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Dalibor Rohac: Wealth is the best protection from natural disasters and climate change

Picture 1 Dalibor Rohac is a Research Fellow at the Legatum Institute.

Although we do not yet know the final number of victims and have only an uncertain idea of the current situation at the Fukushima nuclear plant, it is clear that the earthquake that hit Japan on Friday is an enormous tragedy, pointing out the fragility of human existence and the magnitude of natural forces that are beyond human control. Japan has a long-standing record of destructive earthquakes. The 1896 Meiji-Sanriku quake killed some 27,000 people, while the great 1923 Kantō earthquake had an enormous death toll, estimated between 100 and 142 thousand people.

We should always remember that, however sophisticated human civilisation might be, there will always be forces that escape our control, and we should always be humble when engaging with nature. As Jon Stewart once said on The Daily Show, "God, you’ve made your point. You’re all-powerful."

But besides pondering our role in the universe, feeling sympathy with the victims, and thinking about the possible ways of helping them, this catastrophe should remind us of three important lessons which are all too often forgotten:

1. Humility. We do not have a perfect control over nature - and policies that pretend that we do are bound to fail. The standard thinking about climate change, for instance, is predicated on the belief that humans can exercise direct control over the climate and that, through their action, they can prevent certain climate-related phenomena from happening. If only we cut our emissions below a certain level, the argument goes, we will be able to tame the climate.

However, that belief rests on very shaky foundations. Given the uncertainty about the nature and drivers of climate change, trying to cut CO2 emissions does not guarantee that the adverse effects will be mitigated. Instead of pretending that we can shape the climate to our benefit, our best bet is to make human civilisation as robust as possible to whatever form climate change can take. That means that encouraging adaptation in poor places should be the foremost priority of any serious climate policy.

2. Prosperity brings resilience. While we don’t have a direct control over nature, wealthy societies are enormously robust and resilient to natural disasters. Given the total population living in the areas hit by the quake and the tsunami in Japan, it is a miracle that the death toll is not much higher. In the past decade alone, smaller quakes in Sichuan (2008), Kashmir (2005), Iran (2003) or Gujarat (2001) killed tens of thousands of people each. It is easily imaginable that the death toll of as massive an earthquake as the one we saw on Friday could be higher by an order of magnitude, if the quake hit a place that was poorer and therefore less resilient.

Also, it is reasonable to expect that no humanitarian crisis will ensue in Japan, unlike in other places that were hit by weaker, but effectively more destructive quakes. So while it would be naive to think that humans can ever tame nature fully, this quake shows that economic development and wealth are the most effective ways of minimising human losses and social costs of natural catastrophes.

3. Natural disasters are making us poorer, not richer. After this quake, it is very likely that at least a few pundits will argue that the post-quake reconstruction of Japan will serve as a handy fiscal stimulus, which could perhaps pull the country out of the current secular decline. Massive spending programmes aiming at rebuilding destroyed infrastructure will give employment to people and cascade into the wider economy, stimulating spending and economic activity.

Except they won't. If that was true, then Japan should have endorsed a policy of destroying roads and setting buildings on fire a long time ago. In fact, current Japanese stagnation has little to do with a lack of "stimulus," but rather with demographics, lack of market flexibility and with the lingering issue of massive government debt accumulated precisely because of a decade of inept fiscal stimuli.


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