Entries in global middle class (34)
Pair of NYT stories from earlier in the month. Both speak to the realities and myths of people's adaptability.
First one is about how Latvia (a place I very briefly visited back in the 1980s when it was still back in the USSR) and it talks about how, during the Great Recession, Latvians were able to handle the harsh austerity (sort of crew cut instead of the usual haircut).
Second one is about how Russians are already mall fanatics. I remember Zbig Brzezinski saying, when the Wall fell, that it would be decades and generations before Russians figured out markets, etc. It was all so godawfully patronizing (as only a Pole or Ukrainian might be WRT Russians).
My point in citing them together: people are amazingly adaptable. Latvians remember worse days (like your Great Depression parents or grandparents) and so they are unfazed, but Russians have no trouble slipping right into being material boys and girls (as did the Latvians for a while there and as they will again soon).
Americans have this tendency to believe we're the only adaptable people in the world, and it's true on some points: on religion and "sacred soil," we are freakishly flexible. If they declared that the US was being moved to Canada next week, most of us would pack up and go, because it's the freedom rule-set that we're most addicted to, with darn near everything else being negotiable.
Yes, the world is still full of traditional cultures wedded to sacred soil and religious identities (like . . . fuh-ever!), but given even the slightest chance, man, will they ever break out of their shells - and I mean everybody. Sure, it's the kids who always lead the way, but guess what? Traditional societies are youth-skewed (all that baby cranking) and they often feel the huge need to BE traditional precisely because there are all those young minds that need bending. And yes, when the change comes, it does seem like the "end of X civilization," just like when Elvis and The Beatles and Stones showed up. And yes, many prices will be paid and much of the culture transformed and made that much harsher by all that individualism (to include the freedom to be miserable), but people really are the same all over - when given the chance. No, that expression doesn't come in some archetypal "American" way. At the end of the day, Russians are still Russians and Chinese are still Chinese (go figure!), so the applications are always different.
It's just that the freedom impulse (far more economic in nature than political) is the basically the same: I get to do what I want, when I want, how I want, buying what I want, etc.
So no, no 50-year transformations required on the economics. It's the politics (single-party states in particular) that go slow.
That's what the military and intell people NEVER understand. They think the politics (aka, intentions) can go like "SNAP!" while the economics will never change (or capabilities change slowly).
Truth is, it's entirely the other way around. And all that economic freedom is what drives the super-fast technology adaptations (meaning HOW people use tech is nearly always more revolutionary than the tech itself).
Just my 2 cents .....
Starts by calling farmers "the canaries in the mine when it comes to climate change." Brilliant.
What affects farmers affects the global food supply and causes the price rises that hit middle class wallets and increases the risk of hunger for the world's poor.
CC isn't the "only culprit" when it comes to good security.
The primary drivers, the article notes, are population growth and the stunning growth of the global middle class, which, as we know, likes to eat and eat well.
Next is the loss of land to food crops due to urbanization and the diversion of crops to fuels (dumbest idea in human history).
But here's the quote that caught my eye:
If these were the only pressures on the global food supply, feeding the world sustainably could still be achievable, says Jerry Nelson, a senior research fellow at the International Food Policy Research Institute (IFPRI). "If you didn't have climate change, you could tell a story about how it will be challenging and how we need to invest more in productivity, reduce waste and manage international trade," he says. "But this would be something we could accomplish.
"When you throw climate change into the mix, that makes everything a lot more difficult."
Or better said - with regard to risk - more uncertain.
Great little piece in "FT Special Report: Managing Climate Change."
Interesting FT column by Satyajit Das.
Two important factoids:
- By 2008, $4-5 of US debt is required to create $1 of GDP growth; and
- China now needs $6-8 of credit to do the same.
There was a time for both countries (US in 1950s and China at end of Cold War) where $1-2 of debt would do.
Then an almost Marxian critique:
Debt became a mechanism for hiding disparities in the wealth distribution within many societies. Increased credit availabiliby allowed lower income groups to borrow and spend, encouraging housing booms, in order to deal with the underlying problem of stagnant real incomes.
A bit skewed in its causality. Credit has always been the mainstay of growth in a capitalist society. Reducing its function to "hiding disparities" is a very narrow view.
