The more I listened to their stories the more it became obvious to me that if there was a difference between us it was that they worked even harder than I ever had. I remember standing next to a woman in a Haitian slum, watching her cook with one hand, care for her baby with the other, and occasionally use her cooking spoon to defend her one room shack from the dogs and young men who threatened to take the little food she had. With stunning clarity, I realized that I could never survive in such circumstances, let alone succeed. ...
... Much of what I had taken for granted in my life took on new meaning when I compared myself to some of the people I had met and noted our differences. My list included:
Bill and Melinda Gates Foundation:
We hear these myths raised at international conferences and at social gatherings. We get asked about them by politicians, reporters, students, and CEOs. All three reflect a dim view of the future, one that says the world isn’t improving but staying poor and sick, and getting overcrowded.
We’re going to make the opposite case, that the world is getting better, and that in two decades it will be better still. ...
... By 2035, there will be almost no poor countries left in the world. Almost all countries will be what we now call lower-middle income or richer. Countries will learn from their most productive neighbors and benefit from innovations like new vaccines, better seeds, and the digital revolution. Their labor forces, buoyed by expanded education, will attract new investments.
I still hear many people today talk about the "Third World." It refers to those nations that were poor and not aligned with either the Western capitalism (First World) or the communist world (Second World.) The Third World has vanished and it is time to bury the term. The world’s nations and populations exist on a continuum and there are now multiple poles, not two, shaping the world. Furthermore, the story is not one of descent into global dystopia but one of rising prosperity. It is hard to meaningfully address contemporary problems with antiquated frameworks.
It’s time to develop a new framework for assessing the post-Cold War, post-9/11 world. ...
... The three worlds used to be capitalist, communist, and the rest. Now they are the West, the failed states, and the emerging challengers. But that's still too simple a view. A small and declining number of developing countries are charity cases. And none are competitors with us in a zero-sum game. Rather than dividing most of the planet into two threatening classes, we need to see states of the developing world as vital partners—both in strengthening the global economy and in preserving the global environment. ...
... Given that much of the world only makes headlines when it is in the midst of a humanitarian crisis and U.S. assistance is on the way, it isn’t surprising that the average American thinks things are going to hell in a handbasket: a recent survey of Americans found that two thirds believe extreme poverty worldwide has doubled over the past 20 years. The truth is that it has more than halved. This might also explain why Americans think that 28 percent of the federal budget goes to foreign aid—more than 28 times the actual share.
According to the World Bank, the developing world as a whole has seen average incomes rise from $1,000 in 1980 to $2,300 in 2011. Life expectancy at birth has increased from 60 to 69 years over that same time, and college enrollment has climbed from 6 to 23 percent of the college-age population. Progress is happening everywhere, including Africa: Six of the world’s 10 fastest-growing economies over the past decade are in Africa. There were no inter-state conflicts in the world in 2013 and, despite tragic violence in countries including Syria and Afghanistan, the number of ongoing civil wars has dropped considerably over the last three decades. Emerging markets themselves are also playing an ever-expanding role in ensuring global security. The developing world is the major source for blue-helmeted UN peacekeepers, who are ending wars and preserving stability in 16 different operations worldwide. The 20 biggest contributors of police and military personnel to the UN’s 96,887 peacekeepers are developing countries. ...
Very interesting piece. For more data, see yesterday's post, The (Mostly) Improving State of the World.
Washington Post: 40 charts that explain the world
Our friend and colleague Max Fisher over at Worldviews has posted another 40 maps that explain the world, building on his original classic of the genre. But this is Wonkblog. We're about charts. And one of the great things about charts is that they show not just how things are -- but how they're changing.
So we searched for charts that would tell not just the story of how the world is -- but where it's going. Some of these charts are optimistic, like the ones showing huge gains in life expectancy in poorer nations. Some are more worryisome -- wait till you see the one on endangered species. But together they tell a story of a world that's changing faster than at arguably any other time in human history. ...
As the author notes, we have challenges but we hardly descending into some global dystopia. I think these charts give a pretty holistic view. Here are a three examples.
It was commonly believed that primitive societies were more peaceful and that modern civilization gave rise to unprecedented violence. This chart compares death rates by war in primitive societies as calculated by anthropologists to the death rates for Europe/USA in the 20th century.
And then there is this:
The graphs point to environmental protection and adaptation as the biggest problems in the days ahead. Those challenges are not insurmountable. Energy sources like natural gas and nuclear power can be used in the interim on the way to practical renewable technologies. Genetically modified crops can help to reduce water consumption, increase yield, and improve hardiness. Innovations in fields like biotechnology, nanotechnology, and 3-D printing hold the promise of revolutionizing the world economy into a less wasteful and more affordable human existence for everyone. There is work to do but there is also much reason for hope of a better world.
Jan 16, 2014 in Demography, Economic Development, Economics, Environment, Generations & Trends, Globalization, Health, Poverty, Religion, Science, Sociology, Technology (Biotech & Health), Technology (Digital, Telecom, & Web), Technology (Energy), Technology (Food & Water), Technology (Manufacturing & Construction)), Technology (Transportation & Distribution), Weatlh and Income Distribution | Permalink | Comments (0)
...As I wrote then, “Harriman’s Nuru has taken an integrated approach to ending poverty by lifting entire communities out of poverty. Nuru starts by identifying a local business led by quality people who have the potential to scale. With financial support and mentoring, the plan is to grow the business and plow the profits back into the community. The local business owners pledge a significant portion of profits into nonprofit entities that are also led by locals to address issues of poverty in the community.”
On Friday, January 3, 2014, at noon Eastern, Harriman will join me for a live discussion about his plans to end poverty through his work with Nuru and more broadly about the role of social entrepreneurs in fighting extreme poverty. ...
