The convenient illusion of the fair market

Jopseh raking sea weeds from the beach

I am spending a few days at the Sarova Whitesands in Mombasa, a very large and posh hotel (participating in a workshop).

Every morning there is an army of people raking sea weed from the beach. They are paid by the government to clean up the beach to make it attractive for tourists.

It is just one of many examples of how those that are better off - including myself - benefits from the poverty of others. If Joseph and his colleagues got paid the same as I, or you, this work would be so expensive that it would not be possible to do it.

Also those that never go abroad or even see or meet a really poor person can still benefit from their labour. A glaring examples was of course the collapse of the textile factory building in Bangladesh which left more than a thousand people dead. It is their blood that makes our clothes cheap. Of course one can argue that if we didn't buy the clothes, or if tourists didn't come to Mombasa, these people would have no work at all. But I do think that is a far too convenient argument that we have heard to often. People with privileges always find moral excuses for maintaining them.

Our excuse is that the market is always fair. This is underpinning our whole society. Markets are by definition self-regulating and fair. 
  
But, the unequal value we (well we don't want to admit that it is "we", but instead it is this power of nature - the market) assign to peoples work is simply not fair or reasonable, it doesn't matter if we discuss the difference between the top CEO in Sweden and the workers in the same company or the difference between those workers in Sweden and the farmers producing their morning coffee. As we all live in the global economy, comparisons should also be global, and measuring (in)equality should be global.


And the sea weed? Unfortunately nobody takes care of the sea weed - it is an excellent fertilizer. It is washed out into the sea, and most of it comes back the next morning...
I think Joseph is done now, time for a swim.

Another inequality measure - airmiles

Sometimes images are telling a lot. The picture below is from worldmapper and shows the flights in kilometers from different places. It says something about carbon foot print and it certainly says something about inequality in the world. Especially inequality between the countries.


"In 2000 civilian aircraft flew a total of 25 billion kilometres. If someone flew this distance they could circle the earth more than 630 000 times. If the total distance flown by all aircraft passengers was divided equally between everyone living in the world, we would each fly 317 kilometres a year. In fact some people fly thousands of kilometres a year, whilst others have never been in an aeroplane. The people flying the most kilometres tend to be from island territories. On the other hand, people from Haiti and the Dominican Republic, also island territories, are amongst those flying the smallest number of kilometres per year."

We are the world - or?

The richest 10 percent have almost 90 percent of the total assets in the world, while the poorest half of the global population has a mere 1 percent of the assets. The richest percent alone controls 46 percent, almost half of the world.

 This and a lot more can be found in the Credit Suisse Global Wealth Databook 2012*. Their figures show that global household wealth totaled USD 222.7 trillion in mid-2012, equivalent to USD 48,500 for each of the 4.6 billion adults in the world. The corresponding values for the end of the year 2000 are USD 113.4 trillion in aggregate and an average of USD 30,700 for the 3.6 billion adults alive at that time. Thus global household wealth rose by 96% between end-2000 and mid-2012 and wealth per adult climbed 58%.   

"To be among the wealthiest half of the world, an adult needs only USD 3,700 in assets, once debts have been subtracted."

Averages are deceitful, especially when it comes to distribution of wealth. Some are dirt poor while others are stinking rich. 

Credit Suisse estimates that there are 84,500 Ultra High Net Worth (UHNW) individuals worldwide with net assets exceeding USD 50 million each. North America dominates the regional ranking, with 40,000 UHNW residents (47%), while Europe hosts 22,000 individuals (26%), and 12,800 (15%) reside in Asia-Pacific countries, excluding China and India.


The enormous Indian middle class. really? 95% of the population in India have assets below 10,000 dollars.

First, it is even hard to comprehend how such a skewed distribution of wealth is at all possible. Second, it is astounding that there is not more attention to it, Third, I think is is absolutely clear that redistribution of wealth is  the easiest, the quickest and the most morally just approach to global poverty. Not the only approach of course;  over time it is essential that wealth creation is reaching everybody. But even to start that process presupposes that the dirt poor get access to resources, which equals wealth.


