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?”