The US Election — Are We Forgetting Something?
Unless you live in a cave high in the Himalayas, you will be aware that the US presidential election is looming in November. Much of the world is concerned about the possibility of a return of Donald Trump, while Kamala Harris has not yet revealed enough depth of her policies across various key issues, such as climate change, the economy, foreign policy and resource scarcity to provide assurance she is capable of taking the top job. Most people are very familiar with the first three election issues, but who is getting serious about the fourth?
Consumer spending statistics indicate where primary resources end up as finished goods. Below is a list of the largest consumer markets in the world according to data from the World Bank. The countries are sorted by their household final consumption expenditure (HFCE) which represents consumer spending in nominal terms. The US has held the top position for several decades, if not longer.
Now look at the population for each of these 20 countries and as you can see it tells a vastly different story. In the coming decades, the above statistics will shift dramatically.
Today, China is the largest middle-class market globally, with over 900 million people. Together with India, consumers are spending over $22 billion per day.
The middle-class population in China is expected to increase in the following years, and it is projected to grow by almost 6%, reaching over 1.2 billion people by 2030. Middle-class spending share in China is currently over 83% with the remaining 17% allocated to other consumer income groups. By 2030, it is projected to increase by over 4%.
Compared to China, India’s middle class is more dynamic since it is expected to have a growth rate of 8.5% until 2030. Today, the middle-class population in India is almost 400 million people. By 2030, the Indian middle class is expected to reach over 800 million people. This means that there is substantial momentum in India. The middle-class spending share in India is currently over 70%. By 2030, the spending share of India’s middle class is projected to reach over 80%.
Politics and Policy
There is no doubt governments and policymakers acknowledge the growing emergency of resource scarcity. For example, the impact of increasing prices for materials does not bode well for affordable housing. Now, there are a lot of factors that contribute to material pricing beyond the dynamics of supply and demand based on access to primary raw materials. However, as the world’s population continues to grow, so too will the pressure on affordable housing and the materials houses are made from.
In 2019, the Indian government released a draft of their National Resource Efficiency Policy. The report reviews seven industry sectors: automotive, plastic packaging, building and construction, electrical and electronic equipment, steel and aluminium and the solar voltaic sector. Under building and construction, the report states, “ A new construction (including repair) may lead to waste generation in the range of 45 to 50 kg/sqm, however, demolition can lead to waste generation of 425 kg/sqm. India’s annual consumption of sand is estimated at 750 million tonnes, while 350 million m3 of soil is used mostly for the manufacturing of clay-fired bricks. Annually 2 billion tonnes of stones are used for making aggregates.
Further 242 million tonnes of limestone is consumed in cement plants to manufacture 297 million tonnes of cement a year. A substantial share of the new demand can be met using the waste of the existing stock. For resource resource-efficient construction sector, companies need to manufacture sustainable construction products from recycled materials. Dependence on virgin materials needs to be gradually reduced and enhanced reuse of the construction and demolition wastes needs to be adopted.”
At this stage, India and China’s use of resources has nothing to do with the upcoming US presidential election, however, it serves as a reminder of the pressure on primary raw materials in a region with a growing middle class. The use, reuse and reprocessing of primary and secondary raw materials will, eventually, move up the ladder for officials involved in foreign policy. After all, foreign policy is how a country uses different strategies to guide its relationships with other countries and international organisations.
This means that foreign policy is made up of different global issues, relationships with other countries, and even domestic politics. The foreign policy of the U.S. government may change between different presidential administrations.
The Growing Trend Towards Reshoring in the US
Kearney’s 11th (2024) annual Reshoring Index (KRI) concludes that as reshoring and nearshoring activity increase, “Made in America, for America” is much more than an election year bumper sticker. In fact, it describes the foreseeable future of industrial manufacturing in the Western Hemisphere.
This year’s KRI (Kearney’s Reshoring Index) research found American, Canadian, and Mexican nearshored and reshored industrial production efforts continuing to take market share away from manufacturers in LCCRs (Low-Cost Countries and Regions) — including mainland China.
US imports from 14 Asian LCCRs declined by $143 billion, from $1,021 billion in 2022 to $878 billion in 2023. The majority of the drop in Asian LCCR imports was caused by a 20% (or $105 billion) reduction in Chinese imports (see figure above).
The trend towards reshoring and near-shoring reduces a much deeper risk of dysfunctional economies from (1) war; or (2) another pandemic; and (3) encourages more self-reliance and management of primary and secondary raw materials, which in turn creates a resilient domestic economy.
The Circular Rs for Textiles in the US
In late August 2024, the California Senate passed a negotiated version of the Responsible Textile Recovery Act of 2024 (Senate Bill 707), and the bill next heads to the California Assembly. If signed by Gov. Gavin Newsom, the bill would mandate an extended producer responsibility (EPR) program for clothing, apparel or other textile articles as defined by lawmakers.
