Tuesday, January 04, 2005

Tsunami Economics for Lefty Loons

I don't know where to start with this editorial by George Monbiot in the Guardian.

Monbiot begins with a few self-congratulatory paragraphs before moaning about how we (meaning everyone in the West but him) routinely supress our capacity for emapthy. But the generous response to the tsunamis demonstrates (to him) that we cannot utterly destroy our empathic sense. I think he means this as a compliment, however backhanded. But he goes on to ask what seems to him to be the obvious question:

Why must the relief of suffering, in this unprecedentedly prosperous world, rely on the whims of citizens and the appeals of pop stars and comedians? Why, when extreme poverty could be made history with a minor redeployment of public finances, must the poor world still wait for homeless people in the rich world to empty their pockets?

Jaw, meet floor.

Why must poverty be relieved with public finances? There are plenty of independent organizations assisting with poverty relief. And according to this article, as of last Saturday, UK citizens had donated $115 million -- $20 million more than their own government. Private donations from Germany totalled $40 million -- also more than Germany had committed. And a series of telethons in Sweden raised $60 million.

And what's with the "homeless people" crack (which appears twice in his column)?

Monbiot apparently thinks that money should come from governments (read: taxes) in order for it to count. In this, he's right in line with certain UN officials.

The obvious answer is that governments have other priorities. And the one that leaps to mind is war. If the money they have promised to the victims of the tsunami still falls far short of the amounts required, it is partly because the contingency fund upon which they draw in times of crisis has been spent on blowing people to bits in Iraq.

The figures for war and aid are worth comparing because, when all the other excuses for the invasion of Iraq were stripped away, both governments explained that it was being waged for the good of the Iraqis. Let us, for a moment, take this claim at face value. Let us suppose that the invasion and occupation of Iraq had nothing to do with power, domestic politics or oil, but were, in fact, components of a monumental aid programme. And let us, with reckless generosity, assume that more people in Iraq have gained as a result of this aid programme than lost.

To justify the war, even under these wildly unsafe assumptions, George Bush and Tony Blair would have to show that the money they spent was a cost-efficient means of relieving human suffering.

Pardon me, Monseuir Monbiot, but I had no idea that relieving human suffering had to be cost-effective in order to justify it. I guess this explains why so many of our European friends are hastening the day when they can just kill off the inconvenient among them. After all, they must ensure that relieving suffering is cost-effective. I also wasn't aware that freedom and democracy had a quantifiable price tag. I beg you, please tell me what it is. How much is freedom worth to you? 2 million? 1 million? Would you trade it for 50 cents and a pack of Luckies?

And why is it always either/or with these people?

As it was sufficient to have made a measurable improvement in the lives of all the 2.8 billion people living in absolute poverty, and as there are only 25 million people in Iraq, this is simply not possible. Even if you ignore every other issue - such as the trifling matter of mass killing - the opportunity costs of the Iraq war categorise it as a humanitarian disaster. Indeed, such calculations suggest that, on cost grounds alone, a humanitarian war is a contradiction in terms.

But our leaders appear to have lost the ability to distinguish between helping people and killing them. The tone of Blair's New Year message was almost identical to that of his tear-jerking insistence that we understand the Iraqi people must be bombed for their own good. The US marines who have now been dispatched to Sri Lanka to help the rescue operation were, just a few weeks ago, murdering the civilians (for this, remember, is an illegal war), smashing the homes and evicting the entire population of the Iraqi city of Falluja.

It gets worse from there. He even manages to bark out Halliburton for good measure before his rant is through. (I'm just waiting for Halliburton to jump into the tsunami relief effort, for which they'll certainly be called "profiteers.")

While this appears at first to be a rant about poverty and tsunami relief efforts, Monbiot is really just taking the opportunity to write an anti-war rant. He is simply using the tsunami for political purposes.

But it's clear that Monbiot wants nothing more than a global redistribution of wealth -- a sort of international socialist system whereby wealthy countries pour millions into poorer countries, so that we call all achieve some sort of worldwide financial parity.

Of course, he ignores the fact that we do pour millions into developing nations. And he fails to acknowledge that one thing shown to genuinely relieve poverty is Western-style liberty and democracy. We've recently learned that on the whole, worldwide poverty is, in fact, decreasing, thanks to liberty, democracy, and . . . Capitalism! (See also this earlier entry.)

The recent success of developing countries at fighting poverty could be an Economics 101 lesson for today's American classroom. In East Asia and the Pacific region alone, the number of poor dropped from 472 million in 1990 to 271 million in 2001. By 2015, that number should shrink to 19 million, according to the World Bank.

The bank predicts that the total number of those living in poverty will be halved between 1990 and 2015. Globally, that means that those living on $1 per day or less would drop from 1.2 billion in 1990 to 622 million in 2015.