Read also:
Growing inequality, between people, between countries, between region, between urban and rural.
Who gave you your property?
The wealth Pyramid - a sign of poverty
And of course, I write a lot about this in Garden Earth. 


*Credit Suisse Global Wealth Databook. – an in-depth project that offers investors the most
comprehensive study of world wealth, and which remains the only study that analyzes the wealth of all the world's 4.6 billion adults.

The myth of the country of opportunity

"A closer look at those at the top reveals a disproportionate role for rent-seeking: some have obtained their wealth by exercising monopoly power; others are CEOs who have taken advantage of deficiencies in corporate governance to extract for themselves an excessive share of corporate earnings; and still others have used political connections to benefit from government munificence – either excessively high prices for what the government buys (drugs), or excessively low prices for what the government sells (mineral rights)."

writes Joseph Stiglitz in an article, about inequality in the USA.

In Garden Earth I write:

A widespread myth is that United States is the country of opportunity; the success of the individual is in his or her own hands. This was in particular repeated in conjunction with Barack Obama being elected as President, and by Obama too in his speeches. One is told that American society is a model for how people can be successful if they just work hard. Perhaps this was true[1] in nineteenth–century United States when conditions were very different and where there were almost inexhaustible natural resources waiting to be exploited (well, if one doesn’t consider that Native Americans, salmon and bison already used the space), especially compared to Europe, which was still half feudal. But the growth of the welfare state in Europe and the closing of the frontier in the United States changed this radically. Studies comparing the United States and Great Britain, on the one hand, with Canada, Germany and Scandinavian countries, on the other hand, show that social mobility is considerably higher in the Scandinavian countries and Canada and to a lesser extent in Germany than in Great Britain and the United States (Blanden et al. 2005). 

This pattern coincides with the level of inequality so that the countries with the lower equality show less social mobility. Unfortunately, many Americans still seem to believe the opposite and nurture the myth that the only thing that needed to get rich is hard work and dedication. Consequently, even if rarely spelled out as clearly, if one is poor one is to blame oneself. Those who ‘win’ are in some way seen as ‘better’ and therefore they have the moral right to their wealth. Considering that most wealth is just circulated among the already wealthy, this simply gives a moral superiority to those who are already rich. This also seems to be the message from Christian fundamentalists who have adopted the virtues of wealth and success as expressed in Proverbs 10:22 ‘The blessing of the Lord brings wealth, and he adds no trouble to it,’ instead of the dull and depressing moral of Matthew 19:24 ‘Again I say to you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.’

I note that in comments to Stiglitz article as well as in many other articles on the same topic, many refer to that many have been brought out of poverty the last decades. That is certainly true. Unfortunately, the most impressive record for this poverty reduction comes from a dictatorship with no liberal-capitalist policies, China. A country where inequality is rampant and extend also into other spheres than economics.  

In have written many more posts on inequality. e.g. 


The monuments of the city are built on the backs of poor rural people
Location divide is more important than class divide today
Growing inequality, between people, between countries, between region, between urban and rural
Tale from the sandpit
Equality is good for growth, but growth is not necessarily good for equality

 

 

 

 

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[1]            For whites not subject to indentured labour; certainly not for the Native Americans or the African slaves.

The monuments of the city are built on the backs of poor rural people

When going from Lusaka towards the farm of Susan Mkandawire we meet a constant stream of guys on bicycles on their way to Lusaka with heavy loads of charcoal. One of them is Christoffer Finsoni on this picture. He is a farmer but earns most of his cash from charcoal making and marketing. He carries 4 bags of 30 kg charcoal on his bicycle some 30 km to the market in Lusaka.

