It's so easy to critique Jeffrey Sachs. His failures in logical argumentation are so transparent that I think his stuff gets distributed either because he's so famous that nobody "edits for reality" or because his real job is to give bloggers like me great material to ridicule.
Anyway, in this piece, he argues that scarce resources are going to slow growth for the poor -- see this prior critique of that idea -- and he uses bad examples:
- a simple correlation between energy prices and growth that fails to control for other factors.
- an assumption that a bigger economy uses more resources, which is certainly not true. China uses more resources than the US and has a smaller economy.
- cheap resources are gone BUT technology lowers the cost of using resources -- he's contradicting himself there, so I don't need to say anything.
Yet investments in new resource-saving technologies are not being made at a sufficient scale, because market signals don’t give the right incentives, and because governments are not yet cooperating adequately to develop and spread their use...["if the world cooperates"?!? Wait, how do I get in touch with this "world" fellow? People make decisions -- not organizations or governments! Arg! Sachs the Macro Man does not appear to have heard of individuals...]
But if the world cooperates on the research, development, demonstration, and diffusion of resource-saving technologies and renewable energy sources, we will be able to continue to achieve rapid economic progress.
Instead of more government programs, how about we:
- Establish a market for water. Governments can do this by selling water rights.
- When farmers have to pay more, they will try to use less.
- Companies will innovate to come up with technologies that use less.
- Competition will result in the creation and adoption of the best technology.
- Resources are not wasted and people do more with less.
- This productivity leads to greater wealth.
* I'm trying to keep the critique shorter, but he's got so much crap in here.
4 comments:
You wrote: "Establish a market for water. Governments can do this by selling water rights."
Whose water rights are they to sell? Existing rights holders already oversubscribe every basin in the arid west. I don't think you are suggesting that these right be seized and resold by our Government, but the statement reads that way.
Certainly assuring water rights holders that they can sell some water without fear of losing their rights to that water is, and has been, an important step in making water markets work better. But markets alone can't solve the problems we are facing in CA. Marin County, for example, can afford to buy lots of water, but unless they have lots of tank trucks and buckets it won't do them much good.
Philip -- this post is about water in the developing world, where many of the "rights" are held by government. I agree with you wrt water in the "arid West".
If Marin cannot afford more conveyance, it can use markets to allocate its existing, limited supplies among users :)
Your argument is lacks a basic understanding of resource distribution. I will try to put it into a very simple choice of words. China uses more resoureces than the USA, since the population of China is four times as great as the population of the USA.
Sachs is absolutely right by stating that larger economies use more resources, since a large economy stands for high production.
@Anon -- you condescension is exceeded only by your ignorance.
GDP, whether measured in $ or PPP terms, does not have a 100% correlation with resource intensity (see my post today).
That means that the size of the economy does not move in tandem with its "resource footprint"
Second, the efficiency of an economy is measured by GDP/capita. On $, PPP and resource measures, Americans consume more per capita than Chinese.
The only place where you *may* be right is when resource use is 100% correlated with population, e.g., Chinese breathe as much air as we do (far dirtier), and there are 4x as many of them. Thus, they consume 4x the air "resource" that we do.
Keep reading.
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