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The long road to cleaning it up

  • Published at 12:24 am April 9th, 2017
  • Last updated at 12:26 am April 9th, 2017
The long road to cleaning it up
Excellent news: Hazaribagh tanneries are finally shut down. At least that’s what we’re being told, that the police have started acting upon the Supreme Court’s order that Thursday was it, that was the last day. Close down, move off, go to the new site at Savar but just stop polluting the centre of Dhaka, whatever else you do. The interesting question here though is: Why did it take so long? The answer coming from a long-dead Belarusian called Simon Kuznets who had absolutely no knowledge of the Dhaka tanneries at all. We all know that this case has been rumbling along for years with various back and forths to the courts, appeals to the public and so on. But other than the process itself, why did it take so long to get such a stinking, polluting, industry out of the centre of the capital city? The answer is that Bangladesh was poor, very poor, and now it isn’t. Which is where Kuznets comes in. He noted that as societies develop, they become more unequal. When we’re all Stone Age tribesmen, we are all pretty economically equal in that none of us has anything other than perhaps a change of loincloth. Development means that inequality is even possible, and so it arises. But at some point, that inequality starts to fall again. Some of our greater wealth is spent on lifting up the poor, not just adorning the rich even more.
But Kuznets went on to point out that pollution is as with inequality. At some point, we say that we’re rich enough now that we’d like to have a little less of that pollution thank you very much
This idea was extended to the environmental curve. A very poor society will be rather clean because there’s no one actually doing anything which produces pollution. As we get richer, we learn how to make things. Making things often produces pollution. We should note that knowing how to and actually making things is also the definition of getting richer, they’re the same process. For example, millennia back when we didn’t know how to tan hides there was no pollution from tanneries. Then when we did learn how to then there was such pollution. But we are richer by being able to have leather, thus we put up with the pollution. But Kuznets went on to point out that pollution is as with inequality. At some point, we say that we’re rich enough now that we’d like to have a little less of that pollution thank you very much. We’re prepared to spend some of our higher incomes on slightly more expensive methods of doing things which don’t pollute so much. This all seems intuitively true. When we’re so poor that we don’t know where the next meal is coming from, who cares whether the river has an odd smell to it? That we create the smell by doing something that enables us to eat seems like a good trade off. But there comes a point where we are being fed, perhaps not perfectly but adequately, and we start to think that a stinking reeking mess would be better turned back into a nice clean river again. It’s also empirically true that this happens. There’s no hard and fast law about it, true, but watching the world tells us that this is true. The air in London is, despite there being 10 million people there now not 100,000, vastly cleaner than it was in 1550. The Thames, the river through London, was entirely dead by 1850. It was an open sewer with nothing but microbes living in it. It now has salmon swimming in it again, fish famously intolerant of pollution of any kind. And yes, tanneries have been the early stages of this sort of change since whenever. They really are stinking, reeking places and they’re almost always the first places moved out of town, and the first in line for us to insist upon cleaner, if slightly more expensive, production methods. Various people have tried to work out when this change happens, answers ranging from perhaps GDP per capita of $8,000 a year to $6,000. This is a level far above that of Bangladesh at the moment, at least double when we measure it properly by what money will buy rather than the exchange rate. So why is it happening now then? The first answer is that Bangladesh is now very much richer than it used to be. That 5% and 6% GDP per capita growth over a couple of decades does add up. Pollution that would be tolerated now will not be, as Kuznets points out. We can even run the logic the other way around, that we are having this insistence on a cleaner environment is proof that we’re getting richer. But why is it kicking in now, at this lower level than it did in other places? Part of that is that tanneries are, as above, always the first places to be told to move along and get with the program. But a good part of it is that we’re now richer at any level of income than we used to be. We could also say that our inflation measurements aren’t quite right. Things like vaccinations, water purification, the absence of cholera -- they’re not properly reflected in the monetary standards that we use to measure incomes. Meaning that that $6,000 to $8,000, what used to be the turning point of the Kuznets Curve, is now rather lower in modern money, around $3,000 or $4,000 perhaps, which is where Dhaka at least is when we measure incomes properly. (Technically, we use purchasing power parity, not market exchange rates. Don’t worry, it means we’re trying to adjust for different prices in different places, so we can measure real living standards. The dollar to taka PPP rate is about three times the market one.) And that has a greater importance. Because the thing that usually comes immediately after the tanneries get told to clean up or clear out is that we spend on cleaning up air pollution. Something we all rather look forward to, no?
  Tim Worstall is a Senior Fellow at the Adam Smith Institute in London.