Capitalism thrives on perpetual increase in consumption. It doesn’t much encourage savings on the one hand and advocates debt-based investment on the other. Leveraged investment generates comparatively rapid but high-cost and unsustainable growth. Investment funded by savings results in low-cost, sustainable growth. This is what the Austrian economists say while commenting on the destruction wrought by the Chicago economists during the last three decades.
While global conscience, in the wake of 2007-08 crisis, was seriously looking for an alternative economic model, the tricky Western wisdom came up with the makeshift arrangement of Quantitative Easing, sweeping under the carpet the destabilizing foibles of the system. The systemic patchwork having completed and the global economy seemingly back on the track, no one now thinks of undertaking the long-due major surgery of the system. The atmosphere once again reverberates with the Milton Friedman refrain of “go shopping.”
The globally extending arms of the US and the Western shopping malls, supply chains and retail outlets are the means to aggressively promote consumption, especially in developing and least-developed economies. Goods and services producing corporations have been given free hand to enter the sacred family precincts with their aggressive marketing. Products once sold through door to door personal selling are now sold through electronic media. Corporations are known to set aside gigantic marketing budgets to buy prime time on electronic media. Spots based on psychoanalytical findings are developed to target the different sections of the household, particularly the kids and the youth who by themselves are not the purchasers. They simply influence the family head’s decision to purchase by using adolescent and childish tactics. Such marketing efforts result in either excessive or wasteful consumption.
TABLE SHOWING FINAL CONSUMPTION AS PERCENT OF GDP FOR SOME OF THE WORLD COUNTRIES:
Hong Kong SAR China
Source: The World Bank
To use under-8 kids to influence wasteful purchases might seem immoral to some but not to the corporations who not only take children as their cost-free present assets but also count them as their future consumers. Joel Bakan writes in his book the Corporation: Children as “tomorrow’s consumers … represent a huge market today” and therefore are “fair game” for corporations, says Lucy Hughes …Lucy Hughes who serves as director of strategy and insight for initiative media, the world’s largest communications management company, is one of the creators of Nag Factor, a solution to a problem that has vexed the marketers for years: How can money be extracted from young children who want to buy products but have no money of their own? Though “you can manipulate consumers into wanting and therefore buying your products,” says Hughes, young children present unique challenges. For them, she realized several years ago – and this is the crucial insight behind the Nag Factor – advertisements must be aimed not at getting them to buy things but at getting them to nag their parents to buy things … The aggressive marketing of fast food and confectionary to children does influence their dietary choices early in life, and it puts them at greater risk of becoming obese or overweight later in life. A major concern is childhood diabetes.
There is a lot of enthusiasm in Pakistan about its expanding retail market and forthcoming investment in shopping malls and supermarkets with the added prospects of such global giants as Walmart and Carrefour entering our retail arena. It should, however, be clear to us that the upcoming “galore” is the cup of tea of the top hierarchies of our society that sum up to a paltry 15%. Our consumption that has already touched the dangerous limit of 93% will get further impetus with the arrival of new players. The buying habits of the high-enders of our society will predominantly boost FMCG markets and put further pressure on our currency as well as the external sector.
A glance at the world consumption table would suggest that even the OECD countries have kept their final consumption within the safe range of 60 to 80 per cent. This trend has been followed by most of the countries in the Asian region. We are the only wasteful consumer in the region after Afghanistan. Instead of looking ways and means to increase productivity of our commodity producing sectors, we have taken to the easiest course that is: grow economy through increased consumption. Greece, the only OECD country that has gone berserk – courtesy corruption, mismanagement and over-consumption – is on the brink of default. Do we want to become the Asian Greece?