The Challenge of Global Overconsumption

At the height of the financial crisis in 2008, Asians were urged by Western politicians and economists to consume more to help rebalance the global economy. At the same time, during the runup to the climate talks in Copenhagen, Asians, especially the Chinese, were scolded that they had to be responsible global citizens and reduce carbon emissions.

Few global leaders and commentators dared connect the dots and openly acknowledge that asking Asians to reduce emissions while asking them to consume more simply did not add up.

Now try imagining a world with three Americas. Difficult? But that’s where economists say we’re heading.

Within two decades at most, China will overtake the US and become the world’s biggest economy. Within another 20 years, by 2050, India will be as big.

And what will drive this? Human aspiration, apparently – aided by free markets, technology and finance. As the cheerleader of globalization, Thomas Friedman has written: “World population is projected to rise from 6.7 billion to 9 billion between now and 2050, and more and more of those people will want to live like Americans.”

This is unthinkable. If the United States is joined by two more economic masses as big – or bigger, as on current trends the American economy will also have trebled in size by mid-century – all aspiring to live like Americans, our planet’s resources will be stressed beyond imagination.

Wherever we look – be it carbon emissions, oil and gas, food shortages, water, rare earths, fisheries or forests – there just isn’t enough for the world to soak up another two consumption-driven Americas.

To stop heading down this road, Asian governments must immediately recognize that a bleak future lies ahead if Asians attempt to live out an aspiration to consume like Americans. The current debt crisis in the US, ultimately fueled by over-consumption, has even led China’s media to lecture the Americans that it’s “time to revisit the time-tested commonsense that one should live within one’s means.”

Above all, Asia must reject the blinkered views of those who urge Asians to consume relentlessly – be they Western economists and leaders who want the region to become a “motor of growth” or Asian governments convinced that ever-expanding economies are what their populations need.

Instead the world – and Asia first of all – must find alternative ways of promoting human development. Asian governments must shape expectations critically around the issue of rights with the clear focus on the following basic needs: food as well as security and safety, water and sanitation, low-cost housing, education and primary health care. It must be made clear, for example, that car ownership is not a right. Growing demand for non-essential goods and services must reflect true costs.

Asian governments should look at the Arab spring and understand that what the people on the street want is not some utopian democratic state but a state that even with imperfections focuses on the key areas of human development and progress. Governments should wake up to the reality that in the region, the majority of people – more than 2 billion in total – still do not have equal access to the basic necessities of clean water/sanitation, housing or adequate nutrition.

Asian nations will need frameworks of fiscal measures, land-use practices and new approaches to social organization that can create sustainable national economies. This requires shaping expectations through public education that aspiring to live like Americans is a bad idea for the creation of more equitable societies in a crowded world and unattainable.

Resource management must be at the center of all policymaking, and putting a proper price on greenhouse gas emissions and the resources we use via taxes, licenses and other charges.

Measures constraining resource usage must be extended to every area of life – at play and work. They must become an inherent part of all economic and social policy.

Countries in the region must structure incentives to reward “more is less” activities. It’s not that people must be poor, rather consumption should be funneled in ways that do not increase the demands on our already-stressed resource base, deplete or degrade our environment, and put at risk the livelihood and health of hundreds of millions.

A key step: fiscal and labor policies aimed at strengthening local economies that both reduce poverty and prevent mass migration to cities.

Curbs on the resource-intensive practices of industrialized agriculture would further aid development. Where basic living needs are met, employment policies can explore other directions that reduce wasteful consumption, such as shorter working weeks or more training. People must be encouraged to regard quality-of-life issues as extending beyond the size of their disposable incomes.

Energy networks using renewable sources in conjunction with pricing to penalize excessive use would be another likely target of state funding. But technologies, particularly government-supported ones, should be aimed at spreading well-being rather than only maximizing economic returns. It’s better to forestall environmental problems than expensively treat them.

Another area to be challenged is how consumption-driven capitalism has developed techniques to displace traditional outlooks, and whether these can be countered. One example is today’s preference for owning over yesterday’s for doing. Previously children played games, now they have PlayStations.

We should also revisit the possibilities offered by traditional cultural attitudes, such as the preference many Indians have for a vegetarian diet and an age-old way of life that is increasingly under threat as Indians seek to ape Western lifestyles.

In education, ideas about constraints, the way we use and manage resources must be placed at the center of learning, especially in economics and business courses – not brainwashing, but aggressively countering the promotion of unfettered consumption that lies at the heart of modern commerce and advertising.

For too long, schools and universities have been regarded as the training ground for economic growth, be it preparing people for the disciplines of company life or learning “marketable” skills. Instead, education should be redirected towards giving people an understanding of limits, the human impact on the world and the consequences.

We should return to stressing the public interest rather than individual rights. This is in stark contrast to the arguments of consumption-driven capitalism with its claims that allowing everyone to pursue individual self-interest eventually leads to benefits for all.

Governments must also back policies with constant reminders that being well-off involves balancing a range of factors, among them ensuring social equity and an environment fit to be handed on to future generations.

This won’t be easy in Asia, especially in societies which for the last few decades have been repeatedly told that all limits can be overcome and prosperity can only come from conventional forms of consumption-driven economic growth. Required is a strong, confident state, one with an understanding that its legitimacy depends on changing direction and better serving the needs of the disenfranchised majority.

If the governments of the region rise to this challenge, the decision-makers in Beijing, Delhi and Jakarta will determine whether our world has a future – not the capitals of Europe and America.

(Chandran Nair is the founder and CEO of the Global Institute for Tomorrow a pan-Asian think tank and chairman of Avantage Ventures, a social investments advisory firm. His new book is entitled “Consumptionomics: Asia’s role in Reshaping Capitalism and Saving the Planet.” This is reprinted with the permission of the Yale Center for the Study of Globalization.)