Click through to the website to see the discussion.
I watched the 1950 version of "A Christmas Carol" Christmas Eve. There is an interesting part of the story that I suspect few even notice. In the exchange between Scrooge and the Ghost of Christmas Past, it comes out that both Scrooge's mother and sister died giving birth. Can you imagine a case in our society where both mother and daughter die in childbirth? Such a thing would so strange that we might look for some hereditary or environmental connection between the events.
Scrooge's mother likely died in the 1780s and his sister in the early 1800s, based on Scrooge's age and calculating back from 1843 (when the book was written.) While certainly tragic, you get no sense that this was especially odd. That's because in 1843 and prior it wasn't odd. Throughout world history many women died in childbirth and upwards of one in four children born alive died before their first birthday. Average life expectancy at birth was around 30 years old. (That doesn't mean that some people did not live much longer but so many died so early that the overall average from birth was quite low.) Today it is nearly 70 years globally and 80 years in advanced nations.
The interesting thing to me is how people of Scrooge's day would have seen our life expectancy today as miraculous. Yet once a society moves into the “new normal” of high life expectancy, the miracle is quickly forgotten and seen as the natural order. We are entitled to the new normal and we come to see those not living in the new normal as victims of some injustice or malady that caused their abnormal plight.
I see this over and over with a range of socio-economic problems. For instance, I’ve seen countless books that examine what “causes” poverty. Yet if you were to go back 300 years you would see that the norm was the overwhelming majority of people living just below or just above subsistence levels. By today’s standards, the difference between those below and above was marginal. Someone looking forward from 300 years ago would have seen many of the poorest communities in African or Asia today and not been particularly surprised. Their question would not have been what causes poverty. They would have wanted to know what caused the astounding rise in prosperity in other parts of the world.
As I see it, the human propensity to cocoon within “new normals,” losing all perspective on how change occurred, is one of the biggest challenges to creating a better world. It causes us to be ungrateful for the good we have inherited and to ask bad questions as we seek the welfare of others. Maybe what we need are ghosts of economic past, present, and future, to help us see more clearly.
... Armed with these justifications for both the heart and the head, for the past six months FORBES has engaged in an experiment: Can focusing some of the world’s greatest entrepreneurial and philanthropic minds on the problems of one specific country [Liberia] make a tangible difference? With that in mind, we made Liberia the centerpiece of the second annual Forbes 400 Summit on Philanthropy, attended in June by more than 150 billionaires and near-billionaires. President Sirleaf and several of the country’s top social entrepreneurs addressed the participants, who then broke into groups to see how they could help them. In October FORBES followed up, leading a delegation of a dozen top philanthropists and private sector altruists to Liberia on a three-day mission to see their how their ideas worked in action. ...
See the video at the bottom of the article.
Jamie Aten with some excellent adive: How Churches Can Help Without Hurting After Super Typhoon Haiyan
Rule #1: Don't jump into action before you know the needs on the ground. ...
Keep Your Focus on the Survivors' Needs
... He shared with me that after the Exxon Valdez, many of the local communities were overwhelmed by the support that was provided from all over the world. ... However, they actually had people send barrels and barrels of summer clothes and even swimsuits. (You could imagine how much good that did in the wintery climate off the Alaskan coast.)
In the end, these communities were actually stuck with a $200,000 bill just to get rid of the clothes they could not use. ...
Understand Your Motivation for Wanting to Help
... Some people enjoy the community that comes after disaster work. Others want to be known for doing good. Others are called by their faith to do whatever it takes to help. I want to encourage you and your church to be the latter.
I also want to encourage you and your churches not to self-deploy. Spontaneous uninvited volunteers (SUV) can create havoc at a disaster site and can even get in the way of those trained to offer specialized aid. ...
Join Forces and Support Local or Established Church and Aid Organizations
... Overall, our research has found that one of the most effective ways to help after a disaster is to make financial contributions to recognized aid organizations. Financial contributions make sure that the right assistance is available at the right time.
Needs on the ground also change rapidly and dollars can quickly be changed from a meal to supplies. I realize that we often like to give gifts and items. This is understandable. It makes us feel like we are more personally connected. We can sometimes even picture in our mind's eye someone getting the gift we have sent. ...
Be sure to click through to the article and see the 2.5 minute video.
Many people don't know about the enormous progress most countries have made in recent decades - or maybe the media hasn't told them. But with the following five facts everyone can upgrade their world view.
1. Fast population growth is coming to an end
It's a largely untold story - gradually, steadily the demographic forces that drove the global population growth in the 20th Century have shifted. Fifty years ago the world average fertility rate - the number of babies born per woman - was five. Since then, this most important number in demography has dropped to 2.5 - something unprecedented in human history - and fertility is still trending downwards. ...
2. The "developed" and "developing" worlds have gone
... So much has changed, especially in the last decade, that the countries of the world today defy all attempts to classify them into only two groups. So many of the formerly "developing" group of countries have been catching up that the countries now form a continuum. ...
3. People are much healthier
Fifty years ago, the average life expectancy in the world was 60 years. Today it's 70 years. What's more, that average of 60 years in the 1960s masked a huge gap between long lifespans in "developed" and short lifespans in "developing" countries.
But today's average of 70 years applies to the majority of people of the world. ...
4. Girls are getting better education
... The better education of girls is just a first step on the long road to gender equity. But sadly it is also changing the character of gender inequity. Violence against young women and restrictions on their rights to choose how to live their lives are now replacing lack of schooling as the main gender injustice.
