This blog is about the Law of Unintended Consequences.
It will report on occurrences of the Law of Unintended Consequence and also of Murphy's Law and other inconsequential matters.
I hope that my readers will add their stories that illustrate these, and similar, laws.
One of the most clear examples of this law in operation is "How the war in Iraq strengthened America's enemies" - Peter W Galbraith.
On some level, we are all afraid of failure. It’s a natural instinct to want to succeed, to be proud of your work, and…well, to be able to brag about your accomplishments at class reunions.
The sad truth is, into each life must come a little failure. Your project may tank in the 11th hour. Your novel may stall in the second to last chapter. It’s harsh, but true.
Still, before you chuck your failed efforts into the dumpster and head off for consolatory ice cream, you may want to think about the unintended consequences your efforts might yield.
In fact, some of the greatest inventions in history were created completely by accident. All were considered failures…except by the clever person who saw their potential and made a fortune repurposing that “mistake.”
Here are just a few examples of everyday items that might never had seen the light of day, if they had just stayed “failures.”
Penicillin: When Alexander Fleming was looking for his wonder drug to cure diseases, he probably never thought it would look like mold. Yes, had Dr. Fleming been a little more tidy and a little less innovative, he might have just cleaned the mold from a contaminated Petri dish he found. Instead, he noticed it was dissolving all the bacteria around it and investigated further. Voila! Wonder drug.
Pacemakers: Electrical engineer John Hopps was conducting research on hyperthermia when he discovered that if a heart stopped beating due to cooling, it could be started again by artificial stimulation. This led to the invention of the pacemaker, and countless lives have been saved ever since.
Microwaves: Percy Spencer of the Raytheon Company was conducting radar research with vaccuum tubes when he accidentally melted a candy bar in his pocket. He put some popcorn in his experiment, and thus was born the microwave popcorn industry.
Corn Flakes: What happened the last time you left a pot on the stove too long? When John Kellogg and his brother Will left a pot of boiled grain on the stove for several days, the resulting mess became the launching point for their famous breakfast cereal.
The Slinky: Naval engineer Richard Jones wasn’t trying to invent what is arguably the best toy ever (your opinion may vary – see Silly Putty). He was working on tension springs designed to monitor power on naval battleships when one of them fell to the floor. Killer Question from that moment: Is this fun or what?
The truth is, there is a very fine line between failure and inspiration. When you have the ability to look at a situation from a different perspective, ask a different question, there is no telling what sort of amazing discoveries you might make!
For more on the role of killer questions and how they can help create breakthrough innovation, readBeyond The Obvious.
If the following article's predictions do come true, then the world economy as we know it today will be destroyed as the unintended consequence. No trucks, freight trains, container ships, no major manufacturing facilities, no major hub warehouses. No truck and freight train drivers, no container ship crews, no depot warehousemen. No truck, freight train, container ship manufacturers; less construction workers and companies. I wonder ...
A SPECTRE is haunting the great container ship ports of China, with their highways jammed by lorries and the vast factory estates stretching from the coast of the South China Sea to the mountainous inland provinces.
It is the spectre of a revolution led by a quiet, software-driven 3D printer, a machine that can laser up layers of liquid or granular resin — or even cell tissue — into a finished product.
Some 3D printers are huge devices that make complete components such as aircraft parts. Others are small units that could stand next to a desk and create a small plastic prototype.
Maplin, the British electronics retailer, said last week it would start selling one for just £700. The Velleman K8200 will allow those who are so inclined to make simple objects — mobile phone covers, perhaps, or toys.
“The only restriction is your imagination. You can make whatever you want,” said Pieter Nartus, export manager at Velleman.
To visionaries in the West, the digital 3D printer promises to disrupt conventional manufacturing and supply chains so radically that advocates compare its impact to the advent of the production line, or the internet.
In China, whose big factories are thinking of using giant 3D printers for manufacturing, the technology does not seem to pose an immediate threat.
“It is on their horizon but it is not a factor right now,” says a British buying agent who sources plastics in China.
