PovertyEducation.org
Chapter Eight: Suggestions for the Canadian Government
"The great aim of education is not knowledge but action."
-Herbert Spencer (1820-1903)
Political activism is an extraordinarily powerful tool. It has awarded basic legal rights to women and minorities who had for centuries been persecuted by the evils of bigotry and racism. It has freed populations from the oppression of colonialism without the use of violence. Activism has overthrown tyrants, redrawn political boundaries, and made people aware of evils which they did not previously know existed. When a nation's profound sense of human compassion is channeled into a single push for social change, the result is a political movement which cannot be stopped.
The key purpose of this website was to help activists better understand the science behind development economics in order to help them initiate change; my belief is that when activists take the time to learn about their political issue of choice (in this case, extreme poverty) then they are more likely to successfully debate their point of view and accurately pinpoint the correct solutions to push the government to implement. On our extensive journey to learn about development, we have learned a great many things; how and why certain areas of the world technologically advanced faster than other regions, the pattern each country follows when escaping from extreme poverty, the means by which poverty reinforces itself, how Asian economies were able to grow at unprecedented rates, the role which foreign aid and other international policy reforms can play in eradicating extreme poverty, and the negative consequences climate change can have on the world's poor. In this final chapter, we will pull all of this information together and discuss eight suggestions for activists to present to the Canadian government which, if implemented, will profoundly better the lives of billions of people and play a crucial role in eradicating extreme poverty within our lifetime.
Why Should Canada Care?
Aside from the obvious moral issue of saving millions of lives, the eradication of extreme poverty also benefits rich world nations like Canada in several ways. First, as more people get pulled out of extreme poverty, civil conflict and global terrorism -both of which are threats to Canada's national security- will become less prevalent. Its no accident that Sudan, Palestine, Somalia and Afghanistan, some of the poorest places in the world, have become havens for global terrorist movements such as Al Qaeda; as societies become poorer, the number of unemployed and starving people tends to rise, making the population ever more desperate and more likely to tolerate radical behavior. Alleviating poverty in these regions can help to significantly reduce global violence and make Canada a safer place.
Many have criticized this train of thought by pointing out that several leaders of global terrorism, such as Saudi oil sheiks, are quite rich and yet still support violence. This is certainly true, but the foot soldiers of global terrorism -the ones actually willing to do the fighting- are generally extremely impoverished; without this population of desperate soldiers, terrorism would not be such a prominent threat to global peace and stability. Nobel Laureate Amartya Sen eloquently explains this phenomenon in his book Identity and Violence:
"Leaders like Osama bin Laden do not–to say the least–suffer from poverty and have no reason whatsoever for feeling left out from the benefits of global capitalism. And yet the movements that are led by well off leaders typically do rely greatly on a sense of injustice, inequity, and humiliation that the established world order is seen as having produced. Poverty and inequality may not instantly breed terrorist organizations, but nevertheless they can help to create rich recruiting grounds for the foot soldiers of the terrorist camps. Second, tolerance of terrorism by an otherwise peaceful population is another peculiar phenomenon in many parts of the world, particularly where there is a sense of having been badly treated, for example, because of being left behind by global economic and social progress, or where there is a strong memory of having been politically roughed up in the past. A more equitable sharing of the benefits of globalization can contribute in the long-run preventative measures both against the recruitment of terrorist soldiers and against the creation of a general climate where terrorism is tolerated and sometimes even celebrated…The neglect and plight of Africa today can have a similarly long-run effect on world peace in the future. What the rest of us in the world (especially in the richer countries) did–or did not do–when at least a quarter of the African population seemed to be threatened with extinction through epidemics or starvation, might not be forgotten for a very long time to come."
-Amartya Sen, Professor of Economics and Philosophy at Harvard University
In addition to helping extinguish global terrorism, an eradication of extreme poverty will give more people access to education, increasing the likelihood that humanity will make profound new scientific discoveries which benefit everyone on Earth. I often wonder how many little geniuses have been born into poverty and had their intelligence wasted because their parents could not afford to send them to school. Think of Albert Einstein being born to an extremely poor family in Africa; without university education to hone his skills, he might have invented a new way of irrigating farms, but he certainly would not have made the profound scientific contributions to quantum mechanics which have helped humanity understand the physical makeup of the universe. So how many little Einsteins have been born which nobody has ever heard of? Had all of those children been rich and grown up to be university-educated scientists, could humanity have invented a general cure for cancer? Or invented a new piece of technology which could solve all of our energy worries? Scientific discovery is something which helps everyone on the planet, and so we should make sure that even the poorest of the poor have the means to get educated and have the opportunity to benefit mankind.
Many have criticized this train of thought by pointing out that several leaders of global terrorism, such as Saudi oil sheiks, are quite rich and yet still support violence. This is certainly true, but the foot soldiers of global terrorism -the ones actually willing to do the fighting- are generally extremely impoverished; without this population of desperate soldiers, terrorism would not be such a prominent threat to global peace and stability. Nobel Laureate Amartya Sen eloquently explains this phenomenon in his book Identity and Violence:
"Leaders like Osama bin Laden do not–to say the least–suffer from poverty and have no reason whatsoever for feeling left out from the benefits of global capitalism. And yet the movements that are led by well off leaders typically do rely greatly on a sense of injustice, inequity, and humiliation that the established world order is seen as having produced. Poverty and inequality may not instantly breed terrorist organizations, but nevertheless they can help to create rich recruiting grounds for the foot soldiers of the terrorist camps. Second, tolerance of terrorism by an otherwise peaceful population is another peculiar phenomenon in many parts of the world, particularly where there is a sense of having been badly treated, for example, because of being left behind by global economic and social progress, or where there is a strong memory of having been politically roughed up in the past. A more equitable sharing of the benefits of globalization can contribute in the long-run preventative measures both against the recruitment of terrorist soldiers and against the creation of a general climate where terrorism is tolerated and sometimes even celebrated…The neglect and plight of Africa today can have a similarly long-run effect on world peace in the future. What the rest of us in the world (especially in the richer countries) did–or did not do–when at least a quarter of the African population seemed to be threatened with extinction through epidemics or starvation, might not be forgotten for a very long time to come."
-Amartya Sen, Professor of Economics and Philosophy at Harvard University
In addition to helping extinguish global terrorism, an eradication of extreme poverty will give more people access to education, increasing the likelihood that humanity will make profound new scientific discoveries which benefit everyone on Earth. I often wonder how many little geniuses have been born into poverty and had their intelligence wasted because their parents could not afford to send them to school. Think of Albert Einstein being born to an extremely poor family in Africa; without university education to hone his skills, he might have invented a new way of irrigating farms, but he certainly would not have made the profound scientific contributions to quantum mechanics which have helped humanity understand the physical makeup of the universe. So how many little Einsteins have been born which nobody has ever heard of? Had all of those children been rich and grown up to be university-educated scientists, could humanity have invented a general cure for cancer? Or invented a new piece of technology which could solve all of our energy worries? Scientific discovery is something which helps everyone on the planet, and so we should make sure that even the poorest of the poor have the means to get educated and have the opportunity to benefit mankind.
The Myth of the Population Explosion
Before I begin discussing ways to help the poor, I must address a concern many Canadians often secretly worry about (I mentioned this concern in Chapter Three but wish to repeat it again here, as it is such a widely held belief). Many activists -perhaps you are one of them- secretly think that if we save lives, we would simply be creating a population explosion; creating more mouths to feed. These saved children, they believe, would simply die of starvation later in life, and the entire effort to better Africa's quality of life would be unsuccessful. Under this train of thought, any effort to save lives is fundamentally flawed, since any life saved would cause more death by starvation.
