POLLUTION: AN ECONOMIC PERSPECTIVE

I must first state that this article is borne as a result of the current activities of Senator Abubakar Bukola Saraki (SABS) towards proposing an all-encompassing environmental bill. It true that the environment has become a national concern since the UNEP report on the pollution in the Niger Delta, but what majority of Niger-Deltans and “Nigerians” alike are after the compensations the multi-nationals would pay to the victims of their exploration activities. I however have a divergent view from this, which is about the futuristic consequence of our drive towards development. We are indeed growing both in terms of population and socio-economic strength, the consequences of this growth hasn’t been put forward, talk more of advancing methods to douse its effects. It is therefore of imperative to clean up some of the economic rubbish associated with the subject.

There are, alas, a few “decrees” that cannot be escaped in the effort to reduce the pollution of our air and water, in disposing of solid waste and the like. The decrees do not necessarily prevent a clean environment, but there is no hope of obtaining one unless there are understood. We have become vaguely aware that there will be a cost associated with development, but have we thought how such development would affect our environment. I doubt if there’s any policy(s) safe guarding the health of our environment, when we eventually strike “gold” as a developed nation.

This article will attempt to describe one out of the three decrees that matter. There is no point hiding that all three are very depressing. The only purpose in adding more depressing information to a nation already surfeited with it is a small one, if that purpose is to address it. In shorthand, the three decrees are:

1.       The decrees of economic growth

2.       The decree of compound interest.

3.       The decree of the mix between public and private spending

As stated earlier this article will only address one, and by the decree of descending other, number one is prime.

Whether we like it or not, and assuming no unusual increase in mass murders or epidemics, the Nigerian labour force for the next 50 years is already born and intends to work. It is hard for any of us-myself inclusive-to imagine a deliberate policy to keep a large portion of it unemployed. But that simple fact has enormous consequences.

The International Labour Organization in 2010 stated that “for more than a century, and all over the world, the average outputs of each worker, for each hour worked has risen between 2% and 3% a year,” thanks mainly to advancement to technology, but also better managerial methods and a more skilled labor force. This increase in what is called productivity is by far the most important cause of our gradually rising standard of living, even though some “negaholics” wouldn’t agree. This rise, putting pollution aside, is what nearly all of us want. In simplest terms, each worker can be paid more because he produces more and he consumes more because he earns more. Inflation only increases the numbers and does not change the facts. Technology increase the productivity of a doctor more than a cobbler, but both rightly share, through the general rise in income, in the expansion of productivity in the economy as a whole.

It is difficult to conceive of our society or any other wanting to halt the rise in productivity, or efficiency, which has made real incomes higher for us all, and Iweala and Aganga might accuse one of sabotage if you voice the contrary. But even if “we” wanted to, in our kind of society and economy “we” couldn’t. As David Miller notes “that profit drive will always propel most individuals’ daily decisions in the direction of higher productivity.” A business will always buy a new machine if it will cut costs and increase efficiency, and an individual will insist on buying a car based on necessity rather than luxury.

It is not a matter of enjoying it, however. By any fair test, we are not really affluent; over 70% of our population, the World Bank says, feed on less than a dollar per day. Therefore, apart from redistributing income, which has very real limits, the only way the society can improve the well-being of those who are not affluent- the majority-is through a continued increase in productivity. We can count on the output of the average worker to continue to rise in the years ahead, judging from the figure Iweala continue to dazzle us with, and so will the GDP continue to rise. The fact that opposition figures are of the view that our upswing in GDP is not translating to wealth for the lower class, none have however challenged the fact that our GDP is not rising, and nearly all policy makers and economists would agree that our productivity would continue to rise.

So what do I mean by output? It means electric power produced-and smoke produced. It means cans and bottles produced. It means metals and polyethene bags produced-and unless something is done about it, water and air will be continuously polluted. But that is not the end, for there will not be a static labor force. As noted, the force for the next 50 years is already born and it is going to grow year by year.

Obviously, we want to offer these people employment opportunity. So in addition to a 3% productivity growth, there will be an added growth of at least 1% a year in the number of workers. The result is that we are almost “condemned” to rise in our total output of 4% a year. The only escape, it seems, would be a national decision either to have unemployment or to try to be less efficient. Both are absurd on their face.

The decree of economic growth says, then, that we already know that the national output in 2020 will be, and almost must be, some 50% higher than it is now. Studies have shown, and it is right. That is the result of an annual rate of real growth of about 4%, compounded. It is terrifying. If an economy of over 4trillion Naira in 2012 produces the pollution and clutter we are familiar with, what will an economy half again as large produce?

Is there no escape from this decree? The answer, essentially, is no. but there is one possible way to mitigate the awesome results. We might reduce labour input (but, we hope, not productivity input), without creating mass unemployment.

Each working person has a workday, workweek, workyear and worklife. Any one of them could be reduced by law or otherwise. We could reduce legal workweek from the present 40 hours. We could add more holidays or lengthen vacations to reduce the workyear. We are already shortening the worklife, without planning it that way: increased participation in higher education has meant later entry into the labor force for many, and retirement plans, including social security as practiced in the US, have brought about earlier retirement in the past for others, opening up new employment opportunities.

If, by chance or by law, the annual man-hours of employment are reduced in the years ahead, our output will grow a little less rapidly. This is the only way to cut our economic growth, short of deliberate unemployment or deliberate inefficiency. There is a cost. It is most easily seen in a union-bargained settlement providing for longer leave period with leave allowance but no cut in annual wages, or a legal reduction in the workweek from 40 to 35 hours, with compulsory overtime payments after that. In each case, more workers must be hired to produce the same output, and if the employer-because of market demand-goes on producing at the same level, wage costs for each unit of output are higher than they otherwise would have been. Prices will therefore be higher.

But we cannot guarantee less output. Only if employers produce less-because of the extra cost-would that happen. And in that larger sense, the cost of a reduction in our annual labour input is simply less production per capita because the labour force is idle more of the time.

But less production was the objective of the exercise-the antipollution exercise. If we start with the proposition that the growth of production is the underlying cause of pollution, which has merit as a starting point, the only way we can get less growth in production, if we want it, is to have more of our labour force idle more of the time. In that case, we will have more leisure without mass unemployment, as we usually think of the term. Our national output, and our standard of living, will rise less rapidly.

That last idea we may learn to take, if we can cope with the leisure. But under any unforeseeable circumstances, our output will still go on rising. With the most optimistic assumptions about a gradual reduction of the workday, workweek, workyear, and worklife, we shall undoubtedly have a much higher output in 2023 than we have in 2013. To a man concerned about the environment, it might seem a blessing if our economic growth in the next 10 years could be 2 percent a year instead of 4%; he cannot hope for zero growth.

The decree of economic growth, then, tells us a simple truth: “we” cannot choose to reduce production simply because we have found it to be the cause of a fouled environment. And if we want to reduce the rate of growth of production, the place to look is in our man-hours of work, considering the work of many researchers who believe that workers become unproductive after 2 o’clock.