Weathering The Storms: Bjorn Lomborg On Climate Change, Global Priorities

>> Speaker 1: If you look up at the Hollywood sign, you can see it's kind of hard to see sometimes. We've seen some really low clouds coming down. And again, just this hail really coming down here.

>> Bill Whalen: It's Tuesday, February 28, 2023, and welcome back to GoodFellows, a Hoover Institution broadcast examining social, economic, political, and geopolitical concerns.

I'm Bill Whalen, I'm a Hoover distinguished policy fellow. I will be your moderator today, joined by two of our good fellows, the historian Niall Ferguson and the economist John Cochran, they are Hoover Institution senior fellows. Normally, we're also graced by the presence of lieutenant general HR McMaster, but the good general had a scheduling conflict today.

He sends his regrets, he'll be back with us for our next episode, I hope. But joining us today for a spirited conversation about climate change and other matters of global importance is Bjorn Lomborg, a show favorite. Bjorn Lomborg, in addition to being a visiting fellow here at the Hoover Institution, is a Copenhagen Business School visiting professor and president of the Copenhagen Consensus Center.

Which researches the smartest solutions to the world's biggest problems. That's why, as we turn to GoodFellows today, to give Niall and John some smart solutions to at least two big problems, a changing climate and the world getting its priorities in order. Bjorn, great to see you again.

>> Bjorn Lomborg: That's good to be here, thank you very much.

 

>> Bill Whalen: Question, my friend. Tell the viewers where you are today and what the weather is like outside, and if it's normal weather for this time of the year.

>> Bjorn Lomborg: I'm in Sweden, and it was actually beautiful weather until the sunset, and now it's just freezing as it normally is.

But, yeah, little listener tip, don't ever go to Scandinavia in the winter. That's just dreary, but do come this summer, it's wonderful.

>> Bill Whalen: What about going to London in the winter, Niall?

>> Nial Ferguson: Well, London is grey all the year round, so there's never any danger of disappointment as long as you have realistic expectations.

Spring is visible here, however, and what happens is that the plants anticipate it. And so the daffodils and the snowdrops are out, but it's still freezing cold and the sky is a kind of grim metallic gray. But that anticipation of spring is part of the peculiar magic of this country.

You can tell I'm here by the fact that I'm wearing a cricket jumper rather ahead of the cricket season, but that's the same sense of anticipation that the plants have.

>> Bill Whalen: Well, maybe that's our next GoodFellows uniform. I'm asking about weather, gentlemen, because John, Niall and I happen to be living in northern California, which for about two months now has been the scene of rather erratic weather.

Bjorn our year started with just buckets and buckets of rain, what we call atmospheric rivers here in California. This past weekend, it snowed in the San Francisco Bay area. It's known in Los Angeles, for crying out loud. But this is not just a California story or an American story, it's a world story.

Europe, for example, brutal summer, brutal hot summer. Last year, a mild winter, I've saw some ski resorts in the Alps had shut down because there's no snow on the ground. Question, Bjorn, we read stories about erratic weather. To what extent is climate change involved?

>> Bjorn Lomborg: Well, that's actually a really hard question.

It's not one that I can give any definitive answer to. I think there's a couple of observations that are important. One is that it's obvious that you notice all the stuff that's sort of off. And it's very easy to say, global warming, it's much, much harder to actually go in and say, well, what are all the places where things happen as they usually did, but you just didn't notice?

So it's not very good setup to try and sort of make statistics in the world from our local experiences. Now, we would expect from global warming to see more precipitation. We would expect to see hotter weather. There's a lot of things we would not expect. So, for instance, the whole idea of saying, the extra cold is because of global warming, no, that's just ridiculous.

Overall, all models show everywhere that you would get less cold, not more cold. You just can't have it all those different ways. But I think, crucially, if you just wanna take a look at a few important statistics, which I'm pretty sure that almost everyone has missed. Is if you look at hurricanes, we now have 43, 42 years, 43 years of global coverage from satellites on hurricanes.

Last year was the second lowest in total hurricane activity ever. And of course, you don't hear that, you will only hear once it's really, really high, and typically what you'll hear. So for the last couple of years, it's actually been really low. But then you hear about, but it's high in the Atlantic basin, because that's the one that stands out.

This last year, it wasn't even high, it was below average in the Atlantic Ocean. And so you just don't hear about it, then you hear about something else. And that's why I think we really need to ask ourselves, are we being well informed? If we only hear about the things that sort of fit into the narrative and not the ones that don't, then we're a little bit at the same place as I don't know if you remember over the last three decades.

Maybe not the last couple of years, but the US was inundated by the idea that there were more and more crime. While of course the crime index from the FBI kept going down and down and down everybody. So a large majority of us citizens said they thought crime was getting worse and worse.

It's not good information to just hear on the news, there's a lot of crime, so there must be more and more crime. Just like there's a lot of weather, so it must be getting worse and worse.

>> Bill Whalen: John.

>> John Cochrane: I would just add here that climate is the probability distribution of the weather and extreme events happen.

There was a flood in the 1860s, I think, in which the Central Valley was under 10ft of water the whole way, these things happened. At best, a change in the climate means a change in the frequency of extreme events, which we've all seen all the time. And that's very hard to measure.

But it is interesting culturally we need a story. The ancients said, the gods are angry, it's raining. And so we say it's raining, it must be climate change, at least. It's been kinda funny in California, now we don't need to build a high speed train to bring back the rains, we need to build a high speed train to stop the rains.

These fanciful channels of cause and effect can change on a dime, which is kinda funny to see. But this is not the story of climate change.

>> Bill Whalen: Neil.

>> Nial Ferguson: Well, I feel rather strange having somewhat better weather in England than you're having in California. My wife reports snow at our home, something I never expected to see.

