In 1772, the French philosopher Denis Diderot published a short, acerbic essay titled “Regrets sur ma vieille robe de chambre” (“Regrets over my old dressing gown”). Diderot cloaked his true subject, an ironic reflection on the fate of ageing philosophers, within a reflection on how the acquisition of a new silk robe to replace his old dressing gown led to a wave of further consumption, as the rest of his furniture and clothes seemed shabby by comparison.
“I was absolute master of my old dressing gown, but I have become a slave to my new one,” Diderot wrote. “Beware of the contamination of sudden wealth. The poor man may take his ease without thinking of appearances, but the rich are always under a strain.”
Much more recently, the anthropologist Grant McCracken coined the term “the Diderot effect” to describe this compulsion of spiraling consumption after the acquisition of a new possession. In simple terms, buying something new causes you to increase consumption of other things that you wouldn’t have needed before. You install a new kitchen in your house, and suddenly the rest of your home seems outdated, so you need to refit your living room, then bedrooms, etc, etc. You create unnecessary demand where there was none before.
I’ve long harbored the suspicion that something similar is happening with infrastructure development in Southeast Asia, particularly in the transport sector. You build an airport in one city that doesn’t need it, then other cities must have one as well. (Have you seen the new airport in Siem Reap in Cambodia? Answer: No. Almost no one has because almost no one flies in or out.) One province has a special economic zone (a dubious way of attracting investment), so every province needs an SEZ. After building new motorways and railways, Thailand and Cambodia now want to carve vast canals through their countries.
Most people know that the region is facing an “infrastructure gap.” Per one report from January, “to keep pace with development goals, Southeast Asia requires an average of $1.7 trillion annually in infrastructure investments. However, the region currently invests approximately $881 billion per year, leaving a significant shortfall.” I’m obviously not saying that much of this isn’t necessary, yet there does appear to be little serious thought as to whether all of it is strictly necessary – something that one hopes will change as Southeast Asian governments (and their citizens) are going to bear even more of the financial brunt of these projects moving forward. Try finding a study that assesses in detail whether a particular mega-project has had a cost-benefit after it was completed. There are almost none, most likely because once one project is done, everyone moves on to thinking that something similar is needed elsewhere.
The obsession with more and more infrastructure is understandable. It’s the fixation of Davos Man, so Western politicians and consultancies advise Southeast Asian governments that their economies would work better if people and goods can be moved more quickly and cheaper. There are also incentives for local elites. After all, there’s more kickbacks for government officials and their hangers-on from vast infrastructure works than, say, regenerative farms or teaching contracts. Infrastructure products naturally need a lot of land, so land speculation thrives, good for Southeast Asia’s rentier class.
However, the root cause appears to be an obsession with speed and cost. But it strikes me that the Laos-China railway’s ability to transport goods from Vientiane to Kunming a few hours quicker and perhaps a third cheaper doesn’t justify the $6 billion price tag, a significant chunk of which the Lao state has taken on as debt (which it cannot afford to pay back). That $6 billion probably would have been much better spent hiring thousands of teachers (local and foreign) and paying every Lao citizen aged 15-30 a small stipend to attend as many educational and vocational training programs as possible. Put me in charge and I’d have taken just 1 percent of that $6 billion and offered some of the world’s best academics, engineers, botanists and economists ludicrously high salaries to teach in Laos. If one takes a broad view of Laos’ economy, the main issue isn’t the ability to transport goods more cheaply, but the ability to manufacture goods and services that other countries actually want.
Up until now, at least some Southeast Asian countries could at least justify the potential waste on the grounds that someone else was covering many of the costs. If China is paying, why not fill your proverbial boots? Sure, plop another airport there! But Beijing’s funding is running out, and much of it has come in the form of loans anyway. Moreover, many of the projects haven’t even been finished. According to a report by the Lowy Institute last year, China plays a major role in 24 of the region’s 34 megaprojects valued at $1 billion or more, yet China’s infrastructure funding promises to Southeast Asia are falling short by more than $50 billion, most of which was “allocated to projects that have been cancelled, downsized, or otherwise seem unlikely to proceed.” The Lowy report also found that only 35 percent of China’s projects have been completed, compared to 64 percent of Japanese-funded ones.
After Siem Reap’s new, empty airport, Phnom Penh is soon going to get a brand-new one, even though the country’s tourism sector is on the skids – and that’s not because of the limited capacity of its airports, but because so many foreigners think the country is unsafe and scam-infested. What’s the biggest danger to Southeast Asian trade right now? Arguably, Donald Trump’s tariffs. But these aren’t a result of a lack of supply or inability to export or import goods quickly enough. How does Vietnam justify building a new $8.3 billion railway to China in an era when its largest export partner is going to punish it for importing goods from China?