December, 2000

The environmental benefits of globalization

By John A. Charles

The conventional wisdom within the environmental movement is that our market economy is not sustainable because it promotes crass consumerism that is depleting the earth's finite resources. Environmentalists are particularly alarmed that millions of people around the world aspire to the level of material comforts that Americans take for granted. They fear that the globalization of capitalism is a recipe for ecological disaster, therefore we must move to some as-yet undefined economic system, one with greater government control.

Fortunately, the actual data trends generally point in a much more positive direction, so we need not fear the end of modern conveniences. Nor is there any reason to feel guilty about the typical American lifestyle. Our economy has been becoming more environmentally benign for well over 50 years, and this is likely to continue indefinitely.

Let's examine just a few of the more significant trends. Between 1970 and 1997, U.S. population increased 31 percent, vehicle miles traveled increased 127 percent, and gross domestic product increased 114 percent - yet total air pollution actually decreased by about 31 percent.

In the North American manufacturing sector, the pounds of material used dropped from 2,750 pounds of packaging per gross production unit in 1989 to approximately 2,100 pounds in 1993-94.

Pollution of the Great Lakes, as measured by estimated phosphorus loadings, declined significantly in all five of the lakes from 1976 to 1989. Lake Erie, once declared "dead" by some scientists, showed the greatest improvement, with phosphorus loadings dropping by over 50% during that period.

Atmospheric emissions per constant $1,000 of GDP have been declining by approximately 4.6% per year since before WW II - from 380 pounds per $1,000 of GDP in 1940 to 60 pounds in 1988. Emissions per capita during those years also declined, from 1.1 tons per person to 0.5 tons. Energy consumption declined per constant $1,000 of GDP, at the rate of 1% per year.

How is it that as the economy grows, pollution keeps falling? The answer is simple: market competition imposes a never-ending drive for efficiency and innovation. Since pollution results from the waste of a resource input, rising industrial efficiency results in lowered pollution.

The growth of our economy has also generated the necessary wealth to invest in pollution control. Nationwide, the amount of money spent annually by the business sector on pollution abatement rose from $31.9 billion in 1973 to $59.3 billion in 1993, in constant dollars.

The overall rise in living standards has had tremendous public health benefits as well. The infant mortality rate in the United States dropped from 29.2 per thousand in 1950 to 7.1 in 1997. Since 1980, the death rate for cancer has dropped more than 11% for individuals between the ages of 25 and 64. As a result of these and other similar trends, the life expectancy for all Americans rose from 70.8 years in 1970 to 75.8 by 1995.

In short, wealthier is healthier. A recent report by the World Trade Organization reinforces these points. The report concludes: "One reason why environmental protection is lagging in many countries is low incomes. Countries that live on the margin may simply not be able to afford to set aside resources for pollution abatement…If poverty is at the core of the problem, economic growth will be part of the solution, to the extent that it allows countries to shift gears from more immediate concerns to long run sustainability issues. Indeed, at least some empirical evidence suggests that pollution increases at the early stages of development but decreases after a certain income level has been reached…"

The state interventionist model favored by many "sustainability" advocates has been tried numerous times and has always failed. Some of the most polluted cities on the face of the earth are in countries formerly or currently under socialist rule. Leaders of the former Soviet Union and East Germany were as confident in their ability to run the economy as local sustainable development advocates are in Oregon, but they found out that eliminating market competition also eliminated incentives to develop innovative technologies that use resources more efficiently.

It's time to acknowledge that the search for a sustainable economy is over. We've already got one; we just need to protect it from the meddling of intellectual elites who simply can't stand the idea of "unplanned" voluntary trade in a free society.

John A. Charles is the environmental policy director at Cascade Policy Institute, a Portland-based think tank. He may be reached at (503) 242-0900.