Yet this belief is false; saving lives, paradoxically, actually lowers population growth. Parents in extremely impoverished nations often have many children as a substitute for a pension; they need to have surviving adult children to take care of them when they become too old to work the farm and grow their own food. The parents see children dying left and right from disease and civil war (approximately 17% of children die before their fifth birthday), so they often have five or six children just to ensure that at least one male will survive to adulthood and take care of them.
However, if dramatically fewer children were dying of disease and warfare, the parents would be confident that at least one of their children would survive into adulthood and would not have as many children. One illustration by economist Jeffrey Sachs shows that if increases to health and wellness caused the child mortality rate (the proportion of children who die before their first birthday) to fall from 15% to less than 5%, the average number of children each parent has would be cut in half! The parents are now confident that at least one child will make it to adulthood, so they have less children; the boost in child health has given the parents the confidence needed to lower their fertility rate. This decline in fertility actually more than compensates for the decline in child mortality, meaning that increases in health and welfare which prevent people from dying actually cause the total population to go down!
Ironically, Africa's burdens of disease and civil war, both of which kill millions of people, are actually the reasons why its population continues to rapidly expand, since it causes parents to overcompensate and want to have excessive amounts of children. This helps to explain why the population is growing so much faster in Africa, where disease and war are prevalent killers, than in the richer nations of North America and Europe (as seen on the map above, measuring population growth rate as a percentage).
Now that we have addressed a few of the benefits of helping the poor and debunked some widely held misconceptions, let us examine some ways in which the Canadian government can help impoverished societies. I have presented eight specific recommendations for the Canadian government to implement which I believe can fundamentally help to eradicate extreme poverty.
Yet this belief is false; saving lives, paradoxically, actually lowers population growth. Parents in extremely impoverished nations often have many children as a substitute for a pension; they need to have surviving adult children to take care of them when they become too old to work the farm and grow their own food. The parents see children dying left and right from disease and civil war (approximately 17% of children die before their fifth birthday), so they often have five or six children just to ensure that at least one male will survive to adulthood and take care of them.
However, if dramatically fewer children were dying of disease and warfare, the parents would be confident that at least one of their children would survive into adulthood and would not have as many children. One illustration by economist Jeffrey Sachs shows that if increases to health and wellness caused the child mortality rate (the proportion of children who die before their first birthday) to fall from 15% to less than 5%, the average number of children each parent has would be cut in half! The parents are now confident that at least one child will make it to adulthood, so they have less children; the boost in child health has given the parents the confidence needed to lower their fertility rate. This decline in fertility actually more than compensates for the decline in child mortality, meaning that increases in health and welfare which prevent people from dying actually cause the total population to go down!
Ironically, Africa's burdens of disease and civil war, both of which kill millions of people, are actually the reasons why its population continues to rapidly expand, since it causes parents to overcompensate and want to have excessive amounts of children. This helps to explain why the population is growing so much faster in Africa, where disease and war are prevalent killers, than in the richer nations of North America and Europe (as seen on the map above, measuring population growth rate as a percentage).
Now that we have addressed a few of the benefits of helping the poor and debunked some widely held misconceptions, let us examine some ways in which the Canadian government can help impoverished societies. I have presented eight specific recommendations for the Canadian government to implement which I believe can fundamentally help to eradicate extreme poverty.
Suggestion One: Fulfill the Promise to Donate 0.7% of GDP as International Aid
Many optimists believe that extreme poverty can be solved automatically once African governments successfully implement market reforms; they believe that free market liberalization will cause a sudden dramatic explosion of foreign direct investment in Africa, causing a surge in wealth which will inevitably lead to the cessation of violence, dramatic improvements in health and a rapid increase in literacy rates across the continent. These optimists assume that it is only a matter of time before the quality of life in extremely poor societies matches that of the richer nations such as Canada and the United States. But this line of thinking is false, since the symptoms of poverty -such as chronic civil conflict, the burden of disease and widespread illiteracy- will in itself repel foreign direct investment; a phenomenon known as the Poverty Trap (as explained in Chapter Three). Free markets do indeed have the potential to bring prosperity to extremely poor nations, but only once the prerequisites of physical infrastructure, basic education and civil peace are in place.
Because many extremely poor countries are stuck in various "Poverty Traps", they are unable to generate the initial surge in wealth needed to invest in health, education, infrastructure and technology. If somehow these initial investments were to be made, productivity would improve throughout the poor country and greater surges of foreign direct investment could be brought in, creating a second surge of money for the impoverished economy. This second surge of wealth can once again be invested in health, education, infrastructure and technology. The country enters into a cycle which I have referred to as the Cycle of Prosperity, in which investments in health, education, infrastructure and technology generate wealth;
wealth which is in turn used to make further investments and generate even more wealth. This glorious cycle continues until the country becomes rich; indeed, it has already succeeded in making previously poor countries such as South Korea and Taiwan wealthy, and is currently causing gigantic countries such as China and India to become rich as well.
So is there a way for nations stuck in the poverty traps to get this initial surge in wealth? Several prominent development economists, notably Jeffrey Sachs (author of The End of Poverty), have suggested that rich world nations in Europe and North America could simply give poor nations the money in the form of international aid (specifically, the money would go to the Millennium Challenge Account, a United Nations project devoted to the eradication of extreme poverty). These experts argue that foreign aid could be used as a kind of stimulus to impoverished economies; once the poor nations get the initial surge in wealth, they can enter the Cycle of Prosperity and become self-sufficient.
Because many extremely poor countries are stuck in various "Poverty Traps", they are unable to generate the initial surge in wealth needed to invest in health, education, infrastructure and technology. If somehow these initial investments were to be made, productivity would improve throughout the poor country and greater surges of foreign direct investment could be brought in, creating a second surge of money for the impoverished economy. This second surge of wealth can once again be invested in health, education, infrastructure and technology. The country enters into a cycle which I have referred to as the Cycle of Prosperity, in which investments in health, education, infrastructure and technology generate wealth;
wealth which is in turn used to make further investments and generate even more wealth. This glorious cycle continues until the country becomes rich; indeed, it has already succeeded in making previously poor countries such as South Korea and Taiwan wealthy, and is currently causing gigantic countries such as China and India to become rich as well.
So is there a way for nations stuck in the poverty traps to get this initial surge in wealth? Several prominent development economists, notably Jeffrey Sachs (author of The End of Poverty), have suggested that rich world nations in Europe and North America could simply give poor nations the money in the form of international aid (specifically, the money would go to the Millennium Challenge Account, a United Nations project devoted to the eradication of extreme poverty). These experts argue that foreign aid could be used as a kind of stimulus to impoverished economies; once the poor nations get the initial surge in wealth, they can enter the Cycle of Prosperity and become self-sufficient.
There are several investments to be made in Africa's economy which would allow it to enter the cycle of prosperity: for example, the donors of aid in the rich world could give African citizens fertilizers, tools for small-scale irrigation, and bio-engineered high-yielding seeds resistant to drought and pathogens (similar to those developed by the Rockefeller Administration) to give African farmers a boost in agricultural productivity. Rich world countries could give impoverished nations free bed nets to prevent mosquito bites causing Malaria, treatments for HIV/AIDS, vaccines to cure tuberculosis and other diseases, and new wells and rainwater-harvesting technology to give Africans sanitary drinking water; all of these investments could help promote health in Africa, raising worker productivity and saving millions of lives. The rich world could give Africa money to build and fund primary schools (including money to hire teachers and buy food to attract students); this investment could raise literacy rates, teach students more efficient ways of irrigating their farms to save water, and teach students computer technology skills (enabling African children to get future jobs in the digital information services technology sector just like the students of India's IIT universities). Money could be used to invest in basic infrastructure including paved roads, airports and seaports, electricity for rural homes (given through the use of an electricity generator), broadband cables to promote internet access, and silos to store grains so that wheat can be sold gradually instead of all at once (thereby allowing the farmers to sell the grain for a higher price).
