"World of $10$-a-gallon gas and $20 Big Macs?"

Hanoi – August 2006

The authors of this LA Times piece are not particularly worried about the increase of the global population and the availability of commodities.

Currently in the U.S., we consume the energy equivalent of six gallons of gas per person per day. Some rich countries manage on much less. The Danes, for example — whose public policy mandates expensive energy — use the equivalent of only three gallons of gas per person. The Danes are not suffering much from their missing three gallons a day. Reducing food consumption in our high-consumption society is equally easy: a bit more bread, a bit less steak. Given that we can easily reduce consumption when costs go up, a permanent doubling of the prices of food and energy would reduce income by less than 6%. At current rates of economic growth, incomes would recover from such a shock in less than three years. After that, onward on our march to ever greater prosperity.

However, I was just discussing yesterday how it seems unlikely that people will forgo certain privileges – refusing to let go of some degree of wealth. Even though, of course, a lot of people make individual efforts to reduce their impact on the environment (including me), I just don’t see Americans eating “a bit more bread, a bit less steak” without some serious resistance. In a sense, that means going “backwards”, and since we’ve decided to construe progress as a line along which you move, it will be hard to convince people that foregoing certain habits (using the A/C to make your house as cold as a refrigerator; driving SUVs in big cities, etc.) are neither modern, nor sustainable – but if you’ve ever watched FOX News, you’ll realize that a lot of people are not ready to make these individual changes.

Ultimately, however, the goal of these changes is to ensure that we maintain our current way of life. Someone said “For everything to stay the same, everything must change” (Thanks, C., for that quote) In conjunction to the fact that the richest people in the world are intent on preserving their way of life, the “global South” is busy trying to become rich(er). We must ask ourselves what the goal of development is: ultimately, is development the creation of new consumer markets? People who dedicate their lives to buying things and making the money to buy them? If that’s the case, then can this planet really handle a few more billion consumers? (I know this is a bleak view, but I’m feeling pessimistic today)

Will there always be – no matter what – a “bottom billion”? Is the existence of a global very poor class of people a necessity? Or will we (and this planet) really be able to provide for a multi-billion middle class? If you construe growth as a zero-sum game in a world of finite possibilities, then it becomes clear that the richest will ultimately have to be less wealthy for the poor to gain – however, that seems a bit simplistic, since global wealth IS increasing. Nonetheless, we have to wonder if we can continue to see growth and wealth grow exponentially:

Two things allowed growth to occur from 1750 to 2000 with declining commodity prices. First, only a small fraction of the world grew rapidly…. The West was alone in its voracious appetite for raw materials and energy. Second, fossil fuels cheaply substituted for land in agriculture by increasing crop yields…. What will happen depends on the race between technological improvement and growing demand…. [N]o one can predict which force will win.

Can supply AND demand grow forever without leading us to self-destruction? I’ll leave you with this thought-provoking quote (original in French)

Le développement suppose l’apparition d’un monde nouveau, et non le grossissement quantitatif de ce qui existe déjà

Development supposes the emergence of a new world, and not the quantitative expansion of what already exists

(Jean-Marie Albertini, Mécanismes du Sous-Développement et Développements, 1981)

One thought on “"World of $10$-a-gallon gas and $20 Big Macs?"

  1. I think it’s also a matter of scale; the US economy is a tad larger and more complex than that of the Danes…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s