5. The end of extreme poverty is in sight
... Economists define it as an income of less than $1.25 per day. In reality, it means that a family cannot be sure from one day to the next that they will have enough to eat. ...
... But the number of people in extreme poverty, according to the World Bank, has fallen from two billion in 1980 to just over one billion today. Though many people in the world still live on a very low income, six out of seven billion are now out of extreme poverty and this is a critical change. ... [Note: There were 4.5 Billion people in 1980. That means the extreme poverty rate has dropped from 45% to 15%.]
For centuries, optimists and pessimists have argued over the state of the world. Pessimists see a world where more people means less food, where rising demand for resources means depletion and war, and, in recent decades, where boosting production capacity means more pollution and global warming. One of the current generation of pessimists’ sacred texts, The Limits to Growth, influences the environmental movement to this day.
The optimists, by contrast, cheerfully claim that everything—human health, living standards, environmental quality, and so on—is getting better. Their opponents think of them as “cornucopian” economists, placing their faith in the market to fix any and all problems.
But, rather than picking facts and stories to fit some grand narrative of decline or progress, we should try to compare across all areas of human existence to see if the world really is doing better or worse. Together with 21 of the world’s top economists, I have tried to do just that, developing a scorecard spanning 150 years. Across 10 areas—including health, education, war, gender, air pollution, climate change, and biodiversity—the economists all answered the same question: What was the relative cost of this problem in every year since 1900, all the way to 2013, with predictions to 2050.
Using classic economic valuations of everything from lost lives, bad health, and illiteracy to wetlands destruction and increased hurricane damage from global warming, the economists show how much each problem costs. To estimate the magnitude of the problem, it is compared to the total resources available to fix it. This gives us the problem’s size as a share of GDP. And the trends since 1900 are sometimes surprising. ...
He concludes with:
... While the optimists are not entirely right (loss of biodiversity in the 20th century probably cost about 1 percent of GDP per year, with some places losing much more), the overall picture is clear. Most of the topics in the scorecard show improvements of 5 percent to 20 percent of GDP. And the overall trend is even clearer. Global problems have declined dramatically relative to the resources available to tackle them.
Of course, this does not mean that there are no more problems. Although much smaller, problems in health, education, malnutrition, air pollution, gender inequality, and trade remain large.
But realists should now embrace the view that the world is doing much better. Moreover, the scorecard shows us where the substantial challenges remain for a better 2050. We should guide our future attention not on the basis of the scariest stories or loudest pressure groups, but on objective assessments of where we can do the most good.
I always enjoy reading Bjorn Lomborg. So many times he says what I am trying to say, but so much more succinctly and clearly. This article is right on target. I'll just respond with "What he said!"
Writing in his recent post The Alleged "Perils" of "Premature De-Industrialisation." Economist Gavin Kennedy writes:
"... I also recall more recently of a Vietnamese woman on being questioned by a Western journalist about her 14-hour working day that she worked six days a week in a new computer-board manufacturing plant near her home village. The Western Journalist considered this was a dreadful example of Western capitalist exploitation of the Vietnamese poor and he seemed to want her to receive US wage rates, so she boldly introduced him to the real world. She told him of the real effect that the 14-hour days for light work in an air-conditioned computer factory: it was not exploitation in her circumstance because it was a significant improvement on her experience of grinding 18-hours, seven-day working in near-by farming fields, and it paid her a whole lot more, and more regularly, than in her previous working life. True, by US standards, her pay was still small and her hours were long, but in Vietnam in the 21st century, it was better paid than any financial rewards from the grinding uncertainties of heavy fieldwork to which she was condemned in before the arrival of the local factory.
I think some Western economists should get out more."
This is a delicate topic. There is slave labor in various locales around the world with people made to work in unbearable conditions but most manufacturing labor in newly industrializing economies comes from people freely choosing that work. Why? Because life in rural villages is often filled with long hard work just to stay above subsistence and with no prospect of economic improvement. Industrial jobs pay better, offer more opportunity, and have better working conditions. What many of us Westerners see as substandard work conditions are seen by locals as radical improvements. The typical pattern is that worker skill-sets and productivity begin to rise. Work hours shorten, managerial skills are learned, productivity rises, and prosperity cycles upward. People are not being ripped from lives of idyllic peasantry into slave camps. People are living bare subsistence for greater wealth and opportunity. But this is where the topic is delicate.
It is myopic to look at these situations through Western eyes and see injustice everywhere as this critique correctly exposes. But it is also myopic to think that industrializing countries will magically go through the industrialization process with the best interest of workers in mind and that multi-national corporations, if not closely watched, will never exploit workers. Both critics and advocates of industrialization need to be sure they are looking through the eyes of locals toward both opportunity and justice, not just playing out Western ideologies in other locales.
New York Times: Nicholas Kristoff - A Way of Life Is Ending. Thank Goodness.
... For thousands of generations, a vast majority of humans have lived brief, illiterate lives marked by disease, disability and the loss of children. As recently as 1980, a slight majority of people in the developing world lived in extreme poverty, defined as surviving on less than $1.25 in today’s money.
Yet in a time of depressing news worldwide, about dysfunction and crisis from Syria to our own Congress, here’s one area of spectacular progress.
The share of people in the developing world who live in extreme poverty has been reduced from 1 in 2 in 1980 to 1 in 5 today, according to the World Bank. Now the aim is to reduce that to almost zero by 2030.
There will still be poverty, of course, just as there is far too much poverty lingering in America. But the extreme hanging-by-your-fingernails subsistence in a thatch-roof hut, your children uneducated and dying — that will go from typical to essentially nonexistent just in the course of my adult life. ...
... In 1990, more than 12 million children died before the age of 5. Now that figure is down close to 6 million. ...
