Our Needs: The Conclusion

Is there a causal connection between consumer debt crisis and global warming?

There are four areas of needs this chapter articulated well. The need for exponential increase in human activities as a way to increase wealth, the urgent need for global action to reverse the trend of global warming, the need for the middle class to generate multiple streams of residual income, and the urgent need to adjust lifestyle and spending habits.

Increase in human activities means more factories processing consumer goods, growth in sectors that provide services, building of more and more and more energy-dependent shopping malls not only to encourage consumer spending and lifestyle change but also to showcase the latest technology and gadgets with never ending product versions and releases.

Increase in human activities means exponential increase in the innovative use of technologies, innovation and widespread use of automation that eventually results in unemployment, retrenchment, underemployment, which in categorical term means decrease in the earning capacity of workers and employees.

Increase in human activities also sets the trend that results in the globalization of economic activities from the developed countries of the world to the crisis-wracked countries in South East Asia.

One of the most obvious trends that marked the regime of globalization is the deregulation of the financial services that resulted in the entry of global financial institutions encouraging the middle class to spend more and more and more using borrowed money.

Another obvious event happening in the period of rapid globalization is the liberalization of imports eliminating in particular the restriction on the quantity of imported goods that enters a country.

All these global events started in 1995 during the start of the dot-com bubble that put most of the countries especially the South East Asia in recession starting 2000.

The outcome of these entire consumer driven activities is increase in the accumulation of wealth amongst industrialized nations, increase in the accumulation of debts among middle class consumers in most cities of the world, and worst of all increase in the accumulation of carbon dioxide and other industrial waste in the surface of our mother earth.

The following words from Mario Cuomo, former Governor of New York (1983-1995), has reinforced the truth about consumer debt crisis especially in US:

“Measured by traditional econometrics, the current economy is said to be “growing.” That’s good, it means there is increasing production and distribution of goods and services and consumption of them at a profit that benefits owners of businesses and shareholders. What those econometrics do not tell us however, is whether the jobs that are created are here or overseas and how much most Americans are benefited as a result of our growing economy. In fact, it is an economy that has been wonderfully rewarding for high level corporate executives and big stockholders but not for most other Americans. If consumerism is high it is because people are spending more than they earn: they have a negative savings rate and are increasing their debt dangerously.”

(You may want to visit DMI Blog and read his article at http://www.dmiblog.com/archives/2007/09/cuomo_3_where_we_are_now.html)

Consumerism is not at all bad. In fact it is good. We just need to make a change, some adjustments in the way we look at our needs - the need to increase our source of residual income and the need to adjust our lifestyle and spending habit.

There is hope in this kind of change and every reason that tells us things will never change will have to disappear.

In chapter two we will take a closer look at the twin problems by defining them, setting some measures of success, analyzing the root causes of the problems as well as understanding and misunderstanding our strength and weakness that brought us to this crises.

In chapter three we will come out with a common frame of reference in addressing the roots of the problems, and suggest various options of solving the twin problem of consumer debt and global warming.