Several United Nations Commissions dating back to 1969, including the Rio Summit on Sustainable Development in 1992, the Monterrey Consensus of March 2002, and the World Summit on Sustainable Development in Johannesburg in September 2002 have all concluded that extremely impoverished nations do not have the means to attract significant amounts of foreign direct investment on their own. Each of these declarations have also urged rich countries such as Canada, the United States, Japan, Australia and the nations of Europe to donate 0.7% of rich country GDP (roughly seventy cents out of every hundred dollars) as international aid.
In 1969, Canada pledged to donate 0.7% of its GNP to impoverished nations following the Commission on Sustainable Development under Prime Minister Lester B Pearson; by the 1980s, it had still failed to do so. In 1992, Canada signed Agenda 21 of the Rio Summit on Sustainable Development, once again pledging to donate 0.7% of its GNP to international aid; by 2000, it had once again failed to fulfill its promise. And then again in 2002, it adopted the Monterrey Consensus, once again agreeing that international aid plays an essential role in promoting economic development and pledging to donate 0.7% of its GDP. As of August 2009, the Canadian government has only pledged o.34% of its GNP to impoverished nations; less than half of the amount that it pledged to donate 35 years ago and on multiple occasions since. This failure to fulfill our international obligations should be corrected; we must develop a plan to double aid to impoverished governments within five years time.
Several United Nations Commissions dating back to 1969, including the Rio Summit on Sustainable Development in 1992, the Monterrey Consensus of March 2002, and the World Summit on Sustainable Development in Johannesburg in September 2002 have all concluded that extremely impoverished nations do not have the means to attract significant amounts of foreign direct investment on their own. Each of these declarations have also urged rich countries such as Canada, the United States, Japan, Australia and the nations of Europe to donate 0.7% of rich country GDP (roughly seventy cents out of every hundred dollars) as international aid.
In 1969, Canada pledged to donate 0.7% of its GNP to impoverished nations following the Commission on Sustainable Development under Prime Minister Lester B Pearson; by the 1980s, it had still failed to do so. In 1992, Canada signed Agenda 21 of the Rio Summit on Sustainable Development, once again pledging to donate 0.7% of its GNP to international aid; by 2000, it had once again failed to fulfill its promise. And then again in 2002, it adopted the Monterrey Consensus, once again agreeing that international aid plays an essential role in promoting economic development and pledging to donate 0.7% of its GDP. As of August 2009, the Canadian government has only pledged o.34% of its GNP to impoverished nations; less than half of the amount that it pledged to donate 35 years ago and on multiple occasions since. This failure to fulfill our international obligations should be corrected; we must develop a plan to double aid to impoverished governments within five years time.
Many of the people I talk to claim that one cannot build an economy on money from international assistance. Yet aid has historically been a catalyst to rapid economic development in places such as South Korea, where the United States promoted Korean trade through the use of heavy subsidies and paid for fertilizer to help Korea's impoverished farmers grow more food (Korea's tea fields are shown left).
Foreign assistance also helped Taiwan, where aid from the United States was used to pay for fertilizer and help farmers achieve a rapid boost in agricultural productivity. Similarly, donations of high-yielding seeds from the Rockefeller Foundation helped India and many Southeast Asian nations such as Vietnam end chronic famine during the 1960s, 70s and 80s. Without extensive aid to boost agricultural productivity, these places might not have achieved such successful economic growth.
Other critics claim that international aid is a form of "International Welfare" or a "Band Aid Solution" which makes governments dependent on aid money. However, I would argue that once African governments can successfully achieve a critical mass of wealth, they can make the investments in health, education and infrastructure needed to improve their productivity and attract foreign investment, thereby becoming self-sufficient within about twenty years time. However, they need this initial boost in wealth to become self-sufficient; without it, they will continue to suffer in extreme poverty. By giving African nations these critical tools to help rapidly increase worker productivity and attract foreign investment, the countries in sub-Saharan Africa could enter the Cycle of Prosperity and thereby grow into wealthy regions.
Overwhelmingly the two strongest criticisms of international aid from Canadian citizens are (1) that we should not be donating large amounts of money overseas when we have a large number of poor people right here in Canada and (2) that too much aid is wasted by corrupt governments throughout the impoverished world. In response to the first claim, I certainly agree that Canada must do more to reduce poverty inside of our own borders. Growing up in Hamilton Ontario, I've seen the horrors of street crime and homelessness and believe that more should be done to combat domestic poverty though the use of a greater social safety net. But it is not as if we have a jar of money marked "For Poverty", so that any money used to increase international aid must be taken away from our poor people; we can help both groups. In this sense, domestic poverty and international poverty are two separate issues; we can and should do more to reduce Canadian poverty, and should also do more to eradicate extreme poverty. Pointing to our poor is no excuse for continuously disregarding the extremely impoverished people of Africa.
In response to the second argument, I surely agree that much aid has been wasted by corrupt governance in third world countries, and that this corruption will limit the number of impoverished nations which could receive government aid; indeed, I imagine that a considerable donation to tyrannical regimes such as the government of Robert Mugabe would be wasted on political favors instead of invested in health and education. But we must also remember that there are 53 different countries in Africa; not every single government is so corrupt that it is unable to receive aid. While the governments of nations such as Zimbabwe, Angola and Chad might waste the money, other impoverished nations with good governance -such as Ghana, Senegal and Malawi- would use the money properly. In addition, international aid does not necessarily have to pass through corrupt governments to reach the poor; many aid organizations work on the ground to service the poor directly, reducing the amount of aid that is wasted.
Corrupt governance has not stopped international aid from eradicating serious diseases such as smallpox and polio, nor has it hindered aid's role in curing millions of cases of onchocerciasis and tuberculosis, dramatically expanding the use of oral rehydration therapy to treat cholera, and increasing the global usage of contraception to prevent the spread of sexually transmitted diseases. When US President George Bush announced his PEPFAR program, an aid-based government initiative to help increase medical treatment of AIDS in Africa, the program was met with skepticism as critics wondered whether excessive corruption would prevent Africans from receiving the care they needed. But sure enough, since its pledge in 2003, PEPFAR has saved more than one million lives for the relatively small cost of about $5.4 billion per year; an excellent investment, considering the Disability Adjusted Life Years (DALYs) saved would produce a benefit of about $23 billion each year for Africa's economy.
Yet more needs to be done; I recommend that Canada donate 0.7% of its annual GDP to the United Nations Millennium Challenge Account to help the citizens of extremely impoverished societies receive the life-saving medical treatment, basic education, vital infrastructure and innovative technology needed to enter the Cycle of Prosperity. Given these tools, I believe that the nations of Africa can dramatically reduce,
if not completely eliminate, extreme poverty in just a few decades time.
Foreign assistance also helped Taiwan, where aid from the United States was used to pay for fertilizer and help farmers achieve a rapid boost in agricultural productivity. Similarly, donations of high-yielding seeds from the Rockefeller Foundation helped India and many Southeast Asian nations such as Vietnam end chronic famine during the 1960s, 70s and 80s. Without extensive aid to boost agricultural productivity, these places might not have achieved such successful economic growth.
