Monday, January 29, 2007
The peculiarities of today's growth spurt
There follows a news analysis by me from today's issue of Fund Strategy. It starts to examine, in a schematic way, the particular character of the current period of strong global economic growth.
It has become commonplace to assert that for the past four years the world economy has grown at its fastest rate since the 1970s. While this is true, its implications are often left unclear. Strong economic growth is usually taken to mean that equities will do well, but there is far more to the story than straightforward stockmarket performance.
To understand the dynamic of the contemporary world economy, it is necessary to look beyond growth rates alone. The character of the growth is as important as its speed.
Nor is it good enough to simply say that the world has become more globalised. It is true that the world economy has become steadily more integrated in recent years, with trade and cross-border investment growing faster than GDP. But globalisation is only part of the story.
There are at least three key factors distinguishing growth in recent years from earlier periods: economic volatility is lower; developing countries are playing a larger role; and the end of the Cold War has changed the political context. All of these factors are important, although the last is probably the most critical, and the least understood.
Anyone wanting to understand the significance of long-term economic shifts is fortunate that a huge amount of data is now available to put them into context. In particular Angus Maddison, widely acknowledged as one of the world's leading experts on long-term growth, has produced invaluable long-term statistics (for link see bar on the left).
From studies by Maddison and others, the long-term patterns are clear. The global economy was virtually static until 1800, when it started to grow rapidly. During the 19th and early 20th centuries, the general pattern of growth was strong. Then in the period from 1913-1950 - a time that encompassed two world wars and the great depression of the 1930s - there was a relative slowdown in growth. Of course there were important variations between different countries and in different years. But it is best to start by examining the world economy in aggregate before drilling down to more detailed studies.
It is the post-war boom, from 1950-1973, that provides the immediate backdrop to the contemporary discussion. During that time the world economy grew faster than in any period before or since. If there ever was a golden age of economic advancement, this was it. The prolonged growth spurt ended during the "stagflation" of the mid-1970s. A painful combination of economic stagnation and high inflation seemed to have brought the good times to an end.
The current discussion of the best growth spurt since the 1970s is an implicit contrast to the post-war boom. To anyone familiar with economic history, the implication that this is the best period of growth since the years that followed the Second World War is clear. What is being said is that we have virtually returned to a golden era of economic growth.
It is certainly true that growth is strong and that a rapidly expanding economy should be welcomed. The more rapidly the economy grows, the greater the ability of human beings to live more prosperous lives. But the differences between the post-war period and more recent growth are at least as important as the similarities.
Perhaps the most obvious is that it is now the developing world that is growing much more rapidly than the developed world (see graph). East Asia in particular, with China at its centre, is emerging as the new workshop of the world. In contrast, during the post-war boom the focus of growth was on the developed world. Japan and West Germany in particular enjoyed rapid growth as their economies recovered from the ravages of the Second World War.
Also fairly widely recognised, at least by economists, is the muting of the business cycle over the past two decades. Or, to put it in different terms, economic volatility has fallen sharply. Economic growth is no longer punctuated by periods of restructuring, with firms going bust and unemployment rising. Although the cycle still exists, it has become a far gentler affair than in the past. Ben Bernanke, governor of America's Federal Reserve, has referred to this process as "the great moderation".
The backdrop to these changes is the end of the Cold War in the 1980s. This had enormous implications for both domestic politics and international relations. There were various ways in which the demise of the Soviet Union had a global impact, but the most important is the demise of the socialist model. It suddenly seemed there was no viable alternative to the market as a form of economic organisation.
In international relations, one of the effects of this was to allow the opening up of much of the developing world, such as China and India, to the global economy. During the Cold War their participation was relatively marginal. But the demise of the Soviet Union meant that socialist states such as China were keener to open themselves up to the market. Even India, while never formally aligned to the Eastern bloc, had a relatively closed economy until the 1980s.
In the domestic sphere the end of the Cold War meant the demise of organised labour. Although trade unions still exist, they are not the force they once were. Their concerns are typically focused on such issues as pensions and financial services rather than militant battles with employers. This changing relationship with unions has given employers more flexibility to restructure their businesses without having to worry about any opposition from unions.
It is this final factor, the end of the Cold War, that probably more than any other explains how growth has become stronger and less volatile in recent years. It also accounts for the closer integration of the developing world into the global economy.
