Since Bernie Madoff has put Ponzi schemes back onto the front pages, it's worth considering whether we are all complicit in the biggest Ponzi scheme of them all, the idea that the global economy can grow indefinitely.
I grew up on the idea that humanity would grow out into space, and that resources were for all practical purposes infinite. It may well be that in some possible worlds, that could still be true, but it's increasingly looking like we're going to be stuck here with only one world's resources to draw on. And while most reasonable people are aware that we're using up much of our children's inheritance, and handing them debt in exchange, I don't think as a society we've really come to grips with the consequence of that knowledge.
We're rather like the investors who were complicit in Madoff's scheme, playing along while the getting is good. At least some of us know that the game is rigged, but we're not going to be the first to blow the whistle.
It's clear that getting to a steady-state economy will be hard, perhaps even impossible (although it's worth noting that living systems have accomplished that feat.) But what a challenge! How do we keep the dynamism of modern capitalist economies without borrowing from the future? What does it mean to keep the real costs of what we consume on the balance sheet? Will the economy of the future be built on aesthetic value exchange (the whuffie of Cory Doctorow's imagination), with renewable energy in harness and physical materials seamlessly recycled. Great questions, great opportunities for us to invent the answers!Professional climate worrier Joe Romm starts to have an inking:
One of my New Year’s resolutions is to blog more about the general lameness of the economics profession when it comes to energy and climate issues [Note to self: How about losing a few pounds?].But he still can't resist people who get the wrong problem wrong, thus coming up with the right answer.
I was in the midst of putting this resolution off for a few weeks when I saw a quote by Robert Stavins that seemed to sum up the value-subtracted that economists bring to the world.
I know it is hopeless ask the media and policymakers to stop listening to economists, but if anyone can tell me of any intelligent thing a major economist has recently said on energy or climate other than Weitzman — (see Harvard economist disses most climate cost-benefit analyses) — or Stern (see Stern admits report “badly underestimated” climate change risks), I’ll cook them a soggy dinner.Weitzman at least has a point, albeit one I have been making for fifteen years.
Stern? Stern values the destruction of the biosphere in terms of lost productivity, and then twists the numbers a bit by artificially lowering the discount rate. Is this really the right way to think about preserving the viability of the Earth?
Anybody who values climate policy in terms of growth on a hundred year time scale that way should start over. As James Annan points out, why should we care whether our descendants are nine times wealthier than we or ten? What foolishness.
The game is over kids. Put the dice and the tokens away. It's time to get serious and clean up the house. Maybe we can play again later.