It’s The Poetical Economy, Stupid!
Why do ultra-rich people buy contemporary art of living artists for tens of millions dollars? Peter Singer argues that purchases of Jeff Koons’ art and others aren’t motivated by economic value but are meant solely to enhance the status of the buyer. He thinks this is unethical because those funds could be invested to save lives or help thousands of artists in the developing world. We should redefine the meaning of success and status and make it shameful for rich people to boast in this way. But this is easier said than done. I think, besides success, we should equally change the narrative of development (cooperation) and make the data and statistics more “poetic”, aspirational and inclusive.
Beyond The Cost Effective World
The one problem with development cooperation narratives is they are extremely boring. If you search “Development Cooperation” in Google Trends you won’t get far beyond political capitals and (UN) cities of Washington DC, Nairobi, Brussels, New York and Geneva. On the contrary, search for “social business” and you get Nairobi but also Manila, Singapore, Bangalore and Dublin. The search for “CSR” shows you results from other vibrant cities of developing countries. The narrative slowly changes from the charity of helping poor and saving lives to empowering young people to be successful actors of positive social change. But this requires some counterintuitive moves of working with Big Business and investing for example in events and project such as “CSR in Africa Awards” that doesn’t benefit the poor immediately. And this many times contradicts the requirement that the foreign assistance should benefit the neediest poor people first.
The second problem is the pursue of cost-effective solutions. Should we invest over next 15 years in saving lives through deworming or focus more on sustainable industrialization and promotion of CSR? Deworming and direct cash transfers are one of the most effective and efficient interventions to alleviate poverty according to GiveWell.org. Bjorn Lomborg, the director of Copenhagen Consensus Center, urges states to prioritize the next development goals according to cost/benefit analysis. I think this view is too simplistic, suboptimal and prone to making errors.
United Nations is at the centre of debate on the future development goals that should replace the MDGs after 2015. The question is how to make the Sustainable Development Goals aspirational, marketable and attainable at the same time? One side of the debate argues that we should prioritize proven cost-effective interventions s such as deworming, supplying micronutrients and getting girls to primary schools and abandon grand proclamations such as “End extreme poverty by 2030”. The other side argues for a more systemic change of consumption and production patterns and new development narratives that focus more on inequality than on economic growth.
I argue that sometimes a low-hanging fruit of development opportunities can be a so called wicked problem in disguise. On the other hand taking a more strategic approach and asking the hard questions about global trade, tax havens, corruption and media freedoms can provoke a “race to the top”. And change the status quo for better instead of curing only the symptoms.
Hacking the narrative of development and success
Problem with the cost/benefit view of the policy solutions for the better world is that they are too specific interventions from the past in a concrete context and both the calculation of benefit and the assumption of easy replication are prone to errors. I would say this discourse suffers from “microscopic view”. On the other hand the grand proclamations of ending hunger and poverty suffer from a too vague and “macroscopic view”. We need another, let’s call them mezzanine solutions that are transformative but also clear, concrete and workable. For example instead of “fighting inequality” or destroying “tax havens” one can take an example of a concrete solution by Piketty to tax only the net worth of individuals. So people with outstanding mortgage debts would pay less in property taxes than those, who inherited their real estate or acquired it without debts.
My example of a workable yet revolutionary policy change is to abolish the per diem and consider them just another taxable income. It sound boring but it is much easier to implement and collect than for example carbon or Tobin’s “Robin Hood” taxes on financial transactions. The abolishing of per diems would discourage excessive travel in pursue of financial benefits that would reduce the carbon footprint and free up both politicians and business people to be more productive. It can be also marketed to more conservative politicians as a pro-family solution. The problem of hunt for per diem is very serious especially in development cooperation sector and developing countries and there are various studies of Norad and other agencies that confirm it.
There are two important steps we need to take when changing the obsolete narrative of development cooperation:
1) Change the way we measure progress, success and development. Forget GDP. We need a new unified metric to measure the progress of countries. It could be composed of some meta-indices. I proposed inequality-adjusted HDI, press freedom index and CRIS (Comparative Rating Index of Sovereigns). One could add Fragile States Index and others.
2) Engage in aspirational storytelling and give the data and statistics more life and meaning through “poetry”. I mean some meta-narrative of hope. But based on new and reliable metrics.
Poetical Economy as opposed to the political one: A silly sounding term at first. It is not easy to model the complex “political economy” and predict how exactly one country will progress relative to its peers for example in ten years. My solution of a new paradigm in country rankings mentioned above, deals with this partially. But what about the Balloon Dog statue by Jeff Koons that recently sold for $58.4 million? It is the most expensive piece by living artist sold to date at auction. It is too easy to say that the underlying asset here is not the metal sculpture alone, but the brand of Jeff Koons. In my opinion the underlying asset is the process of sale itself. Similar is the case of the diamond skull art piece named For the Love of God by Damien Hirst. It is like the wave–particle duality problem on quantum scale. The laws that govern the sales of contemporary art in tens of millions of dollars are different from the once that govern retail. Hence the “poetical economy”. One theory about recent global economic crisis blames trade imbalances magnified by Chinese excessive savings. And Chinese one child policy is one of the culprits. Families have to amass big savings to marry their sons on the very competitive market. But yet there are many rich single women. Maybe the whole crisis starts at the dinner date. Where people try to impress each other with a story of their success. One needs to change the definition of success and development in order to alleviate poverty. The cost-effective solutions such as deworming, or the more systemic policy changes can help but won’t do the job alone.
