Resources Research

Making local sense of food, urban growth, population and energy

Posts Tagged ‘inflation

The relative speeds of urban inflation

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How to read this chart. The light grey bars are the current month's CPI-IW (consumer price index for industrial workers) for each urban centre plotted to the left scale (the current data is for 2016 May). The green square marker is the reading for the difference between the current month's CPI and the average of the previous six months. The yellow square marker is the reading for the difference between the current month's CPI and the average of the previous 12 months. And the red square marker is the reading for the difference between the current month's CPI and the average of the year previous to 12 months ago. These are all plotted to the right scale, and their vertical separation helps tell us whether overall consumer inflation is rapid (or not) compared with other cities. You will find accompanying this chart a table. This associates a city code, such as ST21, used for the charting process, with a city: ST21 the city is Shimla in Himachal Pradesh. Data only (not method or treatment) are from Labour Bureau, Ministry of Labour and Employment.

How to read this chart. The light grey bars are the current month’s CPI-IW (consumer price index for industrial workers) for each urban centre plotted to the left scale (the current data is for 2016 May). The green square marker is the reading for the difference between the current month’s CPI and the average of the previous six months. The yellow square marker is the reading for the difference between the current month’s CPI and the average of the previous 12 months. And the red square marker is the reading for the difference between the current month’s CPI and the average of the year previous to 12 months ago. These are all plotted to the right scale, and their vertical separation helps tell us whether overall consumer inflation is rapid (or not) compared with other cities. You will find accompanying this chart a table. This associates a city code, such as ST21, used for the charting process, with a city: ST21 the city is Shimla in Himachal Pradesh. Data only (not method or treatment) are from Labour Bureau, Ministry of Labour and Employment.

Belgaum and Mysore in Karnataka with 12 points. Warangal, Telengana with 12 points. Panaji, Goa with 12 points. Munger, Bihar with 11 points. Bangalore, Karnataka with 11 points. Salem, Coimbatore and Coonoor in Tamil Nadu with 10 points. Rourkela, Odisha with 10 points. Sholapur, Maharashtra with 10 points. Vijayawada, Andhra Pradesh with 10 points.

Charting process codes used for urban centres and the cities they correspond with.

Charting process codes used for urban centres and the cities they correspond with.

These are not Swachch Bharat rankings nor are they ‘ease of doing business’ scores. They are, for each urban centre, the number of points its consumer price index (CPI) increased in May 2016 over the average for the previous quarter. The data is collected and distributed by the Labour Bureau, Ministry of Labour and Employment. This is one of the ways in which the monthly CPI numbers for industrial workers (a somewhat dated term which suited an era when the public sector dominated the economy, but which still relates to urban households) can usefully indicate the acceleration in inflation of household staples.

The picture changes when the CPIs of urban centres for a month (the latest available being 2016 May) are compared with their own averages for the last six months, the last 12 months or the year which ended 12 months ago. When the frame of comparison is the average of the previous 12 months, I find that in 30 of the 78 centres for which a CPI-IW is calculated, the increase is 10 points or more. Warangal in Telengana, Kollam in Kerala and Mysore in Karnataka are 16 points above their previous 12 month average while Munger in Bihar, Rajkot in Gujarat and Jamshedpur in Jharkhand are 15 points above.

This is the relativist picture that perhaps makes the most illuminating use of a monthly index, whatever its faults and shortcomings. The well-appointed chart that I have drawn helps show why the speeds and acceleration, between a current measure and an earlier set of measures, are more important to consider than the absolute numbers themselves. This is an experimental way to help visualise a subject that is alas rather dry but of great import for every single household. I will update this as new CPI numbers are released by the Labour Bureau every month.

Written by makanaka

July 23, 2016 at 22:25

The fuel favour year for India

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The US$ per barrel (red line) and the rupee-dollar exchange rate (green line) are plotted to the left scale. The rupee per barrel (blue line) is plotted to the right scale. I have used data from the Petroleum Planning and Analysis Cell of the Ministry of Petroleum and Natural Gas - the global crude oil price of the 'Indian Basket' in US$ per barrel.

The US$ per barrel (red line) and the rupee-dollar exchange rate (green line) are plotted to the left scale. The rupee per barrel (blue line) is plotted to the right scale. I have used data from the Petroleum Planning and Analysis Cell of the Ministry of Petroleum and Natural Gas – the global crude oil price of the ‘Indian Basket’ in US$ per barrel.

