Profitable Aid

Oh dear, the U.S., among other rich nations, is under pressure to aid poor countries facing starvation and drought and flooding from the effects of the climate change induced by the rich nations’ profligate use of fossil fuels.  The latest UN report in late March had the World Bank report of the need for $100 billion annual aid to ameliorate climate change effects in poor countries removed from its executive summary, though still contained in its body, because of fears from rich countries that such language would force a doubling of their foreign aid during a time of depression.  Let’s see, that would mean for the U.S. an increase in foreign aid from .19 percent of GDP to .38 percent of GDP. What excessive generosity!  Why that’s the current percentage level of foreign aid giving of France or Germany, though it would be somewhat made up for by the fact that much of foreign aid will really be spent in the U.S. itself..  And it’s almost one-fifth of the annual growth in global soft drink consumption, which, by the way, also contributes to starvation by raising the global price of corn.  How dare anyone suggest such an idea!  The prognosticators are not giving increased aid by the U.S. much chance for success.

Sorry for the sarcasm. But it’s hard to avoid when such attitudes prevail in the face of a common crisis.  And that’s what the latest UN report highlights, that climate change is rapidly involving all nations, from Mediterranean droughts to melting Himalayan glaciers to sinking Polynesian islands.  There’s increasing likelihood of food shortages, which means the poor will, as usual, suffer most from the rising costs.  It is also increasingly likely that temperatures will soar above prior determined dangerous limits.  That’s why the focus of the report is on the need for immediate action.  Meanwhile, the “not my SUV crowd” is making it an article of faith that such warnings should be ignored, because they are bad for business.  According to them, the thousands of scientists who compiled the report can indeed be wrong, and are probably secret conspirators anyway.  Has anyone attended a scientific conference lately?

As for the unpleasantness of foreign aid, longer memories than most rampant libertarians seem to possess would recall that 90 percent of the original Marshall Plan aid money was actually spent on things built in the U.S., and helped boost the U.S. economic recovery from WW II as much as Europe’s.  The roaring times of the late 40s and early 50s were in part due to that.  Other contributors to a booming economy, by the way, were that big-government infrastructure boondoggle the interstate highway system and big government at its worst, the G.I. Bill.  Even libertarians don’t even have to feel generous to appreciate that.

Tuesday, Justin Lin, the Chief Economist for the World Bank, warned of the danger of the whole world falling into economic stagnation and depression because of faltering global demand.  He called for a world-wide Marshall Plan for $2 trillion from rich nations to be spent over five years to prevent that, noting that stimulus of poor countries will produce faster, stronger results than stimulus in less consumption-intensive rich countries.  Poor economies don’t just stash away cash in Swiss bank accounts; they go out and spend, creating multiplier effects. Lin suggests things like building new roads, bridges and ports to facilitate trade,  But what better things to spend stimulus money on than ways to handle climate change?  Numerous businesses around the world are already discovering that battling or adapting to climate change can actually be profitable.  It is in fact good for business.  The twin focuses of the new plan could be both trade and climate change.

I've mentioned before that the better way to deal with all the conflicts around the world (including the rich vs. poor nation type) is to treat them not as zero-sum games where one side must lose for the other to win.  Instead, the real winning approach to a better world is to treat the process like a jigsaw puzzle, where differing pieces are gradually put together to create a winning big picture for all.  Sometimes, looked at that way, putting together two problems creates a solution. This rich versus poor controversy could be a classic example.  Instead of fighting each other over a dwindling pot, we need to find ways to help each other and benefit at the same time. The new Marshall Plan proposed by Lin with an additional focus on climate issues is just the sort of project that could benefit all.