Money helps, but it is not enough. We must also ask profound questions

The trade restrictions of the developed world are really pretty inexcusable in political, economic or moral terms
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The Independent Online

What can we learn? We have to try to learn; we have to find some ways of using catastrophe to better the condition of humankind. The past few days have shown in myriad ways the desire of people everywhere in the world to help the stricken countries. Thanks in part to the instincts of ordinary people making their contributions and pushing politicians, insofar as money matters in any human disaster, financial resources will be made available.

What can we learn? We have to try to learn; we have to find some ways of using catastrophe to better the condition of humankind. The past few days have shown in myriad ways the desire of people everywhere in the world to help the stricken countries. Thanks in part to the instincts of ordinary people making their contributions and pushing politicians, insofar as money matters in any human disaster, financial resources will be made available.

But coping is different from learning. Yesterday this paper asked on its front page whether this disaster could be a turning point for the world. That is surely the key question. It can only be a turning point if we learn. It would be presumptuous to try to draw out far-reaching, longer-term lessons at a time when the full immensity of the disaster is still unfolding. But there are some things to be said.

The first is that developed economies can recover from natural disasters remarkably swiftly. People suffer, specific places suffer and industries can suffer but the totality of economic activity usually bounces back. Infrastructure that has been destroyed can be rebuilt and the rebuilding itself generates more activity. For example, it took less than three years to repair the damage done by the Kobe earthquake. Swift recovery can happen after disruption by war as well as by natural disasters. The best example of that was the West German economic miracle of the 1950s. It took little more than a decade to rebuild from the greatest devastation that has ever been inflicted on a modern developed economy.

This is not new. It was evident 150 years ago. Gary Becker, the Nobel Prize-winning US economist, noted just yesterday that John Stuart Mill, the 19th-century political philosopher, remarked on the "great rapidity with which countries recover from a state of devastation, the disappearance in a short time of all traces of mischief done by earthquakes, floods, hurricanes, and the ravages of war".

That carries a message of hope for a country such as Thailand, which has seen the infrastructure of a large part of its coastal tourist industry destroyed. This is a successful industry in a successful country: it can be put back together again and of course it will.

This encouraging message has, sadly, to be qualified when it is applied to less developed economies. In the rich, or reasonably rich, market economies such as Thailand, resources can flow where they are needed. There are global funds available for investment. There is tax revenue and public borrowing capacity to fund infrastructure. Most important, there are the skills needed for reconstruction.

In less developed economies - and particularly in the country that has been most devastated, Indonesia - the nature of the necessary reconstruction is different. Measured in conventional economic terms of dollars or GDP, the value of what has been destroyed is small, but in human terms it is large. All of the homes in a fishing village in Aceh would have a lower capital value than that of a single international hotel in Phuket. But their destruction has a bigger impact on the total community. Because traditional societies rely less on money to maintain themselves, when there is a catastrophe it is more difficult to apply money to help rebuild. You can ship in the cash and skills to rebuild a hotel. You cannot ship in cash and skills to rebuild a fishing community. Only the people who created the community can do that.

To say this is not to downplay the importance of hard money. That would be absurd. Right now in the immediate aftermath of disaster, of course, that is what is most needed. But in the medium term we should be sensitive to the limits of what external financial resources can achieve and the importance of local community organisation.

This surely applies not just to rebuilding after a disaster but more generally to the relationship between the developed and developing world. We in the rich world have the technology and the money that, on the face of it, should be able to fix problems; but we don't necessarily have the sensitivity or the wisdom to do so.

So we should be aware that we have a lot to learn about disaster relief, not just at a practical organisational level or at an economic one, but also at a human one. The practical lessons must come first and a vast amount of thought will go into that: everything from improving early warnings of potential natural disasters to managing better the relief in those first few days after a disaster.

I think too we will see a lot more precautionary planning on the economic front in the developed world, too. At a commercial level a lot has happened in recent years. Any sizeable bank will have multiple back-up systems to cope with the loss of part of its network. But that is mostly a practical physical response to a practical physical problem. I'm not sure that the global links in international finance are sufficiently well understood for us to be confident that we could cope with an earthquake of that magnitude, for example, on the fault-line that runs through Tokyo.

One clear lesson is the need to plan for the almost unthinkable: what happens if? I'm not sure the world's finance ministers and central bankers are really doing this.

But the most interesting set of lessons may come from the thinking about the relationship between the developed world and the less developed world. On the one hand, there is the huge and, in many ways, wonderful desire to help. This is a bottom-up burst of global solidarity expressed in the contributions people are making in the relief effort. We are all human beings. We can help and must do for the reason that John Donne, in his oft-quoted words, put better than anyone:

"No man is an island, entire of itself; every man is a piece of the continent, a part of the main; if a clod be washed away by the sea, Europe is the less ... any man's death diminishes me, because I am involved in mankind ..."

On the other hand, once the initial reconstruction is over we can start to ask what we can learn from the devastated countries, most particularly Sri Lanka and Indonesia, for both are just emerging from a long period of civil conflict. We won't learn how to run an advanced market economy but we may learn how communities can rebuild themselves.

There is a commercial aspect to this. I'd hope that we can learn how to make ourselves more open to the products and services that these countries have developed and will now redevelop. The trade restrictions of the developed world are really pretty inexcusable in political, economic or moral terms. If the disaster creates an impetus for the practical detailed changes in Western trade policy needed to open our markets, then some good will have come of it.

But this is not just about money. It is about attitudes. It is about respect. It is about the relationship between different societies with some different values but united in our common humanity. The plain truth is that whatever the rest of the world does to help the stricken countries, the heavy lifting, both figuratively and literally, will be done by the countries concerned.

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