It started in early August, the extraordinary slide in petroleum prices. Until then, the international crude oil price of the ‘Indian Basket’ (of crude oils, as it is called) had swung between US$ 110 and US$ 105 per barrel.

The rupee-dollar exchange rate, and the effective price of a barrel of crude oil in Indian rupees (both measures also appear on this chart), fluctuated but little for most of the first half of 2014. In early June 2014, the rupee-dollar rate turned around from 59 and has been rising since, while in early July the rupee price per barrel descended from its plateau of 6,300-6,600 and has been dropping since.

The cost of oil-derived energy has had a number of effects upon our everyday lives in the second half of 2014. It has helped the new NDA-BJP government during its first year by dampening overall inflation (the consumer price index) and particularly food price inflation. This has been particularly fortunate for the NDA-BJP government as the deficient monsoon of 2014 has meant a drop in the production of food staples, and market forces being what they are, food price inflation especially would have been well into the 13%-14% range (last quarter 2014 compared with last quarter 2013).

RG_India_petroleum_in_2014_sectionGalloping consumer price inflation has been forestalled by the plunging price of crude oil. The data I have used for this startling chart is courtesy the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum and Natural Gas which computes several times a week the “global crude oil price of Indian Basket in US$ per bbl” – which means the average price we pay per barrel for the various kinds of crude oil we purchase.

A barrel of crude oil is 42 gallons or around 159 litres. This crude, when refined, is turned into diesel, petrol, lighter fuels, feedstock for the manufacture of various plastics, and other products. Typically, up to 70% of the oil we buy is converted into diesel and petrol (and carbon from all those exhaust pipes). Also typically, a barrel of crude oil (which is an extremely dense form of packaged energy) contains around 5.8 million BTUs (British thermal units). More familiar to us is the kilowatt hour (or kWh) and these 5.8 million BTUs are about 1,700 kWh – at current national average rates of per head electricity consumption this is worth about 26 months of electricity!

From early August till the end of December the price we paid for a barrel of crude has dropped from around US$ 103 to US$ 54 and correspondingly (factoring in the rupee-dollar exchange rate) the rupee price of a barrel of crude has dropped from 6,300 to around 3,500. Put another way, the INR 6,300 we paid in early August for 5.8 million BTU could buy, in mid-October 7.1 million BTU and by end-December, 10.4 million BTU.

Most of us tend not to be profligate with energy (our electricity comes mainly from the burning of coal, but the sale of automobiles has continued at a steady pace, or so the industry tells us). The question is whether this windfall energy saving (in terms of petroleum energy units per rupee) has been well used by the sector that can spread the benefit the most – agriculture and food. It will take another three months to judge, and we will keep a wary eye for the next quarter on the Indian crude oil Basket.

Written by makanaka

December 31, 2014 at 19:06

An epidemic of misreading rain

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RG_rain_misreadings_201406

Who can you turn to? It’s easier to list those whom you shouldn’t turn to, the top rankers being the country’s press and television wallahs, followed at a not respectable distance by academic commentators, then come the government blokes and bureaucrats (some of whom do know the difference between isobars and salad bars, I’ll give them that). Lurking behind this cacophonous mob are the boffins of the IMD and its associated scientific chapters, a number of whom have got their sums right, but who aren’t given the space and encouragement to tell the great Bharatiya public what said public is yearning to hear simply because regulations forbid, just like it was in 1982, 1957, whenever.

As I may have mentioned before, this is Not A Good Thing. It has taken about a decade of mission mode tutoring (how the UPA bureaucrats loved that phrase, mission mode) to get the media wallahs to see the difference between weather and climate. A few may even have learned to read a wet bulb thermometer and puzzle their way through precipitation charts.

RG_rain_misreadings_2But overall, the profusion of android apps that profess to show cool graphics of clouds with lightning bolts erupting topside so that our humble ‘kisans’ know when it’s going to rain (i.e., by looking down at their screens instead of up at the sky) has not helped the Bharatiya public make more sense of less rain. We have squadrons of Insats and Kalpanas buzzing around the globe beaming pictures from the infra-red to the infra dig back home, every 60 or 90 minutes, busy enough to crash a flickr photo server, but the knowledge that said public can sift from it is sparse, rather like the rainfall over Barmer, Bikaner and Ajmer.

