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**http://www.foreignpolicy.com/story/cms.php?story_id=3347
The Most Dangerous Deficit
By Moisés Naím
January/February 2006
Why the supply and demand for global public goods could kill you.
In 1970, the world recorded 78 major natural disasters, which affected
about 80 million people and inflicted roughly $10 billion in economic damage.
By 2004, the number of major disasters worldwide had climbed to 384, claiming
200 million victims. The economic cost jumped five-fold, to $50 billion. The
final numbers for 2005 will be even worse.
One reason for the enormous growth in disasters is that many of the
catastrophes that are now well documented would have gone unrecorded in the
past. But, even when one accounts for earlier underreporting, the number of
floods, hurricanes, typhoons, mudslides, and other natural disasters has grown
exponentially in the past three decades. Worse, the disasters now regularly
claim more victims and cost more to clean up than they did a generation ago.
The world is not only more populated, but more people are living in dense urban
corridors or poorly built shantytowns. No wonder that, according to the Red
Cross, the number of people forced to move because of environmental disasters
now exceeds those forced to do so by war.
Meanwhile, the budgets of the international organizations charged with
providing disaster relief and reconstruction have not kept up with demand. The
World Bank, a major source of money and technical assistance for reconstruction
and development projects, is lending less now than it did 10 years ago. The
budget for the United Nations High Commission on Refugees has grown 62 percent
since 1990. That may seem generous, but it is a pittance when you consider
that, by 2010, 50 million people are expected to be displaced by environmental
causes alone. For its part, the overall U.N. budget has only increased a meager
26 percent during the past 15 years. It's no surprise, then, that a recent
report concluded that the U.N. headquarters building suffers from "unacceptable
deterioration, building and fire code deficiencies, deficiencies in modern
security requirements and standards and environmental problems."
There are many explanations for this dangerous imbalance, but an
important one is the very nature of public goods. Public goods are those whose
use or enjoyment by one person doesn't prevent the use or enjoyment by another.
(Think of traffic lights, or the efforts to prevent an avian flu pandemic.)
Better international policing, health safeguards, or rescue efforts are some of
the most obvious examples of the provision of global public goods. The supply
of these precious commodities-even when delivered by national governments
within their borders-is problematic. When the public goods in question can only
be "produced" through the joint efforts of many countries or by organizations
such as the United Nations, the difficulties of balancing supply and demand are
even greater.
The problem is rooted in economics. Once a public good is produced, it is
impossible for those who created it to restrict-or profit from-its use. (You
are probably benefiting, at no direct cost to you, from an international
regulatory system that makes money transfers safer, cheaper, and faster.) That
is why it is so hard to produce public goods in the first place-only
governments and other public institutions can supply them. It also explains why
the demand for public goods tends to outstrip supply. In any market, prices go
up when demand exceeds supply. In the market for global public goods, when
supply falls behind demand, the result is not price inflation but insecurity
and instability for all.
Yes, many problems-financial crises, pollution, criminal networks, and
terrorism, to name a few-are rooted in some countries more than others. But
these problems are increasingly spilling across borders and will spread even
further unless several-often many-countries work together. The United States,
Europe, and Japan weren't able to duck the consequences of the SARS virus in
2003-nor will they be spared an avian flu epidemic-by simply protecting their
own borders. Their fortunes are inextricably tied to how well China, Vietnam,
and other Asian countries control their next deadly outbreak. Indeed, experts
fear that the organizational, financial, and medical capabilities now in place
to combat an avian flu epidemic are woefully inadequate, despite the fact that
governments are clearly worried and raising their budgets to address this
threat.
The global economic imbalances associated with America's budget and trade
deficits, China's exchange rate, or Europe's slow growth may eventually cause
job losses, reduced income, and more poverty. Those are bad outcomes. But they
pale in comparison to the consequences of the imbalance between the supply and
demand of global public goods. That is an imbalance that every year kills
thousands of people and will increasingly hit closer to all our homes.
Everywhere.
Moisés Naím is editor in chief of FOREIGN POLICY.
[Non-text portions of this message have been removed]
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Berdikusi dg Santun & Elegan, dg Semangat Persahabatan. Menuju Indonesia yg
Lebih Baik, in Commonality & Shared Destiny.
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