Reading Chandran Nair's Consumptionomics was like a breath of fresh air! Nair tackles all the stultifying dogmas of market fundamentalism and shows how the West's peddling of its Washington Consensus policies over the developing world has resulted in a form of globalization that is unsustainable and will lead to further disasters beyond the financial, social and ecological crises it has unleashed.
Nair calls for Asian countries to now break with this broken Western model and move beyond economics to a more scientific basis for its own development path. While acknowledging that "trickle down economics" has brought many out of poverty, Nair asserts that its resource-intensity due to mispricing and "externalizing" of social and environmental costs makes it infeasible and destructive of other values and forms of wealth. This mis-pricing extends to national accounts where GDP also ignores externalities, includes clean-up costs and other defensive expenditures as part of national output (confusing "goods" and "bads") while omitting many forms of national wealth: well-educated workers, efficient infrastructure and productive ecosystems. This has led to mis-pricing of sovereign bonds of Ireland, Greece, Portugal and other EU countries (see "GDP: Grossly Distorted Picture").
I applaud Nair's approach. I have called for a similar reshaping of capitalism toward resource-efficiency and the transition from the fossil-fueled Industrial Era to the cleaner, green, information-rich Solar Age.
We have measured private investments in this transition since 2007 at $2 trillion. In my interview with Nair in Hong Kong, I learned that he is a green investor interested in making a positive social impact. He has founded Advantage Ventures. We hope that Nair will join our call for pension funds to shift at least 10% of their assets away from risky hedge funds, dark pools and commodity speculation to direct investments in the green sectors now growing around the world - with Asia in the lead.
I agree with Nair's risk-reduction approach and focusing investment in this transition to a more equitable resource-efficient path to our common future. To this end, Nair calls for stronger, more competent governments. Nair recommends that governments focus on curbing and down-sizing finance to its original purpose and to shift tax policies to proscribe tax waste, pollution and superfluous financial transactions. Nair emphasizes the need to encourage other activities in place of mass consumption, waste, obsolescence, based on capital and resource intensity. He rightly calls for redirecting advertising and marketing toward conservation and new forms of satisfaction.
This book slays many tottering sacred cows: "efficient markets," "rational actors," GDP-growth as well as the Washington Consensus and the dominance of faulty economics over public and private decision-making which ordinary citizens in 12 countries seem to understand (Beyond GDP). Nair might have spent more time exploring the burgeoning socially and environmentally responsible institutional investing models we cover on our site, including the UN Principles of Responsible Investing now comprising over 850 institutional investors with AUM of over $25 trillion.
Nair can also be gratified, as I am, that the Nobel family has now dissociated from the Bank of Sweden Prize in Memory of their ancestor Alfred Nobel as a fraud infringing on the Nobel's intellectual property ("The Cuckoo's Egg in the Nobel Prize Nest"). This alone should release Asian policymakers to go full steam ahead with their own resource-conserving, labor-intensive, green economy plans, as China, Korea, India, Singapore and other countries are pioneering. This book will hopefully spark a wide debate on the future development paths for our common future on this small planet.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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