Consumption Factor Key to Addressing the Food and Oil Crises

Jared Diamond, professor at U.C.L.A., asks: What’s your consumption factor ?

His question is relevant as the world reels from the oil and food crises, which will get worse before it gets better. The Philippines will surely be one of the hardest hit, as crushing poverty combined with the continually rising prices of basic commodities will result in a potentially explosive social cocktail. President Arroyo, an economist herself, understands this all too well. This must keep her up nights, as it does many of us.

Diamond tells us to consider the number “32”.

To mathematicians, 32 is an interesting number: it’s 2 raised to the fifth power, 2 times 2 times 2 times 2 times 2. To economists, 32 is even more special, because it measures the difference in lifestyles between the first world and the developing world. The average rates at which people consume resources like oil and metals, and produce wastes like plastics and greenhouse gases, are about 32 times higher in North America, Western Europe, Japan and Australia than they are in the developing world. That factor of 32 has big consequences.

To understand them, consider our concern with world population. Today, there are more than 6.5 billion people, and that number may grow to around 9 billion within this half-century. Several decades ago, many people considered rising population to be the main challenge facing humanity. Now we realize that it matters only insofar as people consume and produce.

The estimated one billion people who live in developed countries have a relative per capita consumption rate of 32. Most of the world’s other 5.5 billion people constitute the developing world, with relative per capita consumption rates below 32, mostly down toward 1.

Consider further the case of the Philippines. In the Philippines, the gross national income (GNI)per capita is approximately $1,420. When compared to the GNI per capita of the United States, which is about $44,970, it is easy to tell that the economy of the Philippines is very, very poor. Extrapolating our per capita income to that of the U.S. in determining the relative consumption factors of both countries, we find that our consumption factor is approximately 1 while that of the U.S. is around 32 (I’m aware this is inaccurate, and is in fact a conservative figure, since the population of the Philippines is 80 million while that of the U.S. is 300 million, but lets make this assumption for now).

In other words, individual Americans consume thirty-two times as much as individual Filipinos.
Put another way, a single American consumes as much as 32 Filipinos.

Viewed from this angle, the fixation on population growth and environmental depredation in the developing world as major contributing factors to the world crises, particularly on the part of Western-trained economists and policy makers, smacks of hypocrisy and is simply wrong. As pointed out by Diamond’s article, yes, population growth is a problem for us, but its not a burden on the whole world, because Filipinos consume so little. This holds true for the rest of the developing world, in relation to the advanced countries.

Likewise, the United States is historically the world’s largest greenhouse gas emitter, though it was recently overtaken by China. As far as environmental policy is concerned, the U.S. and other rich countries are not as progressive as some of those belonging to the so-called Third World. The U.S. refuses to even ratify the Kyoto Protocol.

As consumption factors increase, particularly among the emerging economic giants like China and India, the crises will be sure to worsen. But the best solution, and the only way to cope long-term, is to lower world consumption rates to a sustainable level. This will happen, according to Diamond, whether we do it willingly or not, simply because our present rates are unsustainable.

But the lead should be taken by the U.S., where waste has become a way of life. As pointed out by Prof. Diamond:

Real sacrifice wouldn’t be required, however, because living standards are not tightly coupled to consumption rates. Much American consumption is wasteful and contributes little or nothing to quality of life. For example, per capita oil consumption in Western Europe is about half of ours (U.S.), yet Western Europe’s standard of living is higher by any reasonable criterion, including life expectancy, health, infant mortality, access to medical care, financial security after retirement, vacation time, quality of public schools and support for the arts.

In other words, less consumption (and consequently, less waste) will enhance, rather than diminish, the quality of life for the global community.

Newsweek’s Ruchir Sharma says economic analysts these days impulsively attribute all major trends to the “Chindia” factor. However, the myth has again transcended the truth. And nowhere is this more apparent than in the discussion of oil. In the oil front, the United States is still the 800-pound gorilla of that market; it consumes nearly 25 percent of the world’s total output, compared with just 12 percent for all of Chindia.

2 thoughts on “Consumption Factor Key to Addressing the Food and Oil Crises”

  1. Why is it our economy facing problems til now, why prices for oil & gasoline increase, wala bang pondo ang government ngayon? saan na ba ang mga pangako ng mga namumuno sa ating bansa? mga pangakong napapako,,kailan ba uunlad ang ating bansa wala na bang pag asa na umunlad? yes we all spent tym & efforts to work para magkapera pero yung mga presyo ng pagkain weekly na tumataas dba sagana ang ating bansa sa produksyon pangkabuhayan gaya ng gulay & bigasan.dapat sana tuonan pansin yung pangkabuhayan ng mamayang pilipino kaysa mag angat ng imported dba mas mahal yun dapat sana yung pangunahing produkto natin ang dapat alalahanin hindi yung issue ng pangulo at ibang kawani ng pamahalaan ang dapat tuonan ng pansin, kaya walang solusyon sa problema ng Pilipinas kasi yung opisyal natin nagsinglabasan ng mga baho, nakakatulong ba yun? dba hindi? lalo nilang pinalala problema natin not only for livelihood program but the dignity of one’s person. Sana naman magkaayusan na lahat ng problemang ito at isipin kung ano ang solusyon..dba tama ako.

    maraming salamat..

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