“No, No, No, Don’t Follow Us” - Friedman 11/4/07

What happens if India’s population starts driving at a rate close to that of America? I’m not sure of all of the consequences, but I agree with Friedman in thinking that it just isn’t likely to be a net postive. The factor driving (pun intended) this issue is the release by Tata Motors of India of a new $2,500 car, which will make a personal automobile a reality for millions of Indian families. It is hard to be the judgmental American on this issue, but developing nations need to understand that this is one area where America’s development model is very seriously flawed. In many ways the USA and China are in better form to handle this new domestic oil demand than India, because both of the former have significant reserves and domestic production. India, however, imports more than 70% of its oil and has virtually no strategic reserve. This means that as oil prices continue to increase and Indians continue to buy more $2,500 cars and thus increasing demand, India will see a larger percentage of its’ wealth shipped to the oil rich countries of the world.

This issue is awash in environmental concerns, both for India and the world as a whole. Additional issues include, India’s economic health, trade surplus, and perhaps the biggest cost, which ties all of these concepts together – the opportunity cost of Indian innovation working on a major problem of the world. Friedman is a champion of Indian innovation, and it is difficult to argue against the following thought:

“If it applied itself to green mass transit solutions for countries with exploding middle classes, it would be a gift for itself and the world... To do that it must leapfrog. If India just innovates in cheap cars alone, its future will be gridlocked and polluted. But an India that makes itself the leader in both cheap cars and clean mass mobility is an India that will be healthier and wealthier. It will also be an India that gives us cheap answers to big problems – rather than cheap copies of our worst habits.”

It would be wonderful if the world started solving the developmental problems that the American model of development has perpetrated. I am mostly concerned with this logic in the fact that if the Indians solve the issue, I’m not convinced America will take to it. We love our cars -- $100 barrel oil, despotic regimes, and declining discretionary income be damned. Until Americans are ready to make some sacrifices in giving up their single occupancy vehicles, we aren’t going to solve our transportation issues – but I guess there is hope for the rest of the world.