But it seems like only the other day that we were lamenting drought in California. And ultimately the discussion has to be about averages to be meaningful, as John just implied. That the central claim of those who are deeply concerned about climate change is that the rising average temperatures and those I think are fairly easy to demonstrate.

Will have very deleterious effects in a variety of different ways. Precipitation, rising sea levels and so on. It's almost pointless to try to infer from extreme weather in any one place some broader systemic story, as Bjorn says. And indeed, I think part of what goes on, and this is driven by the media as much as by anything, is that if the dominant preoccupation of the intellectual and business and political elite is climate change.

If they insist that that is the principle threat to mankind, then there's a market for apparently confirmative data points. And that's, I think, a big part of the reason why we start talking about- Atmospheric rivers, did anybody talk about those back in the 1860s or even the 1960s?

I bet they didn't, I mean, this kind of hyperbolic language is being used to intensify the sense of crisis in a spurious way, and this matters for a couple of reasons that I think we should talk about. One is of course, that there's a pressure to do policies in response to an apparently worsening crisis that may in fact have unintended consequences.

Bjorn has written very eloquently about that in his last book, the other thing I'm really interested in is the extent to which this relentless alarmism about atmospheric rivers or polar bombs or whatever we decide to call a nasty cold snap really upsets and worries young people. I spent part of the last couple of weeks delving into the mental health epidemic, and it's pretty striking, as my most recent Bloomberg column shows, just how much reported mental illness, depression, stress and anxiety there is amongst young people.

And of course you can blame it all on smartphones, which some people do. But actually I think part of what the young people say is making them concerned is the perception that the world is going to end and that were in fact approaching a climate catastrophe, And thats why I think its quite irresponsible to say very bad weather in California that proves that climate change is real and the end of the world is nigh.

This is irresponsible because it leads to bad policy, I think its also leading to a real psychological crisis amongst young people.

>> Bill Whalen: Bjorn?

>> Bjorn Lomborg: Yeah, if I could just, I think thats absolutely true, both we need to understand that things are not actually coming apart, seems another good statistic that I think is worth pointing out over and over again is the fact that as we get richer and richer, we actually get more resilient.

And so even if there are climate challenges, we get better and better at handling them. So if you look at all climate related deaths, that is, from storm straps, floods and extreme temperatures, the international SASTA database estimates that in the 1920s, so 100 years ago, on average, there were about half a million people that died each year.

Since then, you would imagine from the rhetoric that that number had gone up because of global warming, but actually it's dramatically declined. So that last decade it was at about 18,000, in the 2010s, last year in 2022, it was at 11,000 people. So we've seen a reduction of almost 99% while the world population has quadrupled.

So we really are much, much safer and at the same time, and I think that's also a little bit Neil's point, not only does this scare kids mindless, but it also very easily means that the elite sort of shifts away the whole conversation to something else, namely that they will say, this is because of global warming.

So we should be worried about global warming, look at, for instance, Pakistan, where they had huge floods. Now, admittedly, it seems like that could be at least partially related to global warming. The vast majority of this, and that's what all the people who know about Pakistan tells us, is this is because of bad management, this is because of poor infrastructure, this is because the Pakistani government has not been up for its job.

Now, which outcome do you get when you blame it on climate change? You say we should do more cutting of carbon emissions, we should drive our cars less. But the reality is, of course, if you actually wanna help future Pakistani citizens, the total reason that you should be focusing on is to make sure that they have better infrastructure and are more protected against, for instance, floods, just like we are in many, many other countries.

 

>> John Cochrane: I wanna pursue this a little bit, Bjorn, because you're the expert on it, and I follow some of this stuff skeptically. But the central question is, what are the costs and damages of climate change? I think we all know climate change is real, we all know climate change is being pushed by human carbon dioxide emissions.

But in the question what we do about it, which seems to be vastly expensive and devoted mostly to delaying, to making things happen faster, that would happen anyway at tremendous cost, have to ask ourselves, well, what is the damages of climate change? These floods, for example, not the floods, the rain and snow in California is wonderful.

This is, you know, we have previously had a drought, and if we actually went back to a climate with more rain and snow, it would be fantastic. It's fantastic in the short run, despite its inconveniences. But, you know, even if we were going to slightly change the frequency of such things, which is what it's about, would that be worth a trillion dollars a year?

What are my sense of everything I've read that the economic costs of climate change are the best guesses are on the order of 5% of GDP in the year 2100. That number is bandied about, the usual joke is economists. We know economists have a sense of humor because they use decimal places, that number could be plus 5%, it could be -10% the evidence that I have seen on that number is very, very sketchy.

But even take it as you will, 5% of GDP in 2100 is couch change compared to the hundreds of percent of GDP of even our growth and the thousands of percent of GDP, let us hope that India, Africa and even China will experience of growth in the year 2100.

That is not 5% of GDP, two years worth of growth in 100 years is not a calamity, it's not an existential threat, it's not the end of civilization. So if that's the question, boy boy, it's hard to defend spending trillions on the answers, I also notice that we do our policies have very little cost benefit analysis.

We're going to ban gas stoves in Palo Alto. You did an analysis of the Inflation Reduction act, which about a trillion dollars worth of spending and I can't remember the number of zeros before the one in how much this was gonna lower global temperature. At least could we do some, how much money are we spending per ton of carbon?

This from an economic point of view, and this will wrap up the question, bill. The estimate of the damage seems small, the complete lack of even quantifying how much carbon we save per dollar seems incredibly absent. This seems like from an economic point of view, it falls there.

Now, maybe I'm missing something, maybe there are tipping points, maybe indeed there are environmental consequences that they're just not telling us about that are worth spending all this money on. But that doesn't seem to add up, so help enlighten me on both those questions, the actual costs and the cost of what we're doing to try to fix it.