... Illiteracy is retreating and technology is spreading. More people worldwide now have cellphones than toilets. ...
... When additional kids survive in poor countries, does that really matter? Isn’t the result just a population explosion leading to famine or war, and more deaths?
That’s a frequent objection, but it’s wrong. When child mortality drops and families know that their children will survive, they are more likely to have fewer babies — and to invest more in them. There’s a well-known path from declining child deaths to declining births, which is why Bangladesh is now down to an average of 2.2 births per woman.
Ancient diseases are on the way out. ...
... AIDS is also receding. ...
... Rajiv Shah, the administrator of the United States aid agency, says he is optimistic that extreme poverty will be eliminated by 2030 but notes that increasingly the focus will have to be on lagging countries like Congo. ...
... So let’s acknowledge that there’s plenty of work remaining — and that cycles of poverty in America must be a top priority at home — yet also celebrate a triumph for humanity. The world of extreme poverty and disease that characterized life for most people throughout history may now finally be on its way out.
Business Insider: Rising Wealth May Have Made Americans Less Generous
... Using Google's Ngram tool, Patricia Greenfield sifted through more than 1 million books published in the U.S. over the last two centuries to see which kinds of words went in and out of favor. The time period shows a shift in American society from a more rural way of life to a boom in urban populations, which tend to be wealthier and better educated.
Over time, she found words that implied individualism increased in use, while words denoting community and generosity decreased. For example, 'get' has increased in use, while the more generous 'give' took a nose dive over the years. Additionally, "words that would show an individualistic orientation became more frequent," Greenfield told NPR. "Examples of those words were 'individual,' 'self,' 'unique.'" ...
On a related topic, John Teevan has a good post, 10 Perils of Prosperity.
So Why is Sustained Prosperity a Peril? Nearly everyone on earth prefers a life free from poverty and from the need to focus on survival. Call it liberty or call it comfort, everyone prefers this life. Now nearly 2b people enjoy that level of living thanks to the growth of economic freedom. But there are problems.
Economist: What was the Great Divergence?
"A FEW centuries ago it would have been difficult to tell Europe apart from the rest of the world—in economic terms, at least. Indeed, half a millenium ago Europe might justly have been considered a laggard. The three inventions which, in the words of Karl Marx, “ushered in bourgeois society” were not invented in Europe. Gunpowder, the compass and the printing press were probably all invented in China.
But by the 19th century, things were rather different. Western Europe and parts of North America had become fabulously wealthy. Almost everywhere else was horribly poor. Economic historians refer to this as the “Great Divergence”. ..."
I'll add that failure to seriously wrestle with what is going on here and incorporating that into theological implications for work, addressing poverty, and general ethics, is one of the biggest reasons the church finds itself unable to address current issues in constructive ways. Ideologies of Western supremacy or Western exploitation as the driving features are insufficient.
The BBC has a troubling video about the destruction of the Malawi cotton and textile industries as a consequence of Western charity. Before getting to the video I want to say a few things about economic aid and development.
Economic Development comes in three modes: relief, rehabilitation, and development. When people are at the edge of survival, say during a famine or after a major natural disaster, they need the basics of life just to make it to the next day. This is relief. Second, once the immediate needs are stablized, work begins on restoring homes, governance, services, and infrastructure. This is rehabilitation. As rehabilitation takes root, improving productivity and opportunities for exchange, leading to an upward cycle of prosperity, becomes the driving concern. This is development.
Treating less affluent people who are in the development stage as though they are in need of relief is incredibly destructive. American charities repeatedly gather up surplus goods and dump them into some targeted community (a relief tactic). No consideration is given to the fact that there are local merchants and workers who make their livelihoods providing these goods locally. No business can compete with free. Entire local industires are wiped out, jobs destroyed, and people form dependency on outsiders for goods they once produced. After awhile, charities get bored with their intiative and move on to something else, leaving the community cut off from the supply of free goods and no local industry to supply the them.
This relief mentality is especially pervassive in the church. "Helping the poor" is one-dimensional, exclusively focused on matters of consumption and distribtuion: "Consume less to give more." There is an implicit zero-sum game mentality: "The only way someone gets more is when I (and others like me) have less." If people are poor, then the only solution is to redistribute all our "stuff" in a more equitable manner. That means giving our stuff so we can "relieve" the poverty of others. Production, the third critical piece of economic analysis, is nowhere in view.
This mentality is deeply rooted in the ancient order of the world of which the biblical cultures were a part. There was no way to significantly alter the productivity of either the land or human labor. But in the last three centuries we have discovered how to radically alter production. It is this revolution in production, combined with expansive trade, that has led to the prosperity of the modern age. Yet so many Christian instittutions and intellecturals continue to live in pre-Eighteenth Century economic mentalities.
Muhammad Yunnis, champion of the mircofinance movement, uses the image of the bonsai tree to illustrate an important point:
“To me, the poor are like Bonsai trees. When you plant the best seed of
the tallest tree in a six-inch deep flower pot, you get a perfect
replica of the tallest tree, but it is only inches tall. There is
nothing wrong with the seed you planted; only the soil-base you provided
Poor people are bonsai people. There is nothing wrong with their seeds. Only society never gave them a base to grow on.” Creating a World Without Poverty: Social Business and the Future of Capitalism
Essential to a fertile "soil-base" for these bonsai people is inclusion in networks of productivity and exchange.