However, it would be a mistake to assume that everything will be straightforward from here on. Although there are undoubtedly new opportunities ahead, there will also be new challenges to face.
It has become commonplace to assert that for the past four years the world economy has grown at its fastest rate since the 1970s. While this is true, its implications are often left unclear. Strong economic growth is usually taken to mean that equities will do well, but there is far more to the story than straightforward stockmarket performance.
To understand the dynamic of the contemporary world economy, it is necessary to look beyond growth rates alone. The character of the growth is as important as its speed.
Nor is it good enough to simply say that the world has become more globalised. It is true that the world economy has become steadily more integrated in recent years, with trade and cross-border investment growing faster than GDP. But globalisation is only part of the story.
There are at least three key factors distinguishing growth in recent years from earlier periods: economic volatility is lower; developing countries are playing a larger role; and the end of the Cold War has changed the political context. All of these factors are important, although the last is probably the most critical, and the least understood.
Anyone wanting to understand the significance of long-term economic shifts is fortunate that a huge amount of data is now available to put them into context. In particular Angus Maddison, widely acknowledged as one of the world's leading experts on long-term growth, has produced invaluable long-term statistics (for link see bar on the left).
From studies by Maddison and others, the long-term patterns are clear. The global economy was virtually static until 1800, when it started to grow rapidly. During the 19th and early 20th centuries, the general pattern of growth was strong. Then in the period from 1913-1950 - a time that encompassed two world wars and the great depression of the 1930s - there was a relative slowdown in growth. Of course there were important variations between different countries and in different years. But it is best to start by examining the world economy in aggregate before drilling down to more detailed studies.
It is the post-war boom, from 1950-1973, that provides the immediate backdrop to the contemporary discussion. During that time the world economy grew faster than in any period before or since. If there ever was a golden age of economic advancement, this was it. The prolonged growth spurt ended during the "stagflation" of the mid-1970s. A painful combination of economic stagnation and high inflation seemed to have brought the good times to an end.
The current discussion of the best growth spurt since the 1970s is an implicit contrast to the post-war boom. To anyone familiar with economic history, the implication that this is the best period of growth since the years that followed the Second World War is clear. What is being said is that we have virtually returned to a golden era of economic growth.
It is certainly true that growth is strong and that a rapidly expanding economy should be welcomed. The more rapidly the economy grows, the greater the ability of human beings to live more prosperous lives. But the differences between the post-war period and more recent growth are at least as important as the similarities.
Perhaps the most obvious is that it is now the developing world that is growing much more rapidly than the developed world (see graph). East Asia in particular, with China at its centre, is emerging as the new workshop of the world. In contrast, during the post-war boom the focus of growth was on the developed world. Japan and West Germany in particular enjoyed rapid growth as their economies recovered from the ravages of the Second World War.
Also fairly widely recognised, at least by economists, is the muting of the business cycle over the past two decades. Or, to put it in different terms, economic volatility has fallen sharply. Economic growth is no longer punctuated by periods of restructuring, with firms going bust and unemployment rising. Although the cycle still exists, it has become a far gentler affair than in the past. Ben Bernanke, governor of America's Federal Reserve, has referred to this process as "the great moderation".
The backdrop to these changes is the end of the Cold War in the 1980s. This had enormous implications for both domestic politics and international relations. There were various ways in which the demise of the Soviet Union had a global impact, but the most important is the demise of the socialist model. It suddenly seemed there was no viable alternative to the market as a form of economic organisation.
In international relations, one of the effects of this was to allow the opening up of much of the developing world, such as China and India, to the global economy. During the Cold War their participation was relatively marginal. But the demise of the Soviet Union meant that socialist states such as China were keener to open themselves up to the market. Even India, while never formally aligned to the Eastern bloc, had a relatively closed economy until the 1980s.
In the domestic sphere the end of the Cold War meant the demise of organised labour. Although trade unions still exist, they are not the force they once were. Their concerns are typically focused on such issues as pensions and financial services rather than militant battles with employers. This changing relationship with unions has given employers more flexibility to restructure their businesses without having to worry about any opposition from unions.
It is this final factor, the end of the Cold War, that probably more than any other explains how growth has become stronger and less volatile in recent years. It also accounts for the closer integration of the developing world into the global economy.