Other critics claim that international aid is a form of "International Welfare" or a "Band Aid Solution" which makes governments dependent on aid money. However, I would argue that once African governments can successfully achieve a critical mass of wealth, they can make the investments in health, education and infrastructure needed to improve their productivity and attract foreign investment, thereby becoming self-sufficient within about twenty years time. However, they need this initial boost in wealth to become self-sufficient; without it, they will continue to suffer in extreme poverty. By giving African nations these critical tools to help rapidly increase worker productivity and attract foreign investment, the countries in sub-Saharan Africa could enter the Cycle of Prosperity and thereby grow into wealthy regions.
Overwhelmingly the two strongest criticisms of international aid from Canadian citizens are (1) that we should not be donating large amounts of money overseas when we have a large number of poor people right here in Canada and (2) that too much aid is wasted by corrupt governments throughout the impoverished world. In response to the first claim, I certainly agree that Canada must do more to reduce poverty inside of our own borders. Growing up in Hamilton Ontario, I've seen the horrors of street crime and homelessness and believe that more should be done to combat domestic poverty though the use of a greater social safety net. But it is not as if we have a jar of money marked "For Poverty", so that any money used to increase international aid must be taken away from our poor people; we can help both groups. In this sense, domestic poverty and international poverty are two separate issues; we can and should do more to reduce Canadian poverty, and should also do more to eradicate extreme poverty. Pointing to our poor is no excuse for continuously disregarding the extremely impoverished people of Africa.
In response to the second argument, I surely agree that much aid has been wasted by corrupt governance in third world countries, and that this corruption will limit the number of impoverished nations which could receive government aid; indeed, I imagine that a considerable donation to tyrannical regimes such as the government of Robert Mugabe would be wasted on political favors instead of invested in health and education. But we must also remember that there are 53 different countries in Africa; not every single government is so corrupt that it is unable to receive aid. While the governments of nations such as Zimbabwe, Angola and Chad might waste the money, other impoverished nations with good governance -such as Ghana, Senegal and Malawi- would use the money properly. In addition, international aid does not necessarily have to pass through corrupt governments to reach the poor; many aid organizations work on the ground to service the poor directly, reducing the amount of aid that is wasted.
Corrupt governance has not stopped international aid from eradicating serious diseases such as smallpox and polio, nor has it hindered aid's role in curing millions of cases of onchocerciasis and tuberculosis, dramatically expanding the use of oral rehydration therapy to treat cholera, and increasing the global usage of contraception to prevent the spread of sexually transmitted diseases. When US President George Bush announced his PEPFAR program, an aid-based government initiative to help increase medical treatment of AIDS in Africa, the program was met with skepticism as critics wondered whether excessive corruption would prevent Africans from receiving the care they needed. But sure enough, since its pledge in 2003, PEPFAR has saved more than one million lives for the relatively small cost of about $5.4 billion per year; an excellent investment, considering the Disability Adjusted Life Years (DALYs) saved would produce a benefit of about $23 billion each year for Africa's economy.
Yet more needs to be done; I recommend that Canada donate 0.7% of its annual GDP to the United Nations Millennium Challenge Account to help the citizens of extremely impoverished societies receive the life-saving medical treatment, basic education, vital infrastructure and innovative technology needed to enter the Cycle of Prosperity. Given these tools, I believe that the nations of Africa can dramatically reduce,
if not completely eliminate, extreme poverty in just a few decades time.
Ask the World Trade Organization to Change the Rules of Patent Legislation
To gain access to the enormous sea of wealthy consumers in North America and Europe, many impoverished nations throughout Africa, Asia and South America are eager to make free trade agreements with rich world economies like the United States; agreements in which both parties consent to lower their tariff barriers, promoting greater import and export between the two nations. This greatly benefits the poor country, since small businesses in the impoverished region -say for example, a Bangladeshi family making luxurious rugs- will now broaden their consumer market (increase the number of people who they are allowed to sell to), thus increasing demand for their product (in this case crafted rugs) and allowing them to sell it for a higher price.
But when extremely poor nations sign onto these free trade agreements, they are often forced to adhere to standards which are detrimental to their health and well-being. For example, the impoverished countries must recognize and abide by international patent legislation (Trade Related Intellectual Property Rights, or TRIPs). Normally, third world nations would simply choose not to recognize the patent laws of rich world economies and buy what's called the "generic" version (not made by the patent holder) of medicine and technology, allowing them to pay less money for the same product. But under the TRIPs legislation, the impoverished economies are forced buy products such as medicine from the patent holder, meaning that they will have to pay dramatically more money for life-saving drugs and technology needed to benefit their economy.
One of the simplest ways for the Western World to help extremely poor societies is to not force the poor to recognize international patent legislation as a condition for receiving aid or taking part in free trade (in other words, extremely impoverished nations would not recognize any patents created in the West, allowing them to import only generic products from foreign countries). Even when patents don't prevent Africans from receiving drugs altogether, these international patent laws significantly drive up the cost of medicine, forcing already impoverished governments to waste money on drugs which are artificially expensive; with their limited budgets, the cost of medicine matters enormously, since a dollar spent on these drugs is a dollar not spent on investments in better education, infrastructure and technology which can help developing nations escape from their poverty traps. This reform would cost the rich world almost nothing while greatly improving the life quality of poorer nations. Canada should use its considerable influence at the World Trade Organization to push for less stringent Trade Related Intellectual Property Rights in order to allow impoverished governments to save precious tax revenue.
But when extremely poor nations sign onto these free trade agreements, they are often forced to adhere to standards which are detrimental to their health and well-being. For example, the impoverished countries must recognize and abide by international patent legislation (Trade Related Intellectual Property Rights, or TRIPs). Normally, third world nations would simply choose not to recognize the patent laws of rich world economies and buy what's called the "generic" version (not made by the patent holder) of medicine and technology, allowing them to pay less money for the same product. But under the TRIPs legislation, the impoverished economies are forced buy products such as medicine from the patent holder, meaning that they will have to pay dramatically more money for life-saving drugs and technology needed to benefit their economy.
One of the simplest ways for the Western World to help extremely poor societies is to not force the poor to recognize international patent legislation as a condition for receiving aid or taking part in free trade (in other words, extremely impoverished nations would not recognize any patents created in the West, allowing them to import only generic products from foreign countries). Even when patents don't prevent Africans from receiving drugs altogether, these international patent laws significantly drive up the cost of medicine, forcing already impoverished governments to waste money on drugs which are artificially expensive; with their limited budgets, the cost of medicine matters enormously, since a dollar spent on these drugs is a dollar not spent on investments in better education, infrastructure and technology which can help developing nations escape from their poverty traps. This reform would cost the rich world almost nothing while greatly improving the life quality of poorer nations. Canada should use its considerable influence at the World Trade Organization to push for less stringent Trade Related Intellectual Property Rights in order to allow impoverished governments to save precious tax revenue.
Create a Variety of New International Charters to Promote Responsible Governance in Africa
In Chapter Three, we saw how terrible governance can prevent a nation from entering the second stage of economic development; bad governance can repel foreign direct investment through banning trade with rich world economies, and waste the impoverished nation's precious tax revenue on corrupt practices (for example by awarding contracts based on bribery instead of competitive auction) instead of investing the money in health, education and infrastructure. Because of this, the negative actions of one corrupt government can cost as much as $100 billion. Governance in extremely poor countries (such as the nations of Africa) is especially corrupt, since poor citizens often lack the media awareness needed to make correct electoral decisions and choose the best leaders.