The stagnant real incomes problem is hardly universal in this current era of globalization. It is felt primarily in the West, where jobs easily cordoned off from global competition now suffer it greatly. This is the "cost" of letting so much of the world into the global party called globalization. We can decry this, but the cost of our privilieged standard of living in the past was the vast exploitation/disconnection of much of the world, or the have/have-not divide that Europe begat in its previous extension of colonial-globalization.
Is it worth to me to live in a far more just world to suffer this income stagnation?
As a Christian who believes I'm not just here to hoard and tell others to go f#$K themselves, yes, it is worth it.
Did we get addicted to cheap debt in the vast transaction strategy we ran with the world so as to spread the international liberal trade order already deeply embedded in these United States (this multinational economic union)?
We sure did.
Will we eventually run out of new sources of cheap labor in the global economy?
Absolutely. Within my life. But that will be a better problem than today's.
So where do find growth in the future?
The rise of the global middle class - the best thing to ever happen on this planet - will force magnificent resource utilization revolutions. This will dovetail with new environmental challenges (or the exacerbation of old ones). Again, these will constitute our best problems yet.
But massive adjustments must be made to protect the vulnerable amidst globalization's continued rapid expansion. And great investments must be made to bootstrap our national economy into a more realistically competitive shape for the struggles to come.
And that's why higher taxes are coming for the rich in this world. We enter a length redistributionist phase so as to avoid political tumult. It is capitalism's great genius - in combination with democracy - to recognize these moments in history and to address them head-on. Once the oncoming global progressive era works its necessary magic (and no, those ideas and leaders are - by and large - yet to emerge), such a burden for the rich will be less necessary.
But to pretend that tax cuts are the answer now, amidst the populist anger spreading across this planet and in particular this country, is to stay pointlessly dogmatic. There is no one economic theory that rules throughout time. There are seasons for each.
A foolish consistency is the hobgoblin of little minds.
- Ralph Waldo Emerson
A sign of shifting demand centers: the hiring of Asian "brand ambassadors" (aka, models).
In an industry with historically little diversity, even small shifts stand out.
It's like switching the bad guys in the "Red Dawn" remake from Chinese to North Koreans. Why? North Koreans don't go to movies, but Chinese do - in large numbers. So you don't want to piss off your audience.
Same thing here: after a while, the lack of Asian models is noticed in a world where the global middle class' spending shifts from mostly Caucasian to the everybody else.
WAPO story on how a few select US farmers are waiting on pins and needles to see how a planting of GMO corn ultimately handles the worst US drought in half a century - one that costs the US economy about $18B just after last year's TX-centric drought cost $8B.
In western Kansas, the corn looks unsalvageable. The landscape is rife with curled brown leaves, an unmistakable sign of severe drought.
Yet beneath those wilted leaves, some of the corn shows promise. The kernels have held up surprisingly well in a few places given this summer’s swelter. At hundreds of sites across the Great Plains, seed companies such as Monsanto and Pioneer are testing a slew of corn varieties engineered to withstand drought. As the harvest approaches, they’re anxious to see the results . . . farmers are more interested than ever in innovations that could make crops more resilient. That includes improved farming practices, better plant-breeding techniques and even — most controversially — genetic engineering . . . “I’ve been surprised so far. The plants are responding well,” said Clay Scott, a Kansas farmer who planted two plots of Monsanto’s genetically engineered DroughtGard Hybrids among his 3,000 acres of corn. The experimental strain, which carries a gene that helps it draw water more gradually from the soil, is slated for wider release in 2013. “The ear size, kernel counts, the ear weights look good,” Scott said. But, he cautioned, “pretty corn doesn’t always result in yield.”
For Scott, who lives in a region prone to dry spells, where irrigation water from the nearby Ogallala Aquifer needs to be conserved, these crops could prove indispensable.
It’s a pitched battle between nature and human ingenuity that will only grow more difficult. Earth’s population has soared past 7 billion. Climate models suggest that drought will become more frequent in North America. Water will become increasingly precious. Feeding the world will require wringing as much food as possible from every last drop of water.
It’s far from assured that human ingenuity will win out.
