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India’s great moral leader, Mohandas Gandhi,
famously said that there is enough on earth for
everybody’s needs, but not enough for everybody’s
greed. Gandhi’s insight is being put to the test as
never before.
The world is hitting global limits in its use of
resources. The shocks can be felt each day in
catastrophic floods, droughts, and storms, as well
as in the resulting surge in prices in the
marketplace. Whether people cooperate or fall victim
to self-defeating greed will determine the world’s
fate.
The limits to the global economy are new, resulting
from the extraordinary size of the world’s
population and the unprecedented spread of economic
growth to encompass almost the entire world. There
are now seven billion people on the planet, compared
to only three billion half a century ago.
Average per capita income is 10,000 dollars, with
the developed world averaging around 40,000 dollars
and the developing world around 4,000 dollars. The
world economy is now producing around 70 trillion
dollars annually, in comparison with around 10
trillion dollars, in 1960.
China’s economy is growing at around 10pc annually.
India’s is growing at nearly the same rate. Africa,
long the world’s slowest growing region, is
averaging annual GDP growth of roughly five per
cent. Developing countries are growing at around
seven per cent per year, and developed economies at
around two per cent, yielding a global average of
4.5pc.
This is good news. Rapid economic growth in
developing countries is helping to alleviate
poverty. In China, extreme poverty has been cut from
well over half of the population 30 years ago to
around 10pc or less.
Yet, there is another side to the global growth
story that must be understood. With the world
economy growing at four per cent to five per cent
annually, it is set to double in size in less than
20 years. The world economy will reach 140 trillion
dollars before 2030, and 280 trillion dollars before
2050, if the current growth rate applies.
The planet will not physically be able to support
this exponential economic growth if greed gets the
upper hand. The weight of the world economy is
already crushing nature, rapidly depleting the
supplies of fossil-fuel energy resources that nature
created over millions of years, while the resulting
climate change has led to massive instabilities in
terms of rainfall, temperature, and extreme storms.
These pressures are visible in the marketplace
daily.
Oil prices have surged to more than 100 dollars per
barrel, as China, India, and other oil importing
countries join the US in a scramble to buy up
supplies, especially from the Middle East. Food
prices, too, are at historical highs, contributing
to poverty and political unrest.
There are more mouths to feed, but people also have
a greater purchasing power, on average. Heat waves,
droughts, floods, and other disasters induced by
climate change are destroying crops and reducing the
supplies of grains to world markets. In recent
months, massive droughts struck the grain producing
regions of Russia and Ukraine, and enormous floods
hit Brazil and Australia; now, another drought is
menacing northern China’s grain belt.
There is something else hidden from view that is
very dangerous.
In many populous parts of the world, including the
grain growing regions of northern India and China as
well as the US’s Midwest, farmers are using
groundwater to irrigate their crops, depleting the
water table. In some places in India, it has been
falling by several metres annually over recent
years. Some deep wells are approaching the point of
exhaustion, with salinity set to rise as ocean water
infiltrates the aquifer.
A calamity is inevitable unless that behaviour
changes, which is where Gandhi comes in.
If societies are run according to the greed
principle, with the rich doing everything to become
richer, the growing resources crisis will lead to a
widening divide between the rich and poor, and quite
possibly to an increasingly violent struggle for
survival.
The rich will try to use their power to commandeer
more land, more water, and more energy for
themselves, and many will support violent means to
do so, if necessary. The US has already followed a
strategy of militarisation in the Middle East in the
hope that such an approach would secure energy
supplies.
Competition for those supplies is intensifying as
other countries begin to bid for the same
(depleting) resources.
An equivalent power grab is being attempted in
Africa. The rise in food prices is leading to a land
grab, as powerful politicians sell massive tracts of
farmland to foreign investors, brushing aside the
traditional land rights of poor smallholders.
Foreign investors hope to use large mechanised farms
to produce output for export, leaving local
populations with little or nothing.
In the leading economies, the rich have been
enjoying increasing incomes and growing political
power. The US economy has been taken over by
billionaires and the oil industry. The same trends
are threatening emerging economies, where wealth and
corruption are on the rise.
If greed dominates, the engine of economic growth
will deplete resources, push the poor aside, and
drive society into a deep social, political, and
economic crisis. The alternative is a path of
political and social cooperation, both within
countries and internationally.
There will be enough resources and prosperity to go
around if economies are converted to using renewable
energy sources, sustainable agricultural practices,
and reasonable taxation of the rich.
This is the path to shared prosperity through
improved technologies, political fairness, and
ethical awareness.
Jeffery Sachs is professor of economics at Columbia
University. This commentary was provided to Fortune
by Project Syndicate. |
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