We often here the story about ignorant rural population that destroys their environment by cutting down the trees for cooking. But the reality is a lot more complex. Christoffer and his likes are mainly living in the "organic economy" based on biological and renewable resources. Wood (charcoal) and human power (as in bicycle) are the main energy sources. When I meet him in my car I represent the fossil fuel economy and the global industrial system. What strikes me is the direction of the stream of resources.

Many believe that the stream is from the rich global fossil-fuel economy to the poor, but is it?

Andrews family doesn't use char coal for their cooking, they use fire wood. Char coaling for the market in the city is a bigger threat to their forest land. And who is buying the char coal? Well it is certainly not the poor, they use twigs, corn cobs, stalks and other waste for their cooking. It is rather rich people in the city that drives deforestation. A similar case is the cutting of forests for conversion to grazing land. Most of that meat is destined for rich people. A similar thing is the idea to make bio char from bio mass. Again, poor peoples resources are used to enable the rich to continue a life style that is not sustainable. 

In the same way, the notion that urban living is more environmentally friendly as claimed by many, is just a delusion. The city has always been a parasite on the rural areas and most of the destruction in rural areas are caused by "city life and industrialism". This is based on inequality, privilege and violence.

Location divide is more important than class divide today

A very interesting study by Branko Milanovic from the World bank concludes that differences in income between countries have increased tremendously in our modern society. And these difference also extent to salaries of workers. The difference in salary between worker in the richest countries and the poorest countries were small at the footstep of modern industrial society. Today, they are huge.

Among many things, it means that:
- capitalist globalisation has lead to increasing gaps, not decreasing (which is why the elite loves it)
- workers in the industrial countries are most likely profiting from exploitation of workers in developing countries (which is why it is hard to engage them in a global social movement).
- migration has a lot more appeal than ever before, and its potential to reduce difference in income is great(which is why there is such resistance to it).

Read also the post:

Growing inequality, between people, between countries, between region, between urban and rural

Some quotes from the report below

"Inequality between world citizens in mid-19th century was such that at least a half of it could be explained by income differences between workers and capital-owners in individual countries. Real income of workers in most countries was similar and low. This was the basis on which Marxism built its universal appeal. More than 150 years later, in the early 21st century, the situation has changed fundamentally: more than 80 percent of global income differences is due to large gaps in mean incomes between countries, and unskilled workers' wages in rich and poor countries often differ by a factor of 10 to 1. This is the basis on which a new global political issue of migration has emerged because income differences between countries make individual gains from migration large. The key coming issue will be how to deal with this challenge while acknowledging that migration is probably the most powerful tool for reducing global poverty and inequality."

"Angus Maddison has estimated that around 1850, the mean income in the poorest countries in the world (Ceylon and China) was around $PPP 600. 5 At the top were the Netherlands and the United Kingdom with a GDP per capita of about $PPP 2,300. Thus, the ratio between the top and the bottom (of country mean incomes) was less than 4 to 1. Consequently, the better-off workers who earned incomes close to the national means, could not, in terms of their standard of living, differ from each other by more than the ratio of 4 to 1. And the bulk of workers who lived at less than their countries’ average income and closer to the subsistence, could not have incomes that differed by more than 2 to 1—with many of them living at approximately the same subsistence level. Indeed, Broadberry and Gupta (2006, Table 6, p. 17) show that in the period 1800-1849, the wheat-wage of an unskilled daily laborer in India (among the poorest countries in the world then) was about 30% of the wage of a similar worker in England. And comparing the Netherlands with the Yangtze valley, two relatively developed areas sharing a number of similar geographic features, Li and van Zanden (2010, p. 21) conclude that in the 1820s, real wages in the Netherlands were about 70% higher than in the Yangtze valley."

"In 1870, the gap between the richest countries (Australia and Great Britain) and the poorest (Nepal and Ghana) was 8 to 1; in 2007, it is 31 to 1 (United States and Norway vs. Nepal, North Korea and Ghana)."