However, as Chinese leaders ought to know from their compulsory classes in Karl Marx, control of the means of production is everything. And if 3D printing takes off, production will come back to a place near you.
The implications, economists say, are limitless. No huge factories. No fleets of trucks. No ships. No supply chain. No tariffs. Few middlemen. Orders tailored exactly to demand, so no need for stock and warehouses. Just a printer, raw materials, software and a design.
The advantages do not end there. Because the item is “sintered” — created from a powdered material — to precise settings using a laser, there is no waste such as metal shavings. To customise a product, the user simply changes the software. An operator presses a button and the printer spits out the item.
“The first implication is that more goods will be manufactured at or closer to their point of purchase or consumption,” said Richard D’Aveni, a professor at Dartmouth College in America.
Writing in the Harvard Business Review, D’Aveni predicted the elimination of the long supply chain linked to a huge factory staffed by cheap workers and sited on the other side of the world.
It may be the most significant, if underplayed, article in that distinguished publication in decades.
Not surprisingly, 3D manufacturing has been dismissed by the boss of the biggest factories of them all, Terry Gou of Foxconn, which employs more than 1m Chinese workers making consumer electronics for Apple, Sony, Samsung, Nintendo and other household names in technology.
Foxconn has used some elements of industrial 3D printing for three decades but Gou says it is commercially impractical for mass production.
“3D printing is a gimmick,” he told reporters in Taiwan, where Foxconn is based. “If it really is that good, then I’ll write my name backwards from now on.”
Foxconn and its clients are still smarting from publicity over a chain of suicides at the company’s vast plants, where young employees live under heavy security and work to a strict management regimen on the production line.
Conditions on Chinese assembly lines, as in Bangladeshi garment workshops, have long concerned advocates of workers’ rights.
But it may not be the workers who ultimately overthrow the system. The use of 3D printing implies a transformation that persuades hard-headed economists such as D’Aveni that companies like Foxconn might just become obsolete.
“China has grabbed outsourced manufacturing contracts from every mature economy by pushing the mass-manufacturing model to its limit,” he wrote. “It not only aggregates enough demand to create unprecedented efficiencies of scale but also minimises a key cost: labour.
Watch a demonstration of the £700 Velleman K8200 printer, on sale at Maplin
“Under a model of widely distributed, highly flexible small-scale manufacturing, these daunting advantages become liabilities. No workforce can be paid little enough to make up for the costs of shipping across oceans.”
According to the British buyer, who provided a cost breakdown on a commercially confidential basis, a Chinese factory typically gets between 6p and 7p from a plastic product sold in Britain for £1. That includes its labour costs and profit.
Raw materials, shipping and ground transport add 24p to bring the landed price at a port in southern England to 31p.
The product will sell to the retailer for about 45p, handing the wholesaler a profit of 14p. The retailer marks the product up to £1 but the Treasury helps itself to 20p VAT, leaving the retailer a profit of 35p.
In the brutal war for margin amid volatile commodities and currencies at the bottom end of the market — where China has carved its niche — the numbers tell their own ominous story. In a world of 3D manufacturing, the classic supply chain makes no commercial sense.
“China won’t be a loser in the new era,” D’Aveni argued in the Harvard Business Review. “It will have a domestic market to serve . . . and its domestic market is huge. But China will have to give up on being the mass-manufacturing powerhouse of the world.”
China, of course, is not sitting still. It is eagerly buying western 3D printing technology and making its own lightweight machines to sell to consumers. The ministry of industry and information technology has already allocated £20m to fund 10 research centres and set up a group of 40 participating companies.
In May, Beijing hosted the World 3D Printing Technology Industry Conference. Luo Jun, head of a Chinese trade body, told the state media that the domestic 3D industry will generate about £1.1bn in revenues within three years.
Luo Zheng, sales manager of Renishaw, a Shanghai company, said Chinese firms were at present forced to buy large industrial printers made in Britain at a cost, he said, of about £650,000 each.
