How would you rank the following priorities for making the planet a better place?
* A major improvement in health in poor countries, saving millions of lives each year
* Substantial progress in reducing the rate of climate change, preventing large-scale species extinctions and other environmental damage
* New and improved advertisements for consumer goods
You don’t have to be Bjorn Lomborg to agree that, given the choice, improvements in health should get top priority. And you don’t have to be Vance Packard to think that the benefits of advertising, if they are positive at all, are trivial in relation to the first two choices.
In fact, however, countries in the developed world currently allocate about 1 per cent of its income to the advertising industry (this excludes the cost of the TV programs and so on financed out of advertising revenue), far more than to either development aid or climate change. The US, for example, spends about 0.1 per cent of GDP in development aid, and almost nothing on programs to mitigate climate change. If we were all prepared to watch the same old ads, instead of getting new ones every year, we would have enough money to finance either the proposals of the Commission on Macroeconomics and Health or a climate change mitigation program substantially more ambitious than the Kyoto protocol.
The fact that we don’t raises a couple of issues. First, our priorities are seriously screwed. We should all be making more noise, more of the time, about the need to increase development aid, as well as personally giving more than we do to aid organisations. I don’t claim to be much better than anyone else in this respect, though I do try from time to time.
Second, comparisons of this kind are clearly tricky. Even if we all agree that too much is spent on advertising, there is no easy way, in a market or even mixed economy, of stopping firms spending money to promote their products, let alone of redirecting any savings to socially desirable ends. Similarly, and contrary to Lomborg’s implicit premise, there’s no easy way of making a trade-off in which we decide to do nothing about climate change and instead to spend the money on improving the health of the poor.
Third, given that high-priority needs are going unmet, it’s hard to reason properly about social costs and benefits. The Copenhagen Consensus exercise illustrates this. It’s quite reasonable to say that, given the choice, clean drinking water for the world’s poor should rank ahead of mitigating climate change. But is this the appropriate comparison? If Kyoto goes ahead, it won’t be financed out of aid budgets. In fact, to the extent that emissions trading is involved, poor countries will actually benefit. So the appropriate comparison is between mitigating climate change and maintaining higher levels of consumption (including the advertising that is part of that consumption) in the rich countries.
Assessing the cost-benefit issues here isn’t easy, and I doubt that the members of the Copenhagen panel have managed, in the course of five days looking at a whole range of issues, to come up with better answers than those that have been found so far. There’s no easy way of putting a monetary value on species extinctions, the loss of coral reefs and so on, and there are also tricky conceptual issues about discounting. I can only say that I would happily accept an income cut of 1 per cent if even half of the damage projected by the IPCC could be avoided (some warming is, of course, inevitable).
It would, of course, be reasonable for Lomborg, and others who’ve participated in the Copenhagen Consensus exercise to say that climate change is a second-order issue and that it is far more important to devote attention to AIDS and other health issues. Lomborg could start at home if he wanted to. Denmark has been one of the few countries in the world that gives 1 per cent of its income in development aid. But the same government that appointed Lomborg to run its Environmental Assessment Institute has also cut foreign aid repeatedly. Lomborg is a figure with a world profile who could certainly bring some pressure to bear to have these cuts reversed. If I does so, I’ll be the first to cheer him on.