A Question of Balance

“It’s a question of balance.” I guess, this might be the most often-used phrase on this blog. Today, again, I would like to write about an important balancing act that is not easy to achieve. Particularly so, as we have to achieve it (almost) everyday. It is the balance between being satisfied, on the one hand, and not being satisfied, on the other.

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Entitlements: Why Income-Based Measures of Poverty Are Not Enough

In this blog, I repeatedly criticized the use of income-based indicators of well-being in rich countries. Probably the most important reason why their use is inappropriate is the so-called Easterlin paradox, viz. the fact that people seem not to become happier as they become richer in absolute terms (above a certain threshold level). In measuring the well-being of poor people or societies, income seems to be of much more merit. However, here also there are reasons to be sceptical. One of the main problems has been identified by Amartya Sen, who stressed that income (or, more generally, command over commodities) alone does not generate well-being if the individual in question lacks entitlements.

(Partly) Right for the Wrong Reasons

Some time has passed since I commented (i.e., criticised) on Bjørn Lomborg’s writings for the last time. His most recent activity (an article on Project Syndicate) is, however, inviting for another round of critique. Actually, there is not much newness to be found in this piece by Lomborg. But because it kind of summarises his views, it may be worth a brief investigation.

Sacrificing Development Needs for Prestige

China, a country where 4 per cent of the population are still living in poverty (following the rather rigorous definition of the World Bank), is about to spend billions of dollars to enable a few Chinese astronauts a flight to the Moon by 2025. There is hardly a tangible benefit to be found in this project – except some kind of international prestige. Meanwhile, the resources (we are talking here about much more than just money, e.g. time, skills etc.) required for its successful carrying out might well be sensibly invested in development projects that would yield a high social return. China’s Moon project seeems to be a particular variation of the positional goods problem described by Fred Hirsch in 1976 – on the national rather than individual level. And it seems to be even more profound than the difficulty originally identified by Hirsch.

Today The Earth Has Overshot

Today, September 27th, is the symbolic day when humanity used all resources it could sustainably use this year – the Earth Overshoot Day. Since the year is not over, we seem to actually need about 1,5 Earths, so to speak.

Yasuní – Attaching Value to Ecosystems

Many will have heard about the Yasuní-ITT Initiative. It is a proposal made by the Ecuadorian government – it offered not to drill for oil in the Ishpingo-Tiputini-Tambococha (a part of the Yasuní National Park) if the international community were to compensate Ecuador for at least half of the foregone revenues. This initiative could become a milestone towards the attaching of value to ecosystems and biodiversity. Furthermore, although not every Western politician seems able to recognize this fact, saving Yasuní by paying Ecuador would be a win-win situation.

Development Assistance’s Dilemmas

A frequent demand by NGOs that deal with developing countries’ affairs is that rich countries (i.e., mainly the European Union, the US, Canada and Japan) increase the levels of their ODA (=official development assistance). In fact, developed countries commited (40 years ago) to raise their ODA to a level of 0,7% of their respective GDPs. So far, only a handful met this obligation. Meanwhile, there are many arguing that ODA is doomed to failure, so it is a wastage of time and money to engage in development assistance at all. I think that the problem is rather more complex. It is not just about whether and how much to invest in ODA – the matter is, actually, how we do it. And there are many problematic issues in this area.

Oxfam’s 9 Billion Well-Nourished

The well-known and globally active NGO Oxfam just started a new campaign called GROW. It is about the necessity we are soon to face – the necessity having to feed 9 billion people living on Earth. This is the official population forecast for 2050 according to the UN. So, Oxfam is suggesting in its campaign that it is indeed possible to achieve this – i.e., to feed 9 billion people sufficiently – if we want to. Despite all my sympathy and reverence toward Oxfam’s work, I doubt that this is possible.

A Demographic Cap and Trade

Some time ago I mentioned the concept of tradeable birth licences proposed by Kenneth Boulding in the 60’s. One must recognize that population growth, especially in the developing world, is a serious problem. We are facing a kind of a Malthusian situation – there are ever more people in the world without us having the possibility to extend agricultural production meaningfully. Furthermore, this time (unlike in the beginning of the 19th century, when Thomas Malthus lived), agriculture is not the only limiting factor. The stresses we impose over the Earth’s ecosystems generally become ever larger und more severe. And this despite the fact that there are millions of people living in such poverty that their influence on the environment is almost negligible! So maybe the time is ripe to think about population control.