Tale from the sandpit

Once upon a time there were two producers of sand, Henry and Loser. They dug out the sand from the same place, with a shovel and a wheelbarrow. The sand was sold at the side of the road to by-passers. They didn’t earn a lot but enough to survive, to send their children to school, and buy a new wheelbarrow and shovel every other year. The little they could save was used for funerals or if someone in their families fell sick, or had an accident.

One day, for reasons we don’t have to discuss here, Henry was able to buy an excavator. It was expensive and the fuel is also expensive – but still, he can dig sand thousand times faster then before. And he can dig longer hours, his machine works all around the clock and he has bought a truck to supply customers with sand. Through the increased productivity sand prices fall, and therefore consumption increases. More houses and roads are built, the wealth increases. Henry produces more and more sand.

 Taste the word “produce” by the way. Doesn’t that give the impression that Henry creates something, that he creates the sand? In our way of speaking we say that we “produce” when we dig up a piece of nature and sell it. And “our wealth increases”? How, when there is less and less sand left and one has to dig deeper and deeper to get it, can we say that wealth increases? Pertinent questions, but let’s put them aside and look at Loser.

 Loser leads a hard life. The price of sand falls again and again, and the clients now want to have the sand delivered to their doorstep. And the sand is deeper and further away as Henry’s excavators dig more and more. Clients also have very specific demands on the sand, it should be graded in various fractions and there must be no ”foreign” materials. One day a client even asked about the social conditions for Loser’s employees.

Loser looked at him with an empty look: “I have no employees, it is just me and my family.”
“How much do you pay yourself? And what about the children, do they go to school?” the conscientious client asked.
Loser had to admit that he had to take one of the boys out of school to help carry the sand to the clients and that one girl had been taken out of school as they no longer could afford her school uniform, books and pencils. The conscientious client said, “we can no longer buy from you; I am sure you understand that we have to take social responsibility.”

Another client was concerned that Loser was destroying nature, “Didn’t you destroy a fox burrow the other year, when expanding the sand pit?”
“Well I did”, Loser said, “but Henry’s excavators are driving this, they take almost all sand; the little I dig up makes hardly any difference”.
The client replied, “Henry has an environmental policy; he offsets damages here by protecting precious sand dunes in Morocco. Also, he made a very nice mountain bike track for the children in old parts of the pit. He is a good example of corporate responsibility, while you are just destroying the environment.”

As you might have realized by now, life was hard for Loser. Every year his income shrank. When the wheelbarrow broke down, he couldn’t buy a new one. Another child had to quit school and carry the sand in buckets.

For a short while he had a rebound. A consultant from the regional development agency came and told him to look for another market niche; sell sand for special purposes and not “commodity-sand”. “There is a huge demand” the consultant said, “and there is special support for such local quality production” he said, before driving off in his SUV leaving a cloud of dust in his tracks. As long as the support kept coming in it was okay. The support ended, clients were unreliable and fads came and went and as soon as some business was lucrative enough Henry went in and out-competed him. One day Loser had to throw in the towel for good. He now lives on social support.

Our little story shows what happens in an unequal world with free trade and access to fossil fuel; where the price of oil determines the “value” of human labor. That is one of the most important factors in the story. It is simply not possible for human muscle power to compete with fossil fuel driven machinery. We might think that gas is expensive, but a barrel of oil has as much energy as 14 peoples’ annual labor. The absolute poverty line is 1 dollar per day, which is more or less the lowest salary one can pay any place on earth. Even with such deplorable salary, the cost for 14 peoples annual work is around 5,000 dollars, while a barrel of oil costs 100 dollars.

For sure, once can’t compare oil and human toil one-to-one. Human labor has skills and intelligence. True, that is why we have machines to convert energy into something useful. The market is also rarely as “free” as in this example; people with so varied conditions hardly compete next to each other. Some simplifications are made. But with cheap transportation technologies and largely deregulated markets differences in market conditions have plummeted, and prices for most commodities are converging on the planet.