Although we cannot manually change these societies ourselves, citizens of rich world nations can help the heroic political reformers within corrupt societies who are struggling and are usually failing to initiate change. We can do this through the creating various mutual systems of support for governance in the form of international charters. The simple proposal is that we will have some international standards (voluntary for each nation to sign onto) which would spell out the key reforms needed to improve governance. Obviously, many governments throughout Africa will not want to sign onto the charters, but they will at least give the political reformers something very concrete to demand: either the government adopts the charters or it must explain why it won’t. This can help reformists unite in opposition, increasing their effective political pressure.
We saw how effective these charters could be in promoting better governance in 2002 when British Prime Minister Tony Blair created the Extractive Industries Transparency Initiative. Any government which signs on to this treaty is required to report to their citizens what resource revenues they have, and where the money is going. You might think that no government in Africa would ever sign onto this treaty, since they would be forced to expose their own corruption. Yet incredibly, the transparency initiative was wildly successful; since 2002, twenty one of Africa's resource rich economies, including Central African Republic, Democratic Republic of Congo, Liberia, Gabon, Mozambique, Nigeria, Sierra Leone and many others had signed onto the treaty, forcing the governments of these nations to show what revenues they were receiving and where the money was going. It seems that there are plenty of elected reformers throughout Africa willing to make efforts to achieve more responsible governance; they just need to have a firm focus on where to direct their efforts.
So now we have learned that these international standards can work, we'll examine two other possible charters which can create better governance throughout Africa. The first is a Democracy Charter. This would center around three things; (1) a government which is elected democratically in a free and fair election, with an independent panel of Continental African representatives judging whether the election was truly fair,
(2) a free medium (usually radio) uncontrolled by the government, and (3) campaign finance reform which would drastically lower the amount of money a politician needs to run for office (thus reducing the need for political bribery).
The second charter would revolve around budget transparency, examining how governments spend their money. Present spending by governments in impoverished nations is often atrociously wasteful, with politicians often using the tax revenue to benefit their political friends or simply embezzling the money outright. Practical measures of scrutiny and accountability can make a big difference. For example, studies which seek to track where government budget money is going have been shown to significantly increase the effectiveness of government spending–in one study, the amount of government money reaching impoverished citizens was shown to increase from 20 percent success to 90 percent, more effective than quadrupling aid.
If say there is a reformist party in the impoverished world which through some miracle got elected, the party can quickly sign onto these three charters as a means of “locking in” reform. Again, many governments would not want to adhere to these standards, but it would at least give the reformers something to focus their efforts on. Governments who refuse to comply with these standards will signal that they are inherently corrupt to their neighbors, and are more likely to reform as a result of peer pressure.
Canada has traditionally had great success in establishing similar ground-breaking international treaties and institutions; in 1997, Canada founded the Ottawa Treaty, an agreement to effectively ban the use of landmines in military conflict. Since its inception, more than 156 nations (including 47 countries in African) have signed the treaty, agreeing to destroy their existing stockpiles of landmines and prohibit their usage in future wars.
This was an enormous accomplishment; landmines often remain active long after wars are over, causing innocent civilians to be maimed or killed as they walk through unmarked fields and pathways. By prohibiting their use in future wars, Canada has helped to promote health and safety throughout numerous impoverished nations.
Building on its successful record of founding international agreements, the Canadian Government should found the Democracy Charter and Budgetary Transparency Initiatives described above. This would cost the government almost nothing while helping to promote better governance throughout the developing world and demonstrating Canada's positive influence on global stability.
Although we cannot manually change these societies ourselves, citizens of rich world nations can help the heroic political reformers within corrupt societies who are struggling and are usually failing to initiate change. We can do this through the creating various mutual systems of support for governance in the form of international charters. The simple proposal is that we will have some international standards (voluntary for each nation to sign onto) which would spell out the key reforms needed to improve governance. Obviously, many governments throughout Africa will not want to sign onto the charters, but they will at least give the political reformers something very concrete to demand: either the government adopts the charters or it must explain why it won’t. This can help reformists unite in opposition, increasing their effective political pressure.
We saw how effective these charters could be in promoting better governance in 2002 when British Prime Minister Tony Blair created the Extractive Industries Transparency Initiative. Any government which signs on to this treaty is required to report to their citizens what resource revenues they have, and where the money is going. You might think that no government in Africa would ever sign onto this treaty, since they would be forced to expose their own corruption. Yet incredibly, the transparency initiative was wildly successful; since 2002, twenty one of Africa's resource rich economies, including Central African Republic, Democratic Republic of Congo, Liberia, Gabon, Mozambique, Nigeria, Sierra Leone and many others had signed onto the treaty, forcing the governments of these nations to show what revenues they were receiving and where the money was going. It seems that there are plenty of elected reformers throughout Africa willing to make efforts to achieve more responsible governance; they just need to have a firm focus on where to direct their efforts.
So now we have learned that these international standards can work, we'll examine two other possible charters which can create better governance throughout Africa. The first is a Democracy Charter. This would center around three things; (1) a government which is elected democratically in a free and fair election, with an independent panel of Continental African representatives judging whether the election was truly fair,
(2) a free medium (usually radio) uncontrolled by the government, and (3) campaign finance reform which would drastically lower the amount of money a politician needs to run for office (thus reducing the need for political bribery).
The second charter would revolve around budget transparency, examining how governments spend their money. Present spending by governments in impoverished nations is often atrociously wasteful, with politicians often using the tax revenue to benefit their political friends or simply embezzling the money outright. Practical measures of scrutiny and accountability can make a big difference. For example, studies which seek to track where government budget money is going have been shown to significantly increase the effectiveness of government spending–in one study, the amount of government money reaching impoverished citizens was shown to increase from 20 percent success to 90 percent, more effective than quadrupling aid.
If say there is a reformist party in the impoverished world which through some miracle got elected, the party can quickly sign onto these three charters as a means of “locking in” reform. Again, many governments would not want to adhere to these standards, but it would at least give the reformers something to focus their efforts on. Governments who refuse to comply with these standards will signal that they are inherently corrupt to their neighbors, and are more likely to reform as a result of peer pressure.
Canada has traditionally had great success in establishing similar ground-breaking international treaties and institutions; in 1997, Canada founded the Ottawa Treaty, an agreement to effectively ban the use of landmines in military conflict. Since its inception, more than 156 nations (including 47 countries in African) have signed the treaty, agreeing to destroy their existing stockpiles of landmines and prohibit their usage in future wars.
This was an enormous accomplishment; landmines often remain active long after wars are over, causing innocent civilians to be maimed or killed as they walk through unmarked fields and pathways. By prohibiting their use in future wars, Canada has helped to promote health and safety throughout numerous impoverished nations.
Building on its successful record of founding international agreements, the Canadian Government should found the Democracy Charter and Budgetary Transparency Initiatives described above. This would cost the government almost nothing while helping to promote better governance throughout the developing world and demonstrating Canada's positive influence on global stability.
Place a Tax on Oil and Other Natural Resources Sold by Irresponsible Regimes
In the last section I mentioned a variety of charters which could give reformers throughout Africa a set of goals to focus on implementing; by signing onto these charters, the reformers would force future governance to become more transparent in their collecting of natural resource revenues, promote fairer democratic elections through campaign finance reform, and become more responsible when spending public tax dollars.
In order to put additional pressure on regimes to adopt these charters, Western governments could put heavy taxes on products made by African nations which have chosen not to uphold the agreement; this boycott would be an especially effective compliment to the Extractive Industries Transparency Initiative, which deals with countries selling oil and other valuable natural resources to Western consumers. For example, if Angola refused to adopt the charter, then the Canadian government would place a tax on Angolan oil. As a result, Angolan oil would be harder to sell (except at a discount), creating a strong financial incentive for the Angolan government to reform. Although this new tax would raise energy prices, the extra tax revenue created by this system could be used to reduce income tax for Canadian citizens, effectively giving consumers back the money they lost. Thus the consumer is left unscathed while Angolan oil would remain at a higher price.