Nor has China yet mastered the complex chemistry of 3D inks and resins, so it is dependent on imports.
However, observers who have spent many years watching how China operates in world markets don’t expect such dependence to last.
Caixin, a business magazine, reports that a mechanical engineering professor at Tsinghua University, Yan Yongnian, first brought American 3D technology to China in the 1980s.
This year a research team at Beijing University, led by Wang Huaming, a professor of materials science and engineering, won an award for 3D innovation in aviation components from the State Council, China’s cabinet. The country’s military aviation industry is already using the technology. It is employed in making the J-16 fighter and the next-generation J-31, according to Huanqiu, a website linked to the Global Times. Scientists have used it to make critical load-bearing titanium components, including strengthened landing gear for planes that will be operating from aircraft carriers.
In June, Dalian University of Technology in northeast China unveiled the world’s largest 3D printer. According to Professor Yao Shan of the university, the industrial-grade machine also uses a cheaper form of print material that can cut operating costs by 40%.
In the medical field, researchers at Shining 3D Tech, a company based in Zhejiang province, showed off an artificial disc implant that can fuse with human cell tissue to avoid rejection. The company predicts that one day the technology could be used to manufacture human skeletons from cell tissue and biomaterial.
So there is no doubt about China’s scientific, engineering and intellectual commitment to 3D manufacturing.
However, it is a fundamentally different concept in China. To the Chinese, it is an industrial tool to be used in making more things to sell.
To western economies that are hooked on cheap imports with a huge carbon footprint, it could be a means of transformation — perhaps even an agent of de- industrialisation.
That conceptual divergence has led to a tone of complacency in some quarters in China. “Some western media said 3D technology will benefit the West, help American industry recover and attack China’s position as the factory of the world,” said Jia Jinjing, a management researcher, before adding: “I do not support this view.”
In an interview with a Chinese magazine, Environment and Livelihood, Jia said: “3D can make only a single-material product and it cannot print electronic components. Therefore 3D technology will not have a big impact on Chinese manufacturing.”
In the West, one very important person disagrees. In February, President Barack Obama declared that 3D technology could “guarantee that the next revolution in manufacturing is made in America”.
The fate of thousands of companies and millions of employees in the two biggest economies will depend on who is right.
This week, millions of high school students in China will take the dreaded gaokao, the country’s college entrance exam. It’s much more important than the SAT: Admission to most Chinese colleges is based wholly ongaokao scores, and if a student performs poorly, he or she has to wait a full year to have another shot. Because there are more college graduates than good jobs in China, if you don’t go to one of the leading universities, the chances of getting a stable and secure job after graduation are precarious. A bad gaokao score can seal your fate.
Last Friday, I had dinner with Yu Xiubo, a Chinese scientist in Beijing, and his son Raphael, who is studying electrical engineering at a state university in the U.S. and was back in China for summer break. It’s rare to get to talk to a father and son together about the changing aspirations of two different generations in China, and while every family’s story is singular, theirs seemed particularly interesting at the beginning of this very important week of gaokao.
Raphael’s decision to pursue college in the U.S. began with his low score on the gaokao. (On the topic of China’s tightening job market for college graduates, the state-runGlobal Times newspaper has just published this depressing chart.)
Raphael didn’t have to tell his parents his score. His father retrieved it online the day scores were released in late June 2011. For a student at one of Beijing’s top high schools, his score was very disappointing. Worse, he had flopped the science section—because he budgeted time poorly, he says, not because he didn’t know the answers. His only option was to enroll at a far-flung university in northeastern China, with little chance of getting back to a job in Beijing, where his parents live and where he had, until then, imagined his future.
Instead of fretting about it, Raphael, who is clearly a very bright, extroverted, and resourceful young man, spent his next year enrolled at a university in the northern city of Harbin and focused on learning about the admissions process for U.S. colleges. A growing number of high school students in China are now skipping the gaokao and applying directly to overseas universities, and Raphael had some friends who had been through the process. (Currently, one in four foreign university students in North America hail from China; enrollment by Chinese students has risen steeply over the past decade.)