Some may also say that there is rarely such a competition for resources as in this example. To some extent this is true, but seen in a global perspective and long term, there is just one planet with a certain quantity of any resource.  The first oil brought into the industrial economy was available, in good quality, in abundant shallow reserves on land and was therefore very cheap to extract. Oil is now pumped from big depth under difficult conditions, and qualities are often lower, simply because the best sources are long depleted. To be closer to the example, there is even a global market for sand, which is a scarce resource in some places, for example, Singapore imports sand from the USA.

The relevance of our story is most easily seen in agriculture, where farmers using the most basic hand tools, such as a hoe or a spade, are competing with farmers who have a machine fleet that is worth millions of dollars. In this case, the labor of the small farmer is competing with oil and machinery. Making things even more absurd, the highly mechanized farmers are subsidized by their governments. To borrow money for an investment costs them a few percent in interest rate, while the poor have to pay twenty to forty percent interest rates for loans – if they can get any. The conditions for competition in the so-called “free market” are exactly so skewed.

The brutal truth is that there is no future for most of the half a billion small farmers of the world in this market place.  A few can survive by going for niche, organic or high-value products, others have to migrate out of the farm sector, and they do. There are, however fewer employment opportunities for them than there were for my grandparents in Sweden who could go from farming to industries that needed workers. And there is no space for the farmers to invest so that they could compete more fairly with “us”.

These are the conditions that we should discuss when we discuss global poverty and starvation (and not increasing GMOs or the use of chemical fertilizers). These are the conditions which actually make the poor poorer. The neo-liberal market doctrines can’t produce viable solutions to the poverty trap of billion people.

We must realize that a “free” market in a deplorably unequal world is not “free” at all. One percent of the world’s population controls around half of all wealth and gaps are widening. When we have so different access to resources, a free market creates bigger gaps and not only relative but also absolute poverty.

The way out? Well, I don’t say it is easy. I don’t claim that we will solve the problems with government regulations, tariffs and government monopolies – in most cases these have had devastating effects. The first step is to clearly see the problems that are generated by a capitalist market economy and fossil fuel, and realize that their root causes are systemic and structural. The solutions are therefore to be found in alternatives to this.  How they can look like is a subject of another fairy tale.

”One doesn’t discover new lands without consenting 

to lose sight of the shore for a very long time.”

– André Gide

This was first published on my Swedish blog and now in English on the excellent Post Growth blog.  Other posts on Post Growth that are closely related to this one are:
 Four Degrees of Sharing, Two Myths That Keep The World Poor,  Freedom from money

Towards a society of services or servants?

Most people would do their cleaning themselves if they had to pay the cleaning lady the same salary as their own, it is as simple as that.

It is said that we are moving towards a society of services. There is some truth in this, even if manufacturing still plays a bigger role than many believe. Globally manufacturing is actually not shrinking, even if it goes down in high-income countries. On the global level, the striking change is from agriculture to services. Historically there was a transformation from agriculture to industry to services but in some countries, notably in Sub-Saharan Africa, there is no such transition; people move out from the agriculture sector directly to the service sector. When we look at the proportion of people employed in different sectors, and not the absolute number of people, we forget that the number of people working in e.g. farming is very high and in most parts of the world actually rather stable. Between 1970 and 2000 the number of people engaged in the farm sector in Latin America was more or less constant (Ploeg 2009). Perhaps even more surprising for many is that despite the rapid pace of urbanization the number of people in rural areas and the number of farms are increasing and not decreasing (although this will change quite soon and the number of farmers certainly is on a rapid decrease in high-income countries).

