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How to Spend $50 Billion to Make the World a Better Place

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This book may have a catchy title but it deals with many serious problems. It is an abridged edition of "Global Crises, Global Solutions," a work which brought together recommendations of the Copenhagen Consensus. The 2004 Copenhagen Consensus was an international meeting held in Copenhagen, Denmark, and included a debate among 38 of the world's top economists and an expert panel of eight top economists, each of whom prepared a paper on various global problems which were then presented to the whole group for discussion and criticism. The main question put to the conference was certainly a timely one: "If we had an extra $50 billion to put to good use, which problems would we solve first?" Hence the title of the book.

The expert panel inquired into nine global challenges in an order of importance and presented proposals for addressing these challenges. They were guided "predominately by consideration of 'economic costs' and 'benefits'" -- something one would expect from economists considering these issues. The challenges include climate change, the spread of communicable diseases, conflicts and civil wars, access to education, poor governance and corruption, malnutrition and hunger, population migration, sanitation and access to clean water, and subsidies and trade barriers. A tenth challenge dealt with international financial instability, but the panel chose not to come to a view about any proposals to recommend.

The challenge which ranked first of concern to the Copenhagen group was within the area of communicable disease, specifically controlling the spread of HIV/AIDS through new measures of prevention. The estimated cost of this investment was set at $27 billion, more than half of the $50 billion limit. In second place was providing micronutrients, which fell into the malnutrition and hunger category, at a suggested cost of $12 billion. Next was trade liberalization in the subsidies and trade barriers category (minimal cost), then control of malaria within the communicable disease category. These were chosen as the four best opportunities to change the world at this time. Population migration and climate change challenges were at the bottom of the list of proposals. In the book a chapter is devoted to each of the nine major categories and each includes an introduction by an expert or experts, followed by a summary of opposing views by other participants.

As I was reading through the book, I found myself in a constant dialogue with the various writers and with the whole project in general, asking questions and challenging the ranking. I questioned why the HIV/AIDS proposal, for instance, ranked number one. I questioned why the issue of conflicts and civil wars was not ranked at all; it wasn't even included in the ranking table. I questioned why poor governance and corruption was ranked only ninth, below the proposals in the sanitation and access to clean water category. I would have ranked poor governance and corruption as number one or two and would have ranked conflicts and civil wars right before or after it. Why was I so far off from the ranking priorities of these economists?

Then it dawned on me. These were economists! They were all economists! They looked at these challenges from the viewpoint of economists, primarily considering cost-benefit ratios and so forth. Then I recalled something from Lomborg's introduction to the book. He had written: "Why were all the experts economists? Many have questioned this. The goal for the Copenhagen Consensus was to set priorities using the expertise of economists to set economic priorities." And that explained it. I am not a trained economist. I was trained as a political scientist and I was looking at political priorities. From my perspective, little can be achieved regarding disease prevention, access to education, malnutrition and hunger, sanitation and access to clean water, and such, until a political situation is formatted and stabilized. My concern, therefore, would naturally be toward the categories of poor governance and corruption and conflict and civil wars and suggesting proposals to resolve those issues -- first.

This, of course, has nothing to do with who is right and who is wrong, or who possesses the "true" program for making the world a better place. It's a matter of one's perspective. The economists were quite correct in looking at solutions from a cost-benefit point of view. I needed to change my perspective. And the major contribution of this book to my thinking is that it forced me to do so. It didn't take me long to realize that with "only" $50 billion to spend, I would run out of money very fast if I spent it on trying to bring about good governance and eliminate political corruption throughout the world. My ranking would have been "impractical" and most likely doomed to failure. After all, the American government's war and reconstruction in Iraq is costing billions of dollars a month! (And not currently achieving all that much, either.)

So I read back through the book again with a different attitude, adopting a different mindset. I then decided if any realistic, substantial change in the world is to come about, it would have to materialize along the line that these economists had suggested. If we only have $50 billion to spend, then we probably ought to spend it on those goals that can be realistically achieved and these economists were approaching things more realistically than I initially was. If we can prevent the spread of HIV/AIDS by spending $27 billion on the problem, then I say "Go for it!" If we can solve a part of the malnutrition and hunger problem by spending $12 billion, then I say "Let's do it!"

This is an excellent book for anyone who wonders: "If I only had $50 billion to spend, how would I make the world a better place to live?" This is a thought-provoking book which will force readers to rethink their priorities and values, and may provide them with a new perspective toward the very real challenges we all face today in the international arena.

Given tens of billions of dollars to protect the planet and improve the human condition, how would those dollars best be spent?

Some of the world's leading social economists were recently asked to tackle this question, and former Greenpeace activist Bjorn Lomborg has reported on the results in his excellent book, How to Spend $50 Billion to Make the World a Better Place.

