Life in the Rear-view Mirror

The Chinese Phenomenon

I could have easily titled this chapter the Indian or Asian phenomenon because it also involved India and other parts of Asia, but I chose China because that’s where it started. I’m referring to China’s emergence as the factory of the world. As you will see, the Chinese phenomenon was a double-edged sword for us in North America. It cut both ways. It cut costs for consumers, but it also cut jobs from the workforce. On both scores the impacts were significant. Although these affected us directly, others, such as the dramatic price increases of corn, wheat, rice, minerals, and crude oil, were equally important

Overconsumption could not have reached the nosebleed level it did without a little bit of help from our friends. Sometime during the late 1980s, it appeared that the era of overconsumption was ending. The price of everything had risen so high that it was starting to choke demand, but then, suddenly, just out of the blue, the price of consumer goods, particularly clothing, started dropping, and demand picked up at a relentless pace. The western world had discovered China!

Western businesses learned that China could produce anything they wanted at a fraction of the cost in their home countries, and so they packed up their factories and headed to China. Those businesses could now reduce prices sufficiently to stoke demand and make a much higher profit at the same time. It was a win-win solution for all. At least that’s what everyone thought, or was made to believe. However, there is never a free lunch. Some consumers found that out when their jobs were shipped to China, leaving them with none, or with a much lower paying one. It started slowly at first, but became an avalanche by the start of the new millennium. Consequently, the countries that were exporting jobs were left with high unemployment and higher social costs, turning government surpluses into deficits.

Those deficits were an indication that countries were spending more than they should have, and the overspending was simply powering a higher level of consumption than was affordable. So, in reality, governments were putting mortgages on future generations, to stoke overconsumption by the present one. It was at precisely this point that we needed to ask, why are we here? Why are we doing this? But the questions never came up, and consequently they were never debated. The media were too busy singing the praises of capitalism and doing the bidding of the ruling classes, to point attention to what was happening, until it was too late. The suffering of those who lost their jobs was largely ignored, and those with jobs kept on consuming without a thought of how their actions would affect their children and grandchildren.

While China was becoming the world’s factory, India was becoming the world’s call centre. It started with the travel and hospitality industry locating its reservations centres there. Then came the catalogue shopping and telemarketing, followed by the financial sector, and almost all other industries. Whenever I had problems with my Internet service, very courteous individuals resolved them from a call centre in Bangalore. India was the chosen location for call centres because it had a young, well-educated, English-speaking workforce. And with time, they learned to speak Canadian and American English, picking up all the regional accents. So, North American jobs where also being exported to India. The so-called Indian information technology industry was started in the mid 1990s, after the introduction of the government’s Liberalization, Privatization, and Globalization policies; but it didn’t take off in a big way until the start of the new millennium.

Our hunger for consumption, and our disregard for our planet and future generations, was well illustrated by the price trends of the first decade of the new millennium. We were digging up natural resources at such a pace that prices just went out of control. Everything, from the price of gasoline to the price of flour and bread had skyrocketed. I will use petroleum as an example, but what happened to it was typical of other resources. The price of a barrel of crude oil, which traded in a range of 20-40 dollars in the 1990s spiked to more than $140 in 2008. Fortunately, the ensuing financial crisis saved us from the destructive path that world consumption had taken us on. Some may argue that my use of the word fortunately is inappropriate because many people suffered in the aftermath of the 2008 financial meltdown. While that is true, and my heart goes out to all who did, it was short-term pain for long-term gain. Even now, world consumption is on an unsustainable path, but it’s nowhere near the one we were on a decade ago.

The phrases sustainability and sustainable development are starting to be picked up by the media, but they are nothing new. The Club of Rome, a think tank, had waved a red flag way back in 1972, with their Limits to Growth report, which, unfortunately, was largely ignored by the media. The warning came at precisely the same time that consumption was beginning to take off; and I suppose that even if they hadn’t ignored it, people were too busy enjoying the benefits of the technology revolution to pay attention to it. Nothing could have been more prescient. As I discuss in a future chapter, forty years later we have already hit some of the limits.

I pondered the Chinese phenomenon for some time. I asked myself, “Why do people buy more when prices are low and less when they are high? Why do people go out to buy a suit and go back home with two suits, just because the second one was at half price?” I call this mindless consumption because it depletes natural resources at a faster rate than necessary, without paying attention to the needs of future generations. Moreover, it produces unnecessary waste and contamination of our environment: the very same air we breathe, water we drink, and food we eat. We are not used to thinking in those terms, but every buy decision we make has an impact on all of these. It’s a small impact for each decision, but a huge collective one. We pay no attention to the health effects of every buy decision, but we should, and need to, if we care for our children and grandchildren.

Why did the Chinese phenomenon happen when it did? Why did it not happen before? These questions are discussed in the subsequent chapter.