Naked Economics Wheelan, Charles (books to read for 13 year olds TXT) 📖

No. The answer to the CO2 problem is to promote growth—in India, China, the United States, and everywhere else—in ways that minimize the environmental damage. The best way to do that is to discourage the use of dirty fuels by imposing some kind of carbon tax that is harmonized across countries—sooner rather than later, because India and China are making development decisions, such as building power plants, that are going to be with us for fifty years.

The case for keeping people poor because it’s good for the planet is economically and morally bankrupt.

Poverty is a bitch. The principal of a high school near Chicago’s Robert Taylor housing projects once told me that when I was writing a story on urban education. He was talking about the challenges of teaching kids who had grown up poor and deprived. He might as well have been talking about the state of the world. Many parts of the world—places we rarely think about, let alone visit—are desperately poor. We ought to make them richer; economics tells us that trade is an important way to do it. Paul Krugman has nicely summarized the anxiety over globalization with an old French saying: Anyone who is not a socialist before he is thirty has no heart; anyone who is still a socialist after he is thirty has no head. He writes:

If you buy a product made in a third-world country, it was produced by workers who are paid incredibly little by Western standards and probably work under awful conditions. Anyone who is not bothered by those facts, at least some of the time, has no heart. But that doesn’t mean the demonstrators are right. On the contrary, anyone who thinks that the answer to world poverty is simple outrage against global trade has no head—or chooses not to use it. The anti-globalization movement already has a remarkable track record of hurting the very people and causes it claims to champion.22

The trend toward more global trade is often described as an unstoppable force. It is not. We’ve been down this road before, only to have the world trading system torn apart by war and politics. One of the most rapid periods of globalization took place during the end of the nineteenth century and the beginning of the twentieth. John Micklethwait and Adrian Wooldridge, authors of A Future Perfect, have noted, “Look back 100 years and you discover a world that by many economic measures was more global than it is today: where you could travel without a passport, where the gold standard was an international currency, and where technology (cars, trains, ships, and telephones) was making the world enormously smaller.” Alas, they point out, “That grand illusion was shot to pieces on the playing fields of the Somme.”23

Political boundaries still matter. Governments can slam the door on globalization, as they have before. That would be a shame for rich countries and poor countries alike.

CHAPTER 13

Development Economics:

The wealth and poverty of nations

Let us briefly contemplate the life of Nashon Zimba, a twenty-five-year-old man who lives with his wife and baby daughter in Malawi. There is no question that Mr. Zimba is a hardworking man. He built his own home, as The Economist describes:

He digs up mud, shapes it into cuboids and then dries it in the sun to make bricks. He mixes his own cement, also from mud. He cuts branches to make beams, and thatches the roof with sisal or grass. His only industrial input is the metal blade on his axe. Working on his own, while at the same time growing food for his family, Mr. Zimba has erected a house that is dark, cramped, cold in the winter, steamy in summer and has running water only when tropical storms come through the roof.1

For all that work, Mr. Zimba is a poor man. His cash income in 2000 was roughly $40. He is hardly alone. Malawian GDP per capita was less than $200 at the time that story was written. Even today, the nation’s entire annual economic output is only about $12 billion—or about half the size of Vermont’s economy. Lest anyone naively believe that there is something pleasantly simple about this existence, it should be pointed out that 30 percent of young children in Malawi are malnourished; more than two of every ten children will die before they reach their fifth birthday.

According to the UN’s Food and Agriculture Organization, there are a billion people in the world who don’t get enough to eat. The vast majority are in the developing world; roughly half are in India and China. How is that possible? At a time when we can split the atom, land on the moon, and decode the human genome, why do 2 billion people live on less than $2 a day?2

The short answer is that their economies have failed them. At bottom, creating wealth is a process of taking inputs, including human talent, and producing things of value. Poor economies are not organized to do that. In his excellent book on economic development, The Elusive Quest for Growth, World Bank economist William Easterly describes a street scene in Lahore, Pakistan:

People throng the markets in the old city, where the lanes are so narrow that the crowds swallow the car. People buying, people selling, people eating, people cooking. Every street, every lane crammed with shops, each shop crammed with people. This is a private economy with a lot of dynamism.3

It is also, he notes, a country that is largely illiterate, ill housed, and ill fed. The Pakistani government has built nuclear weapons but is unable to conduct an immunization program against measles. “Wonderful people,” writes Mr. Easterly. “Terrible government.” And it is a terrible government that has become increasingly dangerous for the rest of the world. We can (probably) safely ignore Malawi. Not Pakistan.

Every country has resources, if only the