Our current economic model assumes and appears to blindly advocate that technology and free markets can be the main drivers of human progress and development, thereby also overcoming challenges such as alleviating poverty. Such arguments are not backed by the facts and are a fallacy. They must be questioned as they stand in the way of more honest conversations, which are essential if we are to find solutions to many of the challenges in Asia.
The constant pursuit of technological advances, which are important on one level as they do serve the needs of a certain but small segment of the global population, do not however provide the means by which to meet the basic needs of the majority and, therefore, cannot lead to progress in an over-populated and resources-constrained planet.
Policy-makers in the developing world should not be lured by the false albeit seductive assumption that technological advances and free markets, as promulgated by the Western worldview, will create the best possible frameworks to address global issues of human development and solve society’s problems. Rather, public policy should shift away from this paradigm and seek to find the right balance between leveraging technological progress, the need to deliver public goods and the management of resources so as to foster human prosperity.
Gap between the availability of technology and basic necessities
The gap between the availability of technological devices (mobile phones, computers) and basic necessities (safe water, electricity, affordable housing) in the developing world should send a clear signal that technological progress does not necessarily contribute to meeting development needs and fostering human progress. The irony is that these technologies have penetrated impoverished villages in India, Indonesia and the Philippines whilst adequate sanitation and water supply essential to improving the basic quality of life still remain elusive. Today, more than 2.2 billion Asians have cell-phones, which is far more than the number of people who have access to potable water or sanitary toilets. According to the Asian Development Bank (ADB), some two billion Asians (66 per cent of the region’s population) lack access to adequate sanitation. In most Asian cities, less than 30 per cent of the residents enjoy 24-hour supplies of water. Low service coverage and intermittent water supplies are the norm.
This over-emphasis on technological solutions to addressing all human needs has gained so much momentum that the number of mobile-connected devices will exceed the number of people on earth by the end of 2012, according to the Cisco Visual Networking Index. Meanwhile, these advances have not empowered the weakest and created sharp disparities in living standards. A 2012 report by Save The Children highlights that one in four children are stunted in a world that produces enough food to feed everyone. World agriculture actually produces 17 per cent more calories per person today than it did 30 years ago, according to the Food and Agriculture Organisation (FAO) estimates. Yet, malnutrition is on the rise. It is an underlying cause of the death of 2.6 million children each year, which represents one-third of the total of child deaths globally.
Across South Asia, where 400 million people are poor, Internet-capable phones are rivalling laptops, desktop computers and tablets as primary Internet access points in households, as a November 2011 report from Nielsen highlights. This data sharply contrasts with the fact that 25 per cent of children in this region are born underweight at 2.5 kilograms or less. This is a powerful predictor of stunting, compared to 12 per cent in sub-Saharan Africa. Despite significant technological progress, South Asian nations (with the exception of Sri Lanka) are making the least progress in the Asia-Pacific region on meeting key development goals. According to ADB, they are unlikely to mitigate hunger, reduce under age-five mortality and expand access to safe drinking water and sanitation by 2015.
In India, which is Asia’s third largest economy, modern agricultural technologies (which are highly reliant on environmentally destructive chemicals and are displacing traditional methods) enabled the country to be the world’s second largest producer of wheat and rice. Agriculture accounts for 17 per cent of GDP and creates more than half of all jobs. Yet, human development lags far behind. About 48 per cent of Indian children are underweight. It is also worth remembering that 400 million Indians do not have access to a reliable supply of electricity. Instead of promoting technologies which can serve humanity’s needs and create prosperity by investing in vital infrastructure (including toilets, low cost homes and electricity), India has focused on bringing affordable computing and Internet access to the masses. It launched what it calls the world’s cheapest touch-screen tablet computer, which costs only $35. India has become the darling of “the tech will solve the global problems” brigade in the West with talks about a “computer in the wall” for kids in slums becoming TED highlights. Bangalore, the country’s Silicon Valley, is home to many of the world’s leading hi-tech industries – Dell, Microsoft, Yahoo. At the same time, large sections of its population live in poverty and the infrastructure sector lags far behind its supposed cutting edge technological image. Policy-makers have attempted but failed to upgrade infrastructure projects, assuming that the tech boom will trickle through and provide magical solutions to addressing basic needs. A good example is India’s railway system which has not kept pace with population growth such that transporting goods remains expensive. It is estimated that moving goods from Mumbai to Delhi is about three times as more expensive than transporting containers from Singapore to India.
Similarly, Indonesia is another country that showcases the socio-economic gap between one category of the population that is supposedly benefiting from technological progress and taking part in the social media explosion, and another one that suffers from a high level of poverty. Though the country’s poverty numbers amounted to 14.15 per cent in 2009, Indonesia is expected to become the fourth largest mobile market in the world behind China, India and the United States by 2013. Whilst 32.5 million Indonesians live below the poverty line, Jakarta is considered to be the social media capital in the world, in a country that is home to the third-largest number of Facebook users and is considered the most Twitter-friendly nation. Here again, it is celebrated as progress by the international media as if millions of inane conversations on social media stand for progress and will somehow translate into development with regard to meeting basic needs and rights.
