Affluence and Cheap Cars

I recently wrote about some of the causes behind the current global food price inflation. Two of the more obvious and interrelated causes are the high price of oil and the diversion of significant amounts of grain production for biofuel production.

Another reason, though, is a negative consequence of a positive development. In recent years, in India and China and some other developing countries, there has been a real and significant rise of affluence. This is a good thing; even if this increase in affluence has been highly uneven (and it has been), the real rise in standards of living of many is a socially positive development. One consequence has been an increased demand for food, including more meat, on the part of those with somewhat higher standards of living than before, and this has contributed to global food price inflation.

There have been other developments in relation to the growth of sectors of populations in many developing countries with somewhat higher standards of living than before. Tata’s unveiling of the “Nano,” an ultracheap car designed for the Indian market is just one example of products of all sorts being designed primarily for India’s or China’s growing middle class, something that will have positive effects, e.g. increased personal mobility and autonomy, but also many negative consequences, e.g. all the sorts of negative environmental effects of affluence common already in more highly developed economies.

The following is from a recent news article about the unveiling of Tata’s “Nano”:

“The potential impact of Tata's Nano has given environmentalists nightmares, with visions of the tiny cars clogging India's already-choked roads and collectively spewing millions of tons of carbon dioxide into the air.

“Industry analysts, however, say the car may soon deliver to India and the rest of the developing world unprecedented mobility.”