Let’s Spend that $25 Billion

I advanced the proposition that the United States decides to spend an additional $25 billion per year to help the world and asked how we should spend the money on the following list of problem areas: clean water, climate change, communicable diseases, education, financial instability, governance and corruption, malnutrition, migration, trade barriers and stopping wars.

The responses were interesting. Greg wrote: Are you really giving in on this debate??? Your messages have been so persuasive. Gary: I guess this 1 % for ten (problems) is what passes for a clever stratagem in conservative circles. Steve: Global warming is systematically dismissed by the current administration as some sort of communist conspiracy by a bunch of bleeding hearts. David: Here's a novel thought.... How about we DON'T spend it??? Instead, use it to pay down the debt. Mel: I do not think this is the right approach. Of course, it is going to cost us taxpayers a lot of money, but doing little or nothing would cost far more. Anony: With the exception of war, no conservatives believe in funding any of the above. Haya: We need to be safe. Steve, again: I would opt for using the money to fight global warming, because it potentially overshadows everything else.

At Starbucks there were two votes for clean water, one for malnutrition, one for neutron bombs. Then the two (female) votes for clean water changed to population control. I must say, this was not an entirely satisfactory exercise. But that’s OK, it was only meant to get you thinking about decisions and priorities. Too often people want to solve all the problems at once without calculating costs and wind up doing nothing good.

Other smart guys and world leaders have done this exercise and come to a set of priorities based on rigorous cost/benefit analyses.

In May 2004, eight of the world's leading economists, including four Nobel Laureates, and thirty of the world's top specialists within the ten problem areas gathered in Copenhagen. The experts identified 38 solutions that were estimated to cost far beyond $1,000 billion to achieve. Thus the panel was asked to assess what to do with an amount that might reasonably be spent by the most advanced countries.

What would be the best ways of advancing global welfare, and particularly the welfare of developing countries, supposing that an additional $50 billion of resources were at governments' disposal?

The expert panel assessed that the best and most promising solutions were the following four.

1. Disease: HIV/AIDS prevention,
2. Malnutrition: providing micronutrients
3. Trade: trade liberalization
4. Disease: combating malaria

Below these were five Good projects (5. Malnutrition: new agricultural technologies, 6. Water and Sanitation: small scale water technology, 7. Water and Sanitation: community managed water supply and sanitation, 8. Water and Sanitation: research on water in food production and 9. Governance: lowering the cost of starting a business); four Fair Projects (10. Migration: lower barriers for skilled workers, 11. Malnutrition: improve infant and child nutrition, 12. Malnutrition: reduce prevalence of low birth-weight, 13. Disease: scale up basic health services) and four Bad Projects (14. Migration: guest worker programs for unskilled workers, 15. Climate: optimal carbon tax, 16. Climate: Kyoto Protocol, 17. Climate: value-at-risk carbon tax).

Note that the proposed solutions to climate change were ranked at the bottom of the list. The numbers were compelling: $1 spent preventing HIV/AIDS would result in about $40 of social benefits, so the economists put it at the top of the list (followed by malnutrition, free trade and malaria). In contrast, $1 spent to abate global warming would result in only about 2 cents to 25 cents worth of good; so that project dropped to the bottom.

On June 16-17, 2006, ambassadors from eight countries (China, India, Pakistan, Tanzania, Thailand, the United States, Vietnam and Zambia) addressed the same set of problems and were presented with a set of global projects passionately argued by experts in those fields. Here are the ambassador’s top nine prioritized opportunities.

1. Communicable Diseases: Scaled-up basic health services
2. Sanitation and Water: Community-managed water supply and sanitation
3. Education: Build schools
4. Malnutrition: Improving infant and child nutrition
5. Malnutrition: Investment in technology in developing country agriculture
6. Communicable Diseases: Control of HIV/AIDS
7. Communicable Diseases: Malaria
8. Malnutrition: Reducing micro nutrient deficiencies
9. Subsidies and Trade Barriers: Optimistic Doha (50% liberalization)

The top four were basic health care, better water and sanitation, more schools and better nutrition for children. Averting climate change came in 27th (Kyoto) and the last three (38, 39, 40th) were various carbon taxes.

The ambassadors thought it wiser to spend money on things they knew would work. Promoting breast-feeding, for example, costs very little and is proven to save lives. It also helps infants grow up stronger and more intelligent, which means they will earn more as adults. Vitamin A supplements cost as little as $1, save lives and stop people from going blind. And so on.

For climate change, the trouble is that though few dispute that it is occurring, no one knows how severe it will be or what damage it will cause. And the proposed solutions are staggeringly expensive.

I must say that the economists and the ambassadors (supported by the scientists) did a commendable job; they were largely in agreement. Hundreds of millions of poor people are in dire need of basic health care, nutrition, clean water and education. By the time we take a tenth of a degree off the projected global temperature increase many of these people could be dead.

It is the height of hubris to spend billions on climate control in the name of the world’s poor while allowing them to die of preventable maladies. It is a common liberal failing.