‘Constraining Asian Consumption’

by Chandran Nair

Chandran Nair (Malaysian, born 1954) is the founder and CEO of the Global Institute for Tomorrow based in Hong Kong. He also heads Avantage Ventures, a social investments advisory firm in Hong Kong and Beijing. Formerly he was the Asia-Pacific chairman of ERM, growing the company over a decade to become the region’s largest environmental consulting firm.

In 2011, the world witnessed yet another convulsion of global markets due to US debt concerns and the unraveling of European economies. Decades of mismanagement and denial were rooted in a misplaced belief that a consumption-led growth model underpinned by excessive borrowing would deliver prosperity for all and forever.

The turmoil in 2011 and the financial crisis of 2008 had their origins in the almost religious belief of the West in free markets that has gone on to dominate global financial markets for the past three decades. This long-held belief that markets, technology, and finance, coupled with democracy, can offer everyone every freedom and solve all the problems of the world needs to be reconsidered, to say the very least. At the same time the unprecedented riots and looting that took place in England’s various cities in the summer of 2011 was attributed to everything from the breakdown of civic values to weak policing, a sense of entitlement, and rampant consumerism.

In 2011 even those on social welfare felt entitled to grossly overpriced Nikes made by cheap labor in Asia. None of the rioters were risking their lives for food as none were going hungry. Thus the UK riots were quite different from the unrest in the Middle East, where people in the streets were essentially demanding a better life with fair access to the bare basics that can only be provided by more equitable sharing of resources.
The people did not call for some form of utopian Western democracy. Along with many of their brethren and sisters in the developing world, they increasingly believe that the consumption-led economic model that reinforces privilege and entitlement over contribution to the collective is not the template for them to follow. While all of this is going on, Asia, with over 60% of the world’s population, is left watching and wondering what it means for this most diverse of regions.

No doubt, the shenanigans of global markets have played havoc with stock markets in the region. But it is one of the great lies of our times that the performance of stock markets reflects a nation’s true health and affects the well-being of its common citizens. In reality, the stock market has hardly any effect on the vast majority of people in Asia, even those in the middle class.

What is actually having a real, negative impact on the majority of people, who do not own stocks or treasuries, is when many Asian governments pursue policies that continue to perpetuate the myth that they can all live and consume like Westerners. If there ever was an ideal moment to completely reject the propaganda of aDisneyland worldview promoting the American Dream, the time is now.

There is simply no capacity within our planetary boundaries for two or three more Americas. To this day, six billion people are being misled into believing that there are no natural constraints and they can have it all because human ingenuity will come to the rescue.

The truth is they simply cannot, and the denial, by political leaders and those in business who stand most to gain from maintaining the status quo, must stop.If in the next forty years Asians continue to aspire to live like present-day Americans or the slightly more parsimonious Europeans, and they successfully move toward this goal, the natural support systems needed to sustain human life will most likely collapse. The global carrying capacity is too small. It is unclear whether it is the Asians or the Americans/Europeans who will be forced to change their ways to the largest extent, but regardless a majority will still live in impoverished conditions.
A minority, perhaps two billion, will be able to secure lifestyles (at huge cost to the rest) and inure themselves from the evolving strangulation of living conditions on the planet. The true impact will only be known in the second half of this century. For the first time in human history, human beings are at the height of a great technological leap forward and aware that continual progress (as it is now defined) will bring great suffering to many. Yet we plow on.

Let us take car ownership, which has sadly been seen in developing countries as a necessary engine of growth. If China, India, and other Asian countries aspire to ownership levels like those in the rich industrialized countries, which its citizens are told is their right, there will be as many as three billion cars in the world by 2050, almost four times the current number. This will be disastrous on many levels.

Cities will become uninhabitable (many already are), and precious fuels that could be used elsewhere, including biofuels, will be directed toward driving. The health impacts of close to two billion cars in Asia will be the stuff of fiction. The same applies to everything from meat consumption and cheap cookies to air conditioners and iPads.

So what must Asia do to avoid such catastrophic outcomes? Above all, Asia must reject the blinkered view of those who urge Asians to consume relentlessly—be they Western economists and leaders who want the region to become a “motor of growth” to rebalance the world economy or Asian governments convinced that ever-expanding economies are what their populations want or need.

Instead Asian governments must find alternative ways of promoting human development. They will need to urgently reshape expectations and address directly the issue of rights, with clear focus on the following basic needs that must be accessible to the majority: food (safe and secure), water and sanitation, low-cost housing, education, and primary health care.

They need to make clear, for example, that car ownership is not a right and that demand for goods and services must reflect true costs. They must stress that public interest takes precedence over individual rights, although this conflicts fundamentally with the core arguments of consumption-driven capitalism.

They must stand up against the claim that allowing everyone to pursue their individual self-interest eventually will lead to benefits for all. And they should call the bluff. They should state loud and clear that it is the obligation of the rich world to pare back, and to find less wasteful lifestyles.

Organizing such an economy will not be an easy task, especially in societies that for decades have been told that all limits can be overcome and prosperity can come only from conventional forms of consumption-driven growth. This will require strong government actions that will fly in the face of current Western orthodoxy about democracy and capitalism. In doing this they will have to take on a range of vested interests from global multinationals and local elites, including those Western governments and institutions that see largescale Asian consumption as the savior of their economies.

A starting point will be to make resource management the center of all policy making, and then to put a proper price on greenhouse gases and resources via taxes, licenses, and even outright bans on certain forms of consumption. It is not that people must be poor, but rather that consumption must be redirected in ways that do not further deplete or pollute the already stressed resource base and put at risk the livelihood and health of hundreds of millions.

Asian nations will need fiscal measures, land-use practices, and new approaches to social organization that can create sustainable national economies. Measures constraining resource usage must be extended to every area of life. A key step will be fiscal and labor policies that strengthen local economies and reduce both poverty and mass migration to cities.

Two key sectors are agriculture and energy. In the former, curbs on resource-intensive practices of industrialized agriculture will help distribute local income. So will a decentralized energy production system.
Will Asian governments take these bold moves and will they get support from the West? It is very unclear, but being an incorrigible optimist I see the possibility of the second half of the twenty-first century being the era of cleansing and replenishing. This hope stems from my belief that during the next ten to twenty years Asian governments will realize the dead end of the current model and begin to change course.

Hopefully at the same time some nations in the West will try to reduce their global footprints. This shift will be the biggest challenge of the twenty-first century, as it will require leaders willing to engage citizens in an honest debate about limits and therefore the changing expectations about how they live and what they need and want. It will be an almighty struggle, in more ways than one.