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Salvation for Asia lies in consuming less

May 05, 2011

By Sameera Anand, FinanceAsia

The path of consumption-fuelled capitalism that has driven development in the West threatens to become a crippling burden for Asia, according to Chandran Nair, founder and chief executive of the Global Institute For Tomorrow (GIFT).

"My message is quite harsh and the problem is everyone generally wants to go away feeling high," said Nair yesterday, addressing an Asia Society event at Club Lusitano in Hong Kong. "I'm in the business of slaying cows in front of Brahmins."

GIFT is a for-profit social venture think tank based in Hong Kong that is focused on the relationship between Asian society and values with the rest of the world. It says that it seeks to foster communication on issues relating to globalisation, the role of business in society, governance and ethics, and the development of Asia. Earlier this year, Nair released a book, Consumptionomics — Asia's Role in Reshaping Capitalism and Saving the Planet, in which he outlines what he says is the way forward for Asia in the 21st century.

The book is a result of the more than 20 years Nair has spent involved in the conservation of the environment. But his work in this field has made him cynical about much of what is practised under the guise of sustainable development, which he feels has become a catchphrase for doing nothing.

"The US Army has a sustainable development department — I am not sure what that means," he said. "Maybe a carbon-neutral Guantanamo Bay?" Nair was scathing in his criticism of such initiatives, claiming that much of what passes as carbon-neutral is in fact an elaborate public relations exercise. "The analogy would be if we looked back at slavery," he said. "PR departments would have called them migrant workers or guest workers, or even blue-collar workers."

Much of the narrative about the world's problems is framed by the Western world, said Nair, who went on to refute any suggestion that he is an angry Asian with a chip on his shoulder. "I am just stating a fact that Asian economies are asleep at the wheel," he added.

In the book, Nair examines how the world will look by 2050, when the world's population will be up to 9.25 billion people, from around 6.5 billion today. "Imagine a world of five billion people living in Asia consuming like Americans, which is what we have been told to aspire for," he said. Nair squarely laid the blame for the 2008 financial crisis on over-consumption by Americans.

"What was Asia told at the time?" he asked. "Please consume more."

Nair went on to call Asians intellectually subservient to the West, as he tied the point about Asians being told to increase consumption to the Copenhagen climate change meetings in 2009, just three months later, where Asians were told to reduce emissions.

"There is a huge disconnect," he said. "Not a 10-year disconnect, a three-month disconnect — I call it intellectual dishonesty."

Car ownership, Nair argued, is a good example of how Asia's increasing consumption is a recipe for disaster. There are around 800 million cars in the world today. In China, there are around 150 cars for every 1,000 people, and in India it is even lower at around 35 per 1,000 people, said Nair. The average for OECD countries is 750 cars per 1,000 people.

If India and China consume cars at the level of the West, we will use Saudi Arabia's entire oil production to fuel them, said Nair. Nair was also emphatic that it is impossible to have one billion hybrid or green cars, terming them toys for the rich. And his disdain is based on scientific fact. The rare earths required for these eco-friendly vehicles are difficult to mine and expensive.

Nair's second example of the region's impending doom focused on the amount of poultry we eat. Americans eat nine billon birds annually, he said. Asia, with a population 13 times larger than the US, consumes 16 billion. "And yet Asians are told as you get rich, 'Move up the food chain — no more lentils, eat meat.'"

Asia will consume around 120 billion birds a year if it emulates Western consumption patterns; a number Nair finds mind-boggling.

Fish consumption was Nair's final example. "Indians have a good thing going with vegetarianism and that should be a trump card for the country in any climate change negotiation," he said in a lighter vein, before making the point that one fish meal a day consumed by half a billion Chinese families will have the unfortunate consequence of emptying the world’s oceans.

"There is no technological or free-market fix possible, no financial fix or QE4," he emphasised. "By this stage most of you are feeling suicidal and think I am predicting doomsday. Asia must reject the western model for one simple reason — it has too many people. The opportunity for Asia is to reject the Western model of trickle-down economics, which never really trickles because the gravy is too thick."

Nair went on to suggest that rules and limits are necessary in Asia, saying that liberal democratic systems in the West are too well-entrenched to adjust – any policymaker proposing restrictions on what people can have faces certain political suicide. Yet the successful imposition of controls on smoking in public places and the mandatory use of seatbelts in cars shows that people can get used to rules.

Policy needs to be shaped around certain basic tenets, said Nair. First, resources are constrained, which means that economic activity must be subservient to maintaining the vitality of resources.

Second, resource use must be equitable for current and future generations, which means that collective welfare must take priority over individual rights. Nair cited car ownership as an example, saying car owners impinge on the rights of all others.

Third, resources must be re-priced and productivity efforts should be focused on reducing use of resources. "We have a lot of people, we need fewer machines," said Nair.

As Nair sees it, the role of the government is central to all this, as only the government can protect the rights of the majority against the vested minority. "What did we see in Wall Street — they ran a Ponzi scheme for 30 years. We in Asia cannot go down this route."

Nair concluded that benign, authoritarian states that have strong governments are most effective in Asia, making no secret of his admiration for China.

"Governments in this part of the world need to become tough — we need to support strong governments and stop obsessing about individual rights," he said in response to a question from the audience, going on to suggest that the way to make governments stronger is to learn from the lessons of the US, where corporations have infiltrated government and Goldman Sachs basically runs the US Treasury department.

 

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