On the Anti Coca Cola Movement in India
I attended a talk a few days back by Sandeep Pandey. He is the founder of Asha for Education, an organization in which I am a proud and active volunteer. Sandeep currently runs an Ashram near Varanasi in U.P. For the last few years he has become less and less involved in Asha’s basic education related activities, and has become a more strident activist, deeply involved in organizations like the National Alliance of People’s Movements (NAPM), the anti Coca Cola movement, etc. He spoke on three topics – (1) the anti-Coke movement, (2) the Right to Information (RTI) movement, primarily in Hardoi district in U.P., and (3) his Indo-Pak peace march. I am an ardent supporter of the RTI movement in India, and it was heartening to listen to Sandeep’s account of how they have succeeded in improving the level of transparency and accountability of the govt. at the Panchayat level. Regarding Sandeep’s Indo-Pak peace march I think it is a hopeful and well-intentioned but completely futile effort.
Sandeep’s talk on the anti-Coke movement gave me much to think about. I have to say that on this issue I disagree substantially with Sandeep, a person for whom I nevertheless have immense respect for having started Asha – with its emphasis on basic education – as well as for his many other activities (such as the RTI movement mentioned above).
Ostensibly the main problem is that Coke draws too much underground water at its bottling plants, thereby depleting the water resources of the local people. However I don’t think this is the real issue, because if it were so then the solution would be fairly simple: work out an arrangement whereby Coke compensates the community for the water that it utilizes, and does it in a sustainable manner, for example by requiring Coke to recharge a minimum amount of groundwater through rainwater harvesting, or requiring Coke to pay some money for the water it utilizes, etc. In other words, if the real concern was water usage, the movement would have been about how to build a better bottling plant that utilizes water in a sustainable manner, or more generally about what rules and regulations need to be developed regarding water usage by industrial units. That, however, is not the goal of the movement. Its goal is simply to shut down Coke (and Pepsi) bottling plants. The real motivation for the movement – at least as far as Sandeep Pandey is concerned – seems to be a strong dislike/distrust of multinational corporations like Coke and Pepsi, and the international trade agreements and arrangements that allow such companies to function. Thus the anti-Coke movement – as articulated by Sandeep Pandey – appears to have become part of the very vigorous anti-globalization movement, which is unfortunate because at the core there may indeed be a legitimate grievance, which is now lost in the anti-globalization rhetoric. It seems to me that the only reason that Coke and Pepsi are targetted - and not other industrial units that may well use similar amounts of water - is that these companies are very visible and fit into the anti-globalization worldview of "big bad multinationals ruining the earth".
The following are some of the specific accusations made by the anti-Coke movement, and my thoughts on those.
- Coke is depleting water resources. Many kinds of industrial and farming activities use substantial quantities of water. In general water usage in India – in farming, in industry, and by individuals for sanitation, recreation, etc. – is bound to increase as the population increases, and as people’s quality of life improves. Surely the answer to this is to use better technology and better water management principles in order to better utilize available resources in a sustainable manner. This should include more efficient usage of water (for example Coke should work to reduce the amount of water it needs to produce each gallon of Coke), better recycling, better irrigation techniques, etc. It should also include developing a regulatory mechanism with these goals in mind. The answer cannot be to abandon modern industries and move towards a pre-modern economy.
- Coke is harmful as it contains pesticides. This may be true, but this is simply because the water that Coke uses in India contains pesticides. Clearly Coke does not buy pesticides from pesticide manufacturers and pour them into Coke bottles. It uses water that is locally available and probably it does some purification of the water, in spite of which some pesticides remain. The real problem - one that needs to be tackled seriously – is the presence of pesticides in the water supply. Targeting Coke for the presence of pesticides in the water supply seems unreasonable. After all, not only Coke but all water-based drinks that use the same water source have pesticides in them – lassi, nimbu pani, etc. Does it make sense to target tea/coffee shops because pesticides, which come from the water and milk they use, are found in the tea/coffee they serve ? In many cities in India, there is quite a lot of air pollution from vehicle exhausts, etc., but does it make sense to blame window manufacturers or ceiling fan manufacturers for bringing polluted air to people ?
- Coke increases unemployment by taking jobs away from individuals selling lassi, nimbu pani, etc. According to Sandeep Pandey’s analysis, a Coke plant produces 250,000 liters of soda per day and employs 500 workers; meanwhile an individual producing and selling traditional drinks can make 100 liters per day, and so it takes 2,500 workers to match Coke’s 250,000 liters per day. According to this analysis, in order to employ 500 people, Coke has displaced 2,000 people. This analysis is absurd since it totally neglects the benefits of increased productivity and economic growth. Of course Coke employs far less people to produce an equivalent amount of soft drink than traditional drink makers. But this is entirely because Coke’s technology and management systems allow for much greater productivity, which is a good thing. In general Coke (and other modern soft drink makers) pays its employees higher salaries than traditional drink makers could, and it can do so because of the higher levels of productivity that it brings to the soft drink industry. On the whole, this is a good thing because workers in the soft drink industry can now earn a much better living than was possible in the traditional soft drink industry. The key question is this: is the total economic activity generated by Coke greater than that generated by the traditional soft drink makers it replaces. If the answer is yes (which I think it is), then Coke is good for the Indian economy as a whole. Economic theory says that economic growth through increased productivity will eventually lead to more (and better) employment. Of course a serious problem still remains: many individuals who lose their jobs may not be able to take advantage of the better economic opportunities that become available, and the better jobs being created may be taken by other individuals. Individuals who suffer thus must be taken care of by society since society as a whole benefits from increased productivity and better jobs. Education is critically important for such individuals to take advantage of new opportunities in a growing economy. It can be easily shown that the problem of unemployment can never be solved by artificially enforcing inefficiency. For example in the above analysis it is said that a traditional soft drink maker makes 100 liters of soft drinks per day. If the govt. were to enforce laws that no drink maker can make more than 1 liter per day, would the employment in the traditional soft drink industry increase 100-fold ? Surely not. If the solution to the unemployment problem were so simple, there would not have been any unemployed people anywhere in the world today! Consider another example: the auto industry. Say a modern car factory produces 50 cars per month per employee. A hundred years back say a car factory produced 1 car per month per employee. As per Sandeep Pandey’s flawed analysis above, one would expect the auto industry a hundred years ago to have had 50 times as many employees as the auto industry today. Obviously this is not so. On the contrary, the auto industry today employs more people than it did 100 years ago because productivity has increased and the economy has expanded.
I am not claiming that Coca Cola is an angel, or that it is driven by anything other than the profit motive. So proper regulations and oversight are necessary. But at the same time India benefits from the technology, the management and logistics expertise, as well as the new energy and ideas that Coke, Pepsi, etc. bring into the country. To quote the famous economist Prof. Jagdish Bhagwati "economics is addressed heroically to showing how man's basest instincts, not his noblest, can be harnessed through appropriate institutional design to produce public good." Civil society groups are needed to play an active "watchdog" role, and to highlight the plight of those individuals who have been negatively affected. But the anti-Coke movement's demand to shut down bottling plants and its unwillingness to negotiate with Coke go too far. It is an act of cutting off one's nose to spite one's face.