Affluent economies of today did not become prosperous by snatching up a disproportinate share of a fixed amount of stuff. As a thought expriment, imagine ten apples sitting on a table. These are all the apples known to exist. Also imagine ten people seated around the table, each owning one apple. Now redistribute the apples so that one person has 100 apples. It is not possible! Today's American economy is many times larger than the entire global economy of 200 years ago. There weren't enough "apples" 200 years ago to account for today's prosperous economies. The driving force in rising prosperity was wealth creation through rising productivity and exchange, not confiscation. Given the appropriate soil-base, any of today's bonsai economies can experience similar transformations.
This is not dismiss a need for moral reflection on consumption and distribution. There definitely is a need. But such reflection needs to occur within the modern framing that includes the centrality of productivity and exchange, not within the zero-sum game framing of the ancient order. It needs to abandon one-dimensional understandings in favor of organic bonasi conceptual models. Thoughtless redistribution of goods grounded in a relief mentality is positively toxic to the soil-base of bonsai economies. The video below is just one of countless examples. God's love and justice requires better from us.
If you are interested in reading more about this topic you might try two important books: When Helping Hurts: How to Alleviate Poverty Without Hurting the Poor . . . and Yourself and Toxic Charity: How Churches and Charities Hurt Those They Help (And How to Reverse It)
Christian Science Monitor: A penny saved is two pennies earned for poor women in savings groups
Saving for Change operates in 13 countries with 680,000 members, most of them women. They not only benefit from receiving loans but share in overall profits of 30 to 40 percent. ...
... The poor, often unconnected to banks, can benefit from savings groups because they offer a safe place to save money, the chance to borrow small amounts on flexible terms, and a strong support group.
Saving for Change (SfC) is an Oxfam America program that operates in 13 countries throughout the world with 680,000 members, most of them women. Saving for Change works in rural areas, training women to save regularly by meeting every week to put a few cents into a savings box and to borrow from their group’s fund as needed--tiny loans that they later pay back with interest.
At the end of a savings cycle, typically one year long, the fund is divided among the members, who receive not only their own savings but a portion of the profit. The yearly return on the savings is 30 to 40 percent or more. The end of the savings cycle is scheduled thoughtfully, usually during the beginning of the hungry season when members are more vulnerable. The money shared out is mainly used by the women for food, business, and livestock, with 41 percent of the total share-outs being used for income-generating purposes. ...
New Geography: Should Uncle Sam Chase a Scandinavian Model?
When American progressives dream their future vision of America, no place entices them more than the sparsely populated countries of Scandinavia. After all, here are countries that remain strongly democratic and successfully capitalist, yet appear to have done so despite enormously pervasive welfare systems. ...
... But before we all go out drinking aquavit, shouting "skol" and dyeing our hair blonde, it makes sense to recognize that not only is relatively small, historically homogenous Scandinavia an ill-suited role mode for a megapower like the U.S., but that, in many ways, the Nordic system may be far more limited than its admirers here might acknowledge. ...
... In addition, not all the reasons for Scandinavia's relative health are those that would warm the heart of U.S. progressives. These countries, led by Sweden, have reformed many aspects of their welfare state, including such things as labor laws, and reduced taxes in ways that make them more competitive – and far less egalitarian than in the past.
Another positive factor for Scandinavia lies in their exploitation of resources, something many progressives, notably green policy aficionados, tend to view with disdain. Sweden exports loads of iron ore to drive its economy and employs massive dams to drive hydropower, which accounts for 42.8 percent of their energy. Norway benefits from a gusher of oil and gas that, producing nearly 2 million barrels of oil per day, making it the 14th largest oil producer in the world despite having a population of 5 million. If anything, Norway can be a model socialist economy because its economic base resembles the Nordic enclave of North Dakota. Overall, the tiny country produces nearly 15 times as much oil per person than the U.S.
There's also the matter of scale. Demographically, Scandinavia's population is microscopic compared to our far vast multi-ethnic Republic. Taken together the four Scandinavian countries – Finland, Denmark, Sweden and Norway – are home to barely 26 million people, far fewer than California and about the same as Texas. These hardy souls are widely dispersed. The population density of Norway and Finland is roughly half that of the U.S., while that of Sweden is one-third less.
Sweden, to put things in perspective, has fewer people than Los Angeles County. ...
... Scandinavia's greatest strength may lie in its least political correct asset: its Nordic culture. Scandinavians' traditional interest in education, hard work and good governance serves them well both at home and abroad. It's not socialism that is primarily responsible. ...
... More troubling still, notes Sanandaji, who is of Swedish-Kurdish ancestry, many young Scandinavians also seem to be rejecting the old Nordic social compact. Increasing numbers of people under 40 are retiring early, citing disabilities and sickness.
These trends point to serious problems for countries whose birthrates, despite widely praised natalist policies, are dropping and generally are below ours. With immigration growing ever more unpopular, further demographic decline in the Nordic countries seems inevitable.
As a result, the Scandinavian welfare state faces challenges arguably far worse than those here at home. ...
Is India winning the battle against poverty? Going by the latest figures, yes.
The number of Indians living in extreme poverty has fallen from 37% to 22% in the past seven years, according to the latest official data from the Planning Commission.
The good news is that poverty in large swathes of dirt-poor northern India - states like Bihar, Madhya Pradesh, Orissa and Uttar Pradesh, which have been considered a drag on India's development - has fallen sharply.
Today there are more people living in extreme poverty in the economically prosperous western state of Gujarat (16.63%) than in the traditional northern laggard Rajasthan (14.71%). ...
... Despite the good tidings, India's war on poverty is far from over.
Remember, 270m Indians still live in extreme poverty. That is one in five Indians.
Acton Institute PowerBlog: Is Fair Trade Coffee Curing Poverty?
