Commonwealth:    Economics for a Crowded Planet

Jeffrey Sachs is an interesting character. He was instrumental in shaping the Make Poverty History campaign. He was also the principle advocate of ’shock therapy’, the overnight market liberalization that torpedoed a series of emerging economies in the 90s. To some he’s a hero, while others are deeply sceptical about about his transformation into a champion for the poor. Norwegian economist Erik Reinert goes so far as to say “we have in a sense put Attila the Hun in charge of the reconstruction of Rome, with the predictable result that there is no discussion of the damage caused and how it could have been avoided.”

But, comparisons to Attila the Hun aside, there’s no doubt that Jeffrey Sachs is a highly influential economist. As an advisor to the UN secretary general, he has the ear of some very powerful people. His most useful contribution at the moment is to put a price on the change he wishes to see, with clear calculations showing what it would cost to stop biodiversity loss, solve African poverty, halt AIDS or bring population growth under control. He is great at making things look possible, at fostering optimism. It’s a shame then, that pessimism serves the world so well.

Commonwealth: Economics for a Crowded Planet, is Sach’s follow-up to The End of Poverty, an important book that showed how poverty could be realistically ended by 2025. In his new book he addresses one of the main weaknesses of The End of Poverty, that the environmental crisis was barely factored into his thinking. Commonwealth dedicates a whole section to environmental sustainability, alongside sections on demographics, poverty alleviation, and global cooperation.

Unfortunately, it’s still the environment where Sachs falls down. The sections on water and conservation are useful, but climate change is summarily cured with the hope that “powerful technologies will likely be available to enable us to mitigate the climate shocks at very modest cost”. That’s a difficult hope to back up, especially once you realise that he is talking about Carbon Capture and Sequestration (CCS), a technology that he himself refers to as only “close-to-proved”. “If CCS works, then we can combine continued large-scale fossil fuel use with reduced emmissions” he states frustratingly, pinning hope on a currently non-existent technology and a rapidly declining natural resource.

Oh well, on to population, where Commonwealth is much more useful. It’s a strange thing, the population boom. People tip-toe around it as if all efforts to control population involve Chinese-style one-child family planning. In fact, the things that would make the biggest difference to population growth are education, the emancipation of women, and an end to grinding poverty. Nobody is going to argue against those, surely. Well, actually, they might. Sachs singles out the Bush administration for some stinging criticism on its policies here. By drastically cutting its contributions to the UN Population Fund, and favouring projects that only teach abstinence, the US has taken a path that is not only counterproductive, but “directly against American interests in the reduction of conflict and terror, as well as the support of economic development and environmental sustainability more generally.” In fact, says Sachs, considering Iran has dramatically curbed its growth rates through the use of contraception, “the Bush administration’s attitudes toward family planning are in many ways more fundamentalist than Iran’s.”

I’m going to need to come back to population in a separate post, because there is a lot to talk about.

‘Prosperity for All’ is the title of the book’s section on poverty, and here again, my defences go up a little – many of the world’s problems are caused by economic growth, rather than solved by economic growth. Sachs himself has a lot to answer for in railroading through hasty policies in the past. But maybe Sachs has mellowed. He’s willing to admit that “if core infrastructure is left to the private market, there will tend to be under-provision, monopoly prices, and exclusion of the poor”, something you’ll never hear from the IMF, for whom the markets can do no wrong. Sachs is happy to recommend localized solutions too, through the Millennium Villages project, which takes on communities in 5-year plans, providing infrastructure, health, education, and improved agriculture, for no more than $110 per person per year. Scaled up worldwide, this programme would cost around 0.7% of the rich world’s income, which is what we have already promised in aid.

Which brings me to the conclusion, that “the main problem… is not the absence of reasonable and low-cost solutions, but the difficulty of implementing global cooperation to put those solutions in place.” Here again the US gets a kicking, for being “ready to launch a war in Iraq but not ready to honor even the most basic commitments to the world’s poorest and dying people,” for over-investing in the military, for giving more in aid to Israel than to the whole of Africa, for the fact that you could eliminate malaria in sub-Saharan Africa with two days Pentagon spending.

Instead, what we need is increased cooperation, more diplomacy, specific funding bodies, and money for R+D, and as the world’s leading economy, the US needs to lead on those things. Because whatever the differences in opinion on exactly how, we can afford to solve our biggest problems. And if you’re interested in those prices, here are a few of them:

Stopping runaway population growth in the developing world – “less than one tenth of 1% of the annual income of the rich countries.”

The end of poverty – “less than 1% of the income of the rich world to finance the crucial investments in the poorest countries.”

Climate change – “well under 1% of annual world income.”

The Millenium Goals – 0.7%, which is what we already promised. (the ‘rich world’ income quoted is roughly £35 trillion, and current aid is around $100 billion a year. 0.7% would be over double that, at $145 billion)

In total, 2.4% of the rich world’s income, to solve all it’s major problems. In other words, perfectly possible. Except that we’re not listening. If you don’t believe it’s possible, you’ll never try, and that kind of pessimism serves the rich world very well.