However, it would be a mistake to assume that everything will be straightforward from here on. Although there are undoubtedly new opportunities ahead, there will also be new challenges to face.
Labels: economics, Fund Strategy, growth
Sunday, January 28, 2007
Amartya Sen as growth sceptic
In Wednesday’s University of Westminster seminar on Amartya Sen (see 4 January dispatch) I argued that the Nobel prize-winning economist is key growth sceptic thinker. His Development as Freedom redefines development from being a process of social transformation (traditional to modern, rural to urban, agrarian to industrial etc) to a series of individual entitlements. He also uses the term “freedom” to refer to so many different things robs it of any real meaning (for example, removing sources of unfreedom such as poverty, tyranny, poor economic opportunities, systematic social deprivation, neglect of public facilities, intolerance and over-activity of repressive states).
Labels: development, economics, growth, speeches
America is already "green"
The Economist (27 January) makes one clear point and one big error in its coverage of “the greening of America”. It is certainly true that America is moving closer to the European view that managing energy demand is the best way to tackle climate change. However, America long ago embraced environmentalism as a mainstream ideology. Indeed, Anna Bramwell in her excellent The Fading of the Greens (Yale 1994) describes how America, along with Britain and Germany, is where environmentalist ideas originated. It should also be noted that Charles Reich’s The Greening of America, an environmentalist classic and number one bestseller, was first published in 1970.
Labels: America, climate, environment
Friday, January 26, 2007
Strange concerns about Western workers
Many of the world’s elite gathered in Davos this week for the World Economic Forum expressed strange concerns for the stagnating wages of Western workers. According to articles in the Guardian and the Wall Street Journal (25 January, subscription required) they are worried that the rise of China and India will hit developed country wages. Its unusual for Western leaders and thinkers to concern themselves with poor wage rates for ordinary people. It is hard to resist the conclusion that their real concern is the competition from the emerging Asian powers. Protectionist conclusions could easily be drawn.
For the record those quoted as being concerned about Western wages were Stephen Roach of Morgan Stanley, Robert Shiller of Yale and Laura Tyson of the London Business School (and former senior Clinton administration official). In contrast, Ken Rogoff of Harvard argued that changing technology and trade patterns were reducing the demand for unskilled workers.
A similar discussion was aired in last week’s Economist (see 20 January dispatch). Previously former Clinton administration officials such as Larry Summers and Robert Rubin have expressed support for the wage stagnation line (see, for example, the Financial Times on 25 July 2006 on their presentations at a Brookings Institution conference). Paul Krugman of Princeton has also criticised rising inequality in America in his New York Times column. In contrast, Jagdish Bhagwati of Columbia argued a similar case to Rogoff in the Financial Times on 4 January while the Cato Institute, which this month had an event on American income inequality, generally takes a free market line.
For the record those quoted as being concerned about Western wages were Stephen Roach of Morgan Stanley, Robert Shiller of Yale and Laura Tyson of the London Business School (and former senior Clinton administration official). In contrast, Ken Rogoff of Harvard argued that changing technology and trade patterns were reducing the demand for unskilled workers.
A similar discussion was aired in last week’s Economist (see 20 January dispatch). Previously former Clinton administration officials such as Larry Summers and Robert Rubin have expressed support for the wage stagnation line (see, for example, the Financial Times on 25 July 2006 on their presentations at a Brookings Institution conference). Paul Krugman of Princeton has also criticised rising inequality in America in his New York Times column. In contrast, Jagdish Bhagwati of Columbia argued a similar case to Rogoff in the Financial Times on 4 January while the Cato Institute, which this month had an event on American income inequality, generally takes a free market line.
Labels: America, inequality, protectionism, work
Wednesday, January 24, 2007
Debating Oliver James on the radio
This morning I debated Oliver James, the author of a new book on “affluenza” on the Radio 4 Today programme (programme available on its website for the next seven days). His argument is that affluence is increasingly making us sick. Nico Macdonald has produced a summary of our debate which is available here. James has not put forward an original thesis - his book is the third with “affluenza” as a title - but two things were notable about what he said:
* His thesis takes the form of an attack on the rich. However, it is the poor who suffer as a result of attacks on affluence.