Human greed will win out. US farmers and the US economy will want that income in order to exploit the wider human greed for better and longer lives through improved nutrient and caloric intake.
Yes, as the story points out, GMOs are only part of the equation. There are plenty of tactics that improve yields and make crops more resistant to drought - but water is water, and climate change is undeniably here (to all but those who abandon facts for faith).
In the future, GMOs will constitute a clear margin between life and death.
Human life expectancy at birth, which remained stunningly fixed for thousands of years before suddenly doubling over the course of the 20th century, now seems destined to experience a similarly bold leap across the 21st century. When it does, it will shift human thinking about population control from its present focus on the outset of life to the increasingly delayed final curtain. The problem is that the technological advances that will make extending life expectancy possible are likely to come far faster than our political systems -- including the democracies -- can handle.
Read the entire column at World Politics Review.
FT story that reminds me of scenario I ginned up as part of Wikistrat teaser for simulation looking at rising consumerism in East Asia and its impact on various consumer products and food & bev industries.
I can't remember the first time I was in China during the Christmas holiday, but it was probably close to a half decade ago, and I was stunned by how much people embraced the whole concept while treating it as an essentially non-religious holiday. I mean the country has a huge winter festival holiday (Lunar New Year) that runs in the Jan-Feb timeframe, so how could they pick this up too?
Well, it's that rising middle class that seeks more outlets for its downtime and money. So the Chinese are picking up all sorts of foreign/Western holidays on top of the ones they already celebrate. Fairly American, actually.
The quote from local expert:
Christmas is like Chinese New Year, even poor people have to celebrate it. Hotels, kindergartens, schools, supermarkets, they all have Christmas decorations. As people born after the 1980s and 1990s grow up, the [Christmas] culture is having a growing influence.
So inscrutable, these people!
Plus, this year, Chinese decorations companies are surviving the downturn in the West by selling far more at home.
Great and expansive front-page WSJ feature from 15th.
Disappointing to the anti-globalization crowd, but it's been very, very good to LATAM, decreasing its poor and increasing its middle class in a steady fashion since Cold War's end.
A realistic snapshot:
The expanding middle is benefiting from a strong period of economic growth—fueled by high commodity prices in many countries—along with more aggressive social programs with a decided focus on education.
But the advances are still tenuous, and the possibility of a global recession haunts the prospects of los emergentes—the emerging ones—as marketers call the newly minted middle-class members.
Protecting what's gone on there is such a huge - even worldwide - responsibility. Ditto for Africa.
We don't do it out of anything but common sense. Check out the rising demand function:
This is the opportunity we piss away with our insane "war on drugs."
The world is booming and all we see is fear.
According to the United Nations, today marks the birth of the world’s 7 billionth person, an event sure to cause great angst among the many surviving Malthusians who still believe that humanity’s ingenuity and the planet’s resources are both finite. But thanks to globalization’s continued advance and the modernization it enables, roughly four-fifths of humans live in societies with falling birth rates and half live in societies featuring lower than replacement-rate fertility. So we now know that the trajectory of global population growth will proceed somewhat more slowly toward our eighth and ninth billions, and that we may never reach the 10th.
Read the entire column at World Politics Review.
Theodore's respectable and well-to-do New York-based Dutch family was aghast when, as a young man, he told them that he wanted to go into politics. But he was swept up in an emerging progressive age that was directly fueled by America's rising middle class.
India is at the same point now.
Great quote today in NYT:
"We've been told since our childhoods, 'Politics is bad, don't get into politics.' But the point is that somebody has to clean it up. We can't just scold people."
PARTHO NAG, on a new activism among the middle class in India.
Politics considered bad. Somebody has to clean it up.
There's your progressive impulse in a nutshell.
The real clash of civilizations in the 21st century will be not over religion, but over food. As the emerging East and surging South achieve appreciable amounts of disposable income, they're increasingly taking on a Western-style diet. This bodes poorly for the world on multiple levels, with the most-alarmist Cassandras warning about imminent resource wars. But the more immediate and realistic concern is the resulting health costs, which will inevitably trigger a rule-set clash between nanny-state types hell-bent on "reining in" a number of globalized industries -- agriculture, food and beverages, restaurants, health care and pharmaceuticals -- and those preferring a more free-market/libertarian stance.
