Sunita Narain: 2017: De-globalisation to disruption

The year 2017 is coming after a tumultuous one. From the election of Donald Trump in the US and the Brexit vote in the UK to our homegrown protests by the prosperous castes of Patels, Marathas and Jats, who want to be declared “backward”, the world has been split apart. These are signs of economic growth that is going horribly wrong. Inequality and divisions between people are increasing. The same economic growth is also having a huge and devastating impact on the environment — the fallout is the growing cost of toxicity in our air, water, land and food, and, of course, the ultimate cost of a changing climate. So, in 2017, it is time we took stock of this model of growth led by unbridled consumerism. Forget the poor, it is not even working for the rich. 

In India, we have bigger challenges. The global economy is sputtering and slowing. This means our growth cannot be equated with becoming the factory for the richer world. The model of cheap labour and cheap goods that fuelled the last two decades of growth are over, even before Trump puts (or doesn’t) the last nail in its coffin. There is no doubt that growing protectionism and calls for “de-globalisation” will hurt the still developing countries. We are waiting and wanting to produce more at cheap and discounted rates for the rich. But it is clear that the door is shutting in our face and we need to look for new pathways to prosperity and well-being.

In all this, there is yet another challenge of employment. Today’s speed and scale of automation is much more than what we have witnessed in the past, when machines first replaced humans on the factory floor. Now computing skills make the work faster, more productive and pain-free. This means, on the one hand, our cheap labour is not as prized as before and, on the other, unemployment is going to grow exponentially. In a world that is already angry about the divisions in class and resentful of inequalities, this portends a darker future. 

So, 2017 must be a time for us in the rich and getting-rich world to reconsider future economic strategies for growth and sustainability. If growth is not in manufacturing but services, then we need new businesses, which provide employment and services at affordable rates. In this way, localisation is not a bad idea. It is building a new future, based on local resources, with local communities.

Airbnb and Uber — the two global companies that do not own hotels or cars but are ever bigger providers of rooms and taxi service, respectively, — signal the disruptive changes in business that will shape the future. That’s because the modern world has formalised its economy to the point that it has become unviable. The brick-and-mortar world requires huge infrastructure, and this then requires regulations to ensure that all this operates within rules. The high cost of regulations adds to the cost of running the economy. Uber and Airbnb undercut this world by making best use of the individual’s assets. These companies optimise existing resources — the cars and houses people own — to make more money and share the profits. But most importantly, these businesses are working the informal space. They are doing this to reduce costs and to expand opportunity. 

This is where we need to think further. In countries like India, informal business is the order of the day. Everything, from collecting sewage from homes, recycling garbage to providing transport in our cities, is managed by millions of informal businesses. But we do not consider it part of our future. Worse, it defies regulation as we know it today, so we try to kill it. We neglect it, make it illegal and altogether despise it. But still it stays. Given that the formal economy comes with costs, we cannot replace this informal and thriving business. 

It is the same with agriculture. The rich world has moved from an agricultural society to an industrial society. Its agriculture is so mechanised that it has no room for people. But in our world, we are industrialising even as people remain employed on land. Economists say this under-employment is unproductive. But the fact is self-employed farmers working on small holdings can be the backbone of a new economic future, which values employment and well-being. Just consider, if we really measured profits in terms of the returns on investment, then here are people who make so much out of so little. 

This is not to say that the current model of garbage recycling, sewage collection, city transport or small holder agriculture business does not need betterment. It needs drastic improvement in terms of work, service and environmental conditions. Similarly, farmers need better produce, access to markets and above all sustainability. But the answer is not to get rid of this labour-intensive business. We need to use the computing power of new technologies to make it work. This is the future change we need to discuss, this year and beyond. This is disruptive yet sustainable localisation for the brave new world.

The writer is at the Centre for Science and Environment
 

sunita@cseindia.org

Twitter: @sunitanar