"Green" is now a major world religion, and the belief in anthropogenic global warming is evidently the pathway to heaven. Actually, it looks more to me like a religious cult from an old Indiana Jones movie, but its greatest crime is the wasting of the world's economic resources when they could so easily be used to solve many of the real problems of the developing world.


Tackling Human Misery

This book is written in readable economic language, concisely placed on only 208 pages, containing nine chapters dealing with communicable diseases, civil wars, the lack of education, poor governance, corruption, hunger and malnutrition, population migration, water, subsidies and trade barriers, and global warming. Each subject is covered by one or more authors and then critiqued by someone with slightly opposing views.

The second half of the twentieth century brought enormous improvements in health across the world. In fact, life expectancy in developing countries has increased faster than in industrialized countries, although this is easier done because of a lower initial baseline. Areas such as sub-Saharan Africa, however, have largely been left behind.

An early example of the excellent facts contained in Lomborg's text tells us, "in 2002 there were 57 million deaths worldwide. Of these 20 percent were children under five, and 98 percent of these childhood deaths occurred in developing countries." Communicable diseases account for seven of the top 10 causes, resulting in 60 percent of premature childhood deaths.


Desperate Need for DDT

One downside of Lomborg's environmental activist roots is evident in the chapter covering malaria. While malaria kills two million people each and every year and exacts a huge burden on Third World economies, the book fails to mention DDT, the most effective weapon against malaria, among its proposed solutions.

In fact, the acronym DDT appears absolutely nowhere in the text, proving the contributing economist authors have been brainwashed by the environmental zealots who have allowed, if not caused, the deaths of more than 50 million people worldwide over the past 30 years by banning a chemical that's harmless to humans and animals but kills and repels mosquitoes effectively.

Lomborg himself proposes treated bed nets, which pale in comparison to the effectiveness of targeted, indoor DDT applications.


Cost of Conflict

Moving on to a less-frustrating section, I will wager few readers have seen real-dollar calculations for the economic effects of reducing the incidence of civil war. Paul Collier and Anke Hoeffler, two contributing authors to the book, tell us, "one year of conflict reduces a country's growth rate by 2.2 percent. Since, on average, civil conflict lasts for seven years, the economy will be 15 percent smaller at the end of the war than if the war had not taken place."

They also inform us it takes an average of 21 years for an economy to get back to its prewar condition. At the regional level, analysis shows the growth rate of neighboring countries not directly involved in the conflict is reduced nearly a full percent during the war.

Excluding India and China, the 21 countries that were involved in wars between 1965 and 1969 each suffered an average of $54 billion in economic costs. While this is indeed a significant figure, Collier and Hoeffler tell us countries that have experienced a civil war are almost twice as likely to experience another civil war over the next five years as those that did not.

This is fascinating stuff and makes one respect the humorless but altruistic and useful effort of economists to measure human misery in dollars and cents.


Costs of Corruption

Contributor Susan Rose-Ackerman brilliantly describes the challenge of poor governance and corruption. She notes researchers at the World Bank estimate governments are influenced by $1 trillion in bribes annually, which is 3 percent of global GDP.

Rose-Ackerman says, "Corruption is one symptom of a failure to achieve an appropriate balance between private wealth and public power." Ineffective government breeds corruption. Thus policies focusing solely on economic growth will not be sufficient to reduce corruption if the state is not well-governed.

But compared to other global challenges such as hunger, disease, and conflict, corruption is too often overlooked as a root cause of the world's problems. Rose-Ackerman tells us, "There seems to be two ways to limit corruption via grassroots involvement: monitoring the use of central funds and reporting misuse, or local provision of service under contract."


Fighting Hunger, Malnutrition

The chapter on hunger and malnutrition reviews the nature and scale of the problem and the economic benefits that would flow from successful solutions.

They propose four opportunity areas for effectively reducing malnutrition: Reduce the prevalence of low birth weight; promote infant and child nutrition and exclusive breast feeding; reduce the prevalence of deficiencies in iron, vitamin A, iodine, and zinc deficiencies; and invest in technology to assist agriculture in developing countries.

To reduce the prevalence of iron, iodine, vitamin A, and zinc deficiencies, the authors are confident additional micronutrients can be delivered in a variety of ways including fortified flour, the use of iron skillets, and an all-out effort to provide vitamin supplements at extremely low cost.


Water Distribution Problems

Frank Rijsberman's chapter, "The Water Challenge," is quite outstanding. It's important because nearly half the population of the developing world suffers disease related to access to clean water and sanitation.

