Wednesday, November 01, 2006

Standards of living

One of my favourite activities on this blog has been to point out the absurdities of prosperity. This isn't to say I think the goal of prosperity is absurd, only that we have no way - in the real world, today - of achieving what we call prosperity today for the bulk of the world's population.

Let's say, for a moment, that I've got a magic wand that can grant me any wish I want. Because one of my biggest concerns is global poverty, my first wish would probably be to grant every human on Earth a good standard of living. But what's good? If we take the US per capita GDP as a benchmark, that implies a gross world product of 272 trillion dollars. For simplicity's sake, let's assume my magical wand has Leninist tendencies and is allowing no variance from the mean - everyone has roughly $42,000 a year (America's 2005 per capita GDP) but no more or less.

Some obvious first thoughts: on average, the US doesn't directly benefit from this at all, even though the (poorer) majority of Americans would benefit a great deal. In fact, America's relative position in the world would have shrunk dramatically - India and China would each have 4-5 times America's wealth. Given the combination of those two facts - the wealthy would be "punished", America would be marginalized - can we realistically expect American politicians to support this kind of idea, even though it would make the world an immeasurably better place?

To put it in terms of my academic studies, who would win the argument - liberals or realists? In gross caricature, liberals would argue that America has lost nothing, so it would be silly to object to this scenario. In fact, liberals would argue that America has gained a number of new trading partners, so what's the problem? Realists would say America has lost everything - a once-hegemonic power would now be a distant third, if that.

If America would be somewhat marginalized in this scenario, Canada would be entirely so. Our standard of living wouldn't improve that much, if at all, while we would now comprise less than 1/2 of 1 per cent of the global economy.

Then there's the environmental problems - given current statistics, there is simply no way that an American standard of living is sustainable for 300 million Americans, much less 6 billion unAmericans - you know, the rest of us. Just to illustrate, each American consumes 24 barrels of oil a year, while the average human consumes just less than 5. For 6 billion people to consume 24 barrels of oil a year would imply a global production of 144 billion barrels a year, or just under 400 million barrels a day - five times current production, and enough to deplete the proven reserves of the Earth in... five years, assuming you could get it all. Say another five if we get all the tar sands and all the oil shale, which is doubtful.

So the final implication from these numbers is that the American standard of living is permanently out of reach to the global poor - if you don't already have a car, you probably won't get one in the future.

How likely is this scenario? Not very. But it's worth considering that, with a current Gross World Product of $43 trillion, it would take less than three doublings to exceed our theoretical $270 trillion. At 3.5% growth per year - less than last year's growth - approximately 60 years from now.

The problem, of course, is that I've equated "the American standard of living" with "aggregate American economic behaviour", two phrases that are used interchangeably, but - if they are to have any meaning in the future - are totally, irreconcilably, opposed to each other.

I bring this up as part of my ongoing reading of the Stern Review. It brings up an important aspect of sustainable development - the problem of what Stern calls "intertemporal equity", or making sure that our children and grandchildren have the opportunity for the same quality of life that we have today.

That this needs to be said is stunning - it used to be assumed that we would leave a better life for the next generation, right? (I ask because, having been born in 1981, this was not a promise that was ever made to my generation.) One of Stern's many, many arguments is that we cannot ethically decide to enjoy our standard of living now if it directly removes that possibility from future generations, with obvious implications for climate change.

Again, it's depressing this needs to be restated because it is almost the verbatim definition of "sustainable development" the Brundtland commission gave us nearly a quarter-century ago.

Anyway, the final reason to think about all of this is simply because it illustrates how totally ridiculous the idea of "sustainable fossil fuels" is, and why anyone who would like to see continued real, per-person economic growth on a global scale needs to understand how limited the fossil fuel reserves actually are. The only way we will meet the economic needs of the 21st century is with renewable resources - wind, water, but especially solar energy all provide vastly more energy potential than our dwindling dead-dinosaur fortune.

1 comment:

Ronald Brak said...

You're right that a world full of people burning oil and coal like America does is not sustainable. But it's certainly possible for everyone in the world to be as rich as Americans. Rich countries such as Japan and in Western Europe show it is possible to be prosperous while using much less fossil fuels per person than the U.S.

If we could cast a magic spell to get stop climate change and HIV then I would predict the rest of the world would catch up with the west as China and India and quite a few other nations are doing now. The cost of low and zero emission energy sources are currently not that much higher than coal and gas and are coming down in price and the use of fossil fuels in transport can be greatly reduced with technology we have right now.

In reality climate change and HIV makes life extremely precarious for the poorest people on earth, but I am still optimistic about what can be achieved over the next 25 years.