Sarah Stanley does a great job summarizing Victor Claar's take on Fair Trade Coffee:
“Who could be against fairness?” Victor Claar asked this question at Acton University last month. He and Travis Hester gave a talk titled, “Fair Trade Versus Free Trade” with their focus on the coffee industry. They explained what the fair trade movement is, evaluated its effectiveness, and explored ways for caring people to help coffee growers overcome poverty. ...
You can listen to the talk here: Victor V. Claar — Fair Trade vs. Free Trade
... Does the fair trade movement work? Unfortunately, there are a plethora of problems with it. In general, while the demand of coffee is inelastic, the supply is elastic. The artificially high price, set by FLO and other fair grade organizations, greatly increases the quantity supplied by incentivizing individuals, who would normally pursue other endeavors, to enter the coffee industry as growers and by incentivizing current coffee suppliers to grow more. This excess of coffee and coffee growers makes everyone in the industry poorer. Growers will produce more coffee than consumers want. Coffee growers that are not fair trade certified become significantly poorer because they will have to charge a much lower price for their coffee than they would in a truly free market. Claar goes on to explain that the consumer also suffers, but not just because he or she is paying more for a morning brew. Fair trade coffee growers have little to no incentive to grow the best crop as they are guaranteed the highest prices no matter what. In some cases, fair trade growers have been known to sell lower quality crops in the fair trade market and then sell higher quality coffee beans in the non-fair trade market for a competitive price. A guaranteed price means that growers do not have to guarantee quality.
Another significant problem with the fair trade movement is the regulation against child labor. This rule may ultimately hurt children. According to Hester, the school year in Honduras is built around the coffee picking season. Families pick coffee together all contributing to the family’s income. Children are not allowed to work under fair trade rules, so if adults own a fair trade farm, their children will look for work down the road at another non fair trade coffee farm. Thus, they will no longer with their parents or older siblings, but will be working on their own. In effect, child labor is not eliminated it is simply displaced.
The well intentioned fair trade movement places coffee growers in “golden handcuffs.” The incentive of slightly higher prices encourages growers to stay in that industry when they might otherwise pursue more productive endeavors. Claar and Hester both pointed out during their presentation at Acton University that “you will never have a middle class lifestyle growing coffee.” ...
... How might a caring person respond? Some have suggested that the best way to help coffee growers is by ordering coffee directly from the growers so they receive all of the profit. Unfortunately, this may reduce coffee’s quality and taste. People who have tried coffee sold directly by growers say that is significantly more bitter and tastes very little like coffee. However, at least one group has figured out how to do this successfully.
Madcap Coffee in Grand Rapids, Mich. imports the raw coffee beans and roasts them in house. A representative from Madcap has personally visited 75 percent of the farmers who provide their raw beans. While Madcap is not “fair trade” certified, nor do they only work with fair trade growers, they seem to be moving in the right direction to help coffee growers. Madcap owner and founder Ryan Knapp gave an unpublished interview to PovertyCure and explained why he decided to avoid the fair trade certification: “We have been intentional on the fact that we are not going to have a label to say what our coffee is as much as we are going to be a brand that is committed to great business practices.” He goes on, “Fair trade, a certification doesn’t really tell the whole story…Fair Trade isn’t the best option always for producers.” What is the best option for producers? According to Knapp, “the big piece of it is the transparency aspect and knowing exactly where our dollar is going and being able to trace that down to people that are actually growing the coffee, farming the coffee.” This is one solution to helping poverty-stricken coffee growers outside of the fair trade movement.
Instead of paying a premium to fair trade coffee that does not help coffee growers and may in fact harm them, Claar and Hester suggest that caring consumers should donate that extra cost of fair trade coffee to a microfinancing organization or invest it in more holistic and valuable ventures. ...
Also, you might want to pick up the monograph written by Claar: Fair Trade? Its Prospects as a Poverty Solution
Q Ideas for the Common Good: The Shift from 'Alleviating Poverty' to 'Creating Prosperity'
"We see poverty in the developing world and we
ask—what can I do? So we send food, water, clothes. We sponsor children,
build wells, start schools and go on mission trips; we wear wristbands,
we sign petitions, we advocate. But what if the question that animates
our activity is the wrong one?
What if instead of asking how we can alleviate poverty, we asked, “How do people in the developing world create prosperity for their families and their communities?” This sounds like a simple shift, but it can transform the way we think about poverty and the poorest among us because it takes the focus off ourselves and puts it where it belongs. People in need are not objects of our charity, they are subjects, and should be seen as the protagonists of their own development. Changing the question helps lead to an inter-subjective relationship.
Ask people in the developing world what they want most, and they don’t mention more aid or charity. They want jobs; they want the opportunity to build businesses; they want access to markets, to broader circles of exchange so they can provide for their families. As Ghanaian entrepreneur Herman Chinery-Hesse told me, “The people here are not stupid. They’re just disconnected from global trade.” ..."
Through the late 80s and 90s, protests everywhere from Berlin to Seattle revealed a common target of public unrest: globalization. Jobs and industries in rich countries were moving to emerging markets, and the free flow of capital led to concerns about financial instability and a competitive lowering of environmental standards.
Now, however, globalization has become an unsung champion of an empowered, rising global middle class that is more connected and has higher expectations politically. While Brazil’s super-rich have continued to get richer and the poor has received more social welfare, its growing middle class feels ignored, and they are demanding government accountability, as well as political voice and freedoms. ...
... But the Arab Spring was a demand for freedom, not necessarily democracy – and the distinction between the two is crucial. Take, for example, the case of Mohammed Bouazizi, who started this chain of events by burning himself alive on a Tunisian street market two years ago. As his family attest, he had no interest in politics. The freedom he wanted was the right to buy and sell, and to build his business without having to pay bribes to the police or fear having his goods confiscated at random. If he was a martyr to anything, it was to capitalism.
