Sunday, October 9, 2011

Is there space for development?

Many economists and apologetics of capitalism don't think we can speak of “development space”. They frown at the idea of zero-sum games when applied to economics. They believe growth is good and that one can't assume or infer that someone's wealth is built on the exploitation of others. On the contrary, growth and profit will lead to that we all will get a better life: “a rising tide lifts all boats ” or “trickle-down ” are popular slogans. This perspective might have some justification for a shorter period in a certain context, but as we noted above, economic growth with low income equality is less beneficial than growth with a good distribution of income.

We have already in part two looked into the big difference in resource consumption and emissions between rich and poor. People in high income countries consume up to 10 times more natural resources than those in the poorest countries. On average, an inhabitant of North America consumes around 90 kilograms (kg) of resources each day. In Europe, consumption is around 45 kg per day, while in Africa people consume only around 10 kg per day (SERI 2009). Global estimates suggest that 884 million people lack access to clean drinking water and 2.6 billion people do not have access to improved sanitation facilities such as running water and toilets etc. (UNEP 2011). At the end of the last century the 1.1 billion "consumers" in the rich countries represented 19% of the world's population. They had 83% of the world's GDP, 83% of the world trade, 95% of the commercial lending, 92% of all cars, 80% of all iron and steel and 81% of all paper (Carley and Spapens 1998). As we can see, there is an incredible difference in the access people have to the resources of the world.
The American's footprint is ten times as big as Indian's
Another way to express our use of nature resource that has gained considerable currency in recent years is the “ecological footprint ”. The ecological foot print of humanity is assessed to be at least 30% more than the total capacity of the earth and if we continue in the same tracks we will use two planets by year 2030 (WWF 2008). The average inhabitant on the planet has some 2.6 global hectares (the measurement use in the footprint system) as a footprint (mind you this is already too much) which corresponds to the footprints of Costa Rica, Turkey, Iran and Albania. Americans use 9 global hectares, the Brits 6.1 and the Chinese 1.8 and Indians 0.8 respectively.
We thus have four big challenges regarding our use of nature resources, well perhaps challenges is an understatement, system errors is perhaps a more suitable term; First humankind uses already too much of the planets resources; we are eating the capital and it is not a question if we will go bankrupt but when we will do it. Second, the distribution of these resources is extremely inequitable, between countries and within countries; rich countries and rich people use a totally disproportionate share of the resources (and rich people in rich countries are apparently the worst). Third, economic growth is continuing and seems to be hard-wired into our societies, which means that resource use will also continue to grow . Fourth, the world's population is primed to grow for at least forty more years, perhaps longer. We can't negotiate with nature and no less can we expect that the poor will, or should, accept that we waste our common assets.

The resource issues also have to be seen in the context of the very unequal world, where high prices might not be such an issue for rich economies but devastating for poor ones. Björn Lomborg, Julian L. Simons and Johan Norberg and others try to show that discussions about scarcity of resources or environmental space are flawed. Julian L. Simons says: “Raw materials - all of them - have become less scarce rather than more. The air in the US and in other high income countries is irrefutably safer to breathe. Water cleanliness has improved. The environment is increasingly healthy, with every prospect that this trend will continue.”(Wired 1997). Norberg shows that the price of electricity in Sweden has dropped to a fifth compared to what it was year 1900. Since 1920, the time a worker in Sweden had to work for 1kWh of energy in gasoline has fallen ten times (Günther 2011). Since wages have increased faster than the price of gasoline, by 2010 an unskilled worker in the USA spends less than two-thirds as much, as a percent of wage, for a gallon of gasoline than the 1949 worker (Measuring Worth 2011). For a production worker it is only half . We can easily be lulled into the perspective that there is no worry. The average income of a US worker was some US$ 400-500 at the turn of last century compared to some US$ 40,000 hundred years later. Using the perspective of developing country farmers whose income has perhaps not even doubled in hundred years we get a very different perspective, and it easy to understand why they still can't afford electric light or fossil fuel. That there are real conflicts in interest of the rich and the poor in the discussion of resource use, and that the discussion about environmental space is “real” was shown clearly in the failure of the Copenhagen Climate summit 2009 to reach an agreement about which countries that should shoulder the “burden” of reducing its emissions.
Hundred years ago, a lot of the minerals, coal and the oil came from the industrial countries (mind you that England and the USA were the two biggest fossil fuel producers hundred years ago), and the favourable fall in relative prices of those resources are not only a result of higher labour productivity. It is probably as much a result of terms of trade where resource extraction has moved to poorer countries with less bargaining power. A similar discussion also applies for future generations. If we continue large scale mining of some minerals that will run out, we deprive future generations of the same mineral.

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