In mainland China, there is no testing site for the SAT, so Raphael went to Hong Kong. Of the 10 colleges he applied to in the U.S., he was accepted by two—and he selected the one in the more bucolic setting, befitting his idea of what college in America should be. At his university, fully half of the international students (5 percent of the total student body) are from China.
The awareness of how much his family is spending on his college education—financial aid is generally not available to overseas students—has changed his perception of what he should do next. “I have to make my education pay off,” he says. Instead of aiming for a job in Beijing, he’s now hoping to work in Silicon Valley. He’s been following the news about visa-policy debates in the U.S. and thinks his decision to pursue a degree in a STEM field (science, technology, engineering, mathematics) helps his chances to get a green card. Eventually, he hopes to help his family apply for residency in the U.S. “My No. 1 goal is to do better in life than my father,” he says. “My father brought the family to Beijing, and I will bring the family to America.”
If one of the main unintended consequences of the war on drugs is to increase criminality and the trafficking of drugs, will removal of the prohibition lead to a better world? Or will it have its own unintended consequences?
In an open letter, former Latin American leaders call for legal regulation to help undermine organised crime
After more than four decades of a failed war on drugs, calls for a change in strategy are growing louder by the day. In Latin America, the debate is positively deafening. Statesmen from Colombia, Guatemala, Mexico and Uruguay are taking the lead for transformations in their own drug regime, which has set a strong dynamic of change across the region and around the world. Their discussion has expanded to the US, where public opinion toward regulation is also changing.
For the first time, the majority of Americans support regulated cannabis for adult consumption. Nowhere has this support been more evident than in Colorado and Washington, states that recently approved new bills to this effect. This shift in public opinion presents a direct challenge to the US federal law, but also to the United Nations drug conventions and the international drug policy regime.
The Global Commission on Drug Policy, building on the call for a paradigm shift formulated by the Latin American Commission on Drugs and Democracy, has called loudly for precisely these kinds of changes since 2011. Twenty global leaders have highlighted the devastating consequences of repressive drug policies on people, governance and economies not just in Latin America, but around the world.
Our flagship report – War on Drugs – sets out two main recommendations: (i) replace the criminalisation of drug use with a public health approach, and (ii) experiment with models of legal regulation designed to undermine the power of organised crime. By brokering a genuinely global conversation on drug policy reform, we broke a century-old taboo.
The OAS-backed study proposes four possible scenarios for future drug policy reflecting an emerging consensus across Latin America. Fortunately, none of the scenarios call for the status quo. Most experts endorse the first three scenarios – the shift from repressive approaches to ones that privilege citizen security, the experimentation with different approaches to regulating illegal drugs, and the strengthening of community resilience. Obviously, all serious leaders agree that the fourth scenario, the threat of creating narco-states, is to be avoided at all costs. Taken together, the report represents the first comprehensive treatment of drug policy reform from a multilateral organisation.
The OAS study sets out complementary, rather than mutually excluding paths. They are based on the realistic expectation that demand for psychoactive substances will continue to exist over the coming decade and that only a small proportion of users will become dependent. In fact, many states are already decriminalising drug use and experimenting with cannabis regulation, while also investing in harm reduction programmes including the medical supply of harder drugs. Rather than causing problems as predicted by their critics, they are generating positive and measurable results.
The OAS and countries across Latin America are positively contributing to the breaking of the taboo that blocked for so long the debate on more humane and efficient drug policy. It is time that governments around the world are allowed to responsibly experiment with regulation models that are tailored to their realities and local needs. The leadership demonstrated by President Santos and the OAS secretary general is welcomed. But the report is just the start – leaders across the Americas need to take this study seriously and consider how their own policies can be improved. In doing so, they will be breaking the vicious cycle of violence, corruption, and overcrowded prisons and will put people's health and security first.