His opening paragraph nails the problem: "There is clearly sufficient water available in the world for all mankind's needs: domestic, industrial, and agricultural, although distributed very unevenly. The problem is not lack of water, but that the unserved do not have access to capital (financial or political) to make it available to them."

Rijsberman tells us poor returns from centralized water infrastructure projects have shown such projects are best managed at the local government or community level. Additionally, he notes, there is evidence government is not necessarily a better provider of water service than the private sector.


Encouraging Trade

Kym Anderson does a nice job sorting through barriers to economic growth. The main thing, the author says, is to press for free trade.

Anderson reports economic gains "arise from countries producing more of the goods and services they can provide most efficiently, and less of what others can produce more efficiently. Each country will maximize the value of its output of goods or services and these will be sought by trading partners because they are competitively priced. After trading, each individual country will be better off than in a world without trade."

Evidence gathered during the second half of the twentieth century shows countries that have liberalized their trade have enjoyed an average 1.5 percent increase in annual GDP growth over the pre-reform rate.


Warming Money Wasted

In the end, unfortunately, Lomborg tackles global warming in a most unsatisfactory manner. Sound scientific objections to global warming alarmism are altogether absent from the book. Despite this deficiency, Lomborg certainly does not recommend precious economic resources be spent on global warming.

As the book shows, the massive amount of financial resources needed to cause even a minor change in future temperatures would be far better spent addressing many of the problems described in the book, as they are already killing and impoverishing millions of people each year.

The book is a quick and easy read. While not all its answers are simple or definitive, it is guaranteed to open your eyes to the real problems of the world--and to the absurd waste of resources promoted by the wrongheaded do-gooders so prevalent in the world today.


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Jay Lehr, Ph.D. (lehr@heartland.org) is science director of The Heartland Institute.

I greatly enjoyed this little book as well as the Skeptical Environmentalist. Lomborg applies real world cost-benefit economics to our limited resources. So many so called charitable causes are completely unjustified when compared to other possible uses of the money.

This books reviews the outcomes of the so-called Copenhagen consensus, in which a panel of distinguished economists try to rank the policy solutions to the most important problems that face the world today in terms of their costs and benefits. The problems include climate change, hunger and malnutrition, preventable diseases, conflicts and civil wars etc. The book gives a short outline of each proposed policy presented by experts in the field, then a critical evaluation of each policy and finally a comment of the resulting ranking.

This is an interesting work for several reasons. First, if you are not familiar with the Copenhagen Consensus the book is guaranteed to provoke you. The core idea is at the same time simple and extremely controversial (see below), as is the actually produced ranking. Second, because each chapter treats one problem presented and criticized by experts, it is a good opportunity to become a little bit of an expert yourself.
I say 'a little bit' because the chapters are severely truncated from the earlier, complete version of this book, and leave many open questions. Reading it is therefore rather unsatisfactory at times. At the same time the text is often dry. Saying that this is a popular version that is aimed at the general public solves the first issue but makes the second more salient. Anyway, these presentational issues aside, it is a rewarding shortcut to an important work of global citizenship.

As for the central idea behind the Copenhagen Consensus: I sympathize greatly with it (although I can find some fault with its execution). In this age where everybody talks about globalization, it is about time that somebody took an integrated view to the world's problems. Since it is clear that there is not enough money to solve them all now, a pragmatic approach like this is exactly what is needed.

Some critics object that cost benefit-analysis is demeaning when talking about human life. I think what they really mean is that the costs and benefits that they find important have not been included. Of course cost benefit-analysis has its problems that are also apparent in this book. It fails when uncertainties become too big, and the impact of some problems on future generations is just very hard to estimate. It also has to rely on valuations of human life that are in some instances very controversial.

But the critics have to face the fact that there are no completely satisfactory solutions to these issues. Does that mean we should do nothing? I think that the setup of the conference, based on a discussion of experts that have to convince a jury of economists (experts in cost-benefit judgements), does a good job at minimalizing concerns of inclusiveness and to a lesser extent valuation. It may also interest critics of the economist's panel to know that a panel of international and interdisciplinary students came up with almost exactly the same ranking as the economists did.

What I do find puzzling is the amounts of money allocated to each project. In the setup, each project has a cost chosen by the expert, and can be either wholly adopted or not adopted at all. It would have made more sense to sketch how much can be accomplished by allocating different amounts to each problem and then let the experts decide on the final amounts. Otherwise, a good start, let's hope to see more on this!

It appears that Lomborg has reverted to his childhood idealism. Let me don his former mantle as a skeptic.

