Can Asian consumers save the world?

Apr 27, 2012

By Chris Barton

He's been called a demagogue and accused of being too pessimistic. You can see why. Chandran Nair, author of Consumptionomics, paints a seemingly grey future where basic resources are constrained in the face of population pressures. "Bling is out" and "less is more."

On the face of it, "with more time spent on non-material-related activities, less on anything that requires resource inputs", Nairian society doesn't seem much fun. "Golf and car racing might be out, but badminton and social dancing more popular," he writes encouragingly.

Nair may sometimes sound like a Malthusian fearmonger, but his challenge to consumption-based capitalism is genuinely unsettling. As he calmly points out, if east continues to consume like west, Asia's enormous population means the impact on basic resources - water, food and energy - will be severe. The paradox is that ever since the global financial crisis of 2008 and talk of another great depression, that's exactly what Asia, and especially China, have been repeatedly called on to do - to "rebalance" the western books by consuming more and more.

On the phone from Hong Kong, where he runs the Global Institute For Tomorrow, an independent think tank that teaches executives about an alternative narrative, Nair is well aware of the criticism. "If you are intellectually lazy you might think I am a communist or some kind of socialist, but those who know me know I'm actually a capitalist," he says. "I haven't called for the destruction of capitalism, I've called for the reshaping of capitalism."

The response is typical Nair - provocative, a little bit taunting, with a sense of impatience, but also entirely logical. "My basic premise is not that Asia is more important than other parts of the world, it's simply that there are far too many people," he says. "And far too many, even if it is just a quarter of them, thinking having strawberries in Kuala Lumpur 365 days of the year is fine."

The territory Nair explores - the limits to economic growth - is not new. Many economists, including Joseph Stiglitz and Jeffrey Sachs, have trodden this ground. Nair is not an economist, but has developed his ideas over a decade running Environmental Resources Management, Asia's leader in environmental consulting. Executives who attend his institute's leadership programmes hear a world view very much concerned with the shift in economic power to the east. They also visit another country - Mongolia and Vietnam are current examples - to work on a real-world project. As a second-generation Malaysian of Indian descent, Nair's focus is firmly from the Asian point of view.

The book, he insists, is not an environmental or economic argument and not a doomsday book, but a political argument that foresees catastrophes. Some are tied to the effects of climate change, but Consumptionomics is mostly concerned with Asia continuing on its current trajectory.

"I don't think we should be ignoring the possibility of Asia with 6 billion people in 2050 - one billion living in their gated communities surrounded by five billion very angry people, with a lot of the resource base being ravaged and scrambled for."

NAIR backs his argument with some big numbers. If Asia's population were to use as much energy per person as Americans, it would consume 14 times as much as the United States uses now. And if Asia was to match the United States' per capita poultry consumption, it would consume a staggering 120 billion birds, compared with the 9 billion Americans get through each year.

In Asia 2.2 billion people have access to a mobile phone, far more than have access to potable water or sanitary toilets. If consumption patterns continue, by 2020 it's estimated China will have over 330 million vehicles, the same as America, putting a massive strain on oil reserves.

Nair's anger is directed at the "Washington consensus" - "the intellectual dishonesty" at the heart of the free market model the west has peddled to Asia. "The biggest lie of all", he writes, is that consumption-driven capitalism can deliver wealth to everyone. Nair is similarly disparaging about free trade leading to wealth "trickling down" from the developed world to Asia, and then within Asia, from richer to poorer people.

"We have had 20-30 years of this Thatcherite-Reaganite free market, far right ideology being shoved down the world's throat." The "intellectual subservience of the Asian elite" also cops some blame - "because if you have been colonised for two or three centuries you wanted to be free of the colonists, but you wanted to be like them."

In the face of the tables being turned - the widespread view that this will be the Asian century - Nair delivers an unpalatable call for constraint.

He believes such change can come about not from a west, which is wedded to the dream that everyone can have it all, but from Asia. His makeover of capitalism - prosperity without growth - has three fundamentals:

* Resources are constrained

* Resource use must be equitable for current and future generations

* Resources must be re-priced to reflect their true costs

With resource management centre stage, Nair runs headlong into some sacred cows: property rights, human rights and democracy. His central theme - strong national governments willing to take unilateral action - will be anathema to many. Nair advocates countries attending to domestic needs rather than facing outwards, trying to coordinate their responses with other nations.

In other words, countries need rules. To manage resources sustainably, that's likely to include the state bestowing property rights, possibly for a limited amount of time. "Owners of land, for example, should be barred from over-exploiting or polluting it in ways that would reduce its value for future generations," he writes.

NAIR cites other rules that might apply in a resource constrained world. In 2009 South Korea introduced rules for home food waste-disposal units to cut domestic food waste by a fifth. "Restaurants across the country will also have to use standardised kitchenware, aimed at reducing waste by restricting the size of portions." Similarly, California is considering the idea of a sugar tax. "If a sugar tax, why not a fried food tax? Or a meat tax?" The rules keep coming. "Measures could include restrictions on advertising that promotes resource-intensive goods or lifestyles."

Nair has a different view on human rights, too. "The Western narrative for China is: 'Do you have the right to protest in Tiananmen Square?' For me the first human right in China would be: 'Do people have safe food supplies, do they have water and sanitation, do they have access to housing and electricity?' Those are the most important human rights - the right to live."

In speeches, Nair is fond of saying "I'd rather be a poor Chinese than a poor Indian" He says it to provoke debate. "India has the democracy, but I would say human rights abuses in India are higher than in China."

Nair maintains collective welfare must take precedence over individuals, because when the many exercise their individual rights it can create a collective nightmare. Take car ownership. "It does mean taking away the right of individuals to own cars because millions of individuals owning cars creates a collective nightmare which infringes on the right of them and others to other things - like more open cities, fresh air and energy security."

Nair argues against the "false narrative" that democracy is an end in itself. "In America democracy is 'the more we can have, the better'. That's got them into a total mess. Of course I'm a democrat, but if you accept that resource constraints are going to be the challenge of the 21st century then people can't just be allowed to have whatever they want, which is the democratic ideal."

The challenge, says Nair, is what path India and China take. "Which country is likely to take more action - China or India? China. Why? Because the state can act." An example might be China unilaterally deciding to put a price on carbon. "If China puts a carbon tax on, say, meat, this immediately starts changing exports from New Zealand, Brazil and everywhere else."

So is his vision, as one reviewer suggested, a kind of Asian Norway? "The Scandinavian model is part of that. It also comes from the narrative changing the way people expect things." At the same time Nair is a realist. "I do not foresee the world's rich countries voluntarily opting to end their current lifestyles and put growth into reverse." Yet he's also an optimist. "Yes Asia can teach the world, but only if it makes hard choices. I challenge Asia as to whether it can," he says ominously.

"If it doesn't, we can all go to the beach, smoke some pot and hope for the best."

In Person

Chandran Nair will be a guest of the Auckland Writers & Readers Festival, May 9-13. His two sessions are: Business Breakfast, 7.30-9am, Friday May 11 at the Langham; and the Michael King Memorial Lecture, 1pm, Saturday May 12, at the Aotea Centre.

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