Read the entire column at World Politics Review.
The rise of a global middle class, as depicted by The Economist (HT, Richard Jefferson).
People ask, what did America do for the world? It set the conditions for this to happen - and then it defended that system from those who would do it harm. The US is only world power in history whose primary goal has been the peaceful rise of other great powers through trade and development.
From WSJ interview with Peter Brabeck-Letmathe, CEO of Nestle.
The global middle class means a good billion more have recently had the opportunity to access meat - high protein of choice, especially for growing bodies. When you want meat, it's a 10-times multiplier on grains or vegetables.
Do-able, says the CEO, if you follow one simple rule: "no food for fuel."
Other two rules: don't fear genetic advances and DO charge for water.
Besides some geographic adjustment on climate change, that's really it. We can handle the new demand without problems, no matter what the fear-mongers tell you. But we can't simultaneously chase "energy independence," which is doofus amidst all the other skyrocketing commodity interdependencies, because we cannot will ourselves into not caring about the Gap.
Simple solutions requiring decent political leadership, which appears - on a global scale right now - to be our one great unrenewable resource.
It is THE amazing achievement of US grand strategy that we've created the conditions by which the chart of the direct left unfolds. If ANYBODY tells you that globalization is bad or unfair or says similar things about US "empire" since WWII, then simply show them the slide on the left, because it knocks those lies right out of the ballpark.
Or to be more succinct: the US-created and -enabled globalization process never replicated the dynamics of colonialism - i.e., kept the poor down. It did the exact opposite. The rest is just whiny bullshit propagated by little minds who refuse to accept it. We built a world order that enabled the rise of a global middle class, which means near-universal democracy is in the works (there will remain bedroom communities for the nonviolent rejectionists - we'll just ask them to put orange reflector signs on their buggies).
Further down, you see the legacy gaps in capabilities that will be invariably filled in over the coming 2-3 decades. That's when the resource constraints push the world into resource utilization of an entirely different caliber, but that too will be a good thing.
From FT story about effort of world policymakers to set up transparent info system on ag to avoid speculation, etc. Good luck with that. Farmers the world over tend to be tight-lipped, whether family or corporate.
What I found interesting about chart. China, of course, is a huge ag producer, second only to US and not that far behind. Problem is, of course, that China has 4 times as many people, so it's not really an exporter of note and, like India, consumes most of what it produces and then must import additionally (India less so, but as its middle class grows and climate change makes growing harder, it will follow China into a significant dependency). EU is decent exporter, and then you get into the familiar South American and Black Sea countries, plus Canada and Pakistan (the former being more like US - a big exporter, and the latter less so because of its large population).
So you see, just a handful of countries do the bulk of the producing and when you take out the self-consuming, the pool gets even smaller.
Again, water is crucial for the 21st century, and the West Hem has roughly 3 times as much as it needs - by population, so the West largely feeds the East, meaning protecting the food supply in the West becomes important in an age likely to feature biological terror.
From Jason Clay, World Wildlife Fund in a NYT debate on population:
We currently use 33 percent of the Earth's surface for food. As 25 percent isn't usable (deserts, cities, roads) and 12 percent is set aside for national parks and the like, we continue to expand the food production frontier each year. At the current rate of habitat loss, after 40 years, we will have "eaten" nearly all the remaining natural habitat on the planet. Whatever is sustainable with 7 billion people will not be with 10 billion.
So you add up 33 + 12 + 25 and you're talking 30 percent of the surface that theoretically gets exploited. Population growth (we hit 7 billion around Halloween) to come by 2050 (40 years) is approximately 2.5 (not 3 to make 10B), but let's take the three and say we'll have 40% more people.
Honestly, considering how low yields are in most ag environments around the world, the notion that we can't support 40 percent more if we boost current land yields and get access to good land freed up by global warming/climate change (unmentionable to any WWF because of the species loss that will necessarily occur) is a huge supposition, given recent history. For example, America now produces 50% more corn on the same land as it did in 2000. Remember the corn fields you ran through as a kid. Impossible today! Why? Dense rows of plants.