Fernando Henrique Cardoso
former president of Brazil, chair
Cesar Gaviria
former president of Colombia
Ricardo Lagos
former president of Chile
George P. Shultz
former Secretary of State, United States, honorary chair
Paul Volcker
former Chairman of the United States Federal Reserve and of the Economic Recovery Board
Louise Arbour
former UN High Commissioner for Human Rights, President of the International Crisis Group
The future of jobs? Robots assembling Tesla sports cars in California. Photograph: Paul Sakuma/AP
Suddenly a robotised, automated economic reality is moving off the science fiction pages and into daily life. The growing use of unmanned battlefield drones is encouraging the growth of pilotless commercial aircraft – the first ever flew in British airspace last month. Google's driverless car is completing ever more trials ever more successfully: the world's major car companies are all hot in pursuit, working on their own prototypes of their own versions. The automated checkouts at supermarkets are becoming as familiar as bank cash machines. From staff-free ticket offices to students who can learn online, it seems there is no corner of economic life in which people are not being replaced by machines.
This is the "Great Reset" – a cull of broadly middle-class jobs with middle-class incomes that is apparent across the west, but with little current sign of what industries and activities will replace them.
The world has lost millions of jobs before – on the land or in the old horse-powered economy – but they were soon replaced by jobs in the car industry or the new service industries. What worries many economists and computer scientists is that today's technologies are going to remove people from economic activity completely. Some argue that a dystopian world is emerging in which good jobs and full-time employment will become the preserve of an educated, computer-literate elite. For example Apple, Facebook, Amazon and Google are plainly riding the new wave, but they are not mass employers like Tesco, Ford or General Motors.
Moshe Vardi, a computer scientist at Rice University, asks if we are ready for a world in which half the adult population does not work. The Great Reset – the economy resetting itself, after a major technological shock, to deliver jobs for all – may never happen.
The omens are all around. The US economy has never generated so few jobs in an upturn since records began. In Britain, the Resolution Foundation charts the ongoing squeeze on low and middle incomes, and observes brutally that already Britain has the second highest proportion of low-paid jobs in the developed world. The formal unemploymentnumbers, now ominously rising five years since the crisis began, do not capture the full extent to which the economy is not delivering good work.
Plainly some of the explanation is that the economy is still reeling from the effect of the financial crisis and the accompanying vast overhang of private debt. But economies have an embedded resilience. Output will return to the levels of 2008, probably some time next year. There will be an economic "recovery". But this raises the question: what happens afterwards?
Think through the implications of the driverless car. These will be vehicles whose complex sensors allow them to communicate with one another, so that they know one another's intended route. One of the reasons Google is investing so much is that whoever owns the communications system for driverless cars will own the 21st century's equivalent of the telephone network or money clearing system: this will be a licence to print money. The benefits are endless. Roads will both be able to carry more traffic and be safer. Personalised door-to-door transport will become hugely pleasurable: your car will deliver you to your home or place of work and then park itself without you. Road accidents will plummet. Energy efficiency will be transformed. Insurance rates, even the need for insurance, will plunge. Personalised transport, ordered by your mobile phone, will gradually replace mass transport networks.
But the implications for employment are awesome. Thomas Frey, senior futurologist at the DaVinci Institute, lists taxi-, bus- and truck-driving as soon-to-be-extinct occupations – along with traffic police, all forms of home delivery and waste disposal, jobs at petrol stations, car washes and parking lots. The cars themselves will be made by robots in automated car factories. The only new jobs will be in the design and marketing of the cars, and in writing the computer software that will allow them to navigate their journeys, along with the apps for our mobile phones that will help us to use them better.
Professor Larry Summers, former US treasury secretary, thinks that the challenge of the decades ahead is not debt or competition from China but the dramatic transformations that technology is bringing about. Summers believes that the transition to the automated economy that robotisation implies has only just begun. The invention of 3D printing, in which every home or office will be equipped with an in-house printer that can spew out the goods we want – from shoes to pills – anticipates a world of what Summers calls automated "doers". They will do everything for us, eliminating the need for much work. The only jobs will be in writing the software and building the "doers", creating a bifurcation of the labour market that is already discernible.