This seems like a foolproof way of getting African nations to enact such charters, but unfortunately, Westerners are not the only consumers of Africa's oil and other resources. With their rising economies, both China and India are becoming major consumers of African oil and minerals.
Both China and India have taken the political position of "Not asking Questions" when it comes to buying oil abroad; they'll essentially buy it anywhere, including nations of corrupt governance such as Angola and Sudan (home of the Darfur crisis). Their willingness to buy oil from corrupt regimes will cancel out any pressure that a Western boycott may put on African governments. Can anything be done about this? Well, as I discussed in Chapter Six, the implementation of currency reform on the condition of participating in "Blood Oil" boycotts would give both China and India a strong monetary incentive to tax oil from corrupt regimes. A universal tax on natural resources from corrupt African governments would put profound pressure on African countries to sign onto the three transparency charters and better manage their resource revenues; Canada should take a leading role in this global movement as a means of further aiding African economic development.
Reform the Currency Reserve System to Help Promote Consumption in Developing Countries
To help stabilize the value of their currencies, all countries keep what's known as "Foreign Currency Reserves"; this is essentially a pile of foreign money which the government can spend in times of emergency to help quickly lower or raise the value of its national currency. In recent years, major emerging Asian economies such as China, Malaysia, Thailand and the Philippines have accumulated enormous currency reserves (made up mostly of US Dollars) worth trillions of dollars in order to keep the value of their money low (thus promoting their export sector) and to provide a large monetary cushion to fall back on in times of crisis.
Unfortunately, maintaining these enormous Foreign Currency Reserves comes at a high price. I mentioned before that the Asian governments usually buy American Dollars to put in their reserves; they trade their Asian currency for American money or buy US bonds. These American bonds yield very low return; the Asian government makes only about 1-2% interest on their investment. As rising markets, these Asian governments could have invested the money into their own economy, lending to small businesses or using it to build vital infrastructure; if they had invested in these projects, they could have gotten 12-15% interest on their money. Therefore, by investing in US bonds instead of their own economy, the Asian nations are losing a difference of about 10% per year on their $3 trillion investment money (roughly $300 billion each year)! This cost is gargantuan, but the Asian governments are willing to pay this high price in order to keep their currency devalued and continue exporting goods. Even though the Asian governments are losing enormous amounts of money, this set up is a great deal for the United States; because there is such a high demand for US bonds, the American government can borrow large amounts of money overseas while paying very low interest rates on their borrowed cash (as mentioned before, the US only has to pay about 1% interest). This has allowed the US government to sink deeper and deeper into debt without going bankrupt. Currently, the US national debt amounts to more than $11 trillion, yet it is always able to pay off the interest on this huge bill without severely hurting the economy because the high demand for US bonds allows them to pay very low interest rates.
And so the United States wants to keep this system in place and continue paying very low interest on their national debt. But Asian economies such as China don't particularly like this system, since the money they invested in US bonds goes overseas and is used to fuel consumption in the United States (due to low interest rates) instead of being invested in their own Asian economies. However, China is still willing to continue buying US Dollars and maintaining their Foreign Currency Reserves since it keeps the value of their Chinese currency unusually low and keeps its export-driven businesses booming. But is there a way for China and other Asian states to keep large Foreign Currency Reserves without losing large amounts of money? Is there a way for China's huge Foreign Currency Reserves to decrease interest rates (and thus fuel consumption) within impoverished Asian nations instead of simply fueling consumption in rich countries such as the United States?
This favorable outcome can occur if a new kind of currency called "Global Greenbacks" were to be created to work along side all of our other forms of money. Nobel Prize-winning economist Joseph Stiglitz describes how this system would work:
"Every year, each member of the club–the countries that signed up to the new global reserve system–would contribute a specified amount to a global reserve fund and, at the same time, the global reserve fund would issue global greenbacks of equivalent value to the country, which they would hold in their reserves. There is no change in the net worth of any country; it has acquired an asset (a claim on others) and issued a claim on itself. Something real, however, has happened: the country has obtained an asset (a claim on others) that it can use in times of an emergency. In a time of crisis, the country can take these global greenbacks and exchange them for euros or dollars or yen; if the crisis is precipitated by a harvest failure, it can use the money to buy food; if the crisis is precipitated by a banking failure, it can use the money to refinance the banks; if the crisis is precipitated by an economic recession, the money can be used to stimulate the economy."
-Economist Joseph Stiglitz, winner of the 2002 Nobel Prize in Economics
So instead of using US Dollars in their Foreign Currency Reserve, countries like China would keep these "Global Greenbacks" in reserve in order to decrease the value of their currency and create a lifeline of cash in times of emergency. The value of this new currency is the average value of all the currencies which are a part of the system (Dollars, Euros, Sterlings, Yuan).
Normally, China would buy US Dollars to put in its reserve system, increasing demand for US money and lowering interest rates for the United States. But under this new system, the decrease in interest rates would be felt in every country which is a part of the system, spreading the low interest rates out instead of concentrating them on the United States. As a result, consumption would increase all throughout Asia, and the emerging economies of China, Thailand, Malaysia and the Philippines would benefit. In addition to increasing consumption throughout Asia, this new currency would decrease the need to buy US Dollars. Because the demand for US bonds has decreased, the interest rates on the bonds would go up slightly, meaning billions of extra dollars will be flowing into Asia each year.
And so life goes on normally in each country; everyone still uses their old currencies (Canadian Dollars, Japanese Yen, etc.) and countries still keep sizable Foreign Currency Reserves. But now, in addition to buying currencies from other nations, each country also has the option of buying "Global Greenback" money; the nations of Asia use this line of mutual credit in their reserves, increasing consumption throughout the developing world and slightly increasing the interest rates on US Dollars (thus benefiting the developing economies).
The rich world should certainly create this option for the benefit of the developing world. Yet such a system would not be nearly as strong without containing rich world currencies such as the Dollar and Euro; Asian nations such as China and Russia have already called on Western countries to
add their money to the Global Greenback System, but thus far, the leaders of Europe and the United States have refused to ratify such an option.
I suggest that these leaders add their currencies to the Global Greenback system, but only on several conditions. For example, the United States could add its powerful dollar to the fund only if China agrees to sign onto treaties (such as the ones stated above) which would force them to no longer buy oil from malevolent regimes such as the one in Sudan or Angola. In addition, emerging economies like China and India must agree to issue a tax on their carbon emissions to help curb global warming. Since the option of a Global Greenback Currency will benefit emerging economies disproportionately more than rich world economies, the West has enormous political leverage; it should seize this opportunity to push the governments of China and India into changing their foreign policies so that they better match the interests of the extremely poor. Thus, instituting this new international system of currency reserves can possibly benefit both the emerging markets such as China and India, and also those economies stuck in a poverty trap.
Ask the International Lending Institutions to Pardon All Odious Debt
Organizations such as the International Monetary Fund (IMF) and World Bank often encourage developing economies to borrow large amounts of money; they believe that if the impoverished governments need the money to make investments in health, education and infrastructure, they should not be given this money, but rather should borrow it (similar to how a small business borrows money to get its feet off the ground and then repays the bank once it becomes successful). Often, an impoverished economy gets taken over by a malevolent dictator, such as Mobuto Sese Seko in the Democratic Republic of Congo, Saddam Hussein of Iraq and Anastasio Somoza Debayle of Nicaragua. The poor economy often racks up huge sums of debt when the dictator spends extravagant amounts of money on either himself or his political friends. The vast majority of this money is not used to benefit the nation's citizens, even though it is those impoverished citizens who end up paying off the debt incurred by military dictators after the tyrant is overthrown. This debt incurred under a dictator, known as odious debt, is a large drain on tax revenues and often puts a huge burden on the impoverished economy. In some cases, half or more of their annual government revenue is used to pay off the interest of this debt, taking away from money that could have been used to build hospitals, schools, and vital infrastructure needed to catapult the economy into the second stage of development.
