Davos Newbies

I can highly recommend two books that I finished recently.

Charles Fishman’s The Wal-Mart Effect stands for the moment as the definitive treatment of one of the world’s key economic actors. When I was reading The Wal-Mart Effect, I rather annoyingly interrupted my wife every few pages to share with her some amazing fact. The percentage of P&G’s sales that go to Wal-Mart. The ubiquity of Wal-Marts in the US (I am apparently one of the few Americans never to have stepped inside a Wal-Mart). The severely Spartan ethos of headquarters. And on and on.

What Fishman does so well is to take a behemoth as controversial as Wal-Mart and present what I consider a balanced view. You cannot read Fishman without marveling and admiring Wal-Mart’s logistical and retailing genius. You also cannot read Fishman without being appalled at Wal-Mart’s blindness to the impacts of its decisions. Is Wal-Mart good or bad? Yes, is Fishman’s answer, and he manages the adroit trick of that not seeming a cop-out. I will make that trip to Wal-Mart one day – for sociological reasons – but after reading Fishman I’m certain that I’ll be both amazed and appalled.

My other recent read, The Economic Naturalist, by Robert Frank, does a better job of helping readers understand key economic concepts than The Undercover Economist, which I also enjoyed. Frank’s contention that most people learn best through storytelling is certainly right, and I found his series of everyday questions and answers guided by economic principles both entertaining and instructive. It’s clear that Frank’s book won’t become a bestseller like Freakonomics (it’s currently 516th on Amazon.com, which isn’t shabby, but the revised edition of Freakonomics – two years after the original publication – is 39th), but it’s more deserving than the Levitt and Dubner blockbuster.

Today’s Financial Times has an important scoop. A World Bank report, Cost of Pollution in China, was heavily amended because of Chinese government fears that it could cause “social unrest”. The draft report originally contained estimates of the number of deaths annually caused by pollution in China.

Based on an epidemiological model used by the World Health Organisation, the report found that about 750,000 people die early every year in China because of the filthy air and water.

The officials in China’s State Environmental Protection Agency (Sepa) and health ministry who vetoed the publication of the report’s full findings may have been most disturbed by a map accompanying the findings.

This gave a detailed regional breakdown of the deaths, with most clustered in China’s coal-belt in the north-west.

But, according to an adviser to the study, the World Bank was told by Chinese officials that it could not publish the information because it was deemed too sensitive and could thus cause “social unrest”.

I understand that multilateral institutions like the World Bank can only operate and do their research with the cooperation on governments. So what strikes me about the story is not the suppression of the results – given the opacity of so much in China, that’s unremarkable. It’s the scale of the pollution problem and the deaths it is causing.

According to the FT, high air pollution levels in Chinese cities are causing premature deaths of 350,000-400,000 people each year. A further 300,000 die prematurely because of poor air indoors. Another 60,000 die prematurely because of poor water quality. The World Bank had already determined in previous research that China has 16 of the world’s 20 most polluted cities.

Here’s another striking data point from the FT:

To calculate levels of air pollution, the biggest killer, the report uses the globally recognised measure – which looks at the concentration of particulates measuring less than or equal to 10 microns per cubic metre of air.

Only 1 per cent of Chinese urban residents live in cities with concentrations of such particulate matter below 40 microgrammes per cubic metre of air. The WHO guideline sets the bar at 20 microgrammes.

That’s after some success in recent years to improve air quality in China’s cities.