TED Conversations

  • W Wu
  • Toronto
  • Canada

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How can we justify implementing solutions based on their price tag set out by economists?

I agree with what you have to say about setting the right priorities in a world where we only have limited resources to deal with a limited number of problems. However, is it wise to see everything from an immediate short-term perspective? From what you state in your video, we should “do the great things we can do at low cost right now”. Included in the list of “great things” to do is prevention of HIV/AIDS and iron fortification in the malnourished. However, we can’t just assume that the short-term priorities will solve the many future disastrous issues. For example, if a country (i.e. the Maldives and Bangladesh) will be flooded within the next century, should we not divert some of the $50 billion dollars in creating flood barriers, artificial islands, or simply educating the poor so that they might eventually find a solution that we never thought about? What’s the point in increasing the productivity of agriculture where the land would be permanently flooded in the future? For that matter, how do you put a price on any issue like climate change? If by giving mosquito nets to the people in need can generate 5 times the worth of buying the nets, then wouldn’t investing in R&D in earthquake/tsunami detecting machinery reveal even greater profits/returns? The cost of the 2011 Japanese earthquake and tsunami was $300+ billion and that cost is overwhelming in comparison to the $50 billion allotted the Copenhagen Consensus. In a group of 30 students where we were told to choose the one global issue that our world should prioritize, there was a wide range of answers, ranging from global security to women. So my question is, despite having the world’s top economists and students from developing countries come together, how do we justify that our solution will truly benefit everyone in need?

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    Jun 5 2011: We don't need to bother.
    All markets clear - it's the most wonderful thing about economics!
    Give it a few years, and Supply and Demand will meet, and a Price will be struck.
    Sure, in the short term, there are some annoying frictions like Copenhagen, but that won't last, and we can leave it to market forces to sort the World out.
    Maldives? Easy, they can do what the MK Dons did and move the Football Club to a different place. Not sure how much they've saved up, but maybe could move somewhere cheap but with potential? They could do a deal with the Falkland Islands - Sex up the Malvinas a bit in return for some of the oil rights?
    Look, don't sweat it, we've done just fine so far thanks to human ingenuity, creativity, innovation and commerce. Economics solves everything in the end.
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    Jun 4 2011: Short:
    If you don't trust them: try and do the calculus yourself, or look at their calculus and find out where you think there are problems, false assumptions or nuances to be made...

    Other than that: no need to justify what has been justified: I assume that they have done their homework and have justification enough... If it happens to strike me as odd, and if I wish to invest time and energy into it to do the verifications, I might find some justifications happen to be in conflict with what I think, and I could take action to show that their justifications are false, incomplete or insufficient.