Monday, 12 January 2015

It’s the economists, stupid

What is the cost of deploying 80,000 French police officers over two days? What is the cost of 17 lives cut short? When will economists include these costs in the balance sheet on poverty?

There are many, many reasons behind terror attacks, some of them delusions in the heads of the individuals who carry them out. But there is one clear reason behind the war that is currently being waged from Baghdad to the banlieue; poverty.  People with nothing, with nothing to lose, excluded from a society that appears wealthy and comfortable. Imagine if Afghanistan were a prosperous country, or if Syria were Norway, full of people engaged economically, emotionally, socially with their society, and whose growing prosperity depended on that society. In that world people would have no need to create terror.

But Afghanistan, Syria and the Levant, and most of North Africa are not like that. Nor is the banlieu. In all of these places there is poverty, defined as people having an income that is under 50% of the median income in the place they live. In all of these places people have emerged who are able to gather and organise the poor and the dispossessed and turn a few of them into bombers and fighters. A few, but enough to cause death and destruction in the rest of the world.

We, the rest of the world, have allowed these places to get poor or to stay poor. We have allowed some suburbs to rot while others, often only a few kilometres away, enjoy all the fruits of wealth. Through our trade rules and our geopolitics we have allowed North Africa to grind along in poverty while we sun ourselves across the water on the Riviera or the Costa del Sol.

According to normal economics, that’s all fine. We measure ourselves, economically, as having prosperous lives and economies. The World Bank says that Afghanistan has a GDP of $20 billion, while that of France is $2.8 trillion, more than 100 times greater. This is the wealth gap – and to underline that, the World Bank says that 35% of the Afghan population live in poverty.

But “normal economics” is wrong, stupid.

France is now paying the economic cost of allowing other parts of the world, including its own banlieue, to fall into poverty.  So are all of us in the rich countries.  These costs of poverty should feature in our accounts. From France’s GDP we should deduct some cost for the fact that she (alongside all of us in the West) has allowed other places to fall into poverty. Some cost reflecting the 80,000 police officers and the 17 lives lost. Some cost reflecting the hundreds of thousands of life-opportunities lost to the people who live in her banlieue. Some cost reflecting the ways we all pay for poverty.

That would be real-world economics. A world in which we could not balance our books without taxing ourselves heavily for the true cost of poverty.

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