In a state where abject poverty remains pervasive and less than four per cent of the capital’s population is connected to the sewer network, Filipinos spend an average of 21.5 hours online per week, making them the second most prolific Internet users in Southeast Asia, according to Nielsen’s report. Yet, perhaps not that surprising, the Philippines’ government has long mismanaged urgent development issues such as the necessity to establish a water quality management system to improve access to safe drinking water. This is a problem of critical importance in those areas that recently suffered from massive flooding and landslides. To further exacerbate the situation, access to improved sources of water supply decreased from 87 per cent in 1990 to 85 per cent in 2004, according to UNICEF Joint Monitoring Programme for Water Supply and Sanitation, thus leaving more than 20 million Filipinos without access to water, as the population grew rapidly during these years.
The roots of the current economic model
The inability of most developing countries to meet the basic needs of its population, whilst somehow being swept up in the euphoria of new technologies that cater to more individualistic needs and pursuits (not all socially useless or destructive), has its origins in flawed governmental policies that have defined progress as the quest for productivity gains and economic growth rather than human development. Policy-makers in the developing world adopted a fundamentally invalid economic system that has led to the crisis of capitalism the world is experiencing and the questioning of the perpetual growth mantra. These decision-makers have put their faith in consumption-led growth with its emphasis on technology, and abdicated their responsibility to meeting people’s basic needs and protecting natural resources. This approach is rooted in the Western economic model of the past two to three centuries, when a minority saw the world as their oyster and plundered other countries to create prosperity. As such economic growth through externalizing cost, underpricing resources and promoting relentless consumption has become the world’s one and only economic model, a recipe for disaster in Asia.
In the last two centuries, developing nations perceived powerful Western states as the source of all knowledge and accepted the orthodoxy that they could “manufacture their way out of poverty”. In the post-colonial era, Asian and African countries willingly adopted the West’s economic paradigm. Being intellectually subservient, the leaders whilst wanting independence were nevertheless determined to “catch up” with the train of globalization and the economic performance of developed nations. Aspiring to be like the West was the common currency of the development process. Leaders of the developing world were lured by the arguments of Western institutions and economists contending that the only fast track to prosperity is through the “Washington consensus” model of economic growth.
Despite the rhetoric about the pressing need for development and the emphasis on primary education, health care and even resources management, the Washington Consensus has exclusively focused on economic growth. It has advocated broad trade liberalization through privatization and the increase of foreign direct investments, amongst other structural adjustment strategies, as a “first stage policy reform” for developing countries to boost economic growth. The promotion of this set of policies is primarily driven by the desire to secure markets for multi-national companies and Western economies. Local elites benefited from it too.
East Asia, for instance, has grown 6.7 per cent per annum in per capita terms since 1981 but human development is still an issue in a region where reducing socio-economic inequalities and exclusion would make it more resilient to natural disasters. Despite the fact that poverty levels dropped significantly, income disparities are growing and rural areas risk being left behind. The brutal truth is that trickle-down economics does not work because it assumes that a sizeable segment of society has met their basic needs and can support lifting the poorest out of poverty. Decision-makers in developing countries should know this based on the evidence to date and wean themselves away from such muddled thinking.
Developing the wrong technologies in today’s unsustainable economic system
The consequences of adopting an economic model that promotes growth at any price are critical for developing nations. How can technologies that require reducing labour benefit the world’s most crowded region, at a time when there is a clear need to create gainful employment for many? How can more chemical usage to meet food demand be appropriate for an environmentally stressed region? How can encouraging to buy and drive more cars in Asia be the right policy for its cities and citizens? How can the Internet be treated as a sacred cow of free societies (and therefore economies) when so much of its bandwidth is pornography?
Technological progress only cannot solve the clear humanitarian and development priorities in Asia. It cannot alleviate the daily struggle of millions of Asians who have been displaced by the floods due to indiscriminate deforestation, who have lost livelihoods because of increasing water scarcity or those who live in appalling urban slums. The irony is that policy-makers in the developing world have promoted the development of sophisticated high-tech devices but overlooked basic technologies that are able to improve the quality of life for billions, through the provision of sanitary toilets, mass transport systems and rural infrastructure.
In the agricultural sector, Asian governments encouraged technological advances to boost productivity instead of investing in rural infrastructure (irrigation, water conservation, roads, electrification, housing and communication), social infrastructure (basic education, health care) and agricultural services (rural banking). Such policies increased agricultural output but hastened the degradation of arable land and exacerbated rural poverty. In addition, increasing amounts of arable land have been usurped to build factories, housing, resorts and golf courses. In China in particular, 8.2 million hectares of arable land were lost from 1997 to 2009. The country’s arable land may further drop below the “red line” (120 million hectare), which is essential to maintain food security until 2020, due to illegal use and land degradation. Institutional neglect and policy shortcomings based on the illusion that technology can cure all ills caused, therefore, the waning of agriculture in the region – a critical sector for economic development and social stability.