* He claimed that over the long-term working hours in America and Britain have lengthened. This is simply wrong. Long-term statistics on his this trend are tricky to interpret - for example, because of the rise of the number of women in the labour force - but there is no doubt the trend is for working hours to fall. Even apart from the working week people are spending more time in education and more time in retirement. The amount of back-breaking manual labour people have to do has fallen dramatically. Also, according to the latest figures from National Statistics, the average working week in Britain has fallen by one hour over the past 15 years. I intend to do more work on the subject of working hours in my book.
At lunchtime I had a rematch against Oliver James on the Jeremy Vine Show on BBC Radio 2. A summary of the debate can be read here. James made much of the fact he was talking about mental illness rather than unhappiness. He did not see the bigger picture of how his arguments relate to growth scepticism.
* His thesis takes the form of an attack on the rich. However, it is the poor who suffer as a result of attacks on affluence.
* He claimed that over the long-term working hours in America and Britain have lengthened. This is simply wrong. Long-term statistics on his this trend are tricky to interpret - for example, because of the rise of the number of women in the labour force - but there is no doubt the trend is for working hours to fall. Even apart from the working week people are spending more time in education and more time in retirement. The amount of back-breaking manual labour people have to do has fallen dramatically. Also, according to the latest figures from National Statistics, the average working week in Britain has fallen by one hour over the past 15 years. I intend to do more work on the subject of working hours in my book.
At lunchtime I had a rematch against Oliver James on the Jeremy Vine Show on BBC Radio 2. A summary of the debate can be read here. James made much of the fact he was talking about mental illness rather than unhappiness. He did not see the bigger picture of how his arguments relate to growth scepticism.
Labels: affluenza, America, happiness, media appearances, radio, work
Tuesday, January 23, 2007
More on America’s climate change shift
More confirmation that America seems to be moving towards the European consensus on dealing with climate change. According to a substantial feature in today’s Financial Times the president will mention global warming in his State of the Union speech this evening - something he has not done in the past five - and link it to the debate about energy security. Meanwhile, the Wall Street Journal Europe has a substantial piece on how America’s biggest industrial companies are moving to agree with cuts in carbon emissions.
However, there is reason to believe that the difference between America and Europe was always exaggerated. As Gregg Easterbrook of the Brookings Institution has pointed out in the past the US has emphasised cuts in methane emissions while Europe has focused on carbon dioxide. Also America’s rejection of the Kyoto protocol seems to be more on pragmatic grounds than in principle. And there are several state-level initiatives, such as in California, that follow the European model closely.
However, there is reason to believe that the difference between America and Europe was always exaggerated. As Gregg Easterbrook of the Brookings Institution has pointed out in the past the US has emphasised cuts in methane emissions while Europe has focused on carbon dioxide. Also America’s rejection of the Kyoto protocol seems to be more on pragmatic grounds than in principle. And there are several state-level initiatives, such as in California, that follow the European model closely.
Labels: America, climate, environment
Monday, January 22, 2007
America closer to Europe on climate change
It seems that America is moving ever closer towards the European consensus on climate change. According to a leader in today’s New York Times:
* Four major bills have recently been offered to the Senate calling for mandatory controls on emissions of carbon dioxide.
* Last week 10 big companies joined an informal coalition to press Congress and the Bush administration for action.
* Nancy Pelosi, the House speaker, established a select committee on global warming last week.
It is a pity that America is following the route of managing energy demand rather than the alternative strategy of bolstering supply.
* Four major bills have recently been offered to the Senate calling for mandatory controls on emissions of carbon dioxide.
* Last week 10 big companies joined an informal coalition to press Congress and the Bush administration for action.
* Nancy Pelosi, the House speaker, established a select committee on global warming last week.
It is a pity that America is following the route of managing energy demand rather than the alternative strategy of bolstering supply.
Labels: America, climate, environment, Europe
Saturday, January 20, 2007
The Economist on inequality
The Economist (20 January) has a comment and several related articles on the raging debate (at least in some quarters) on inequality and wage stagnation. It starts with the common observation that executive pay is growing rapidly while the real wages of American workers are growing much slower than productivity. In the rich world the share of GDP going to labour is at a record low while the share going to capital is soaring.
There are two schools of thought on the cause of this growing divide, according to the Economist. One blames globalisation: from this perspective the growth of trade and the entry of new developing country workers entering the labour market have widened inequality. The other places the responsibility on technology.