 

>> Bjorn Lomborg: Yeah, no, I tend to broadly agree. So look, the only climate economist to ever win the Nobel Prize, William Nordhaus, made his career on making that exact point of saying, look, you can't just talk about climate and damages from climate. You also need to recognize that anything we do to tackle climate will incur real and serious costs, given that we have to pay both.

His point was to say you should minimize the sum of those two costs, both the cost of climate and the cost of climate policy. You need to minimize the cost of both, and not surprisingly, all studies show that you should find somewhere in between. You shouldn't do nothing, you shouldn't do everything, you should do somewhere in between.

And he actually found that you should do not so much for climate.

>> Nial Ferguson: I wonder if I can add a little bit more economics. A couple of other points are worth making, the more we talk about climate disaster the less we talk about other forms of disaster. And this actually is, to my mind, the big concern that we end up underestimating other forms of risk.

I remember back in 2020, long before the pandemic was over, Larry Summers and a co author estimating that the cost of COVID would be approximately the estimate of damages from 50 years of climate change. So one pandemic, and that was almost certainly an underestimate because nobody quite foresaw how many more people would die in 2021.

The other thing thats interesting, Bjorn, you mentioned the Pakistan floods, but the number of people who died in the earthquake in Turkey and Syria was 30 times larger, roughly speaking. And its all worth reminding people that earthquakes have absolutely nothing to do with climate change. And geology is in fact a much bigger historical cause of death than relatively slow moving changes in climate.

And don't get me started on the risk of a major war, we've returned to a time when nuclear threats are made by Russian leaders. That's not a trivial increase in the risk of large scale premature mortality. And if there were to be a use of nuclear weapons, and I think the probability of that has gone up quite a bit, it would make our concerns about climate seem somewhat preposterous because a nuclear war would kill vast numbers of people very fast indeed.

And that's why this preoccupation with climate change, which you see at all the major conferences, whether you're at Davos or Aspen or for that matter in California, this preoccupation with it, I think, underprices the risk from other really serious threats.

>> Bjorn Lomborg: I think that's exactly true, I mean, if you look at World Health Organization a couple of years before COVID hit telling us that the big challenge in the world is climate for global health.

And it doesn't take a rocket scientist to figure out that that means the World Health Organization paid less attention to, for instance, pandemics and were paying the price. I thought it was hilarious that World Economic Forum in the beginning of 2020 told us when I think you actually made that exact point.

While Covid was starting to spread around the world, they said the biggest challenge for the next ten years, indeed for the next two years, is climate. How can you get it so wrong that you constantly just focus on one thing and then pretty much forget all other things?

I think it goes back to, and sorry if I can just, John, on your points and the cost and benefits, I think its very true that theres no good estimates of the cost of any realistic climate change that would go beyond 10% of global GDP by the end of the century.

And yes, Nordhaus would come out with 4%, so your 5% is absolutely in the ballpark. And that does indicate that we should at least make sure that we don't spend a lot more than what that cost yet. The cost that we're talking about with net zero going net zero that people are now bandying about, even if we did it really, really well, would cost in the order of five or more percent now.

And of course, 5% now is a lot more than 5% in 100 years, moreover, we're also talking about a policy that if you do it incredibly well and well structured across the entire world, the cost will be 5%. We've not known any climate policies that actually achieve that.

What we have known is a lot of climate policies are really badly done. That is, they have multiple targets, they have multiple ways to try to do it. The typical way of both having some sort of carbon tax and having a subsidy for renewables, and having some claims onto how much renewable do you need and for instance, renewable mandates or that kind of thing.

So you actually end up steering in multiple different ways and making the costs much greater. We know, for instance, that the European 2020 policy, which is the best analyzed climate policy, ended up being about twice as costly as what it was originally intended to do and what it would have cost had it been done with the lowest cost.

So again, its very likely that the real cost will be even costlier. So were ending up spending lots and lots of money and achieving very little. And I think both of those points, so the fact that were undervaluing other impacts and that were failing to make just a simple benefit cost ratio, and most of these benefit cost ratios, certainly on the climate policies that were enacting right now are very, very low.

That is much less than a dollar back on the dollar, seems to underestimate that. What you actually need if you want to fix many of the world problems, is prosperity. We talked about the very beginning, if you prosperous, you're very much more likely to be resilient towards a lot of different impacts, not just from climate but also, as Neil pointed out, from earthquakes and, and many, many other impacts.

Just simply people love to point out that the poor are hurt the most from climate change which is absolutely true. But again, remember, the poor are hurt the most from pretty much everything and they're obviously hurt by being poor, they're hurt by bad education, they're hurt by lack of food, they're hurt by poor health and so on.

So fundamentally it seems weird to say I care so much for the poor. So I'm going to help them very ineffectively with one thing in 100 years rather than, I don't know, make sure they get out of poverty right now. Which of course would help them across the board.

 

>> John Cochrane: I want to add it's actually darker than this. The US's GDP per cap is about 60,000, India's about 2000, a lot of Africa is less than that. All of climate change going forward is about China, India and Africa. Whether we drive a Tesla or a Ford down to our private jets in Palo Alto is not what climate change is about.

You have a private jet in Palo Alto. Speak for yourself, the people who pass all the climate stuff in Palo Alto do. It's about how do China, India, Africa grow? And a lot of climate stuff is intertwined with the degrowthers who are basically saying you must stay this ridiculously poor for the next hundred years in the name of climate.

So it's really not about helping them, it's about making them tremendously worse off. And as you say, if you want to make them richer, starting from numbers like that, you want to make them better off. In the year 2100, growth is the answer and growth will improve the climate and the environment.

So I want to get back to where Neil was both on the young people I know, young people who are not having children because they think the atmosphere is going to burn in five years. But there's plenty of other things and this is one of the things that worries me about this preoccupation with climate.

