The global economic unbalances related to US commercial and fiscal deficit kills thousands of children every year and they are going to strike even harder everywhere Moisés Naím

Moisés Naím

 

Little murders Washington – In 1970 the world suffered 78 major natural disasters that affected close to 80 million people and caused material damage for over US$ 10 billion. In 2004, there were 384 natural disasters that caused 200 million victims. The economic cost was multiplied by five, rising to US$ 50 billion. The final figures for 2005 will be even worse. One of the reasons for the enormous increase in the number of disasters is that many of those that in the past went by unreported, today are registered. But even with this fact in mind, the number of floods, hurricanes, typhoons, landslides and other natural disasters has grown exponentially in the last decades. And what is worse, the catastrophes usually cause more victims and are more costly than they were a generation ago. Not only is the world more populated, but also there are more people living in dense and fragile urban areas or in vulnerable and badly built settlements. It is not a surprise what the Red Cross states, in terms that the number of “environmental refugees” has grown up to an average of 19.2 million per year (more or less the same number of refugees for all the other causes put together, according to UN statistics). Tragically, the budgets of the international organizations in charge of aid distribution and reconstruction after the catastrophes have not been growing like the disasters have. The world’s response capacity to these circumstances is well below the needs. The World Bank, a fundamental source of money and technical assistance for reconstruction projects, lends less money now than ten years ago. The budget of the UN High Commissioner for Refugees has increased only 62% since 1990, despite the tremendous increase in demand for its services and the forecast that in 2010, 50 million people will have been relocated only for environmental reasons. On the other hand, UN’s total budget has only grown in a meagre 26% in the last 15 years. Therefore, it is not a surprise that a recent report concluded that the UN headquarters is suffering from “unacceptable deterioration, building and fire hazard protection deficiencies, as well as modern security requirements and environmental problems”. There are a number of explanations for this dangerous unbalance, but the most important one comes from the nature itself of what economists call “public goods”. These are things that when used or enjoyed by a person, it does not hinder that they be used or enjoyed by others (if your neighbours decide to pay for the lighting of a dark alley, you can enjoy the benefits without having contributed to the costs). But, just as there is a need for very local public goods (traffic lights, policemen, etc.), they also exist at world level. The world campaign to stop an avian flu world pandemic, the air transportation international regulation system, the efforts to restrain terrorism or the control over environmental degradation, are some of the most evident examples of global public goods. Supplying these valued goods –even when the governments administer them within their own frontiers- is problematic. When these public goods can only be “produced” through the joint efforts of many countries, or by organizations such as United Nations, the difficulties to balance offer and demand are even greater. Offer will always be a couple of steps back, and this is a deficit that kills. So, the fact that once a public good has been produced it is impossible for the owners to prevent others from using them without paying, causes that the production of public goods always tends to be insufficient: if the investment cannot be recollected and get a profit, there is no private investment. That is why governments and other public institutions are usually the sole providers of public goods. And generally speaking, governments answer with delay to the demand for public goods. In any market, the prices rise when the demand is higher than the offer. In the global market for public goods, when the offer falls behind the demand, the consequence is not inflation, but insecurity and instability for all. It is true that many problems –financial crisis, pollution, criminal networks and terrorism, to name but a few- are more deeply rooted in some countries than in others. But these problems are crossing national frontiers more and more often, and they will extend to the whole world unless a couple of countries, or frequently many countries, work together. The United States, Japan and Europe weren’t able to avoid the consequences of the SARS virus in 2003, nor will they be able to avoid an avian flu epidemic if they protect only their own frontiers. Their destinies are unavoidably related to how well China, Vietnam, Turkey and Burma or other countries do in controlling the mortal break out. In fact, experts fear that the organizational, financial and medical measures taken until now to combat the avian flu epidemic will be pitifully insufficient. The global economic unbalances related to the US commercial and fiscal deficits, to the Chinese currency exchange or to Europe’s slow growing rate, in the long rum may cause unemployment, lower incomes and more poverty. These are unwanted results. But they are pale in comparison to the consequences of the unbalance between the offer and the demand for global public goods. This is an unbalance that kills thousands of people every year, and it will be striking closer and closer to home. Everywhere.
__________________
Moisés Naím Director of Foreign Policy magazine and author of Illicit: How Smugglers, Traffickers and Copycats are Changing the World. Translation by News Clips .