From the Economist’s perspective the two factors are inter-twined. But it rejects restrictions on executive pay, is against protectionism and is wary of giving aid to the victims of trade. Instead the magazine argues for greater social mobility. For example, making it easier to move jobs and improving education.
There are at least two important and related factors missing from this discussion. First, the political defeat of organised labour with the end of the Cold War has strengthened capital at the expense of workers. Second, the desire to raise the level of the mass of society as a way of achieving equality has become muted. Instead the dominant view is that consumption growth needs to be curbed.
There are two schools of thought on the cause of this growing divide, according to the Economist. One blames globalisation: from this perspective the growth of trade and the entry of new developing country workers entering the labour market have widened inequality. The other places the responsibility on technology.
From the Economist’s perspective the two factors are inter-twined. But it rejects restrictions on executive pay, is against protectionism and is wary of giving aid to the victims of trade. Instead the magazine argues for greater social mobility. For example, making it easier to move jobs and improving education.
There are at least two important and related factors missing from this discussion. First, the political defeat of organised labour with the end of the Cold War has strengthened capital at the expense of workers. Second, the desire to raise the level of the mass of society as a way of achieving equality has become muted. Instead the dominant view is that consumption growth needs to be curbed.
Labels: globalisation, inequality
Tuesday, January 16, 2007
A robust defence of human progress
Spiked has published my interview with Indur Goklany, the author of the excellent The Improving State of the World (Cato 2007).
Labels: book, health, progress, spiked
Monday, January 15, 2007
Review of Improving the State of the World
My review of Indur Goklany's Improving the State of the World (Cato 2007) for Fund Strategy magazine (15 January 2007) can be found below. An article based on an interview with Goklany should appear in spiked later on this week:
One of the great tragedies of contemporary life is that we are gripped by what could be called the "miserabilist tendency". There is a pervasive sense that things are generally worse than in the past and the outlook for the future is even more negative. This bleak view is embodied in popular books such as Steve Lowe and Alan McArthur's Is It Just Me Or Is Everything Shit? (Time Warner 2005). Unfortunately, it is not just them. The whiners, who would previously have been assigned the status of pub bore, have become hugely influential in policy making, the media and academia.
Under such circumstances Indur Goklany, an American policy analyst, has written a genuinely important book. From a careful analysis of masses of data he shows that life for human beings is better than ever before. Of course the world is far from perfect. But the combination of economic growth and technological development could make things better still in the future.
The inclusion of so many statistics does not make for easy reading but it is worth the effort. Statistics are not perfect but they are necessary to help overcome impressionism. Too many people rely on a vague sense of how they think life today compares with the past. Far better to look at the hard data. Perhaps the single most important set of statistics relate to life expectancy. It is staggering to realise the average life expectancy in the world before the industrial era was 20-30 years. In other words, the average person would be lucky to reach the age of 30. By 2003 the figure had risen to 66.8 years. So thanks to growing prosperity the average person had more than doubled their lifespan, with an extra 36.8 or more years of life.
Of course there remain inequalities between the rich countries and the developing world. The average person in the developing world today lives 63.4 years - although this is still more than double that in the pre-industrial era - compared with 75.6 years in the developed world. However, today's gap of 12.2 years between the two compares with 25.2 years in the early 1950s. Both sets of populations are living longer, although the gap between the two is narrowing.
A similar trend is apparent in relation to infant mortality. In the pre-industrial era it was more than 200 per thousand live births - more than 20% of babies died before reaching their first birthday. It was a common experience for parents to see their babies die. Today the global average figure is 56.8 and in the developed world it is 7.1
The single most important factor behind these improvements is the spectacular rise in agricultural productivity. Food is cheaper and more easily available than ever despite massive increases in the world's population. For example, average daily food supplies rose from a global average of 2,254 calories per person in 1961 to 2,804 calories in 2002. Whereas food supplies in the developed world rose by 24% over that period, the increase for developing countries was 38%.
The improving trend disguises some remaining tragedies. Globally more than 850 million people are undernourished - they cannot meet their basic needs for energy or protein. About 3.75 million deaths a year can be attributed to insufficient food supplies.
Under such circumstances, Goklany is strongly in favour of genetically modified crops. He argues that such technology could boost agricultural productivity still further, making it possible to feed more people better than ever before.