Let's just put our doomsday hats on, there are so many plausible things that really could go wrong. Another pandemic, H5N1 is spreading around and that's way worse than Covid. Massive crop failures could happen, nuclear war could happen, general social breakdown, United States falls apart. That would be really, really bad for all sorts of reasons, environmental problems, you visit India, you visit Africa.

Their problem is not gently getting warmer, their problem is bad water, indoor air pollution because they're burning wood and or cow chips, emphysema. Particulates in a horrible fog. There's genuine environmental problems, easily curable diseases, garbage all over the place, loss of biodiversity, that one keeps me up at night.

There are huge environmental problems that could use some of these trillions and trillions of dollars, and we seem to be forgetting about them. And maybe there is a reason for these millennials to worry, they're just worrying about the wrong reasons.

>> Bjorn Lomborg: I would certainly tend to agree that if you look at what really matters for most developing countries, it's all those things you were talking about.

It's education, it's clean drinking water, it's healthcare, it's jobs, it's lack of corruption, those kinds of very simple basic things, many of which we actually know how to fix. And yet instead, we're sort of obsessed about saying, no, no, let's pick the one that they don't really care about.

That we can really only do a little bit about at really high cost, but at least it'll only work in 100 years. That seems like the worst kind of outcome of all the things that we're really focused on. There's a great example, I don't know if you saw the Uganda and Tanzania is trying to make a new pipeline where they're gonna be selling some of their oil.

Mind you, they're probably gonna be selling it to Europeans and North Americans, but, yeah, people are saying, no, no, no, you can't do that. Despite the fact that this could almost increase the income for Uganda, about 50% of their government income. This could be tremendous in so many different ways for the Ugandans, and yet you have rich Europeans and rich Americans telling, no, you can't do that.

And I'm just struck by the fact we're sitting and telling them they have one tenth of what we have in annual emissions from climate, that we use so much more energy. And we're basically telling, no, you can't get rich because this is fossil fuel, but we're using ten times as much.

And remember the increase in what Europe and North America? So the OZD had from 20 to 21 the last year that we have data, but because of COVID we increased our use of fossil fuels and we increased our emissions. That increase is twice as much as what Uganda and Tanzania would increase their emissions with if they were to use all the oil themselves, which, of course, they won't.

So there's something phenomenally hypocritical going on here, and I think we need to call it out. So one of the campaigners literally said, it's being couched as a way to drive economic growth in Uganda and Tanzania. But both for the environment but also for these people and their development, we have to say no to it.

And that's just outstandingly hypocritical. No, if you want to make them poor, you should definitely say no to this if you wanna keep them poor. But maybe you should be honest about that. And I think most of the Ugandans and Tanzania's, and they're certainly saying so, actually wanna get richer.

 

>> Bill Whalen: Bjorn, let's steer the conversation on the global priorities. First, by the way, I'd like to note viewers should get Neil Ferguson's excellent book doom, in which he talks about how historically mankind has handled catastrophes. It's just the title of that book never ceases to amaze, well done, Neil.

Question for you, Bjorn. I'd like to put you and the Neil and John into a Wayback machine and take you back about 20 years to October of 2004 at a column that you wrote for the Guardian. The headline first things first, and here's what you wrote, quote, the end of civilization argument is counterproductive to a serious public discourse on our actions.

We do have a choice, we can make climate change our first priority or choose to do other good first. You then went on to describe how the Copenhagen Consensus Center brought together 38 top economists to examine global priorities using cost benefit analysis. John Cochran, they came up with the following list.

HIV AIDS, hunger, free trade, and malaria were the world's top priorities. Let me repeat those, HIV AIDS, hunger, free trade, and malaria. Bjorn, it's 2023, not 2004 is that still at the top of the list or what would you add or subtract?

>> Bjorn Lomborg: Yes, so it is funny.

And yes, we are making those exact points yet again, 19 years later. I think what we've learned methodologically, there is something wrong in setting up what's the priorities of problems we've identified, and we did somewhat back then. But we've made it much more about what are actionable policies to actually make solutions.

Because you have to rank solutions, yeah, in some sense, you could say the world's biggest problem is that everybody dies. But economists would say we have an undersupply of immortality. But, yeah, it doesn't make sense to say that's the biggest problem if you don't know how to fix it.

So the reality is you need to ask what are the things that we can actually fix? And malaria, for example, is one of those top things, we know we for very little money could make a huge dent in malaria. So malaria kills about 600,000 people every year. If we made sure that people could afford about 10% more mosquito nets than what we're handing out right now.

We could increase the coverage such that the mosquitoes would both be hindered when you're sleeping under the net. But also because they're insecticide treated, they would kill the mosquitoes when they just sit on the net. And that would actually reduce the number of people by about 200,000 over the next eight years.

So the rest of this decade, for about $1.1 billion, that turns out to be one of the very best investments the world could make at benefit cost ratio, sorry, of $48. So for every dollar you spend, you will deliver $48 of worth for the world. This is both advice to governments in the developing world.

This is mostly in Sub-Saharan Africa, where malaria is still a problem for a wide range of reasons that we could get into. But this is both advice to those governments. So this would be Nigeria and the Democratic Republic of Congo and Tanzania and Niger, which have more than half of all the malaria deaths in the world.

But also, of course, for USAID and all the other development agencies. And along for Bill Gates and many other philanthropist billionaires that are trying to give away their money. So, yes, those are some of the very top outcomes. Likewise with hunger, we should be investing in getting more research and development for agriculture.

Because, fundamentally, how do you get more food out to people while you can hand it out, which turns out to be pretty corrupt often, and pretty difficult and pretty expensive. But if you could make seeds more productive, you can make sure that everyone can produce more, which gives both benefits to farmers because they can produce more.

And benefits to consumers because they have to pay less for each quantity of these foods. We know how to increase yields, we've done it once before with the green revolution back in the 60s and 70s. This drove enormous increases in yields, for instance, wheat and maize and rice.