The Wikipedia brief definition of economics is the "science which studies human behavior as a relation between scarce means having alternative uses," or, "how people seek to satisfy needs and wants." Lomborg's authors' equations are all reduced to a cost-benefit analysis. A life saved, or a disease prevented, represents an economic benefit and costs avoided. In the simplest application, if the cost per case of treating a curable disease such as syphilis were $1000, and the cost per capita of inoculating against it were $100, and the incidence were 20%, the equation would be:
Cost per capita of inoculations: $100
Cost of not inoculating: $1000 × .2 = $200
Assuming the costs would be borne in the same timeframe, the return on investment for inoculation would be 2 for 1, or 200%

At the most profound level, the logic of human population is non-economic. Not only is doing so morally repugnant to many, there are vast practical difficulties assigning economic value to value human life. Humans are inexpensive to reproduce but costly to maintain. Human beings are unique. A unique set of future economic costs and returns, could be computed for each of us, based on native ability, education, social and work situations, health and remaining lifetime. Not only must the calculation be unique, but also be wildly approximate. Even before taking externalities into account, Lomborg is making a twofold error. He is presuming that human life can be assigned a monetary value, and that such value can be fairly accurately estimated.

Lomborg's economists make projections about unknowable costs and benefits. Especially when betting on future technology, such assumptions can be off by orders of magnitude. What will oil cost in ten years? Solar energy? Estimates vary extravagantly. Such variability renders his computed returns of investment, mostly in the range of 150-200%, essentially meaningless.

The unstated assumption is that the world knows how to define its needs and to communicate them to Lomborg's economists.
Their apparent assumption is that the highest good, for which economists should strive, is
1) saving a maximum of human lives. Possible alternatives might be:
2) minimizing human suffering
3) maximizing human fulfillment, as per the Maslow triangle
4) maximizing the economic life of the Earth's resources.
5) maximizing humanity's potential for achievement, per Charles Murray
6) ensuring humankind's long term survival
All of these formulations are consistent with the existentialist, Darwinian/ Dawkinsian view that mankind is no more than the product of eons of blind evolution. The number would expand dramatically with the admission of teleological arguments advanced by the religious. Even accepting the existential premise that humankind has no purpose, Lomborg must confront the fact that the decision to commit $50 billion to the betterment of mankind involves value judgments. Gates and Buffet, if not Lomborg, are setting themselves up as gods. How will they shape their creation?

Lomborg's finding that the best uses of $50B will be to control HIV/AIDS and malaria assumes alternative 1) above: maximizing human life. It doesn't ask the question of what becomes of those lives. How do those people live? What do they do? Even today the answer is bleak. Traditional small scale agriculture village life cannot support the population densities that even primitive medicine have created. The poor of the Southern hemisphere, especially Africa, are moving to the cities, which have no work for them. The physical, social, educational and judicial infrastructures that would support industry just don't exist. Grafting them from the European model didn't work, and there is no indigenous model of social organization above the tribal level. Even today there is an immense press of immigration towards Europe, one which rightfully scares many Europeans including Lomborg's fellow Danes.

The Danes and the Dutch built prosperous societies with far fewer resources than most developing countries enjoy. I would propose that Lomborg consider, as an alternative, using the $50B in an attempt to build a successful civil societies in the Middle East and Africa. Intelligent man that he is, he should reply that it is impossible. Aid programs, the World Bank, the IDB and a host of volunteers and NGOs over the past century have demonstrated that it can't be done. Intelligent man that he is once again, he should reflect on why these effort haven't worked, and then on the unintended consequences of his program to reduce disease there.

Before enabling population growth, researchers should determine why some parts of the world cannot organize the agriculture and industry to support the present populations. UNESCO and others believe it is a want of education. Lynn and Vanhanen believe it is a want of the intellect required to absorb education. If education can be the foundation for civil society, the balance of the $50B would be well spent there. If curing AIDS and malaria will only exacerbate Europe and the West's own problems, the money might be better spent on projects Lomborg considers less promising, such as reducing global warming.

Lomborg is talking about the deployment of money earned in the West, by western men, benefiting from our western values and heritage. It is liberalism that fosters the altruistic desire to better the state of the world. Would it not, however, be perverse if that altruism contributed to western society's own demise?

This book makes plausible and somewhat thought-provoking claims about how an altruist ought to spend money to provide the most benefit to the needy. It concludes that high priorities should include control of HIV, malaria, malnutrition, and trade barriers.
It appears to come close to being a good book. It addresses fairly good questions about important issues. Unfortunately, it has been simplified for readability to such an extent as to prevent it from accomplishing much. Its arguments aren't sufficiently detailed or backed by references for me to evaluate them. So they were probably intended to be accepted as a result of the authors' authority. But their credentials leave plenty of room for doubt about how much deference their authority deserves.
So I'm left unsatisfied, and highly uncertain whether I ought to read the more detailed version of this book (Global Crises, Global Solutions).