Consumption's End Game
About the time we can make the ends meet, somebody moves the ends. - Herbert Hoover
The question most people ask these days is "is the economic crisis over ?". There are no easy answers to this question - different experts have varying opinions from doomsday to glory days. Most of us want to lead a decent and prosperous life, we feel happy when we have food on table, bils are paid and cash flow is secure. We make decisions and take actions which, to the best of our knowledge, will improve our livelihood. Or so we think.
Every action and everything we do has an associated cost, which at some point comes due - for example if a farmer uses too much pesticide, as it happens in developing countries, traces of it will eventually show up in the food chain causing much harm. If a child is raised in a highly protective and sterile environment, as it happens with some families in developed world, the child may not acquire immunity against all disease and again causing much harm. In both situations the principals took decision which they thought was beneficial for their lot but in both case it consequences which were harmful.
However these are individual situations which can be taken care off and effectively remedied. What is striking in both cases is it was the lack of knowledge which precipitated the situation. Knowledge is usually the key between poverty and prosperity. What if we didn't think through the whole basis of our society and made decisions whcih at the time we thought were expedient but which later turned out to be unsuited. What if the basis of our economy is on a shaky ground. Say hello to the prime driver of our economy: consumption.
A GDP is a basic measure of a country's economic performance, it is the value of all goods and services produced by a country in a year. A prime indicator of our capitalistic societies, it is calculated and measured as
GDP = private consumption + gross investment + government spending + foreign trade (exports − imports)
As it turns out the consumption part of the GDP equation is the key factor that drives the GDP growth (except during recession when government kicks in with various stimulus packages). By some estimates the private consumption fuels 70% of the GDP growth in US, in other words if you and me do not buy stuff and put our money for safekeeping, the GDP goes south - the jobs do not get created, the purchasing power of workers go down, the value of goods go down as less money is chasing the goods and so the downward spiral continues until somebody starts to consume again. Companies measure their performance in how much they were able to sell more than last year. Consumption is good for the economy - a message that gets drilled during every crisis.
Is there an end game to the whole consumption cycle. Can Dell keep increasing its sale of laptops & PCs forever (theoratically it can, once everybody has laptop & PC something else will be invented)? - what happens when aluminum that is used for casing or the plastic that is used for parts run out. Granted it is too far away to envisage this scenario and clever people at Dell will figure out an alternative long before their raw material runs out. That is what the corporation are good at - they maximize the productivity way better than individuals can and keep rolling out goods efficiently. What if the end product is not really needed by the society like soda or are detrimental to our health or enviornment like cigarretes, theoretically that is where government comes in and keeps them in check. Or so we are told.
Our consumption spree has affected the stuff in three ways:
Stuff that is forever gone - Rain forests, glaciers, animal & plant species, part of ozone layer etc. These are either gone forever or are increasingly getting extinct fast and barring some technological breakthrough, this will affect the delicate balance our enviornment in not so good way.
Stuff that will eventually deplete - Oil, coal, uranium, lithium etc. This and many other natural materials are needed for generating energy and making goods for us without which so many areas of this earth will become unlivable. Although this will take many years to deplete, we are already started to feel their affects via high prices.
Everyday Stuff - like paper, plastic, cloth, water etc. This may not deplete quickly but with increasing population and better standard of living it will become costly and scrace, the price pressure will make the life of average consumer difficult.
Coming back to our original question about can we go on consuming indefinitely - we obviously cannot. Stuff that is gone and stuff that is getting depleted has set off some chain of actions & reactions which would be hard to deal with. Now that higher population is chasing the same amount of resources, a correction is bound to happen. At some point two things will surely happen: the raw material would get very scarce or become exorbitantly expensive and weather patterns will change due to excessive burning of fossil fuels disturbing the ecological balance. That would be the moment of reckoning for humans as a race - whether we would be able to achieve a breakthrough or whether we will fight for resources, will decide whether we survive or we wither away.
In some ways we already see that happening in the world - there has been fighting over water, arable land, oil, gas and other resources and on the other hand there have been innovation to replace oil, coal and energy sources with renewable resources. End of the day it is a race against time and environment, whoever finishes first - gets to live.
 Comments |
|
|
Powered by !JoomlaComment 4.0 beta1
|