But now we need to do it for YAAPS and sorghum and all these other things that most people haven't heard of, but which are stables in the poorest part of the world. If we could drive up that yield curve, and we know how to do that for about $5.5 billion, we could shave about 130 million people in hunger.

We could reduce the number of people hungry by 130 million. And we could drive up economic growth, both for consumers and producers, for about $184 million a year. So a benefit cost ratio of, 33, again, both of these cost benefit ratios are almost abnormally high and that's, of course, what I'm trying to do with our new project.

We're simply trying to find the very, very best benefit cost ratios in the world, and those are two of them. So absolutely, the world hasn't changed much, but we have much better evidence, and this is where we should be spending our money first.

>> Bill Whalen: Niall.

>> Nial Ferguson: John, can I ask a question?

Because in a way, whether you're addressing hunger or malaria, mostly in sub-Saharan Africa, you're addressing consequences of poverty. Isn't the real question how to get economic growth higher in Africa so that they are not so poor? And if that's something you've looked at, i'd love to get your thoughts on it.

I used to spend more time than I do at the moment thinking about these problems of development. The standard view that I suppose I came to 20 years ago was that there were institutional barriers, not just geographical or climatic barriers, to economic growth in many African countries. And until you improve the governance, it would be very, very hard to get economic growth to be sustained.

And there are some interesting examples that seem to bear that out. You've got good governance in Rwanda, you may find it authoritarian, but then people found Lee Kuan Yew authoritarian and was good governance in Singapore, too. So I'd love to get your thoughts on the kind of fundamental developmental question, one that, say, Paul Colliers spent a lifetime thinking about how do you just get Africans to get richer?

Cuz if they get richer, then presumably they're less vulnerable to malaria and hunger.

>> Bjorn Lomborg: Yes, so that's a very good question. And so our fundamental point and our starting point is to say we'd love to sort of fix everything, but there are some things we do know how to fix.

There are lots of things we don't know how to fix. And I think how to get more growth in general is a really hard question. I would love to hear your and John's thoughts on it, but I'll just give you my two cent on it. We have identified some particular ways that you can actually achieve that.

One is actually exactly with malaria, so malaria, and I didn't tell you this because it's not the main part of it, the story, just simply because you can save so many people. But remember, malaria mostly doesn't kill, so while there's about 600,000 people that die, there's about 200 million cases of malaria each year.

And so the vast number of cases are just simply that you're incredibly sick and then get well again. And then, you get malaria five months later so in reality, in many places in sub-Saharan Africa, you actually have to hire two people to do one person's job. Fixing malaria doesn't just mean that people stop dying, it doesn't just mean that it's incredibly good for families not to lose their dad or mom.

It doesn't mean just that it's incredibly good to avoid having these intense bouts of disease, but it also means you could become more productive, and that's part of it. So we actually estimate the benefit would be about $40 billion alone from higher productivity. So fixing malaria would give you higher productivity, it simply would mean that people in Africa would become more productive.

But there's also more general ways of doing that, so obviously, one of the things that we point out is trade. So we do the first trade paper, I'm very proud of this, but economists always love free trade cuz it basically means that the people, yes, thanks. Everybody does what they're doing best, and then they trade with everyone else, with all the other stuff and that's a great sort of general point.

But of course, there are actually downsides and I think we've been too bad at emphasizing that, yes, there will be rust belts in the world when you open up for trade. The people who work in trade exposed areas will possibly see their incomes go down or maybe even lose their jobs.

We've tried to make a standard economic model of what increased trade means. If you then also look at what will be the impact of imposed areas, and what we find is overall, you get much, much better outcomes. So the costs, if you take them very negatively, for income exposed working areas, you will get about a trillion dollars of cost if you open up your world economy.

So you get 5% more trade, but you will get benefits of $11 trillion, that's only a benefit cost ratio of about 11, right? The trick, though, is to realize that it's in the rich world the real costs are, almost all of the costs come to the rich world.

Because, not surprisingly, the metaphorical, if you're sewing t-shirts in the rich world, you will experience a loss of your job, whereas if you sew t-shirts in Bangladesh, you will have more jobs. And so what we actually find is the benefit cost ratio of free trade is only seven, it's still great, but only seven in the rich part of the world, but for the poor part of the world, it's 95.

That's, of course, why it's a really, really good idea for the poor world to get more free trade. And that would be another answer to Niall's point on saying, how do we make the world richer? Free trade and the rich world should admit that one of the things we need to make sure is that we have less of benefits, we still benefit from free trade, but less so than the poor world.

The last couple of points I just wanna make is we do have a solution to corruption, which is one of the problems of getting growth going. We can't fix all corruption, but remember, about half of all public spending in poor countries go to procurement, and that's often terribly ineffective and filled with corruption.

And if you do e-procurement, we find that for very little money, so basically make sure that you make procurement more transparent. You basically put all your requests for building a road or getting more pens on eBay or a similar kind of thing. It costs some money, we estimate for the last.

There remain about 30 countries that still need to implement it, and many countries could do it even better. It would cost about $72 million a year, so virtually nothing and the benefits would be about $10 billion a year, so benefit cost ratio is 132. So you could actually get a huge benefit, but also long term growth.

The last two points I wanna make is we also emphasize nutrition. Nutrition is one of the ways that you can actually get kids brain to grow more so that they become more productive in their adult lives. Even if they're stuck in countries with poor governance and poor institutions, they'll still be more productive, although they still won't get to $60,000 in the US, as John pointed out earlier.

And education, one of the crucial bits in education is that we managed to get almost all kids in school now, which was one of the goals that we've had for the last 30 or 50 years, really. That's great, but they're not learning very much. So we have the PISA studies in the rich world.

We don't have really good measurements of how well people learn in the developing countries, but we do have some studies. Angrist from Oxford and many others have actually been studying this really, really intensively. What they find is that about 80% of all kids in primary school just don't learn anything reasonable.