And so it goes, with the waiting for rain replacing with an equal banality waiting for Godot but with a far larger cast of characters, most of them insensible to the greater climatic drama being played out, 30,000 feet overhead, and at the poles, in the vast turquoise swells of the eastern Pacific where a malignant El Nino is brooding, in the Himalayan valleys where crystal zephyrs have been shoved aside by an airborne mat of PM2.5, or to the desiccation that creeps outwards from our towns and cities (7,935 of them, India’s triumphant ‘growth story’) that have enclosed sweeping hectares with cement, asphalt, and the hot foetid belches of factories and air-conditioners. GDP, they have been told, is the great liberator.

And that is why we have in place of the quiet concern of our forefathers in their dhotis, an electronic jumble of shrill alarm. “Weak monsoon intensifies drought like conditions in India” was one such headline, the text beneath finding the most ludicrous connections: “… threat of food inflation and weak rural demand in the first year of the Narendra Modi government”. Naturally, the cheerleaders of a demand-centric world cannot do otherwise.

RG_rain_misreadings_1And likewise with “Weak rains deliver India’s new Modi government its first economic challenge” that desultorily spies impending delays in the “sowing of main crops such as paddy, corn and sugarcane” and which notes mournfully that “about half of all farms lack irrigation systems” and, even worse, that “reservoir levels are only a fourth of last year’s levels”, this last despite the best efforts, ham-handed though they are, by the Central Water Commission to show India (for Bharat knows) that the reservoir levels in the 85 major reservoirs are low, but not much lower at this point in 2014 than they were in 2013. The GDP bullies dislike contrary numbers, and would go cross-eyed were someone to mischievously mention the existence of 4,845 large dams in India (the blue-ribboned 85 included) whose many water levels we don’t in fact know at all.

And similar vapidity from another quarter, which like its peers cloaks ineptitude with what it takes to be appropriate jargon, “The cumulative rainfall across the country has so far been 45 per cent below the Long Period Average (LPA) for 1951-2000” and brandishes even more frightful credentials with “a further breakdown of rain data recorded in different meteorological subdivisions shows that normal rainfall has been recorded in only seven of the 36 regions”. But which sere farmer and her wise daughters consider in their universe such things as meteorological subdivisions, when their world is what Balraj Sahni and Nirupa Roy in 1953 showed us so lambently, is no more than ‘do bigha zamin’?

But still the misreading gathers pace, as vexed fixations upon an existence merely economic chase away plain common-sense. For rains may come or rains may go, but in tractors – for so we are instructed by the agents of hardened merchants – we trust. To wit: “… tractor sales have typically expanded at a double-digit pace in the years when rains have disappointed… In the 11 years between fiscal 2003 and fiscal 2013, rains fell short by 5% or more on six occasions… In four of those six years, tractor sales grew at a double-digit pace”. Let us then leave behind our cares and go rollicking over the dusty, still dustier now, plains of the Deccan in tractors tooting red.

But a shadow of monsoon yet for Bharat, and at June’s end. It is past time that the prattling ceased and the learning began.

The fitful pulse of an Indian food staple

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RG_pulses_prices_201405

The history of consumer price indices for pulses in India’s ordinary shops and bazaars since 2006 January is one of five periods. The first, from 2006 January to 2008 June, is of a rise in some pulse foods, a decline in a few, and little movement in others. The second period is one of a rise in concert from 2008 June to 2010 January, some pulse foods rising very steeply and not others – whole moong did but not whole urad, masur dal did but peas did not, horse gram did but not rajmah.

The third period, from 2010 February to 2011 August, is an overall lowering of the price indices for almost all pulse foods. This happened when the general food price index rose quickly and stayed high – but pulses remained relatively unaffected. That insulation, the fourth period, didn’t last long, from 2011 September till around 2012 May (even shorter for some pulse foods).

The fifth period began around 2011 July for some pulses, and two months later for others, and is continuing. This is a period of volatility in the price indices of the pulses group to an extent not seen in the previous seven years – peas rises but not gram, horse gram and rajmah shot up but raungi and white gram dipped, whole masur and whole moong soared while besan fell and papad remained flat.

The data I have taken from the monthly itemised retail consumer price indices, weighed to be all-India, for industrial workers with their base of 100 being in 2001, and compiled by the Labour Bureau, Ministry of Labour and Employment, Government of India.