It is undeniable that 2004 was a great year for the poor. The World Bank's prediction that global poverty will continue plummeting is particularly encouraging. But if we are ever to wipe poverty from the face of the Earth, our next generation of leaders must first understand what makes the global economy tick -- the fundamental relationship between free trade and economic growth.

As David Brooks wrote so succinctly in this piece, "Write this on your forehead: Free trade reduces world suffering."

(But using the tsumanis for an opportunity to slam Bush and Blair makes us feel so much more . . . empathetic.)

10 Comments:

At 1:00 PM, Blogger Ray said...

Re: the last bit there - interesting article and it is a good reminder for me.

I'm sometimes very skeptical of "free market" capitalism as a solution for the world's problems, because many times it's more free for one side than another. If you want a detailed explanation of this, you may find this book (it's available to read online) enlightening: http://www.ied.info/books/ed/contents.html

Of course, when I visit developing countries and see what free market capitalism looks like, I get a little discouraged because it looks a lot like the strip mall I left at home.

I can't help thinking that there's got to be a better way than Starbucks diplomacy.

 
At 1:26 PM, Blogger Kathleen Nelson said...

Ray, life isn't fair, why should we try to "level the playing field" when we know it doesn't work?

The free market is all we've got. Instead of refining the system to make it equal for everyone, why not try something different and empower people to go out and work that market for their own betterment and the betterment of the world? The former simply brings more regulation down on all of us and artificially inflates the prices of the goods and services. When, with the latter, you're encouraging people to realize that if they deal fairly, the market will regulate itself and everyone will prosper.

Capitalism works. I would daresay that those mini-malls you spoke of are highly appreciated by the people in those areas. If that's what they want, give it to them.

 
At 1:57 PM, Blogger Ray said...

Kathleen,

It's funny - I had this same conversation with a good friend of mine last night. He said exactly the same thing you did. He even used the same words. Does somebody teach people how to talk like this?

I mean no disrespect - my point is that what you said is the story that we get most of the time and we never bother to question it. It's not capitalism itself that I have a problem with. It's our implementation of it that I don't like.

And it's not just the financial factors (although, I have to say that your comment "life is not fair" is spooky and whenever people say things like that to justify bad behavior, I think we're in trouble).

Take Japan, for example - pointed to as one of the best examples of how a nation can come from absolute poverty to become the second largest economy in the world. I'm glad for many of the changes that have happened there since WWII - but they have lost a lot in the process and they can't get it back.

The younger generations may be glad they get to eat at McDonald's, but they're also fatter, lazier, and more materialistic than their parent's generation. And they don't know that the skyscraper where they go to buy their double latte is the former site of a 500 year old temple that was torn down to build it.

That's what concerns me the most about our style of capitalism - we give up what we can never get back in order for temporary financial gain. And we kid ourselves that financial gain is the only measure of success.

 
At 2:07 PM, Anonymous Anonymous said...

During the opening minutes of today's "Good Morning America" special coverage of the tragedy, Diane Sawyer wasted no time in playing "gotcha" with Colin Powell. Her line of questioning seemed to be a little too concerned with the "lack of financial support" that was originally offered up by the U.S., to which Powell (thankfully) set the record straight. The 35 million dollars in assistance was what was asked of us originally, then we were asked for more later on. Regardless, it's just more proof of how our capitalist system is viewed by those around the world (in contempt).

I think it's pathetic for "GMA" to fly over to this place of great tragedy (in the supposed spirit of good intentions), and then proceed to try the obligatory cutesy "political rectal exam" on our own leaders.

 
At 2:27 PM, Anonymous Anonymous said...

Ray,

What exactly is your definition of good capitalism then? I'm not sure where this all ends up?

I wouldn't disagree that in this day and age, we all seem to be governed by cell phones, strip-malls, McDonalds, etc., blah. I wouldn't disagree that it's hard to see many people leading out of control lifestyles. But if I take my child to McDonalds for a Happy Meal (and kids DO like McDonalds), then shouldn't I be the one ultimately responsible for what my child eats?

Or is that the government's job too?

 
At 3:01 PM, Blogger Ray said...

By no means is it the government's job. You're talking with someone who has to remind himself almost daily that government might have some uses (just maybe). I despise big government - probably more than you do.

My definition of good capitalism is the kind of capitalism that lets all nations have first dibs at making a profit on their own raw materials. This is the economic policy that the US insisted on in it's infancy, in addition to every major economy in the world today. It is essential to long term, positive growth.

The problem that I have with organizations like the IMF and the World Bank is that their policies do not let the developing countries of the world today do the same, and yet they persist in calling this "free market" capitalism. It's just not true.

In addition to the above, my definition of capitalism includes a respect for the traditional cultures of developing countries and seeks to develop more of an artisan based economy as opposed to an assembly line approach.

Admittedly, this is more of a value system than a policy to be implemented (and this is as it should be - please let's stop legislating value systems) - but I think it's crucial if we're going to leave any kind of cultural legacy beyond Happy Meals to future generations. In the US, because we don't have thousands of years of history that must be protected, it's easy to forget that other countries do.

