RE(D)D is BAD!

Rafał Chudy

My view about the UN-REDD is very straightforward: it simply does not work and will never do, as it is based on wrong premises. I mean here that it will never realize targets included in its long name. However, I strongly argue that this program plays perfectly important political role in the hands of developed countries.

Political economy of state building

Let us move backward to the period between 1500 and 1750, when the collection of economic thoughts called mercantilism, was dominating economic thinking and policy during this period in Europe. Mercantilism was based on couple interesting ideas, that I think nicely apply to the REDD program. I will discuss shortly main ideas of mercantilism or often referred to as the political economy of state building.

The Economic System of Mercantilists

One of the most important pillars of Mercantilists thought was related to the static view of world resources. Economic activity in this setting was viewed as a zero-sum game in which one country’s economic gain was at the expense of another.
Moreover, mercantilists saw the economic system as consisting of three components: a manufacturing sector, a rural sector and the foreign colonies. The merchant class was regarded as the most critical group to the successful functioning of the economic system and labor class as the most critical among the basic factors of production.

Here comes two of the most important points. The Mercantilists employed a labor theory of value, which claims that all commodities are valued relatively in terms of their relative labor content. Finally, the Mercantilists supported the need to maintain an excess of exports over imports, that is, a favorable balance of trade.

Finally yet importantly, the Mercantilists pursued policies thatkept wages low. Because labor was the critical factor of production, low wages meant that production costs would be low and a country’s products would be more competitive in world markets.

It was widely held that the lower classes must be kept poor in order to be industrious and that increased wages would lead to reduced productivity.

Why to help developing countries?

Somebody has to be really naïve to believe that developed countries want to help developing ones. For what? Henry Kissinger said about U.S.:

“America has no permanent friends or enemies, only interests”

I argue that this statement hold to every country, business and politics. Therefore, developed countries are not motivated to help developing countries at all, unless they do not see their own interests and goals.

Growth of the Service Sector

Since the times of mercantilism, the world has changed quite dramatically. Nevertheless, to get to the current state of welfare, every developed country had to pass all steps of development, i.e. from agriculture, through industry to the services. World Bank compared shares of three main sectors—agriculture, industry, and services—in the country’s total output.

Credit: World Bank

We can observe that agriculture is the most important sector for a developing economy. However, as income per capita rises, agriculture loses its primacy, giving way first to a rise in the industrial sector, then to a rise in the service sector. As mentioned before, all growing economies are likely to go through these stages, which can be explained by structural changes in consumer demand and in the relative labor productivity of the three main economic sectors.

As people’s incomes increase, their demand for food reaches its natural limit, and they begin to demand relatively more industrial goods. New farm techniques and machinery lead to faster increase in labor productivity in agriculture, compared with industry. As incomes continue to rise, people begin to demand more services—in health, education, entertainment, and many other areas. Therefore, most high-income countries today are becoming less reliant on industry, while most low-income countries are becoming more reliant on it.

However, this cycle can be easily broken up. And REDD perfectly do it, by not allowing the developing countries to cut their forest, increase the agriculture production and in consequence satisfy basic needs of people. According to UN, about one in nine people on earth does not have enough food to lead a healthy active life. And significant percent of these people come from UN-REDD Pilot or Partner countries.

For me, the worst here is the intervention of developed countries in the internal cases of developing ones, by any kind of subsidies, forest certification, REDD and other programs. Everything in the name of climate change, carbon sequestration and other green movements, which all are “RED” inside.

 What do such policies cause?

Thanks to such policies, developing countries will never develop and always will be producing basic products (food and other raw materials). Those countries will never compete on the market of services with developed countries, and here is the core mission of all environmental policies in my opinion. By doing so, developed countries suppress the development of low-income economies, make them a garner for developed world and finally make them dependent on all kind of services flowing from high-income economies.

Exactly like in mercantilism, current policies (including REDD) form a zero-sum game, where developed countries win at the expense of developing countries. A favorable balance of trade (export dominates import) is realized by developed countries by exporting high-value products (services and products that they have abundance) and import low-value products (e.g. food).

Finally yet importantly, developed countries still maintain a labor theory of value in developing world. The best for developed countries is to import food and other commodities for cheap prices. Therefore, the best for them is to keep the poor economies in the same state.

Neocolonialism

Let us look closer at Africa, which is not any longer a European colony. The same as communism did not die together with the fall of the Soviet Union, colonialism did not die with the end of Second World War. European countries that were controlling colonies, decided in my opinion, to give the control of colonies to local governments and instead make them dependent on their products (e.g. high value services). This is so called neocolonialism, where developed countries focus on investments, services (banking etc.) while developing countries have to provide only basic products.

However, as European countries thought that neocolonialism can replace lack of their presence in Africa, I think that they were completely wrong. It appears that new player started to dominate in Africa and fulfills the “gap” after European colonies.
This new player is China. You can read more about it, for instance here:

China Is Africa’s New Colonial Overlord, Says Famed Primate Researcher Jane Goodall

Source: China Is Placing Africa On The Map Next To Shanghai. What’s Washington Doing?

To conclude, I argue that developed economies want to stop the developing ones before they will start to specialize in more profitable products (services, high-tech, technology) and will want to trade and compete with developed world on such markets.

This article was originally published in Forest Monitor

Featured Photo credit: David Dees