Clay then goes on to sound ominous notes about food production in 2100 due to per capita (he has to switch his argument there because the pop growth will level off and end mid-century) and he comes up with this meaningless stat that we'll "need to produce an amount of food that is 2.5 times the amount that all human societies have produces in the last 8,000 years." That one is a pure scare tactic. Human population was negligible until about 200 years ago and hunter-gathering was the prime route for a major portion of that sub-billion population, so stacking up the previous 7,800 years of ag production is a goofy standard. Almost as unintelligent as saying we've got more humans alive today than have ever lived!
I do like the stats on the land use, so I blog to remember.
FT story on how producing countries (mostly Gap) and emerging markets (mostly New Core) are driving an expansion in coffee consumption globally.
Coffee demand globally is described by one expert as being at a "turning point":
Demand in western Europe and the US is nearing a plateau, while consumption in emerging markets is rising strongly, particularly in coffee-producing countries.
Brazil is considered the exemplar of the trend, and as readers of this blog will note, I've posted in the past about its rapidly expanding middle class and the stunning growth in food consumption there (both more volume and moving up the caloric chain).
Tea is kind of weird: both high- and low-brow, meaning the rich love their tea and the poor depend on it in much of the world. But the middle class likes its coffee - its stimulus package every ayem.
Good news for producers.
FT story on how "China influence on design growing fast."
Fundamental tenant of my vision since the late 1990s: when the global demand center shifts in an industry, everything changes for that industry. Now, it's Chinese tastes and desires that shape design, not so much the American consumer. Yes, some customization by market, but the underlying dynamics shift.
At the Shanghai car show that opens today, General Motors and PSA Peugeot Citroën will both launch global models for the first time in China, a symbol of how the car industry’s centre of gravity continues to shift to the mainland, the largest car market.
But it is not just about launching the new-generation Chevrolet Malibu or Citroën DS-5 first in China, to attract more Chinese buyers.
The shift goes both ways.
When GM on Monday unveiled its Buick Envision SUV concept car, it revealed a car designed in China, for the world.
Chinese tastes are increasingly influencing the design of cars driven not just in China, but around the world.
China is having the greatest influence on luxury cars.
Demand for premium cars is soaring in China, making it crucial for luxury carmakers to satisfy them first.
When Mercedes-Benz set out to design a new S-Class luxury saloon, to hit showrooms in 2014, Daimler flew 100 Chinese consumers to customer clinics in Germany and the US to ensure they had input in the car’s design.
But the Chinese car boom is shaping the look of some mass-market cars too.
When General Motors designed its LaCrosse saloon, the brand, which is popular in China, devised a roomy and plush rear seat of the kind that Chinese owners – many of whom have chauffeurs – prefer.
“It’s a natural extension of the size and importance of the China market,” Kevin Wale, head of GM in China, says.
Ed Welburn, GM head of global design, says: “The trends here in China are having an influence on the design of our brands, but it is not a case of China dictating what cars are driven in Detroit.
“The influence is more subtle.”
Mr Welburn says one of the reasons Buick has become so successful in China – where owning a Buick is a status symbol – is that its fluid lines are more oriental in feel than the angular shapes of some other global auto models.
“China connected with Buick in a very positive way because . . . Buicks have a lot of flow in their design and Chinese artwork and calligraphy have a lot of flow,” he says.
“I’ve encouraged the design team here to . . . continue to play that up, and they have used that aesthetic in every detail [of the Envision SUV concept car], to give the same kind of feeling you get with a jade sculpture.”
Mike Dunne of Dunne & Co, an Asian motor industry consultancy, says: “Five years ago, no one would have imagined that China would have surpassed the US as the largest market.
“But now it’s natural that these cars are being developed for Chinese customers and sold globally.
This is such an amazing change in just a decade, but it signals globalization's immense power. It is evidence such as this that always makes me laugh when people posit globalization's retreat because of this or that policy in the West, or the dividing up of the internet, etc. There are some profound forces at work here and they mostly have to do with greed for a better life. It's a demand function - not a supply one.
WSJ from early March.
Good example of the impact of the rising global middle class.
Also tells you something about the timing of the 2.0/Facebook Revolutions in food-dependent Arab world.