Enlightened Economics: Valuing the Truly Valuable
3M earnings helped by swine flu mask sales
Bottled water global sales to cross $85 billion by 2011
The entire family had been looking forward to the Disney World experience, and we were all excited on the plane trip from India to Florida. My daughter Samvitha, who was 8 at that time, was especially eager. But almost as soon as we landed, she took ill. This was a few years ago, at the height of the SARS epidemic, and my wife and I were very concerned.
Our daughter was bedridden our entire week in Orlando. She suffered no lasting problems beyond the disappointment of not getting to meet Mickey and Goofy and go on the many rides but I often think about her illness today when I exit a plane with breathing difficulties or read about the threat of the H1N1 swine flu epidemic.
From the beginning of time, we humans have taken clean air and water for granted. No more, especially in densely populated areas such as the cities in India where movie theatres, shopping malls and schools have been closed to stop the spread of the flu. Whether in the enclosed space of an airplane or in a crowded market, we are right to worry about air quality. And water quality, too: just look at the increase in demand for bottled water all over the world in recent years.
These concerns over air and water the most basic necessities of life are leading us to think in new ways about what is valuable in our lives. Adam Smith talked about the paradox of value, also called the diamond-water paradox. He made a distinction between value in use and value in exchange. The things that have the highest value in everyday use, such as water, often have relatively little value in the commercial marketplace. Conversely, things that have the highest value in exchange - such as diamonds - have little practical value in terms of use.
Over the last two centuries, the Industrial Age, with its focus on scale and efficiency, has centralized agriculture and farming, bringing prices of food down quite significantly. But this is not without its costs. According to Bill McKibben in Deep Economy, concentrated agriculture makes us sick on a fairly regular basis.
Seventy-six million Americans fall ill annually from food-borne illnesses, 300,000 are hospitalized and 5,000 die. For instance, the cheapest way to raise hogs is all in the same place; one worker can take care of tens of thousands of animals. But this concentrates their waste in one place. Instead of being useful fertilizer to spread on crop fields, that concentrated waste becomes a toxic threat and increases the chances of swine flu.
While it is fortunate that countries like India do not have this level of concentrated farming, globalization makes up for it. We are affected by the H1N1 threat in the same way we have been affected by the sub-prime crisis and the financial meltdown.
It is time to step back and take stock. As we look at reinventing our fundamental constructs, our idea of economic value needs close inspection. Should we start valuing whats really valuable to our lives on this planet rather than what just makes us feel good or look good?
Should our decisions on centralization and decentralization be driven by considerations of what drives true value, rather than just efficiency? How global is too global what global governance mechanisms do we need when we deal with systemic and globally interrelated issues like pandemics, recession etc.? These are but a few questions that we will dialog on this site.
Enlightened Economics: Valuing the Truly Valuable
By: Sudhakar Ram
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