Table 19: World employment by sector 1998-2008

	Agriculture (%)		Industry (%)		Service (%)
	1998	2008	1998	2008	1998	2008
World	41.6	34.5	20	21.6	38.4	43.8
High-Income countries	5.8	3.7	28.0	24.9	66.2	71.4

Source: KILM 2010

We can see more detail from the US employment data, where retail trade is a bigger employer than manufacturing, however in terms of economic output it only “produce” one third as much value. Professional and business service is a growth sector as well as health care. 9.6 million were employed in food services (restaurants, bars, catering) and 1.5 million in food manufacturing, 15.3 million in retail, compared to just above 2 million in the agriculture sector (Bartsch 2009)

The statistics mask that earlier a lot of the services, e.g. health care and personal care was performed outside of the formal labour market, mainly in the families. Also, manufacturing has outsourced a lot of functions which means that was earlier counted as “manufacturing” is today called services. The growing service sector has four distinct segments. One is the professional services oriented to the business and industries, it can be auditing, engineering, back office functions of many kinds. In the statistics, these same jobs if they are performed in-house the factory would be qualified as a manufacturing job. These kinds of services are generally speaking well paid. Second, we have the whole apparatus of wholesale, transport and retail, together representing 17-18 percent of the work force in the USA. Some of that is also oriented to manufacturing, but most of it is for the consumer market. There is a hospitality industry dominated by restaurants, bars and drinking places with almost ten percent of the work force. This sector is where we find a lot of low-paid low skilled work. Third, we have the police, health care and education, things that in most countries are performed by the public sector. Often these jobs are quite badly paid, but have better employment conditions than the retail or restaurants. Fourth, there is the pure personal service sector, cleaning, massage, shoe-shining etc. things that historically were done by servants. Here conditions are often bad, in some countries a lot of it is done by migrant workers, legal or illegal. Those who predict that there will be a lot of growth in that sector also predicts that we will continue to have big differences in income because it is basically differences in income that drives and make possible most of these kinds of services.

Growing inequality, between people, between countries, between region, between urban and rural.

In absolute terms, some 900 million live on daily income of below US$1.08 (the World Bank’s lowest poverty threshold) and some 2.1 billion below US$2.15 per day, i.e. almost one third live on “almost nothing”; they earn per year less than I earn per day and what some charge per hour of their work, and yet very few earn per minute. The proportion of poor people shrank from 37 percent to 30 percent 2002; most of the improvement was in China. In Africa south of Sahara 51 percent are poor (World Bank 2007). Seen over a longer term, things are not moving in the right direction, on the contrary. David Landes estimates that today the difference in income per head between the richest nations, such as Switzerland and the poorest, such as Mozambique, is about 400 to 1. Two hundred and fifty years ago, the difference was perhaps 5 to 1 and the difference between Europe and India and China was perhaps less than 2 to 1 (Radkau 2008).


There are also significant differences within countries The Economist writes about growing regional inequality in the UK the difference between GDP per person in the richest region is almost ten times as high as in the poorest (well the definition of region in the UK case is a bit strange compared to the US, in the US they used states, but in the UK they used some substantially smaller units and of course you get more disparity the smaller units you use...). In the USA the difference in income between the District of Columbia and Mississippi is five times, and increasing. Shanghai in China is set to overtake Mississippi in 2015 and people there already earns more than a quarter och the regions of the UK and Italy. And in most countries the gap between rural and urban areas is increasing. See the graph from the World Bank Development report of 2008.

The wealth Pyramid - a sign of poverty

One can draw a lot of different conclusions from a pyramid like that
Credit Suisse, the one making the graph concludes.