All this has been established by Hernando de Soto, a Peruvian economist who travelled to Egypt to investigate the causes of the Arab Spring. His team of researchers found that Bouazizi had inspired 60 similar cases of self-immolation, including five in Egypt, almost all of which had been overlooked by the press. The narrative of a 1989-style revolution in hope of regime change seemed so compelling to foreigners that there was little appetite for further explanation. But de Soto’s team tracked down those who survived their suicide attempts, and the bereaved families. Time and again, they found the same story: this was a protest for the basic freedom to own and acquire ras el mel, or capital.
Wall Street Journal: The Middle-Class Revolution
All over the world, argues Francis Fukuyama, today's political turmoil has a common theme: the failure of governments to meet the rising expectations of the newly prosperous and educated.
... The theme that connects recent events in Turkey and Brazil to each other, as well as to the 2011 Arab Spring and continuing protests in China, is the rise of a new global middle class. Everywhere it has emerged, a modern middle class causes political ferment, but only rarely has it been able, on its own, to bring about lasting political change. Nothing we have seen lately in the streets of Istanbul or Rio de Janeiro suggests that these cases will be an exception.
In Turkey and Brazil, as in Tunisia and Egypt before them, political protest has been led not by the poor but by young people with higher-than-average levels of education and income. They are technology-savvy and use social media like Facebook and Twitter to broadcast information and organize demonstrations. Even when they live in countries that hold regular democratic elections, they feel alienated from the ruling political elite. ...
... The business world has been buzzing about the rising "global middle class" for at least a decade. A 2008 Goldman Sachs report defined this group as those with incomes between $6,000 and $30,000 a year and predicted that it would grow by some two billion people by 2030. A 2012 report by the European Union Institute for Security Studies, using a broader definition of middle class, predicted that the number of people in that category would grow from 1.8 billion in 2009 to 3.2 billion in 2020 and 4.9 billion in 2030 (out of a projected global population of 8.3 billion). The bulk of this growth will occur in Asia, particularly China and India. But every region of the world will participate in the trend, including Africa, which the African Development Bank estimates already has a middle class of more than 300 million people. ...
Forty-one years after publication of the infamous Limits to Growth, Bjorn Lomborg offers this excellent piece, The Limits to Panic:
... But the report’s fundamental legacy remains: we have inherited a tendency to obsess over misguided remedies for largely trivial problems, while often ignoring big problems and sensible remedies.
In the early 1970’s, the flush of technological optimism was over, the Vietnam War was a disaster, societies were in turmoil, and economies were stagnating. Rachel Carson’s 1962 book Silent Spring had raised fears about pollution and launched the modern environmental movement; Paul Ehrlich’s 1968 title The Population Bomb said it all. The first Earth Day, in 1970, was deeply pessimistic.
The genius of The Limits to Growth was to fuse these worries with fears of running out of stuff. We were doomed, because too many people would consume too much. Even if our ingenuity bought us some time, we would end up killing the planet and ourselves with pollution. The only hope was to stop economic growth itself, cut consumption, recycle, and force people to have fewer children, stabilizing society at a significantly poorer level.
That message still resonates today, though it was spectacularly wrong. For example, the authors of The Limits to Growth predicted that before 2013, the world would have run out of aluminum, copper, gold, lead, mercury, molybdenum, natural gas, oil, silver, tin, tungsten, and zinc.
Instead, despite recent increases, commodity prices have generally fallen to about a third of their level 150 years ago. Technological innovations have replaced mercury in batteries, dental fillings, and thermometers: mercury consumption is down 98% and, by 2000, the price was down 90%. More broadly, since 1946, supplies of copper, aluminum, iron, and zinc have outstripped consumption, owing to the discovery of additional reserves and new technologies to extract them economically.
Similarly, oil and natural gas were to run out in 1990 and 1992, respectively; today, reserves of both are larger than they were in 1970, although we consume dramatically more. Within the past six years, shale gas alone has doubled potential gas resources in the United States and halved the price.
As for economic collapse, the Intergovernmental Panel on Climate Change estimates that global GDP per capita will increase 14-fold over this century and 24-fold in the developing world.
The Limits of Growth got it so wrong because its authors overlooked the greatest resource of all: our own resourcefulness. Population growth has been slowing since the late 1960’s. Food supply has not collapsed (1.5 billion hectares of arable land are being used, but another 2.7 billion hectares are in reserve). Malnourishment has dropped by more than half, from 35% of the world’s population to under 16%.
Nor are we choking on pollution. Whereas the Club of Rome imagined an idyllic past with no particulate air pollution and happy farmers, and a future strangled by belching smokestacks, reality is entirely the reverse.
In 1900, when the global human population was 1.5 billion, almost three million people – roughly one in 500 – died each year from air pollution, mostly from wretched indoor air. Today, the risk has receded to one death per 2,000 people. While pollution still kills more people than malaria does, the mortality rate is falling, not rising.
Nonetheless, the mindset nurtured by The Limits to Growth continues to shape popular and elite thinking. ...
... Obsession with doom-and-gloom scenarios distracts us from the real global threats. Poverty is one of the greatest killers of all, while easily curable diseases still claim 15 million lives every year – 25% of all deaths.CommentsThe solution is economic growth. When lifted out of poverty, most people can afford to avoid infectious diseases. China has pulled more than 680 million people out of poverty in the last three decades, leading a worldwide poverty decline of almost a billion people. This has created massive improvements in health, longevity, and quality of life. ...
The key issue here is innovation. Think in terms of a continuum. At one end is the ape from the opening of 2001: A Space Odyssey. The first human ancestor discovers the idea of using a large bone as a tool for manipulating his environment.