At least Summers sees some underlying economic dynamism. For techno-pessimists such as economist Professor Tyler Cowen the future is even darker. It is not only that automation and robotisation are coming, but that there are no new worthwhile transformational technologies for them to automate. All the obvious human needs – to move, to have power, to communicate – have been solved through cars, planes, mobile phones and computers. According to Cowen, we have come to the end of the great "general purpose technologies" (technologies that transform an entire economy, such as the steam engine, electricity, the car and so on) that changed the world. There are no new transformative technologies to carry us forward, while the old activities are being robotised and automated. This is the "Great Stagnation".
That is a very lopsided view of the future with little recognition of the opportunities. The growth of transformative technologies is not tailing off: as scientific knowledge explodes and crosses new boundaries, they will accelerate. The 21st century will witness more technological and scientific advance than in the last 500 years. The pace of change is certainly accelerating – business models today already become obsolescent in less than 20 years, and that figure is going to fall further. But human demands are infinite. Notwithstanding robotisation and automation, I identify four broad areas in which there will be vast job opportunities.
The first is in micro-production. There is going to be a huge growth in micro-brewers, micro-bakers, micro-film-makers, micro-energy producers, micro-tailors, micro-software houses and so on who will deploy the internet and micro-production techniques to produce goods at prices as if they were mass-produced, but customised for individual tastes.
The second is in human wellbeing. There will be vast growth in advising, coaching, caring, mentoring, doctoring, nursing, teaching and generally enhancing capabilities. Medical provision will explode, with replacement organs, skin and limbs opening up new specialisms and industries. Taste, sight and hearing will be vastly enhanced. Ageing will be deferred, with old-age advisers offering advice on how to live well in one's hundreds. Geneticists will open up a live-well economy. Instantaneous language translation will break down language barriers.
The third is in addressing the globe's "wicked issues" . There will be new forms of nutrition and carbon-efficient energy, along with economising with water, to meet the demands of a world population of 9 billion in 2050. Space exploration will become crucial to find new minerals and energy sources. New forms of mining will allow exploration of the Earth's crust. The oceans will be farmed.
And fourthly, digital and big data management will foster whole new industries – personalised journalism, social media, cyber-security, information selection, software, computer science and digital clutter removal.
Doubtless the futurologists can come up with more: the truth is, nobody knows. What we do know is that two-thirds of what we consume today was not invented 25 years ago. It will be the same again in a generation's time. What is different is the pace of change, obsolescence and renewal – and new dangers of extraordinary inequality not just in wages, but in working possibilities. Firms and individuals will be on their mettle to open up, innovate and constantly reinvent themselves. If there is to be a successful Great Reset, Britain will need the open innovation structures, financing mechanisms and social support institutions to capitalise on the opportunities quickly, rather than be overwhelmed by the risks.
This is what threatens our future, our living standards, and this is what we should be arguing about – not the European Union, despite the efforts of Ukip and the Conservative party. Those whom the gods wish to destroy they first make mad.
Nobody but Kim Jong-un knows what he hopes to achieve with his saber-rattling campaign, but the young North Korean leader probably didn't set out to aid the United States, the sworn enemy of three generations of Kims, at the expense of his country's main ally, China.
In a boon for U.S. policy that can only add to China's frustration with Kim, North Korean bellicosity has helped reinforce an American strategy of rebalancing its security policies toward the Asia-Pacific region.
To a China that often sounds more wary of Washington than of Pyongyang, months of North Korean missile and nuclear tests followed by a daily stream of bloodthirsty war threats may be worrisome, but the U.S. reaction is even more troubling.
"We understand what kind of regime North Korea is, but we also understand that North Korea is playing games," said Sun Zhe, director of the Center for U.S-China Relations at Beijing's Tsinghua University.
"Most importantly, we are complaining that the United States is using military drills as an excuse to continue to do this (rebalancing), putting up B-2s and other advanced weapons systems," he said.