It for instance points out that the global wealth currently held by 4.4 billion adults has increased by 72 percent since 2000, to reach 195 trillion dollars. Driven by robust economic expansion in the emerging markets, the Credit Suisse Research Institute estimates that global wealth will grow 60 percent to 314 trillion dollars by 2015. The middle segment of the global wealth pyramid is composed of one billion individuals who are located in the fastest-growing economies of the world and hold one-sixth or 32 trillion dollars of global wealth. In total, almost 60 percent or 587 million individuals in the middle segment of the wealth pyramid are located in Asia Pacific. China stands out as the third-largest wealth generator in the world, behind only the US and Japan, and is 35 percent ahead of the wealthiest European country. Read more

And of course, it is their business to care for the ones that have money to spend, i.e. their clients or prospective clients. My concern is more the 3 billion at the bottom and the fact that they will be there also 2015. The fact that gaps are increasing is simply not acceptable and it is also not sustainable or tenable in more normal language (this sustainable word is rapidly taking the lead in being the most used, overused and abused word in English language) It should worry also the rich, because sooner or later this will explode, and I doubt the poor will show much mercy with those that have lived on their backs.

Read also
Growing inequality, between people, between countries, between region, between urban and rural.
Who gave you your property?

We are the world - or?

Equality is good for growth, but growth is not necessarily good for equality

Even if there is economic growth, there are no guarantees that this will help the poor. The appalling inequality can nullify all the possible wealth for the poor. Well, now some may object and say that there is a clear correlation between e.g. GDP and life expectancy. There is. But there is a much stronger correlation between income of the poor and public expenditure and life expectancy. A society with slow or no economic growth, but with equality and good public health care system will have a higher life expectancy than a society with high growth rates but with no public health care and continued poverty among large groups. Studies from Great Britain show that during the two great wars, life expectancy increased markedly. Despite a limited supply of food, undernourishment decreased. The reason for this surprising pattern is likely that solidarity, sense of community and social responsibility increased by the external pressure of the war. Public health care and support to the poor increased remarkably in the periods (Sen 1999).

Increased incomes for farmers and farm workers stimulates demand for goods and services by local artisans (blacksmiths, construction workers, seamstresses and brewers among others) and can in this way induce a virtuous cycle. A dollar in increased income, can in this way easily become two. Local wages will increase. There is a big difference in this regard between situation when growth is by hundreds of smallholders or when it is in a big plantation. When the latter increases is income, most of the money is spent on imported inputs and machinery as well as on luxury products for private consumption, with little positive impact on local trades. There is thus a strong link between equality and local economic development (FAO 2003).


Extract from Garden Earth

Being among the 1 percent richest in the world. me, no way!

I work a lot with development issues and think a lot about inequalities in the world. Still I was shocked to realise how privileged I am when I checked my income on the Global Rich List. A great web site.

Microsoft CEO Bill Gates has more wealth than the bottom 45 percent of American households combined

Inequality is bad for development

Yesterday evening I went to a seminar with Richard Wilkinson, who, together with Kate Picket, has written the book: The Spirit Level: Why Equality is Better for Everyone.

For me the conclusions were hardly revolutionary, that inequality is not only morally unjust but also leads to more problems in society was something I thought all along. They prove it fairly well. The also show that econimic growth above a certain limit doesn't really contribute to our well being. Also that point is not entirely new,many has made the same case before. I add some graphs that might speak for themsleves.

Garden Earth - a modern civilization

There is no land left to settle, the last frontier we have left to civilize is ourselves.(Jewel)

Garden Earth is my project to summarize thirty years of thoughts and a whole lot of practical experiences of environment economy and society. I have been frustrated with that most books and debates are about one issue at the time and then people try to explain and predict everything from that perspective. One year ago it was climate change, today it is the financial crisis. I have written the Garden Earth to merge political, social, ecological and economical analyses.

I look at the history of human society, how it was shaped by ecological and social conditions. As an example, I show the importance of trade for our ecological adaptation. People might believe that trade emerged as a means to make profit, but the reality is that trade is what enabled us to populate areas were some essential resource was missing. A main focus are the technical and energy development “complexes”. From the first use of fire, we harnessed energy in animals for animal traction and transport and in the wind for trade and for new conquest. Up to around 1750, wood was still the main source of energy, and that led to a very high pressure on the forests, large tracts of Europe and other developed parts of the world were almost deforested.