 
At 3:26 PM, Blogger Kathleen Nelson said...

It's funny - I had this same conversation with a good friend of mine last night. He said exactly the same thing you did. He even used the same words. Does somebody teach people how to talk like this?

---um, not that I know of.

I mean no disrespect - my point is that what you said is the story that we get most of the time and we never bother to question it. It's not capitalism itself that I have a problem with. It's our implementation of it that I don't like.

{...}That's what concerns me the most about our style of capitalism - we give up what we can never get back in order for temporary financial gain. And we kid ourselves that financial gain is the only measure of success.

---You seem to think that feeding, clothing, and sheltering ourselves and our offspring is something that we can take for granted. I'm not an ascetic. Are you? Unless you're going to go out and kill a bear for some good eats, wear its pelt, and build yourself a log cabin, you need to purchase these things with money. To earn that money, we go to work in the marketplace. We produce goods and services for consumption of the masses.

This is what we do, this is how we earn our daily bread, and while it's all well and good to say that "geez, we sure do lose a lot with our implementation of captitalism." Well, as much as I hate to quote Uncle Joe, but you do have to break a few eggs to make an omelette.

While I understand your concerns about the behavior of corporations---and have had some qualms myself---self regulation of the market will happen. People will educate themselves and they will buy products from companies that conduct themselves in an appropriate fashion. If you are interested I would highly recommend reading "Empires of Profit" by Daniel Litvin. In this book, Litvin looks at historical examples of multinational corporations (starting with the English East India Company and going on down the line) and their track records. He comes to the ultimate conclusion that if a company is interested in long-term financial gains, the best thing to do is to act ethically. And "ethically" doesn't mean doing anything other than following the golden rule. This will ensure prosperity for all. I believe the market is already working toward this end. But this will take time, and the market is not free---which means, to a certain extent---that these regulations we have enacted to make the market "fair" are hampering this evolution. The market will make itself fair: it just takes time.

An open market is the only way to go. We seem to think that the world as it is today is the only way the world has ever been. 500 year old temples were razed way back when in the name of progress. You seem to be implying that the only way we can save our souls---and those of those poor developing nations---is to enact some worldwide regulations to prevent something like this. If this isn't what you're saying, then I apologize, but that's the impression I get. I believe if you could ask that citizen of the developing nation would they rather have the temple or the jobs a McDonalds and a minimall and a skyscraper will create, they'd pretty much opt for the jobs. The temple isn't going to keep their children alive nor will it provide them with an education and all that other good stuff money can buy.

 
At 3:48 PM, Blogger Ray said...

Kathleen,

We may have been posting at the same time, so you may not have read my last post, but take a minute to read it. If you do, you'll see that the last thing I want is more regulations.

If jobs at McDonalds are the only thing we offer them, then of course they're going to choose that over their old temples. It's still a loss and it's still not right.

But what if (and again, see my previous post for more on this) we give them the opportunity to develop their own industries by getting first access to their own raw materials rather than buying their raw materials (or labor) from them cheaply and then selling them back the finished products that we profit from?

How is that open? It's completely one-sided - the open market you're talking about is a myth. Do the research - the sins of the IMF, World Bank, and developed nations are quite well-documented and completely opposite from our own policies when we were growing up.

Your comment about asceticism was a little over the top. It also demonstrates the problem with how polarized people's thinking has become - if someone questions one extreme, we automatically jump to the other extreme as if it were the only other option. There are many things that we can do in order to feed and clothe ourselves that don't require slave labor, damage to the environment, or the reliance on the fragile infrastrcture we have created for ourselves.

Finally, regarding your comment about how companies naturally self-regulate - they only do this after a lot of damage has been done.

Take IBM in WWII - they provided data systems to help the Nazis catalog Jews. Do I need to mention the last four years of financial scandals? They only start playing the ethics game when they get caught and after a lot of people have been hurt.

It may indeed be smarter financially for companies to act ethically but there is no short term financial incentive for them to do so, and this bites us every time. The pursuit of profit for profit's sake and ethical behavior are not the most compatible practices in the world.

 
At 11:56 PM, Blogger Mark Sides said...

Folks, The solution is not more or better capitalism, or maybe more or better government, or a wee bit of socialism. What is needed are values. Capitalism does not do a great job at fostering values among citizens, but it also doesn't do any worse. When you talk different economic systems past each other, you're missing the point. People in any society are only going to be as good as they want to be--regardless of the economics.

 
At 12:16 AM, Blogger Ray said...

There are two issues.

One is the problem with values and I agree completely with Mark on this one.

Two is the problem with the actual policies that prevent developing countries from getting a fair shake. I disagree that nothing can be done here. Not only can something be done, to modify the current policies in a way that allows developing countries the rights to develop their own industries is a great way to start improving in the values department.

 

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