At the end of the second quarter of 2014, the spread of price index values for the pulses group of our staple foods is wider than at any time in the last eight years. It is this food group that provides the nutritional balance and is a culturally rich source of protein in everyday meals and popular home-made snacks. The overall price rise these charts graphically illustrate, and the uncertainty about their availability (which is what the recent volatility of the individual index lines show) are evidence of the threat to the nutritional security of many millions of rural and urban households in India.

Written by makanaka

May 23, 2014 at 20:39

Fewer cereals still for more rupees

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RG_cereal_staples_chart_20130309

The Labour Bureau of the Government of India has done us a most valuable service by disaggregating from the consumer price indices, separate indices for the individual items that a household typically buys, whether every day, periodically (weekly or monthly) and even annual purchases.

I have charted here the data for the cereal and cereal substitutes. This group consists of rice, wheat, maida (flour), suji (coarse wheat flour), bread, sewai (rice vermicelli), maize atta, wheat atta, tapioca, jowar, sago, ragi, bajra, maize, sattu (ground cereals) and the grouping of beaten or flattened rice (chira, muri, khoi, lawa (CMKL)).

The chart describes the movement – over 96 months from 2006 January to 2013 December – of the price indices (not the prices) for these foods. These are calculated as all-India prices using the consumer price index for industrial workers (CPI-IW) and the base is 2001 = 100.

There are several significant findings from examining the movement of this group of price indices. (1) Over 2008, 2009 and 2010 the rise was steadily upward with a pronounced spike in some items that lasted from 2009 August to 2010 May. This is noteworthy as no spike is visible (for the group as a whole) during 2007-08 when there was a worldwide steep rise in the prices of foods.

(2) From around 2010 May, maida, maize atta, CMKL, bread, wheat atta, rice, wheat increased at a muted rate and even remained flat over short periods whereas other cereals and cereal substitutes rose steeply and/or showed volatility in their indices. (3) From 2012 June the price indices of all items in this group rose steadily and steeply – more steeply than at any time since 2006 January and have continued this accelerated pace until the end of the recorded period, 2013 December.

This is another excellent release into the public domain of valuable indicators by the Labour Bureau which help describe the relentless rise in the prices of food staples in India. As the Labour Bureau has shown, whether it is the consumer price indices it maintains or whether it is the individual goods and services necessary to maintain an acceptable minimum standard of living for the households engaged in agriculture, manufacture or which are dependent on self-employment, the so-called ‘India growth story’ that the ruling government and its supporters speak triumphantly about in fact imposes burdens on the working classes that have grown heavier every month.

Still too few jobs, still paltry wages, says ILO

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ILO-employment_trends_2014_key_factsAlthough the Global Employment Trends 2014 report has adopted a mild turn of phrase to describe the vicious and sustained attack on workers and labour around the world, the message from one of the key reports from the International Labour Organisation is that economic ‘recovery’ has done nothing to create jobs, in fact the reverse.

The report has called for “an urgent switch to more employment-friendly policies” – that is, in contrast to the policies that encourage criminalising workers who organise themselves, and policies that drive – in a race to the deadly bottom – wages ever lower in the face of rampaging inflation. The weak global economic recovery has “failed to lead to an improvement in global labour markets”, the ILO report has said, with global unemployment in 2013 reaching almost 202 million.

While this is a very large number, we should remember that the ILO, a United Nations agency, relies on official statistics given it by the countries themselves. Even with allowances made for the true nature and scale of unemployment and under-employment, recommended to the ILO by trade unionists and researchers who study labour trends and conditions, the numbers available in the report will be a fairly large under-estimate of actual conditions.

ILO-employment_trends_2014Nonetheless, the Global Employment Trends 2014 report said that employment growth remains weak, unemployment continues to rise as a trend in all the world’s geographic regions, and especially amongst young people, and that large numbers of discouraged potential workers are still outside the labour market. The report has also bluntly said that “profits are being made in many sectors, but those are mainly going into asset markets and not the real economy, damaging long-term employment prospects”.

In developing countries, informal employment remains widespread, and the pace of improvements in job quality is slowing down, the report said. That means fewer people are moving out of ‘working poverty’ – that is, those who have some work but that work is not enough to keep their households consistently above a given income and food calories poverty line. In 2013, the number of workers in extreme poverty – living on less than the (widely-criticised and altogether meaningless World Bank) US$ 1.25 a day – declined by only 2.7% globally, which is one of the lowest rates over the past decade, with the exception of the immediate crisis years.