B-2 and B-52 bombers, radar-evading F-22s and anti-missile system vessels like the USS John S. McCain represented the initial U.S. response to North Korea's repeated, explicit threats to launch nuclear strikes against the United States.
The UK passed a law several years ago allowing lawyers to charge on results rather than a fee based on time spent. Unfortunately, amongst many other unintended consequences is this one.
Insurers have called for a clampdown on fraudulentwhiplash claims which they say are driving up the cost of motor cover for honest motorists.
Rear-end shunts often result in costly claims for whiplashPhoto: ALAMY
The Association of British Insurers (ABI) said the UK was now the "whiplash capital of Europe", with one out of every 140 people claiming for a whiplash injury each year.
It said the activities of ambulance chasing lawyers and claims management firms, as well as staged "cash for crash" accidents, were driving up the number of claims.
Whiplash occurs when the soft tissue in the spine is stretched and strained following a sudden forceful movement, such as being hit from behind in a car.
But it is often difficult to diagnose, while it is easy to fake or exaggerate, making claims for the injury a target for fraudsters.
Around 1,200 whiplash claims are made in the UK every day, six times more than the number of people who claim for workplace related injuries each year.
From http://www.guardian.co.uk/world/2013/feb/05/fbi-us-gun-control-record-number-buying
More than 2.4m gun background checks were initiated in January, topped only by last December's 2.7m
in
'America is crazy for guns,' says Pam Bosley, mother of a young student shot dead in Chicago. 'We love guns more than life.' Photograph: Elaine Thompson/AP
Americans are lining up to buy guns in unprecedented numbers in the wake of the Newtown school shooting and the debate around tightening gun controls, with federal background checks on prospective buyers running at record levels.
New figures released by the FBI show that 2,495,440 gun background checks were initiated in January. That is the second highest number since records began in 1998, and is exceeded only by the entry for December 2012, which reached a peak of 2,783,765.
The Times: "Just as America’s booming shale gas industry has helped to wean the country off an unhealthy dependence on imported Middle Eastern oil, a new national addiction is emerging — to the Indianguar gum on which the industry depends.
Soaring demand for guar from US oil companies — whose apparently insatiable appetite stems from its use in making the drilling fluids used in the process of hydraulic fracturing or “fracking” for shale gas — triggered a 374 per cent surge in Indian exports between January 2011 and January 2012.
With 80 per cent of global production of guar — which means cow feed in Hindi — India has a near monopoly on the bean, a fact that has led to a bonanza for Indian farmers who witnessed a ninefold increase in prices during 2012. “The price increase has been just astronomical,” says Naveen Mathur, commodities analyst at Angel Broking in Mumbai.
For decades, apart from cow feed, powdered guar has been used as a thickener in toothpaste, pet food and ice cream, but global demand has mushroomed in recent years because oil companies such as Halliburton and Schlumberger have required huge quantities for use as a thickening agent in the fluid needed to squeeze shale gas out of rock formations deep underground.
Almost overnight, guar has become India’s biggest agricultural export, shipments of which were worth $4.9 billion between April and January 2012, roughly double the value of the country’s exports of basmati rice and cotton combined.
Like the Texan oil booms of the 19th century, the guar rush is having a similar effect on the desert state of Rajasthan, where most of it is grown and where some farmers have earned more in a single season than the previous ten put together.
Guar beans, which are milled and powdered to produce gum that is eight times more viscous than cornstarch, grows only in rare climatic conditions — arid areas watered by intermittent but heavy monsoon rains.
But the huge surge in prices and exports has prompted some to ask whether the boom can last.
As Indian farmers frantically plant new areas to meet demand, US oil scientists in Houston are desperately trying to come up with synthetic alternatives, such as carbon methyl cellulose, which could rival guar on both price as well as efficacy.
Others are trying to develop new strains of guar that can be grown in different climatic conditions.
So far, they have not managed to do so — and India’s guar boom looks set to continue.
