The Price of Everything - Eduardo Porter [1]
The purpose of this comparison is not to underscore that the rich have more opportunities than the poor. It is that the poor choose among their options the same way the rich do, assessing the prices of their alternatives. The relative costs and benefits of the paths open to them determine the behavior of the poorest Indian girl and the richest American man. These values are shaped by the opportunities they have and the constraints they face. The price we put on things—what we will trade for our lives or our refuse—says a lot about who we are.
The price of garbage provides a guide to civilization. Pollution is cheapest in poor countries. Their citizens are more readily willing to accept filth in exchange for economic growth. Yet the relative price of pollution rises as people become richer. Eventually it becomes expensive enough that it can alter the path of development. China is a dirty place. Yet underlying its dismal air and foul water is a choice that balances the costs of pollution in bad health, poisonous rivers, and so forth against the cost of cutting back production or retooling plants to control their effluvia. It is a different choice from that of Switzerland, where preserving environmental assets—clean air, trees, wild animals—is considered more valuable than providing manufacturing jobs to unemployed farmers. Twice as many Swiss as Chinese are members of environmental organizations. More than a third of the Swiss population believes environmental pollution is the most important problem facing the nation; only 16 percent of Chinese feel the same.
But as China grows, the price of building one more coal-fired power plant, measured in terms of its contribution to acid rain, global warming, and the rest will one day exceed the value the Chinese place on the extra output. As it keeps growing, it will likely evolve out of the most noxious industries, like steel and chemicals, into less polluting sectors, like medical and financial services. It may even one day buy its steel and chemicals from poorer countries with a higher tolerance of foul water and air. In other words, it will behave more like Switzerland or the United States. One study concluded that emissions of sulfur dioxide peak when a country’s income per person reaches around $8,900 to $10,500. In the United States, sulfur-dioxide emissions soared until the passage in 1970 of the Clean Air Act. Since then, emissions have fallen by half.
HEREIN LIES THE central claim of this book: every choice we make is shaped by the prices of the options laid out before us—what we assess to be their relative costs—measured up against their benefits. Sometimes the trade-offs are transparent and straightforward—such as when we pick the beer on sale over our favorite brand. But the Indian scavenger girl may not be aware of the nature of her transaction. Knowing where to look for the prices steering our lives—and understanding the influence of our actions on the prices arrayed before us—will not only help us better assess our decisions. The prices we face as individuals and societies—how they move us, how they change as we follow one path or another—provide a powerful vantage point upon the unfolding of history.
Nearly two decades ago, when he was chief economist of the World Bank, Lawrence Summers, President Barack Obama’s former top economic adviser, signed his name to a memo suggesting it would make sense for rich countries to export their garbage