Periods of unemployment for job seekers and those laid off have lengthened considerably, the report said; in some countries such as Spain and Greece, job seekers need twice as much time before landing a new job than before the crisis (with no assurance that the pay they will receive for the new job matching their last drawn salaries or wages). More and more of those potential workers are discouraged and remain outside the labour force, “leading to skills degradation and obsolescence, and rising long-term unemployment”.

When India’s food growers cannot afford fuel, light and food

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This group of ten charts describes the trends over more than seven years of the food, and the fuel and light components of the consumer price index numbers for agricultural labourers. The data has been taken from reports issued by the Labour Bureau, Ministry of Labour and Employment, Government of India.

This group of ten charts describes the trends over more than seven years of the food, and the fuel and light components of the consumer price index numbers for agricultural labourers. The data has been taken from reports issued by the Labour Bureau, Ministry of Labour and Employment, Government of India.

This group of charts describes the trends of two indexes – food, and fuel and light – for agricultural labourers in ten states. The consumer price index (CPI) that is usually invoked by the government, by industry, by the corporate associations (such as chambers of commerce), and by economists and banks is a number for that month considered to be ‘national’.

This has no meaning, for what you and I buy is not at a ‘national’ market but at a local one – we may even buy from a roving street vendor, provided our municipal corporation or council has the sense not to outlaw these vendors (which sadly is discrimination common in metropolitan cities).

A consumer price index, in order to be of any use, must be local, and must relate to those who can set some store by it. That is why it is most useful to look carefully at what CPI includes, and it does include much detail, which this small group of charts helps reveal.

The consumer price index numbers for agricultural and rural labourers (with a base of 100 fixed to the year 1986-87) is calculated by the Labour Bureau, Ministry of Labour and Employment, Government of India. Who are agricultural labourers? The Bureau’s definition is: “Agricultural labour households – the rural labour households, who derive 50 per cent or more of their total income from wage paid manual labour in agricultural activities, are treated as agricultural labour households.”

According to the Bureau, a person is considered an agricultural labourer, if she or he “follows one or more of the following agricultural occupations in the capacity of a labourer on hire, whether paid in cash or kind or partly in cash and partly in kind” and the occupations are: farming including cultivation, growing and harvesting of any agricultural commodity; production, cultivation, growing and harvesting of any horticultural commodity; dairy farming; raising of livestock, bee-keeping or poultry farming; any practice performed on a farm “incidental to or in conjunction with the farm operations” (this includes forestry, market-related activities such as delivery and storage, and the actual movement of produce to markets).

The collection of rural retail prices every month from shops and markets is done by the Field Operations Division of the National Sample Survey Office (NSSO). In 20 states it collects data from 600 representative sample villages every month, with one-fourth of the sample being covered every week. Prices are collected either on a market day (which is most commonly a set day of the week) for those villages that do not have daily markets, or on any day for those that do.

And here we have – for Andhra Pradesh, Uttar Pradesh, Maharashtra, Madhya Pradesh, Tamil Nadu, Rajasthan, Karnataka, Gujarat, West Bengal and Bihar, ten of India’s most populous states – the proof of how much India’s growers of food are burdened by the rising price of fuel and light (that means of electricity and power, diesel, kerosene and coal) and of food (cultivators and food growers also buy what they do not grow or husband).

What rural India does and doesn’t eat

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How much cereals (rice, wheat, millet, sorghum) and pulses do rural Indians consume in a month? In general, not anywhere near how much they should.

How much cereals (rice, wheat, millet, sorghum) and pulses do rural Indians consume in a month? In general, not anywhere near how much they should.

The circles in this chart represent the rural population of 20 of India’s largest states by population. The National Sample Survey Office (NSSO) divides the rural (and also the urban) population of each state into tenths (they call them ‘deciles’), and the NSS surveys on consumption expenditure tell us how much each decile in each state spends, for example between Rs 800 and Rs 950 a month.

I made this chart using data from the NSS report, ‘Level and Pattern of Consumer Expenditure’ (the 66th Round, which surveyed the population between 2009 July and 2010 June). With 20 states and ten categories each, I had 200 readings to plot, examining the consumption in quantities for cereals and pulses.