Coal changed all this. In the short run it saved the forest. In the long run however it was paving the way for an enormous expansion of our energy use to a level where each human use energy resources corresponding to thirty, forty people. And this has enabled the development where we now use more than 40 percent of the land surface for production of food and for our cities, and where we annually use more than 100 percent of the total production capacity of the planet – clearly not a sustainable situation.

Our society faces a lot of challenges. On the one hand, the pressure on the natural resources, in particular all the ecosystem services. On the other hand poverty and inequality. Our society has no mechanisms to value the services of nature. This has led to large scale depletion. One way of dealing with this is to “liquidate” these resources and services, e.g. with carbon payments or payment to farmers for environmental services. There is a certain logic to that, but it also means that we let the same system that actually created the problem, capitalism, fix it. Is that wise. Capitalism and market economy has gradually expanded to bigger and bigger parts of life. From markets for goods, then to labor and soil. Later on financial markets – buying money for money – developed. Lately we have seen a large scale “marketization” of social capital, when public goods have been transferred to private ownership and management. To also let nature itself, the air we breathe, the water we drink be managed by markets seems like a very risky venture.

My study has a special focus on energy and farming, both critical for our survival. And farming is all about energy, our food is the basic energy source. In early societies it was obvious that we had to produce more energy than we consumed, otherwise we could not work and reproduce. With the introduction of fossil fuel this all changed. Now we use some 15-150 times (figures vary a lot depending on how it is counted) as much energy to produce our food than we get from farming. Hey, that is a extremely inefficient system!

Our society and the capitalist market economy has failed in creating wealth for the many. Big parts of humanity are as poor today as they were fifty years ago, despite an unprecedented growth. We have failed to create an equitable society. In addition, the economic system, supposedly managing itself through the “invisible hand”, is in constant need of corrections and controls, simply because it doesn’t work as it is supposed to work.

The capitalist economy and its associated values – such as the vision of constant growth – were perhaps appropriate for a world bent at expansion and colonization. But we have now colonized what there is to colonize and spread ourselves on all parts of the globe. Even if economic growth perhaps is still possible (we can always create some new virtual globes on the internet, can’t we?), biological, physical and geographic growth isn’t. Therefore we need new values and paradigms. Most likely we also need a new economy and new forms of social capital.

We have changed the globe so much that Nature can’t make it without us anymore. On contrary, more and more wild life is dependent on us for its survival. There is no point in looking back to the time when we were equal to the elk, the carrot and the sheep. Today, weather we like it or not, we must act as gardeners for the whole Garden Earth. And we must manage the planet as a garden.

The thoughts above are some of the essential parts of my thinking. Garden Earth is currently a 400 page book in Swedish, where those thoughts are elaborated. My plan is to make an English edition - I am looking for a publisher.

Solar energy in Sahara?

We hear about that a rather small area of the Sahara desert would suffice for the whole European energy needs. This is still more an theoretical example to show the pootential of solar energy, rather than a real proposal. But the example also shows that the pattern of colonialist thinking doesn't disappear so easily.

Now, we don't want these people here in "our" Europe. We are afraid of their habits, culture and religion as well as the possible impact on our salaries and jobs. But we do, once again, see that they might have something that we could use and then we are all for "cooperation".

Why would we not cover parts of Spain, Italy or Greece with those solar panels? If the Libyans and Algerians could produce cheap electricity with solar panels, wouldn't it make more sense to use that electricity to desalinate water and use for irrigation, and sell that grain to the hungry Europeans? Or for them to produce the aluminium of the world, or the chemical fertiliser....

It is tiring that Europeans and Americans tend to see other people mainly as suppliers of things we need or consumers of stuff we want to sell. And not as fellow human beings.

Now, this posting is surely not against the development of photovoltaic cells, I think they are great and they do have potential. The posting is about the imbalanced thinking.