Foreign debt should not be a major hindrance to economic development; those impoverished nations which are struggling under the crushing weight of national debt should have the debt canceled by the IMF and pardoned by rich world countries. Allowing debt cancellation would free up the budgets of impoverished governments, allowing them to invest in their own economy instead of continuously wasting money on interest payments. Many Non-Governmental Organizations, including Jubilee 2000 and odiusdebts.org, have called on the IMF to completely forgive all debts accumulated by governments which were not democratically chosen; those dictators which borrowed money to help their oppressive regime stay in power and left their citizens to fit the bill. They argue that it is not moral to force newly liberated societies to continue to be hindered by the debts of past dictators. This simple solution not only solves the problem of the current debt overhang but also will stop future recurrence of Odius Debts; if major banks realize that they will likely not be paid back by dictatorial regimes, then they will be less likely to lend money to them. In fact, "Credit Sanctions" may be much more effective than "Trade Sanctions" in pressuring oppressive governments to treat their citizens fairly. For these reasons, forgiveness of Odius Debts is another very good idea which should be strongly recommended to global lending institutions such as the International Monetary Fund by powerful G8 nations such as Canada.
Foreign debt should not be a major hindrance to economic development; those impoverished nations which are struggling under the crushing weight of national debt should have the debt canceled by the IMF and pardoned by rich world countries. Allowing debt cancellation would free up the budgets of impoverished governments, allowing them to invest in their own economy instead of continuously wasting money on interest payments. Many Non-Governmental Organizations, including Jubilee 2000 and odiusdebts.org, have called on the IMF to completely forgive all debts accumulated by governments which were not democratically chosen; those dictators which borrowed money to help their oppressive regime stay in power and left their citizens to fit the bill. They argue that it is not moral to force newly liberated societies to continue to be hindered by the debts of past dictators. This simple solution not only solves the problem of the current debt overhang but also will stop future recurrence of Odius Debts; if major banks realize that they will likely not be paid back by dictatorial regimes, then they will be less likely to lend money to them. In fact, "Credit Sanctions" may be much more effective than "Trade Sanctions" in pressuring oppressive governments to treat their citizens fairly. For these reasons, forgiveness of Odius Debts is another very good idea which should be strongly recommended to global lending institutions such as the International Monetary Fund by powerful G8 nations such as Canada.
Place a Thirty Dollar Tax on Each Ton of Carbon Dioxide Emitted in Canada
Virtually all climatologists now agree that the excessive release of carbon dioxide into the atmosphere is causing the Earth to warm to dangerously high temperatures. If the Earth continues to warm at its current trajectory, then by the turn of the next century many of our major cities may be underwater due to rising sea level. This may happen even faster if the rapidly ascending economies of China and India continue using coal-energy to power their major cities; the additional amounts of carbon dioxide released by these coal plants will cause the Earth to warm even faster than previously expected. In addition to rising sea level, global warming may also cause prolonged droughts, severe storms, and increased disease transmission which will devastate vast regions of sub-Saharan Africa, potentially killing millions of impoverished people. Because the poor have less money to fall back on in times of emergency, extremely impoverished societies -those least responsible for the gargantuan amounts of CO2 in the atmosphere- will die in the greatest numbers. Humanity must prevent this from happening by drastically lowering global carbon dioxide emissions over the next few decades.
The world is currently subject to a phenomenon known as the "Tragedy of the Commons"; everyone would like to avoid the eventual outcome of rising sea level, severe storms and devastating drought, yet each individual has a personal incentive not to do reduce carbon emissions. With polluting fossil fuel energy still much cheaper to use than clean renewable energy sources such as solar and wind power, each individual country, company and person wishes to let "everyone else" solve the problem while they personally enjoy cheap carbon-intensive energy. Of course, this logic will eventually cause the planet to warm to dangerous levels and cause everyone to be worse off than if they had collectively agreed to each reduce their personal carbon footprint. If we are going to lessen global carbon dioxide emissions and avert catastrophe, humanity must collectively agree not to treat the atmosphere as a commons; we must make the personal monetary cost of emitting carbon dioxide into the atmosphere reflect the environmental damage those emissions are inflicting on the rest of the planet.
To give each individual a monetary incentive to reduce their personal carbon footprint, I suggest we charge a tax of approximately $30 (the price which many countries of Europe have opted for) on each ton of CO2 emitted in Canada with a rebate of $30 per ton of carbon dioxide sequestered for roughly the next twenty years. Now that each individual person and corporation is directly paying a monetary cost for the carbon dioxide which they are responsible for emitting, each individual person and company has a sufficient incentive to significantly reduce personal carbon emissions. This cost of emitting CO2 will tend to spur private sector research studying more efficient, less expensive ways to generate large amounts of electricity from renewable energy sources such as solar and wind power. In addition, the $30 rebate per ton of carbon dioxide sequestered will spur wider usage of Carbon Capture and Sequestration technology and promote private-sector researching into more efficient processes of
sequestering CO2. More advanced CCS technology may be crucial to have in the future if both China and India choose to capitalize on their vast coal reserves; the ability to sequester carbon at low cost may be the key to powering these enormous economies without emitting unprecedented amounts of carbon dioxide.
Some of the money generated by this tax could go towards researching and perfecting carbon capture and sequestration techniques, creation of affordable batteries to power zero-emissions automobiles, development of more efficient solar and wind power, and increasing the safety of nuclear power plants. Another portion of the funds could be directed at programs to pay off farmers in third world countries to prevent further deforestation (a primary cause of global warming). The rest of the money could be used to offset income tax, effectively giving citizens back some of the money collected from them through higher energy prices. Through putting a straight, predictable tax on carbon dioxide emissions for the next 20 years, Canada can spur innovative research in renewable energy sources as well as promote conservation, helping to avoid climate catastrophe for the world's poor.
The world is currently subject to a phenomenon known as the "Tragedy of the Commons"; everyone would like to avoid the eventual outcome of rising sea level, severe storms and devastating drought, yet each individual has a personal incentive not to do reduce carbon emissions. With polluting fossil fuel energy still much cheaper to use than clean renewable energy sources such as solar and wind power, each individual country, company and person wishes to let "everyone else" solve the problem while they personally enjoy cheap carbon-intensive energy. Of course, this logic will eventually cause the planet to warm to dangerous levels and cause everyone to be worse off than if they had collectively agreed to each reduce their personal carbon footprint. If we are going to lessen global carbon dioxide emissions and avert catastrophe, humanity must collectively agree not to treat the atmosphere as a commons; we must make the personal monetary cost of emitting carbon dioxide into the atmosphere reflect the environmental damage those emissions are inflicting on the rest of the planet.