Depending on the population of the state, some of those circles represent 3-5 million people! Now here is the grim finding. Of these, 72 do not meet even 75% of the minimum cereals requirement (about 10.4 kg) a month, and 106 do not meet even 50% of the minimum pulses requirement (about 0.6 kg) a month – these are the National Institute of Nutrition recommended dietary allowances. And 43 of these deciles are severely deficient in both.

How can the state explain the existence of these huge deficits in basic nutrition (see the coloured area of the chart, which includes tens of millions) while simultaneously chasing 'growth' as the means to remove those deficits?

How can the state explain the existence of these huge deficits in basic nutrition (see the coloured area of the chart, which includes tens of millions) while simultaneously chasing ‘growth’ as the means to remove those deficits?

For the last week, there has been a great deal of comment and discussion about how the increase in expenditure – especially in rural India – is ‘evidence’ of increasing incomes, of widening prosperity and a general ‘lifting out of poverty’. It is misleading because neither the central government nor its supporters (there are many supporting views to be found in the media) has pointed out that an increase in expenditure will of course take place given the rise in the price of food and fuel.

Comparing what the NSS has surveyed in 2009-10 with its 2004-05 survey, in some areas of expenditure the rupee rise is 300%-400% (such as for the eggs fish and meat, fresh fruit and beverages categories) and it will be useful to extract the quantities behind these increases in expenditure (I will get around to doing this as soon as possible).

In any case, the quantities consumed for cereals and pulses have actually declined for rural and urban citizens. While the proportion of expense, out of total food expense (all-India figures for rural populations), on pulses and on milk (and milk products) has remained roughly the same – 5.6% to 5.2% and 15.3% to 15.2% – the proportion spent on cereals has dropped from 32.7% to 20.2%.

I think this an extremely significant change that can be read together with the two big increases in proportion of spending – on egg fish and meat from 6% to 9% and on beverages from 8.2% to 15%. In the NSS definition, beverages also includes purchased meals and processed food, and it is this conversion of primary cereals (including coarse cereals) and pulses to processed foods that I see as an important factor behind the biggest change in the proportions spent on food in recent years.

Peaks, spikes and food price worries in India

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RG_WPI_major_groups_main_chart_20130410

This chart traces the trends of the wholesale prices of ten major food and crop groups in India. The data is from the Office of the Economic Adviser to the Government of India, which is a part of India’s Ministry of Commerce and Industry.

The cereals group has from early 2012 risen relatively more steeply than it has from the beginning of the period described by the chart. The pulses group has gone through three peaks (late 2006, late 2009-early 2010 and mid-2012) that have led to successively higher base levels. (In the panel below, these groups are coloured to distinguish them from the rest.)

The eggs, meat and fish group has accelerated from about mid-2009, rising fairly steeply for about a year-and-a-half and then steadily thereafter. The vegetables groups shows the distinct cyclical nature of prices, with nine peaks erupting from a steady upward trend (the last being in mid-2012).

The other groups – fruit, milk, spices, tea and coffee – help us understand the causes for the overall rise in food price inflation experienced by the consumer and also the changing market prices for crops in the fibres (6 components) and oilseeds (11 components) groups. [You can get a zipped set of these charts here.]

RG_WPI_major_group_charts_20130410

Written by makanaka

April 10, 2013 at 16:40

Global trends to 2030 and the confusion of alternative worlds

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Global_Trends_2030-graph3The National Intelligence Council of the USA, earlier in 2012 December, released the latest Global Trends report, which is titled ‘Global Trends 2030: Alternative Worlds’. The Global Trends project is described as bringing expertise from outside (the American) government on factors of such as globalisation, demography and the environment. In the USA, the Director of National Intelligence serves as the head of what in America is called the ‘intelligence community’, overseeing and directing the implementation of the American National Intelligence Program and acting as the principal adviser to the President, the National Security Council, and the Homeland Security Council for intelligence matters related to national security. Specifically, the goal of the Director of National Intelligence is described as “to effectively integrate foreign, military and domestic intelligence in defense of the homeland and of United States interests abroad”.

Global_Trends_2030-icon1With that background, ‘Global Trends 2030: Alternative Worlds’ is the fifth installment in the National Intelligence Council’s series aimed at providing to the ruling regime of the USA “a framework for thinking about the future” by “identifying critical trends and potential discontinuities”. This 2012 report distinguishes between ‘megatrends’ (factors that will likely occur under any scenario) and ‘game-changers’ (critical variables whose trajectories are far less certain). Finally, to better explain the diversity and complexity of various factors, the 2012 report sketches out scenarios or alternative worlds.

