Playing chicken with the world's resources

PUBLISHED : Monday, 07 March, 2011, 12:00am
UPDATED : Monday, 07 March, 2011, 12:00am

The world expects an awful lot from Asian consumers, and from Chinese consumers especially.

The leaders of the Communist Party in Beijing hope that rising consumption at home will allow China to maintain its rapid economic growth over the coming decade.

Economists in Washington and other Western capitals hope that an increase in private spending in China will help correct the dangerous imbalances in the global economy.

And investors everywhere are pinning their hopes for the future on the Chinese consumer, in the conviction that rising consumption in China will fuel the next great stock market boom. If only they are canny enough to spot China's versions of Wal-Mart, Coca-Cola or Gillette in the early days of their businesses, countless investors are convinced they will stand to make enormous fortunes.

What the politicians, economists and investors all have in mind when they picture these consumers of the future is a Chinese version of the ideal American consumers of today. They picture a family, dressed head to toe in designer labels, who happily tumble into their huge off-road vehicle to drive to the local hypermarket, where they snap up the latest electronic games console and load up on steaks to grill on their new gas-powered barbecue in the garden of their suburban villa.

It's an enticing vision, both for policymakers and investors. But as Chandran Nair, Hong Kong-based founder of the Global Institute for Tomorrow think tank, points out in his new book Consumptionomics, it is a vision with a serious flaw.

The problem is one of scale and resources. At the moment the average American eats 30 chickens a year ('chickens' here include chickens, turkeys, ducks, geese and any other sort of poultry you can think of). That adds up to nine billion chickens a year.

If by 2050 every consumer in Asia is eating as much chicken as Americans do today, then Asians will be chewing through 120 billion chickens annually. To put that figure into perspective, it is one chicken for every star in our galaxy, the Milky Way; an astronomical number of chickens.

More down to earth, America today boasts some 250 million cars, trucks, buses, pick-ups and other petrol-powered vehicles. At its current growth rate China is on the road to overtake that number in the next decade. By 2050, China will have as many as 660 million motor vehicles.

Fuelling all those cars would need around one billion tonnes of oil a year. That's more than double Saudi Arabia's entire current production.

Nair argues that consumption on this scale is suicidal. The earth simply cannot sustain such a huge demand on its finite resources. Asians cannot emulate Western levels of consumption. If they try, the result will be catastrophic environmental collapse.

It's an argument neither the politicians nor the investors who have such high hopes for the future of Asian consumers want to hear. Nevertheless, Nair makes a persuasive case that the consumption-driven economies of the rich world were only able to develop as they did because they failed to price in the cost of their consumption on the natural environment.

'Without having to pay to use air, and not having to pay much for water or other inputs, producers used these resources as if they did not matter,' he writes. In short, he argues that the Western economic model relies on a fundamental market failure. If Asians now try to replicate that model, they will be guilty of repeating that failure, with potentially catastrophic results.

So far it is hard to disagree. But Nair's proposed solution to the problem is unlikely to win many backers in Asia's developing economies. He argues that Asia should abandon the dream of American-style consumption and instead build 'societies that can guarantee a future for the descendents of people alive today.'

'The only way to achieving this,' he adds, 'is constraint.'

And here's the difficulty. Nair calls for 'stiff taxes' to encourage more efficient use of resources. Economic success should be measured not by output, but by how little material and how few resources are used in the production of goods and services.

But as he admits, 'for Asians, it will be harsh to be told that as latecomers to the capitalist party they will never be able to attain the way of living taken for granted by most in the developed countries.'

Nair argues that this is a message Asia's leaders must deliver regardless. On reflection, however, Asia's leaders are likely to conclude that any among them who tries to deliver such an unpopular message may well find himself out of a job.

People don't take kindly to being told they can't have what others enjoy - even if that message is true.