In book three Adam Smith discusses the progress of opulence in different nations. He states, ‘the surplus part of the rude and manufactured produce, or that for which there is no demand at home, must be sent abroad in order to be exchanged for something for which there is some demand at home’.
DEFINING IDEA…
Only when the last tree has died and the last river has been poisoned and the last fish has been caught will we realise that we cannot eat money.
~ CREE INDIAN SAYING
Smith suggests that a nation progresses when they use their resources to satisfy home demand and export the remainder. What’s especially interesting about this idea is that China, an economic superpower, doesn’t do it that way! For many reasons, China is a unique country, but the big one in relation to economics is the fusion between capitalism and communism. The average Chinese citizen is very conservative, hardworking and frugal. They have not been so afflicted by the materialistic malaise of the Western culture, at least not yet. In the TV documentary This World: American Time Bomb (2008), the contrast between the two countries couldn’t have been starker.
A young Chinese couple were interviewed about their lives. Both worked in an electronics factory in Shanghai yet their home did not possess a single item that their manufacturing plant made. They saved half their income and their dream was to live in a quieter area and buy a car! The realistic and affordable aspirations of the Chinese have resulted in minimal internal demand, although that is changing.
Perhaps China has become an economic powerhouse because most of their manufacturing output is exported. In 2007, the Chinese exported more than they imported to create a trade surplus of $315,700,000,000. In contrast, the US imported more than they exported to create a trade deficit of $816,000,000,000. The UK was next, with a deficit of $175,400,000,000!
Smith believed that the natural progression was ‘the greater part of capital of every growing society is first directed to agriculture, afterwards to manufacturers and last of all to foreign commerce’. He goes on to say that for most nations the steady movement from agriculture to manufacturing improves a nation’s economic opulence, but eventually the improvements made in manufacturing filter back to agriculture. Perhaps the importance of land management, cultivation and food production, so often brushed aside in the name of progress, becomes glaringly obvious as Mother Nature extracts her revenge.
In the past China has thought little about deforestation to make way for its people and industry. In 2002 China embarked on a US$2.4 billion regeneration programme in an unprecedented effort to reverse the damage caused by their industrialisation. Wholesale logging has resulted in expanding deserts, chronic droughts and deadly flooding, which China hopes to stop by replanting 170,000 square miles - an area the size of California - over a ten-year programme.
HERE’S AN IDEA FOR YOU…
Do your bit for the environment and teach your kids to do the same. Don’t let the tap run while you are brushing your teeth, limit your use of plastic bags and if you must use them, re-use them over and over again. Instead of throwing things away, give them to a charity shop where they can be recycled for a good cause.