Jeffrey Sach on “Sustainability, Growth and Development”

Sachs talked in Expomanagement, Madrid, June 5th, of the crisis of violence and ecology the world faces, projections in 30 years time, and the need to respond to challenges with a new Economics for the 21st. century.

We are in a world of increasing ecological stress, possing new challenges, says Sachs, and Spain is in the epicenter of the challenge. On the down side, Spain is affected by energy dependency and a subtropical Mediterranean climate that is experiencing the effects of droughts and water stress: Water challenges are great. On the problem solving side, Spain is a leader in solar technology and wind tech, with an enormous potential.

The nature of the challenges requires policies of a long term thrust and “a new economics for the 21st. century”. His argument goes as follows: We have arrived at a very populated planet –that poses challenges for this generation not envisioned before. World gross product has increased up to 60.000 trillion dollars, in a world economy more dynamic than ever before in history (See slides here). While most of the word was excluded from economic growth in the twentieth century (growth started steadly in UK, Germany, Anglosaxon, and in the mid 20th century in Japan), this century sees new incomers.

Rising literacy, improved communications, and new models of development explain this success for many new incomers. From 1978 China has doubled its economy every seven years (five continues cycles of impressive growth). And global growth will be doubling in 17 years, according to projections. This explains why oil and food prices are soaring.  We never before faced this scale of population and global growth.

Within this scenario Sachs makes the following predictions about year 2050. He says that in the next 20 years, Asia will catch up and its share of GNP will make more than half of world share. The share of GNP for the West envisioned in his projections goes back to the percentage held by the region of the world in year 1500 (25%).  Latin America also increases its share (measured together with Africa) to more than 25%. In this new scenario, China is seeing closing the growth and development gap in just two generations.

We are facing two crises, according to Sachs. One is a crisis of violence, highly connected with water shortages. The other is a crisis of ecology. Those are crisis for which planetary scale cooperation is needed.

Sachs presents data showing that human society is facing an unprecedented change on all key components of the earth system: land transformation, CO2 transformation, water use, nitrogen, plant invasions, bird extinctions, and marine fisheries. And he argues that extrapolation of production is not an option because ecological chaos would subdue unless there are political responses. Challenges include mass migration, and he predicts an explosion of mass migration from Africa looking for food and water in Europe. He proposes to dissect the technical problems, and design critical paths to take action.

He gives positive examples in Spain, pioneering the technology that could produce huge amounts of energy: Sachs mentions Iberdrola lead in concentrated solar thermo power technology. And he also speaks of the need to use fossils fuel safely, citing the example of Carbon Sequestration Systems. However, there is only one plan in the world, and governments are doing very little on this direction, while private initiative do not take action about it.

He says that “we are fighting wars in dry lands, while we are not investing in dry lands”. He defends mayor investments in agriculture, and direct investments in the poorest populations, so they can escape extreme poverty. Sending food is not the option, but helping the poor with     investment, irrigation and family planning.

Among the challenges:

  • Bigger technological capacities are needed.
  • Governments have to provide themselves with new tools of analysis and new ways of partnership with the private sector. While the public  sector should regulate, the  private sector have to participate.
  • Talking specifically of Spain he mentions that the country needs to find alternatives not to destroy the oceans soil, with new solutions that do not do more of the same.

He quotes in Spanish a speech by President Kennedy in June 1963, after the Cuban Missile Crisis in order to explain the need to talk and make peace to solve problems globaly:  “La razón y el espíritu del ser humano han resuelto a menudo lo irresoluble… por ello podemos volver a hacerlo”.

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