To give each individual a monetary incentive to reduce their personal carbon footprint, I suggest we charge a tax of approximately $30 (the price which many countries of Europe have opted for) on each ton of CO2 emitted in Canada with a rebate of $30 per ton of carbon dioxide sequestered for roughly the next twenty years. Now that each individual person and corporation is directly paying a monetary cost for the carbon dioxide which they are responsible for emitting, each individual person and company has a sufficient incentive to significantly reduce personal carbon emissions. This cost of emitting CO2 will tend to spur private sector research studying more efficient, less expensive ways to generate large amounts of electricity from renewable energy sources such as solar and wind power. In addition, the $30 rebate per ton of carbon dioxide sequestered will spur wider usage of Carbon Capture and Sequestration technology and promote private-sector researching into more efficient processes of
sequestering CO2. More advanced CCS technology may be crucial to have in the future if both China and India choose to capitalize on their vast coal reserves; the ability to sequester carbon at low cost may be the key to powering these enormous economies without emitting unprecedented amounts of carbon dioxide.
Some of the money generated by this tax could go towards researching and perfecting carbon capture and sequestration techniques, creation of affordable batteries to power zero-emissions automobiles, development of more efficient solar and wind power, and increasing the safety of nuclear power plants. Another portion of the funds could be directed at programs to pay off farmers in third world countries to prevent further deforestation (a primary cause of global warming). The rest of the money could be used to offset income tax, effectively giving citizens back some of the money collected from them through higher energy prices. Through putting a straight, predictable tax on carbon dioxide emissions for the next 20 years, Canada can spur innovative research in renewable energy sources as well as promote conservation, helping to avoid climate catastrophe for the world's poor.
Ask the World Trade Organization to Consider Refusal to Tax Carbon Dioxide as a Type of Subsidy
As of August 2009, the United States, which has just 5% of the world's population but is responsible for 25% of global carbon emissions, is the only rich world nation to choose not to approve the Kyoto Protocol and refuse to reduce their CO2 emissions. Yet it is not just the United States which will feel the burden of American carbon dioxide; global warming will affect every country as sea levels rise and flood all low-lying areas. For the benefit of mankind, the US must make efforts to reduce its emissions just as the citizens of Europe and Japan have done; if the US continues to allow its corporations to pollute the global commons, measures must be put in place by the rest of the international community to force American corporations to become more eco-friendly. By placing tariffs on carbon intensive exports from the United States, countries which have approved the Kyoto Protocol can put a strong external pressure on American industry to reduce their harmful CO2 emissions.
The one of the main functions of the World Trade Organization is prevent countries from subsidizing their own domestic industries in order to discourage protectionism. When the United States refuses to tax its steel industry for polluting the entire planet with high carbon emissions, the US is in effect giving its domestic steel industry a kind of subsidy, since American steel will require less money to produce than cleaner European steel (which is burdened by heavy emissions taxes). This gives the American companies an advantage; the American government is well aware of this fact, so it continues to refuse to put a carbon tax on its steel industry. But what if the World Trade Organization decided to consider refusal to place a carbon tax on domestic products as a form of subsidy; one could argue that since these American companies are not paying for the damage they are doing to the global environment, they are in effect getting a subsidy.
Economist Joseph Stiglitz suggests that countries which have ratified the Kyoto Protocol -countries like Japan, European nations and Canada- should restrict of tax the import of American goods that are produced in ways which unnecessarily harm the environment. In other words, counter tariffs should be put in place on products relative to the amount of greenhouse gas they produce. In his book Making Globalization Work, Stiglitz explains this mechanism:
"It would work like this. Assume, for instance, that American-produced steel sells for $500 per ton, and that in the process of producing that ton of steel, two tons of carbon are emitted. The price of a ton of carbon is, say, $30 (the price of the European carbon trading system in early 2006). Because America did not join the Kyoto Protocol and its firms are under no obligation to reduce carbon emissions, they are in effect being subsidized to the tune of $60 per ton of steel. Thus, European and other countries could levy a tax on American steel of $60 per ton (just over 10%). This would provide strong incentives for companies to reduce their carbon emissions."
-Joseph Stiglitz, Making Globalization Work
This is an excellent idea which would put heavy external pressure on countries which did not ratify the Kyoto Protocol -such as the United States- to reduce their carbon emissions. With the help of other nations which signed Kyoto, Canada can help push the World Trade Organization to implement this reform, helping to reduce carbon emissions in those areas of the world unwilling to cooperate.
The one of the main functions of the World Trade Organization is prevent countries from subsidizing their own domestic industries in order to discourage protectionism. When the United States refuses to tax its steel industry for polluting the entire planet with high carbon emissions, the US is in effect giving its domestic steel industry a kind of subsidy, since American steel will require less money to produce than cleaner European steel (which is burdened by heavy emissions taxes). This gives the American companies an advantage; the American government is well aware of this fact, so it continues to refuse to put a carbon tax on its steel industry. But what if the World Trade Organization decided to consider refusal to place a carbon tax on domestic products as a form of subsidy; one could argue that since these American companies are not paying for the damage they are doing to the global environment, they are in effect getting a subsidy.
Economist Joseph Stiglitz suggests that countries which have ratified the Kyoto Protocol -countries like Japan, European nations and Canada- should restrict of tax the import of American goods that are produced in ways which unnecessarily harm the environment. In other words, counter tariffs should be put in place on products relative to the amount of greenhouse gas they produce. In his book Making Globalization Work, Stiglitz explains this mechanism:
"It would work like this. Assume, for instance, that American-produced steel sells for $500 per ton, and that in the process of producing that ton of steel, two tons of carbon are emitted. The price of a ton of carbon is, say, $30 (the price of the European carbon trading system in early 2006). Because America did not join the Kyoto Protocol and its firms are under no obligation to reduce carbon emissions, they are in effect being subsidized to the tune of $60 per ton of steel. Thus, European and other countries could levy a tax on American steel of $60 per ton (just over 10%). This would provide strong incentives for companies to reduce their carbon emissions."
-Joseph Stiglitz, Making Globalization Work
This is an excellent idea which would put heavy external pressure on countries which did not ratify the Kyoto Protocol -such as the United States- to reduce their carbon emissions. With the help of other nations which signed Kyoto, Canada can help push the World Trade Organization to implement this reform, helping to reduce carbon emissions in those areas of the world unwilling to cooperate.
End Note
"To the people of poor nations, we pledge to work alongside you to make your farms flourish and let clean waters flow; to nourish starved bodies and feed hungry minds. And to those nations like ours that enjoy relative plenty, we say we can no longer afford indifference to suffering outside our borders; nor can we consume the world's resources without regard to effect. For the world has changed, and we must change with it."
-Barack Obama, 2009 Inaugural Address
As one billion humans throughout Europe and North America enjoy the wonderful luxuries of health, education and state of the art technology,
one sixth of humanity lay dying of starvation and preventable illness, unable to afford basic living requirements such as clean water or protection from disease-carrying insects. Desperation routinely causes civil war to break out in these impoverished regions, leading to the slaughtering of millions of people; millions more die of chronic drought, which is bound to get worse as the rich world continues emitting carbon dioxide. If left unaided, Africa will continue to wallow in its miserable Poverty Traps, unable to enjoy the excellent quality of life that you and I take for granted.
As one of the wealthiest nations in the world, Canada should do everything within its power to help this desolate region eradicate extreme poverty. Activists can play a key role in bettering African welfare by demanding that their elected officials push for the reforms laid out in this final chapter, including the pardoning of odious debt, the scaling up of international aid, the creation of several charters of transparency, and the implementation of reforms needed to reduce carbon dioxide emissions.
By combining human compassion with deeper knowledge of economic science, activists from around Canada can work to eliminate extreme poverty within our lifetime. So let us not be blinded by the distortion of stereotypes and misinformation, nor held back by the shackles of excessive pessimism toward the world and its people. Believe that when decisive action is taken to remedy our global issues, humanity can share in a collective celebration of prosperity which everyone can be a part of.