Climate Justice

I would like to recommend a post written by James Boyce from the TripleCrisis blog – “The Climate Justice Imperative”. Though Boyce writes about the US, I think that his recommendations are generalizable for all developed countries. In his text he points out that there are four pillars that make climate justice critical:

New Paradigms Needed

Through all its history humanity has been facing challanges which often seemed unsolvable. Nevertheless, we have been able to achieve a solution every time so far – sometimes better, sometimes worse, but we’ve done it. Today again we face a whole spectrum of huge challanges: the climate change with all its facettes. Biodiversity reduction due to general damages to ecosystems all over the world. Poverty and undernourishment. There are many proposals how to solve these problems, many of them of a rather technological nature. But these won’t do. More is needed: new value systems. New paradigms.

Sustainability and Population Control

For the time being, the world population is approaching the level of 7 billion people (it probably will reach it this year). According to UN estimates, by the middle of the century there will be 9 billion people out there. Since we are already heavily pressing against the Earth’s carrying capacity limits, it is obvious that 2 billion more of us won’t alleviate the pressure – quite the opposite is to be expected. Thus it seems clear that a sustainable world economy require a constraint of the population growth (and, indeed, its reversal). Thus a group of scientists calling for a sustainable (or steady-state) economy – notably the economist Herman Daly – is calling for a form of population control to achieve this.

The Health Impact Fund – a Chance for the Poor?

As I already once have mentioned, a great challenge for the development aid efforts is to create incentives for the pharmaceutical corporations to research on medicines that are really needed. Unfortunately, most of the pharmaceutical products developed are cosmetics. According to the WHO, only less than 1% of what is being developed are medicines against tropical diseases. But there are millions of people in the developing world dying and suffering from AIDS, tuberculosis, malaria etc. Either there are no new, potent medicines against these diseases, or, if there are (as in the case of AIDS), they are too costly due to patent rights.

But there are initiatives with the aim to change that. One of them is the Health Impact Fund project.

Trade and Hunger

As you can see in the picture in the right (for source, click on it), food grain prices in international markets has been spiking in the end of 2010 – again, after they already did in 2008, the year of “hunger revolts” in the developing world. It is clear that something must be done to prevent another crisis. Today I would like to shortly comment an article by Pascal Lamy, Director-General of the WTO, on that subject.

Another Problem of Monetizing the Losses from Climate Change

I already have written on why monetizing the losses from climate change must lead to flawed results and therefore to flawed reaction proposals (see here). But there still are other problems related to taking GDP estimates as the basis for analyzing the economics of climate change, which I haven’t mentioned.

The notion of one of these problem comes from one of the most prominent mainstream economists, himself a participator in Bjørn Lomborg‘s Copenhagen Consensus – Thomas Schelling.

Trade Should Not Be Free as a Matter of Dogmatism

In the mainstream economic thought there is hardly any place for constructive criticism of free trade. But, while the idea of free trade is not wrong in itself, it has become a dogma – no matter what it looks like in reality, in the eyes of many free trade is of unquestionable benefit. It was not always so. John Maynard Keynes once made a highly interesting remark that, regrettably, seems almost forgotten:

I sympathize therefore, with those who would minimize, rather than those who would maximize, economic entanglement between nations. Ideas, knowledge, art, hospitality, travel – these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible; and, above all, let finance be primarily national.

Africa’s Problems Are Not Due to Civil Wars Only

Two days ago I attended a workshop on economic ethics. It was a rather interesting one. But one thing has stricken me: when telling us students “the wonderful story” of growth, our professor showed us this simulation. His only explanation on why the African countries have such a low life expectancy and per capita income compared with the rest of the world: civil wars. It was said only “by the way”, but nevertheless: it was a terrible oversimplification.

Power to the People

According to Malavika Jain Bambawale, there are near to 1,5 billion people without access to electricity out there. Out of that number, more than a half is living in (no, not in Africa, as you may have thought) the Asia Pacific region. Just to realize: 1,5 billion is close to one quarter of the world’s population. It is one of the most challenging problems (and, for that matter, inequalities) of humanity.

Don’t Forget Adaptation

The Economist, normally not exactly the best source of information in the area of climate change, published an article really worth reading. It begins with some interesting remarks on Cancún:

0,7 per cent ODA – Is that Enough?

An often quoted criticism of the rich countries by globalization critics is that they permanently seem unable to meet the goal of spending 0,7 per cent of their GNP on Official Development Assistance – something they committed to in 1970 for the first time. 40 years have gone since, and there are only 5 OECD countries whose ODA lies above the target: Luxemburg, Sweden, Norway, Netherlands and Denmark. Others are far from reaching it.