In the industrial sector, the growth of technology has aggravated discrepancies in wages and working conditions by creating the means for companies to constantly call for productivity gains, reduce labour costs and externalize true costs through complex supply chains. For instance, Apple’s net profit of US$13.06 billion in a single quarter equals the combined salaries of 300,000 workers at Foxconn’s assembly line over 11 years, many of whom are overworked and essentially exploited. The huge disparity between workers’ conditions and the massive profits realized at Apple’s corporate headquarters which is to be seen in much of the electronics industry, stems from an economic system that worships productivity gains at any costs via technological innovations, whilst neglecting the value of human effort, not to mention the environmental costs throughout its entire value chain. What would be the true price of the icon IPAD if these externalities were internalized as they should be?
“Innovation”, an over-used concept
From the standpoint of this economic paradigm, the relentless pursuit of technological innovation is supposed to solve global challenges such as poverty and even resources depletion. In reality, technological progress has, in many instances, accelerated resources depletion rather than reduce it. Technological innovation might have served the needs of the global population in terms of productivity and efficiency but not in terms of sustainability.
Forestry technology, for example, allowed harvesting on hitherto unimaginable scales. Whilst cutting trees was mainly done by hand until World War II, advance in engineering led to the development of small and powerful chainsaws, hence transforming the logging industry. Lumberjacks can now cut down trees between a hundred and a thousand times faster than they could with axes. Fisheries are another sector where the lack of strong policies has allowed people and companies to exploit the oceans thanks to technology.
To go further deep into this model’s misconception of the role of innovation, one must cast doubt on the contention that green technology will come to the rescue and create a more sustainable environment. “Greening” the economy by just producing more so-called “green” consumption is actually an intellectual lie. Zero-emission vehicles will remain toys for the rich because they require exotic material and thus will keep being expensive. In addition, they do not address the issues of externalized costs, which more and more cars will impose on Asian cities. This problematic can be extended for a whole range of consumer goods where “greening” and “innovation” are used to camouflage the reality, which is the pursuit of producing more goods cheaply and encouraging relentless consumption.
Decision-makers should not, therefore, freely promote the overrated concept of “innovation” without recognizing that relentless growth (propelled by so called technological innovations) jeopardizes our collective future as it overlooks the earth’s regenerative capacity and ignores limits.
The way forward: Balancing the need between technology, public goods and resources management
Leaders in the developing world, Asia in particular, need to rewrite the rules that have driven growth up until now and redefine the role of technological innovation in fostering human development. Clearly, mobile phones will not create affordable housing or help farmers if their land is taken away, denuded or if irrigation water is scarce. They need to shift away from the worldview that technology and free markets are the main agents of human progress and find the right balance between technological progress, delivery of public goods and management of resources.
Such radical thinking demands a focus on prosperity via social justice rather than on GDP-growth numbers. Development should be measured according to the right of the individual to water access, safe and secure food supplies, shelter medicine and education, not just on income. In this respect, technology should be deployed to enable people to create new enterprises centred on resources management instead of resources extraction.
To set up this framework, a more interventionist state is required. Governments have to be stronger and more effective than most of them are now. They have to use all the scientific knowledge at their disposal to encourage more equitable economies, prevent the destruction of natural assets and ultimately promote human development. Policy-makers should integrate technological advances into a system that enhances the provision of public goods.
As an example, Asian governments should make concerted efforts towards managing water resources to ensure that farmers can grow safe food, in a region where the majority of four billion people remain rural. Existing agricultural technologies can deliver public goods by giving the means to farmers to improve productivity of the land whilst ensuring that food production pollutes less and conserves natural assets. There must be a clear understanding of the risk of genetically modified crops, nanotechnology and nuclear power before policies are adopted and all other options fairly examined. But this needs strong policies that constrain vested interests, especially those in industrial agriculture.
Realizing change and embarking on projects to transform society require emphasizing the value of public goods and creating sustainable societies by putting resources management at the centre of policy-making and education. People should be made to understand that the growth of the technological sector whilst important must serve the needs of the majority rather than a minority. In that process, they should ask the vital question: Is technological progress making things better in the broadest sense? The answer today given the key global challenges is a “NO”.
In the face of South Asia’s depressing development paradox with the largest concentration of human misery (more than in Sub-Saharan Africa) in the midst of a technological boom, it is time for policy-makers to shift their focus from a development path mandated by the diktat of extreme capitalism to one that puts less emphasis on technological innovations and is, instead, inspired by the need to fulfill people’s basic needs through strong public policy. ■
Chandran Nain is the CEO and Founder of the Global Institute For Tomorrow, a pan-Asian think and do tank dedicated to advancing an understanding of the impacts of globalization through thought leadership and positive action to effect change. He is the author of Consumptionomics: Asia’s Role in Reshaping Capital.