Further along the continuum might be simple tools like hammers and plows. They are extensions of the human body. Then come machines. Human beings are no longer wielding tools but are directing and servicing machines. Next there is artificial intelligence, where computers are able to make some decisions for us, as well as doing repetitive dehumanizing work. Finally, at the other end, might be something like the replicator in Star Trek, where you simply state your wish and a device rearranges atoms to create the desired object.
The problem with the Limits to Growth mentality is that it is locked into a current point along the continuum. It correctly observes that there is a fixed amount of resources in the world but it incorrectly assumes that economic growth means increased use of a materials at rate proportional to the rate of economic growth. To get the depletion date for a resource you calculate the quantity of a material known to exist, calculate annual present usage of the material, project a rate of economic growth, and subtract the projected annual usages from the total.
Total Resource/Current Annual Resource Usage = Years to Depletion (Increase economic growth and the years to depletion shrinks.)
Since the material quantities are fixed, the only variable is economic demand. Consequently, economic growth … whether the result of escalating wants and needs per capita or from increasing population … is unsustainable. (Similarly, take the current level of pollution and multiply it times the rate of economic growth to see how polluted the world will be.) Human innovation is nowhere in sight!
But we are not frozen at a point on the continuum. Human creativity is constantly changing the equation. Here is how.
First, in the short run, there is productivity. As demand for a natural grows it becomes more profitable to go after previously unconsidered deposits of that resource. For example, copper is everywhere but it varies in its accessibility and quality. Quality accessible cooper is the first to be used. But as demand increases, new techniques are invented for finding cooper, accessing deposits, and processing cooper. The Limits to Growth report estimated available cooper in the world in 1972 and projected we would run out of cooper by 2000. Today, not only have we not run out, but we are using more annually and the amount of available cooper has grown magnitudes larger.
Second, economizing. Figuring out how to do twice as much (sometimes much more) with the same resource changes the equation. Household appliances today use less than half the power they did forty years ago and often have features that were not imagined then.
Third, substitution of less plentiful resources with more plentiful resources, especially renewable resources. It is true that over a long time horizon that cooper would one day be depleted barring changes in consumption. But as productivity and economizing gradually lose their ability to keep cooper plentiful, the price of cooper will begin to rise. Recycling cooper will become more attractive. But even more likely is replacement of cooper by other alternatives. Think how much of our communication now is done with sand (fiber optics are made from silica) versus cooper (our old phone lines.) Furthermore, virtually everything made of nonrenewable resources can eventually be made using renewable resources.
Fourth, nanotechnology. We are in the beginning stages of manipulating matter at the molecular level. Nanorobots, about fifteen times the size of an atom, that can disassemble molecules and assemble atoms into new molecules. 3-D printers are already “printing” a range of items, including human tissue and organs. Scientists are developing printed food for long-term space voyages. Something akin to a replicator is not that unthinkable. The range of materials we can use for particular applications, our ability to manipulate matter at the molecular level, and our flexibility at forming matter into useful forms continues to evolve.
A finite stock of materials is not a limit to economic growth. That is not to say to we are without challenges. While many resources can be made more plentiful over time it is true that the very near term there can be shortages and injustices. Extraction of raw materials without adequate consideration for environmental impact could lead to horrific consequences. I’m not making the case that everything will magically take care of itself. I’m making the case that opposition to economic growth based on static zero-sum perceptions of the world that sees inevitable depletion of resources or over-pollution is groundless.
Huffington Post: How Free Trade Might Be the World's Best Option - Bjorn Lomborg
... The classic argument for free trade points out that specialization and exchange benefits everyone, because goods are produced by the countries that specialize in those goods and produce them most efficiently. The standard World Bank models show that realistic free trade, even just by the end of this decade would increase global GDP by several hundred billion dollars per year, with perhaps $50 billion accruing to the developing countries. Towards the end of the century, the annual benefit will likely exceed Cameron's $1 trillion annually, with half going to the developing world.
But a growing number of academic studies now show that the free trade story goes much further than simple specialization. History shows that open economies grow faster. Good examples include Korea from 1965, Chile from 1974 and India from 1991, which all saw their growth rates increase significantly after liberalization. Even modestly freer trade helps domestic markets become more efficient and get supply chains better integrated. At the same time trade transfers knowledge, which spurs innovation. Free trade means we don't all have to reinvent the wheel over and over again.
This is perhaps best captured in a recent state-of-the-art literature review by Professor Kym Anderson for the Copenhagen Consensus think tank. Anderson, one of the World Bank's lead modelers, shows that the long-run benefits from even a modestly successful Doha free trade round would be vast. The annual GDP compared to no extra free trade would in 2020 be about $5 trillion larger, with $3 trillion going to the developing world. Towards the end of the century, slightly higher growth rates will have accumulated to benefits exceeding $100 trillion annually, with most going to the developing world. By then, benefits would add about 20 percent annually to developing world GDP. ...
Christianity Today: Want to Change the World? Sponsor a Child
A top economist shares the astounding news about that little picture hanging on our refrigerator. ...
... We can't yet establish a clear causal link between the increased levels of hopefulness and aspirations among sponsored children and their improved adult lives. But the puzzle pieces are beginning to fall into place: the patient nurturing of self-worth, self-expectations, dreams, and aspirations may be a critical part of helping children escape poverty. It is a holistic approach that secular antipoverty initiatives have largely downplayed, but an approach that Christian development groups have championed for decades. ...
I recently saw a video where Michael Miller said, "Markets create prosperity but they do not take care of orphans. People do." Amen! And to that it might be added that governments and aid take the edge off material need but they do not transform lives. People do.