We have literacy in that very technical way of can you read a word and tell me what that word sounds like and what that means? Yes, but you can't string together a sentence. So one of the. Questions they give kids ten year old across the world is Vijay has a red hat, a blue shirt and yellow socks, what color is the hat?

And literally 80% of children in the developing world can't answer the right answer is red, right? But the point is you can read the individual words, but you can't string together the sentence to understand it so you can actually respond. We have a good solution to how to do that it's about better pedagogy this is studied in many different ways.

You basically make semi scripted lecture plans for the teachers, they're putting this out across Kenya, for instance. We've studied this in many different randomized controlled trial studies. We know that we for very little money, so about 9 dollar per kid per year can make the school about twice as effective.

Likewise teach at the right level one way of doing that is to put the kids together with an iPad that they just have 1 hour a day, so they share it with many others. And there's lots of cost involved with iPad, but the iPad can basically find the very right level of that kid and teach it at that level.

It can actually triple the efficiency of the school we're now putting that across in all of Malawi. So theres lots of things we could do, we find that if we actually did this across the developing world. So theres 467 million kids in primary school age in the low and low middle income countries.

If we managed to get 90%, either one of these solutions I just described, it would cost about $9.8 billion a year. But would generate benefits in terms of these kids being much more productive of about $600 billion a year so a benefit cost ratio of 65. Again, this is just amazing stuff and that's some of the answers to your question, Neil.

There are some ways we can make the world a lot more productive in ways we know work. It doesn't mean we've suddenly unlocked now India will be the US in 20 years or something that's not what we're proposing. But we're simply saying this is a way to put them faster towards being richer and hence being more resilient.

Also being able to deal with earthquakes and all the other terrible things any planet, John. Yeah, I'm a little bit uncomfortable about this because of the, who's this we boss.

>> John Cochrane: This is a program of western philanthropy and multilateral institutions parachuting in to help them, which has not had a tremendously great track record in the past.

I mean, what we recognize is the fundamental problem is the institutions in the countries are not conducive to growth. And the US did not get where we are by the Martians, United nations and NGO's coming in and running our schools for us, although their schools might be better if they did.

And I'm also disturbed by the frequent unintended consequences, one of the stories I heard about malaria nets is they were handed out. And immediately they grabbed them and used them as fishing nets rather than malaria nets because to them, eating fish was more important granted that they're horrible problems of malaria.

And also the tendency for us to us and now I'm gonna use the we us to want to offer help and then impoverish them at the same time. Your comment about helping them to grow their own food as opposed to giving food handouts is an excellent one, of course, that requires genetically modified foods.

Whoops, sorry, we can't allow that to happen and similarly, I want to echo free trade I mean, a lot of what we could do is get out of the way. And I'll put it as simply buy what they have to sell, as opposed to offer them all sorts of help, but refuse to buy what they have to sell.

I'll even push back, you said there were costs in the west, there are no net costs on us from importing cheap sneakers from Africa. Some people lose, some people gain, but the economy as a whole gains there are only transfer costs, not overall costs. Trade and migration, which could raise world GDP tremendously, would be great for all of us.

But simply buying what they have to sell, getting out of the way, managing disasters, seems like first order. And now where I am sympathetic, is that the problem of corruption, the problem of institutions? Countries do seem to need external help in order to go through that hard process of improving their institutions.

And this is, I think just a compliment to what you said the World Trade organizations were good. Now, from an economic point of view, trade does not have to be fair, I don't need to get you to drop your tariffs in order for me to drop my tariffs.

But forcing people to join, to get the benefits of joining international institutions, that forces them to clean up their own institutions. This was great for Eastern Europe as it tried to join the EU and I think the World Trade Organization was good in that sense. A politician can say, look, I can't keep protecting you forever because we need to join the WTO.

So help in the sense of what you're offering really is helping governments who want to which kinds of western technology to adopt, or the schools, the nets and so forth that's useful. Getting ourselves out of the way recognizing the fundamental problems in the institution. So I just wanted to add that flavor to it and not just we the benevolent westerners country for you.

 

>> Bjorn Lomborg: John, I totally agree and can I just sort of clarify? Yes, I'm not suggesting that this is just a listen for USAID or for the Bill Gates of the world. It is absolutely as much or even more for the developing countries themselves. So as I also tried to emphasize, for instance, with the examples on education, this is something that Tanzania is already doing.

This is something that Malawi is already doing what we need to do is, sorry, I meant Kenya and Malawi. What we need to do is to make sure that all these governments know about it. And so I'm actually writing about this in 35 papers around the world exactly to make this point.

And look, politicians, as you very well know, are somewhat resistant to facts and good ideas, but sometimes it will play into a local setup where they want to do this. So in Malawi, I'm happy to say that we at least help in pushing the idea of saying these iPads we know from evidence can actually, they will cost about dollar 31 per kid.

Which is less than 10% of what they're spending on schools, but it will her kid, but it will cripple the output of that school. So it's really, really good idea it's a really good idea if you give it from USAID, it's a really good idea If you give it as Bill Gates.

It's a really good idea If you get the country itself to do it, it would probably be an even better idea because there will be more buy in and I think you need to have some sort of buy in to do this. So this is not about somebody from outside coming and say, this is about having research to say, these are some of the great ideas to do.

I absolutely agree with you on the trade thing that was also what I tried to say. Even trade for rich countries is a seven, but its not this amazing thing. And I think as economists were probably better off by saying, we recognize that there are some trade offs, we recognize that there are some people who will actually lose out on trade.

And we need to somehow make sure that we somehow address that so that these people dont become the ones who, because honestly, if you can get stuff cheaper in Walmart, thats nice. But if you lose your job, youll be really, really annoyed and be much more likely to vote.