He also dismisses health and environmental concerns in relation to GM as unfounded. On health he points out that 300 million Americans and tens of millions of visitors have consumed GM food with no apparent ill effects since 1996. If there are any as yet undiscovered problems, they are likely to be hugely outweighed by the benefits of higher agricultural productivity.
The Improving State of the World also argues that greater use of GM crops could be better for the environment. If less land is needed to produce food then more will be available for forestry and other uses. This greater availability of unfarmed land could also bolster biodiversity.
Although Goklany's book is heavy in its use of figures it would be wrong to see it as a statistical almanac. It includes useful and insightful arguments too. For example, it argues that economic development is typically characterised by an "environmental transition". In the early stages of development, as countries industrialise and urbanise, their environments tend to worsen. But then, as they become more prosperous, the environment generally improves.
Most key indicators follow this trend. For instance, British cities were hellish places to live when Charles Dickens was writing in the mid-nineteenth century. Goklany quotes a passage from the The Old Curiosity Shop describing a London darkened by coal dust and factory smoke. It should also be remembered that at that time diseases such as cholera and typhoid, carried by polluted water, were rife. In contrast, London today is an immensely clean and healthy place. And even third-world cities are much better than Victorian London as they have learned from the experience of the developed world.
Goklany uses the concept of environmental transition to draw astute conclusions about future possibilities. He concedes that the world's fish stocks are currently on the wrong side of the environmental transition, with supplies dwindling through over-fishing. However, the conclusion he draws is the need to develop modern aquaculture - farming the sea using modern technology - just as agriculture was developed in the past. That way the productivity of food production from the sea could rise enormously.
The Improving State of the World is an excellent antidote to the painful whining of the miserabilist tendency. The world is far from perfect but complaining about how bad everything is only reinforces cynicism rather than opening the way to improving things further.
One of the great tragedies of contemporary life is that we are gripped by what could be called the "miserabilist tendency". There is a pervasive sense that things are generally worse than in the past and the outlook for the future is even more negative. This bleak view is embodied in popular books such as Steve Lowe and Alan McArthur's Is It Just Me Or Is Everything Shit? (Time Warner 2005). Unfortunately, it is not just them. The whiners, who would previously have been assigned the status of pub bore, have become hugely influential in policy making, the media and academia.
Under such circumstances Indur Goklany, an American policy analyst, has written a genuinely important book. From a careful analysis of masses of data he shows that life for human beings is better than ever before. Of course the world is far from perfect. But the combination of economic growth and technological development could make things better still in the future.
The inclusion of so many statistics does not make for easy reading but it is worth the effort. Statistics are not perfect but they are necessary to help overcome impressionism. Too many people rely on a vague sense of how they think life today compares with the past. Far better to look at the hard data. Perhaps the single most important set of statistics relate to life expectancy. It is staggering to realise the average life expectancy in the world before the industrial era was 20-30 years. In other words, the average person would be lucky to reach the age of 30. By 2003 the figure had risen to 66.8 years. So thanks to growing prosperity the average person had more than doubled their lifespan, with an extra 36.8 or more years of life.
Of course there remain inequalities between the rich countries and the developing world. The average person in the developing world today lives 63.4 years - although this is still more than double that in the pre-industrial era - compared with 75.6 years in the developed world. However, today's gap of 12.2 years between the two compares with 25.2 years in the early 1950s. Both sets of populations are living longer, although the gap between the two is narrowing.
A similar trend is apparent in relation to infant mortality. In the pre-industrial era it was more than 200 per thousand live births - more than 20% of babies died before reaching their first birthday. It was a common experience for parents to see their babies die. Today the global average figure is 56.8 and in the developed world it is 7.1
The single most important factor behind these improvements is the spectacular rise in agricultural productivity. Food is cheaper and more easily available than ever despite massive increases in the world's population. For example, average daily food supplies rose from a global average of 2,254 calories per person in 1961 to 2,804 calories in 2002. Whereas food supplies in the developed world rose by 24% over that period, the increase for developing countries was 38%.
The improving trend disguises some remaining tragedies. Globally more than 850 million people are undernourished - they cannot meet their basic needs for energy or protein. About 3.75 million deaths a year can be attributed to insufficient food supplies.
Under such circumstances, Goklany is strongly in favour of genetically modified crops. He argues that such technology could boost agricultural productivity still further, making it possible to feed more people better than ever before.
