On musing consumer-driven economy and growth...

Earlier today, I read an article on Wall Street Journal about how manufacturers in China are expanding their domestic market in China, in the hope of replacing the declining export market to developed countries like US and Europe.

Since I was a very little child, as soon as I'm aware of the concepts of economics, I have always wondered the notion of economic growth that is dependent on consumerism.

I started off with distaste for consumption due to unnecessary packaging. I had thought, how unnecessary and wasteful it is, to wrap a product so very nicely, only to be ripped up and thrown out when it's opened. I remember some 20 years back, Japanese products commanded a high premium over products made in other countries (except those with the "Made In Italy", "Made In France", "Made in USA", or "Made In England" labels). I would be the first to admit that the packaging of Japanese goods really were very nice. Over time, I find myself saving up quite some of the wrappings (eg. nice boxes that products are packaged in). One day, I have this epiphany, asking myself why these wrappings exist in the first place. They are completely and absolutely unnecessary. If they had not been saved (by me), thereby sitting in my room, they would be in the landfill, most of which might not be broken down for a hundred years. The more I think about it, the more ridiculous it becomes.

And then, there is the economic side of things. Granted that I don't study economics, I have some levels of understanding in terms of money supply, and others. (These days, most everyone can be a self-made economist, to some degree.) I have always been doubtful about the heavy reliance of consumptions and consumerism to prop up economic growth and expansion. As if on cue, this current financial crisis shows us all how global markets fall like dominoes, with the abrupt withdrawal syndrome of American consumers. In hindsight, it's always easy to say the obvious, that the show cannot go on forever, that American consumers (who borrowed to the max, bought on credits and later their property into some biggy banks for cash out, thereby fueling the property market bubble, until it all came crashing in late 2008) cannot possibly afford to keep spending and buying everything that the world made for them.

Which brings us back to the WSJ article on the inward focus of Chinese manufacturers on their domestic market now. Surely, stimulus from the Chinese government has helped propped up the market in China. How long can that last is anyone's guess. Still, my question remains: Now that Americans stop buying/spending/consuming, all eyes are on the Chinese market. Is that the only way that economies can expand on? Surely we know the growth engine for the next 20-40 years will be in India and China. But what happens next?

Does everyone have to keep throwing out our 2-year-old cell phone and buy new one, or thrashing their 3-year-old sedan for the latest model, in order for the economy to grow? Do we really need to extract all these precious natural resources from Mother Earth, then thrashing them like a kid onto his next new toy, just so that the economy keeps expanding? Is there any other way??