Vote according to that. So there might be some reasons for us to actually make sure that these people are not that annoyed with the outcomes of free trade. And likewise, I just think, absolutely, we should buy their stuff. Absolutely, we should do all these other things. I'm simply saying, I'm trying to point out if you have a dollar and want to do good or a shilling or a rupee or whatever your currency is, here are some of the things that you could do that would do amazing good.

That's true if you're government. That's true if you're a philanthropist in that country. If you come from the outside or whatever else you are, it's still true. So let's try to spend more of our money that way. And remember, again, if we just can take the step back, we were talking about climate at the beginning of this conversation.

A lot of the money, right now we're spending about $1.1 trillion on climate. That's more than a percent of global GDP. We're spending that to very many people's understanding because we want to do good, especially for the world's poorest. Well, if you wanna do good for the world's poorest, here's a list of stuff that you should probably start with doing.

I'm not saying you should not also try to spend it on all these other things, but maybe you should start with the things that'll make an enormous impact before you do something that'll just do a tiny bit of impact.

>> Bill Whalen: Right, meanwhile, with the world's richest, let's go back to London, Neil, for a second.

I don't know if you have time to go grocery shopping or not, but what is going on in the produce section of UK supermarkets? We're I understand there's now rationing of fruits and vegetables?

>> Nial Ferguson: Well, I did just go shopping before coming here, but I must say it was a rather hasty grab for the ingredients for afternoon tea, which I badly needed prior to GoodFellows.

I think the kind of problems that the UK economies are going through at the moment are really rather trivial compared with the problems we've been discussing in the world's poorest countries. And you're risking unleashing my I told you so sermon on the consequences of Brexit, which I will not deliver, tempting though it is.

Actually, as you were all chatting about these big development questions, I was remembering a conversation I had with an African entrepreneur last year who said to me, look, you can't expect African growth to be propelled by Bill Gates or USAID. It has to be propelled by African entrepreneurs.

And he said the things that are gonna transform Africa's economy are investment in electrical infrastructure and fintech. If you can actually get the power grids to work, and you can get fintech up and running because people do now have the smartphones, then you will transform Africa economically. And his business model is actually to combine investment in electrical infrastructure with investment in fintech and then with the profits, he does educational philanthropy, principally by investing in girls schools.

I really like that way of thinking about the problem, because it gets to the heart of what makes Africa very different from, say, the UK. I mean, there is a tremendous problem when it comes to just getting electricity to many African communities. And even in the developed or more developed parts of Africa, say, South Africa, there is an impending catastrophe with the electricity supply in South Africa.

It wouldn't entirely surprise me if this year the entire grid crashed. It's extremely close to failure. And this brings me back to the governance problem. Ultimately, the reason that you can't build sustainable and effective infrastructure in Africa has a lot to do with dysfunctional governance. But I really want to emphasize something that I think John was getting at.

These developmental problems will not be overcome by philanthropy. Philanthropy will be an accompaniment to a transformation of entrepreneurship. But this brings us back to a very central point that we began with. Ultimately, Chinese economic growth is the most impressive, biggest, fastest industrial revolution in history, and it has transformed living standards in China.

There's only one small problem that in transforming living standards in China, China drastically increased its carbon dioxide emissions. And in fact, this is the kind of surprising or least stated obvious truth about modern global economic growth. Economic growth in the United States and Europe has been accompanied by declining emissions of carbon dioxide.

But in the period after 2000, China's increase in emissions of carbon dioxide have vastly exceeded the declines in North America and Europe. And this is kind of the problem that I think we were alluding to earlier. If you want to get the poor out of poverty, it's quite hard to do that without increasing carbon dioxide emissions.

 

>> Bill Whalen: Right.

>> Nial Ferguson: And so, imagine a successful Africa. Let's imagine that it all works out, and that actually the power grids start to really get built and they work. They don't crash. In fact, they spread rapidly. And then on the basis of fintech, Africans can actually raise loans.

They credit, they start to take advantage of the fact that labor costs are really low there. There's no way that happens without an increase in carbon dioxide emissions, right, John? I mean, it's just not conceivable. I mean, how are they going to generate the electricity, to go figure?

 

>> Bjorn Lomborg: The International Energy Agency did, in two tries, an African century scenario where they imagine Africa becoming much richer than on the standard trajectory. And it was very clear they sort of moderated in the second round and said, a lot more solar and stuff. But even then they would have lots more fossil fuel.

And it's just simply basic. Most of the world still relies on fossil fuels. We use about 80%, or 80% of our energy comes from fossil fuel. And remember, the OECD is much less green than, for instance, Africa, which gets about 50% of its energy from fossil fuels because they're really poor, and they get most of their energy from burning wood and dung and carbon and whatever they can get their hands on.

So the fundamental point is, yes, you'll need a lot more emissions and a lot of the problem I see Africa having, and other developing countries is that we're basically telling them, no, you can't have that growth, you have to stay poor. Because we're so worried about climate change.

Now, in the long run, that's a correct concern to have, that we should try to limit carbon emissions rather than raising it. But we need to weigh that against all the other benefits that will come, for instance, from being richer and more resilient. And I think the evidence overwhelmingly show, and of course Africans and Indians and others like you mentioned, John, with China, they're overwhelmingly gonna say we actually appreciate the benefits from war energy much more than these benefits.

And that's probably what's going to continue throughout much of this century.

>> John Cochrane: To which I would throw in demographics. If you wanna think about what's happening in the next hundred years, Africa is the last place that is still producing lots more people and we and the rest are not.

And that just overwhelms everything else, if you wanna think about migration and global poverty and so forth. No, no, there is the hope that they can do a little better. They could at least do natural gas, widespread nuclear, some solar where it's appropriate. Solar actually is useful if you're out in the middle of nowhere, and it takes 500 miles of transmission lines to get something to you.