He also dismisses health and environmental concerns in relation to GM as unfounded. On health he points out that 300 million Americans and tens of millions of visitors have consumed GM food with no apparent ill effects since 1996. If there are any as yet undiscovered problems, they are likely to be hugely outweighed by the benefits of higher agricultural productivity.
The Improving State of the World also argues that greater use of GM crops could be better for the environment. If less land is needed to produce food then more will be available for forestry and other uses. This greater availability of unfarmed land could also bolster biodiversity.
Although Goklany's book is heavy in its use of figures it would be wrong to see it as a statistical almanac. It includes useful and insightful arguments too. For example, it argues that economic development is typically characterised by an "environmental transition". In the early stages of development, as countries industrialise and urbanise, their environments tend to worsen. But then, as they become more prosperous, the environment generally improves.
Most key indicators follow this trend. For instance, British cities were hellish places to live when Charles Dickens was writing in the mid-nineteenth century. Goklany quotes a passage from the The Old Curiosity Shop describing a London darkened by coal dust and factory smoke. It should also be remembered that at that time diseases such as cholera and typhoid, carried by polluted water, were rife. In contrast, London today is an immensely clean and healthy place. And even third-world cities are much better than Victorian London as they have learned from the experience of the developed world.
Goklany uses the concept of environmental transition to draw astute conclusions about future possibilities. He concedes that the world's fish stocks are currently on the wrong side of the environmental transition, with supplies dwindling through over-fishing. However, the conclusion he draws is the need to develop modern aquaculture - farming the sea using modern technology - just as agriculture was developed in the past. That way the productivity of food production from the sea could rise enormously.
The Improving State of the World is an excellent antidote to the painful whining of the miserabilist tendency. The world is far from perfect but complaining about how bad everything is only reinforces cynicism rather than opening the way to improving things further.
Labels: book, economics, Fund Strategy, health, progress, review, spiked
More happiness references
In response to my recent spiked essay on the paradox of prosperity I have been sent two interesting-looking references. Life, Liberty and the Pursuit of Utility (Imprint Academic 2006) is by the father and son team of Anthony Kenny (philosopher and former master of Balliol college, Oxford) and Charles Kenny (World Bank economist). More details along with extracts can be found here. Utility and Happiness is a 2006 paper by Miles Kimball and Robert Willis, both professors of economics at the University of Michigan.
Thursday, January 11, 2007
Climate change at Exxon
Another sign of the shift in the climate change debate towards a “pro-mitigation” consensus (see dispatch of 15 August 2006). Exxon, often reviled by environmentalists, has subtly shifted its position according to todays’s Wall Street Journal Europe (subscription required to read articles):
“The changes in Exxon's words and actions are nuanced. The oil giant continues to note uncertainties in climate science. It continues to oppose the Kyoto Protocol, the international global-warming treaty that limits emissions from industrialized countries that have ratified it. It also stresses that any future carbon policy should include developing countries, where emissions are rising fastest.
“Still, the company's subtle softening is significant and reflects a gathering trend among much of U.S. industry, from utilities to auto makers. While many continue to oppose caps, these companies expect the country will impose mandatory global-warming-emission constraints at some point, so they are lining up to try to shape any mandate so they escape with minimum economic pain.
“Exxon has stopped funding the Competitive Enterprise Institute, a Washington-based think tank that last year ran television ads saying that carbon dioxide, the main greenhouse gas, is helpful. After funding them previously, Exxon decided in late 2005 not to fund for 2006 CEI and "five or six" other groups active in the global-warming debate, Kenneth Cohen, Exxon's vice president for public affairs, confirmed this week in an interview at Exxon's headquarters in Irving, Texas. He declined to identify the groups beyond CEI; their names are expected to become public in the spring, when Exxon releases its annual list of donations to nonprofit groups.”
“The changes in Exxon's words and actions are nuanced. The oil giant continues to note uncertainties in climate science. It continues to oppose the Kyoto Protocol, the international global-warming treaty that limits emissions from industrialized countries that have ratified it. It also stresses that any future carbon policy should include developing countries, where emissions are rising fastest.
“Still, the company's subtle softening is significant and reflects a gathering trend among much of U.S. industry, from utilities to auto makers. While many continue to oppose caps, these companies expect the country will impose mandatory global-warming-emission constraints at some point, so they are lining up to try to shape any mandate so they escape with minimum economic pain.