The opening paragraph of the bill indicates reuse will be emphasised, stating reuse “…minimizes generation of hazardous waste, generation of greenhouse gases, environmental impacts, environmental justice impacts and public health impacts.” While reuse can extend the life of a product, the bill’s authors also say apparel that ultimately is discarded will need to be recycled into secondary products.
However, the bill includes considerable text focusing on secondhand retailing and online marketplaces while only briefly mentioning reprocessing discarded items into new fabrics or materials.
Regarding materials processing, the bill states in part that “… the actions and investments needed to avoid [PFAS and other chemical] contamination in the recycling process and available end markets for recycled material that cannot be remanufactured into textiles or textile articles in California“ must be included in the PRO plan.
The nonprofit California Public Interest Group (Calpirg) describes the bill as one “ that would tackle clothing waste by establishing a statewide clothing recycling program paid for by clothing companies .”
“By making companies pay for their own waste, we can encourage them to be more conscious of their output,” Calpirg Legislative Advocate Fiona Hines says. “We are hopeful this nation-leading bill will reduce clothing waste and lead us toward a future where we produce quality clothes that we can repair and reuse longer and recycle when they reach their end of life.”
There is no doubt we shall see a dramatic shift towards secondary raw materials management. However, it cannot be solely driven by regulations or, supposed, circular entrepreneurs, who have little understanding of the textile industry and resource management as they focus on profits and may fall into a potential trap of circular (green) washing. We must also be mindful that consumers are critical to the overall outcome of a responsible circular textile system to evolve.
Yet, despite all the evidence, the rising cost of primary raw materials and the obscene amount of waste we generate, resource management has not entered the mainstream narrative. Resource management lags far behind the two other global crises of climate change and biodiversity loss. The primary raw materials we extract and use drive all economies around the world but it is a conversation we seem to ignore. Even a degrowth economic model will require the use of primary raw materials and will generate end-of-use-cycle items.
As a keen follower of the US Presidential elections, political strategy is everything. In April this year, President Biden announced an Executive Order to reduce student debt. In June, there was the promise to find a new path for undocumented spouses of U.S. citizens. In these two cases — and a long list of other executive actions — Mr. Biden’s promises of progress and relief have been stymied by aggressive legal challenges led by conservative activists, lawmakers and Republican state attorney generals.
“Republicans and far-right Supreme Court justices are doing everything possible to harm our borrowers and obstruct the student debt cancellation they demand and deserve,” said Representative Ayanna S. Pressley, Democrat of Massachusetts, in a recent statement.
Really, Ms Pressley? Or is it an example of a strategy that sets up the Republicans to be the bad guys? Surely President Biden and his cohort of lawyers would have known the Republicans would scuttle these two initiatives along with other Presidential executive orders that have not seen the light of day. The timing, in an election year, could not have been better. Which is what politics is all about. Strategy.
Conclusion
Despite China’s rise as an economic and military power, the US election still matters as the largest consumer of resources in comparison to other countries with far larger populations. Soon other countries and regions will begin to demand more share of primary raw material wealth. After all, there is only so much to go around.
The Covid 19 pandemic rocked the globalised supply chain boat exposing our vulnerable underbelly. The shift towards reshoring and near-shoring is a strategy to maintain economic stability. The growing middle class in China and India is sending warning signals for these countries to recognise the urgency of improving resource efficiency, after all, many current and future politicians’ careers will depend on it.
Hopefully, California’s Responsible Textile Recovery Act of 2024 will be signed into law and so begins an increasingly targeted approach to managing at least one category of end-of-use-cycle items — textiles. Domestically, it may make good politics for some, how mainstream and middle America takes to managing textiles in a country whose economy is based on vast amounts of consumption is yet to be seen. More importantly, consumers may wonder why they need to manage textiles. Surely, we have come to the end of using the environment as the sole reason for responsible behaviours.
A globalised world brought us wealth and in some countries reduced poverty. But, it came at a very steep price. Foreign policy will slowly adapt to the new world order of resource management although it will not bring world peace. And, finally, no matter what happens with resources, politics will always remain politics and there is no getting away from political strategy in the quest to maintain power.
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Ms Adrienna Zsakay is the Founder and CEO of Circular Economy Asia Inc., and this article represents her opinions on the circular economy. Circular World Pick of the Week is brought to you by Circular World™ Media — a brand owned by Circular Economy Asia Inc.
For all the best content, join one of the fastest-growing circular economy groups on LinkedIn — Circular Economy Asia.
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References
‘China vs. India — Where is the momentum in consumer spending?’ from World Data Lab
‘Made in America: Here to stay?’ by Patrick Van den Bossche — Partner, Omar Troncoso — Partner, Shay Luo — Partner and Karthik Rai — Consultant, published by Kearney, 2024
‘What is Foreign Policy?’ published by the National Museum of American Diplomacy
‘California apparel EPR bill moves forward’ by Brian Taylor, Senior Editor, published by Recycling Today, 29 August 2024.
‘With Court Victories, Conservatives Push Back on Biden Policies’ by Hamed Aleaziz and Michael D. Shear, published by The New York Times, 29 August 2024.
Originally published at https://www.linkedin.com.
