Read: “Is the global economy a Ponzi scheme?”

23 Jul 2010

Uncharacteristically, Joe Romm pulls a punch in the title of his blog post, “Is the global economy a Ponzi scheme?”

So here’s his answer: Definitely yes.

In an earlier post, I pulled from a Thomas Friedman column a quote from Romm on this idea, so I was happy to run across a post where Romm expands on the idea.

The global economy is a Ponzi scheme, or pyramid scheme, because of how we’re using up nonrenewable resources like oil and forests—and making the planet worse off:

In our case, investors (i.e. current generations) are paying themselves (i.e. you and me) by taking the nonrenewable resources and livable climate from future generations. To perpetuate the high returns the rich countries in particular have been achieving in recent decades, we have been taking an ever greater fraction of nonrenewable energy resources (especially hydrocarbons) and natural capital (fresh water, arable land, forests, fisheries), and, the most important nonrenewable natural capital of all — a livable climate.

There’s a huge amount at stake, he says: “every generation that comes after the Baby Boomers are poised to experience the dramatic changes in lifestyle that inevitably follow the collapse of any Ponzi scheme.”

“This global Ponzi scheme is not just a metaphor…, but for me a central organizing narrative of how to think about the fix we have put ourselves in.”

He compares all of us with Bernie Madoff—although he does give us a little bit of credit, since most of us didn’t realize what we were doing. But that doesn’t excuse active denial of the evidence—and the people holding the levers of power should be aware of the evidence. If they come before Congress and say “we didn’t know,” they’ll be even less believable than the tobacco CEOs.

“Madoff is reviled as a monster for targeting charities,” Romm says. “We are targeting our own children and grandchildren and on and on. What does that make us?”


books I've read on failure & grace

The World Without Us
The Last Oil Shock: A Survival Guide to the Imminent Extinction of Petroleum Man
A Paradise Built in Hell: The Extraordinary Communities That Arise in Disaster
Hell and High Water: Global Warming--the Solution and the Politics--and What We Should Do
The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl
The Tipping Point
Three Cups of Tea: One Man's Mission to Promote Peace... One School at a Time
The Upside of Down: Catastrophe, Creativity and the Renewal of Civilization
Out of Poverty: What Works When Traditional Approaches Fail
The Little Ice Age: How Climate Made History, 1300-1850
Confessions of an Eco-Sinner: Tracking Down the Sources of My Stuff
Deep Economy: The Wealth of Communities and the Durable Future
The Geography of Bliss: One Grump's Search for the Happiest Places in the World

Mason's favorite books »