That's actually a good case for solar. But They need energy, they need development. Which brings us to this, we started in on the rhetorical and zeitgeist issue of it.

>> Bill Whalen: Yes.

>> John Cochrane: Climate seems to be, we have stayed in this sort of technocratic bubble, which we all like, here's the problem, here's the GDP estimates, here's the cost of adaptation, and so forth.

But the zeitgeist of it seems to be the profound hypocrisy of the Davos set, which is looking for some sort of self-flagellation story to virtue signal about the west. But they all show up to Davos on private jets to do this. Then there is the Greta Thunberg, I love little Greta Thunberg, cuz her school taught her, climate is a catastrophe.

The end of western civilization is coming in ten years. Everybody else said, that's nice, can we go play soccer now? And she said, you must be kidding, this is real, we better do something about it.

>> Speaker 6: How dare you?

>> John Cochrane: And the degrowth, then it got combined, she's up now protesting against windmills because they're using land of the Sami people.

But the second ideological nexus is the degrowthers, the climate justice. Turn it back to the way it was in 1800, that you can't do this unless combined with the US, where it's crony capitalist. We have to fight climate, but only with union labor made in the US, and so on and so forth.

It seems like we're caught in a profound set of bad ideas clashing each other. I think the hypocrisy of the main policy line will be revealed that the next big, I think net carbon credits are gonna be the cryptocurrency of the 2030s, when we find out that actually they don't reduce carbon at all, and that net zero was a complete lie.

Where is this going? Bjorn, help us.

>> Bjorn Lomborg: I think you're right in that we have a lot of bad ideas historically. Unfortunately, we've only really gotten rid of bad ideas when we found some other ones to love. And so, I'm not really sure we have a simple way of getting rid of this.

One of the points that I try to make, and again, this is because I'm an academic, I'm simply trying to say, well, here are some amazingly good things to do. Should we at least just squeeze them in first to get the amazing stuff done? The 12 ideas we have will cost about $35 billion a year, and they will deliver about $1.1 trillion in economic benefits to the world poor.

That's almost a dollar a day for each person in the low and low middle income countries, so about half the world population, and it'll save 4.2 million lives each and every year. I think those kinds of very simple points at least can somewhat make us sure we should also do that.

And then, of course, we'll go back to doing bad deals. I would love if I had sort of an absolute fix to that, but I think really good ideas can at least temporarily make us do smarter stuff.

>> Bill Whalen: So, Bjorn, final question, then we're going to end the show.

Since HR McMaster is not here and General McMaster is our in-house optimist, let me again repeat the four global priorities to you, HIV/AIDS, hunger, free trade, malaria. Bjorn, give me a hopeful reason for one of those.

>> Bjorn Lomborg: Right, I think, look, all of these have actually dramatically improved.

So we've gone, for instance, in hunger, 100 years ago, the League of Nations in 1928 estimated that more than two-thirds of humanity was permanently in hunger. Today, that number is down below 10%. Likewise, with poverty, free trade has dramatically increased, we've actually fixed a large portion of HIV AIDS.

That's one of the reasons why it's not on the list, because it's no longer nearly as good an investment, because we fix a large part of it. Tuberculosis has come down, malaria killed every tenth person in the world in 1900. Now, it's only 600,000, and it'll probably be much less by 2030.

The world is generally an improving place and there's a simple reason for it. As we get richer, we actually want to stop stupid stuff and bad stuff from happening, so we have improved a lot. There's good reason to believe that the world will keep improving. The question that we have to ask ourselves is, without political emphasis, with the policies that we're promoting, with the things we want, are we helping the world just a tiny bit at incredible cost, like for instance, climate?

Or are we helping a lot with a tiny bit of extra cost, like the 12 things I've just been talking about? I hope that we're more going to be pushing for even more prosperity, even better world, rather than only a little bit better.

>> Bill Whalen: Hey, John, do you want to channel your inner McMaster?

 

>> John Cochrane: Yeah, I think Bjorn is right, I mean, I think we are seeing outbreaks of sanity in lots of places, slowly but surely, the fact that we're even talking about this, so I agree. And everyone is right, those of us, we tend to be a little grumpy and things are always falling apart.

But on the way to falling apart, general numbers about crime, welfare are increasing as Neil said that a billion Chinese left absolute poverty to middle income. They've got some problems going forward, too, but the machinery of reform of we can't keep going down this bad idea forever is, I think, alive and well.

So I'll join the HR cautious optimist club, but you only stay optimistic if you're always afraid of disaster and doing something to keep it from coming. So, a little grumpy fear is useful.

>> Bill Whalen: Okay, Neil, I'll give you the last word.

>> Nial Ferguson: The thing we haven't talked about is that of the two superpowers, the one that's been taking much more interest in African economic development is China.

And that has not, on balance, been a force for good, and so, for me, and I'm never as radiantly optimistic as HR. The question is, if China's model is beginning to unravel, the infrastructure falls apart, they then turn out to be the worst kind of creditors. Is there going to be a new kind of lease of life for western interests in Africa, which has been sadly in abeyance for most of the last two decades?

And if there is, I hope it takes the form of investment and things that will increase Africa's rate of growth, rather than attempts to pay Africans not to develop economically on rather spurious grounds related to climate change.

>> Bill Whalen: And we'll leave it there, great conversation, gentlemen. That's it for this episode of GoodFellows, but fear not, we'll be back later this month with a new episode.

Behalf of my colleagues Neil Ferguson and John Cochran, our special guest today, Bjorn Lomborg, we hope you enjoyed the show. Thanks for your support over the past three years, we enjoy doing GoodFellows, it's great to hear that you enjoy watching us, and we will see you soon. Till then, take care, thanks for watching.

>> Speaker 7: If you enjoyed this show and are interested in watching more content featuring HR McMaster, watch Battlegrounds, also available at hoover.org.