Global_Trends_2030-graph4From our Asian point of view, ‘Global Trends 2030: Alternative Worlds’ has a most interesting section describing the middle classes, which the report says almost everywhere in the developing world are poised to expand substantially in terms of both absolute numbers and the percentage of the population that can claim middle-class status during the next 15-20 years. “Even the more conservative models see a rise in the global total of those living in the middle class from the current 1 billion or so to over 2 billion people,” said the report.

All the analyses reviewed by the authors of the ‘Global Trends 2030: Alternative Worlds’ suggest that the most rapid growth of the middle class will occur in Asia, with India somewhat ahead of China over the long term. According to the Asian Development Bank, if China “achieves the new plan target of increasing household expenditures at least as rapidly as GDP, the size of its middle class will explode” with “75 percent of China’s population enjoying middle-class standards and $2/day poverty will be substantially wiped out”.

The report does not make an attempt to link the impact of the rise of this middle-class with either one of the ‘mega trends’ described or two of the ‘game-changers’ described, which speak in a halting manner about the effects of over-consumption and galloping resource grabbing.

Global_Trends_2030-icon2‘Global Trends 2030: Alternative Worlds’ has conceded that “establishing the threshold for determining when someone is middle class versus climbing out of poverty is difficult, particularly because the calculations rely on the use of purchasing power parity”. In India the debate about who is poor is 40 years old and remains intractable – thanks mostly to the intransigence of central planners who still refuse to link the current cost of basics with current low levels of real income.

Instead, ‘Global Trends 2030: Alternative Worlds’ has forecast that most new members of the middle class in 2030 will be at the lower end of the spectrum. “Their per capita incomes will be still rated as ‘poor’ by Western standards even though they will have begun to acquire the trappings of middle-class status. Growth in the number of those living in the top half of the range of this new middle class — which is likely to be more in line with Western middle-class standards — will be substantial, rising from 330 million in 2010 to 679 million in 2030.

Global_Trends_2030-graph2Much of the future global leadership is likely to come from this segment,” said the report, raising a number of worries. Firstly, I would be loath to see any kind of leadership – political, economic or social – come from this segment as such leadership will strengthen, not diminish, the consumption patterns destroying our environment. Second, it is less the chasing of ‘Western’ per capita incomes we need and more the re-education of the middle-class to emphasise the virtues of ‘less’ and ‘small’ that is urgently needed.

More to the point, ‘Global Trends 2030: Alternative Worlds’ has forecast that with the expansion of the middle class, income inequalities — and the report says these “have been a striking characteristic of the rising developing states” — may begin to lessen in the developing world. This is astonishingly misread. Approximately a generation of economic liberalisation (which has gone under various names in different large countries) in India, China, Russia, South Africa, Brazil and Indonesia have proven the opposite.

Global_Trends_2030-icon3The report goes on in this befuddled vein: “Even if the Gini coefficients, which are used to measure inequalities, decline in many developing countries, they are still unlikely to approach the level of many current European countries like Germany and Finland where inequality is relatively low”. Again, a decade of ‘austerity’ under various guises (longer in Britain in fact, under Thatcherism) in Europe has created inequalities approaching the true levels seen in the BRICS and similar countries, and these have been camouflaged by welfare measures that are fast-disappearing and by community action. So this ‘Global Trends 2030: Alternative Worlds’ is flat wrong on these matters.

However, the report has made an attempt to infuse some social science into what is otherwise good news for the global consumer goods multinationals (and of course for the fossil fuel barons). “That said, a perception of great inequality will remain, particularly between urban- and rural-dwellers, motivating a growing number of rural-dwellers to migrate to the cities to seek economic opportunities. Their chances of becoming richer will be substantially greater in cities, but the increasing migration to urban areas will mean at least an initial expansion in the slums and the specter of poverty,” said the ‘Global Trends 2030: Alternative Worlds’ report. More interesting is the warning the report has issued, which is that if new middle-class entrants find it difficult to cling to their new status and are pulled back toward impoverishment, they will pressure governments for change. “Rising expectations that are frustrated have historically been a powerful driver of political turmoil.” Hear, hear. Remember the 99 per cent.