“Exxon has stopped funding the Competitive Enterprise Institute, a Washington-based think tank that last year ran television ads saying that carbon dioxide, the main greenhouse gas, is helpful. After funding them previously, Exxon decided in late 2005 not to fund for 2006 CEI and "five or six" other groups active in the global-warming debate, Kenneth Cohen, Exxon's vice president for public affairs, confirmed this week in an interview at Exxon's headquarters in Irving, Texas. He declined to identify the groups beyond CEI; their names are expected to become public in the spring, when Exxon releases its annual list of donations to nonprofit groups.”
Labels: climate, corporations, energy, environment, television
Monday, January 08, 2007
Paradox essay on Arts & Letters
My spiked essay on the “paradox of prosperity” today features on the excellent Arts & Letters Daily website.
Sunday, January 07, 2007
A plane stupid government
The British government is proving itself “plane stupid” in relation to air travel. Ian Pearson, an environment minister, launched an attack on the airline industry for its attitude to climate change in the Guardian on Friday. He said Ryanair represented “the irresponsible face of capitalism” and said the attitude of the main American airlines was a disgrace.
This is typical posturing from the government. It does not consider the immense economic and human benefits from air travel. Nor does it take into account the relatively minimal impact it has on climate (see my 22 November dispatch). Instead it uses the air travel debate to further its moral crusade aimed at curbing consumption growth. With New Labour in office who needs lobbying groups such as the aptly named Plane Stupid?
Unfortunately the airline industry conceded too much ground to the minister. Michael O’Leary, the head of Ryanair, hit back in a BBC interview saying his airline was “the greenest in Europe”. He accused Pearson of being “silly” while pointing out the power generation and road transport were between them responsible for over 50% of emissions. In other words, he denied that his airline was a problem but accepted the one-sided climate change agenda.
This is typical posturing from the government. It does not consider the immense economic and human benefits from air travel. Nor does it take into account the relatively minimal impact it has on climate (see my 22 November dispatch). Instead it uses the air travel debate to further its moral crusade aimed at curbing consumption growth. With New Labour in office who needs lobbying groups such as the aptly named Plane Stupid?
Unfortunately the airline industry conceded too much ground to the minister. Michael O’Leary, the head of Ryanair, hit back in a BBC interview saying his airline was “the greenest in Europe”. He accused Pearson of being “silly” while pointing out the power generation and road transport were between them responsible for over 50% of emissions. In other words, he denied that his airline was a problem but accepted the one-sided climate change agenda.
Labels: climate, environment
Friday, January 05, 2007
Essay on the “paradox of prosperity”
Spiked has published my essay on the myth of the “paradox of prosperity”. Growth sceptics make great play of the fact that, above a certain threshold, economic growth does not seem to make people happier. But who promised it would? Whatever people’s subjective feelings the rise of popular prosperity is immensely beneficial. And wanting even more should be welcomed rather than derided.
Thursday, January 04, 2007
Speaking at development events
I will be speaking at a seminar on Amartya Sen’s seminal Development as Freedom at 7pm on 24 January at the University of Westminster. The book is probably the most eloquent statement of the case for downplaying the importance of economic growth in the development process. Not only is Sen a top academic, with a Nobel price in economics, he has also acted as a senior adviser to the United Nations and the World Bank.
The seminar is not restricted to those at the University of Westminster. For more details click here.
I will also be speaking at an event in Newcastle on the environment and development on 17 March. The Saturday conference is jointly organised by the Great Debate and Worldwrite. Details are available here.
The seminar is not restricted to those at the University of Westminster. For more details click here.
I will also be speaking at an event in Newcastle on the environment and development on 17 March. The Saturday conference is jointly organised by the Great Debate and Worldwrite. Details are available here.
Labels: development, speeches, Worldwrite
Wednesday, January 03, 2007
Scientists against celebrity nonsense
Science about Science, an independent charity, has produced an excellent leaflet with scientists debunking some of the pseudo-scientific claims made by celebrities. For instance, David Baddiel, Melinda Messenger and Sharron Davies have all complained that their bodies contain dangerous chemicals. What they neglect to mention is that the exposure is so tiny it will not have any damaging effect on their health. And Jamie Oliver says he prefers organic food because it is “grown with nature”. Yet all our crops and domestic animals have been created by selective breeding over 10,000 years.
