Monday, 28 December 2009

The American Ponzi Scheme

The Economist double Christmas edition was full of interesting articles to read over the holiday ranging from an analysis of modern politeness to climate change and forests. Looking backwards, the Economist provides an excellent commentary on the developments that have brought society to where it is. Inevitably a conventional economic view prevails. A focus on economic methods and economic outcomes has been a successful recipe - if rising GDP is the measure of success. Some of us have started to see that a globalized world of ever rising GDP and ever rising consumption is a Ponzi scheme that must eventually collapse. Conventional economics is weak on the tools and concepts to break out of the problems that the word will encounter in the coming decades.

The Economist wrote about America under the title ‘A Ponzi scheme that works’. In the article, The Economist explained that ‘immigrations keeps America young, strong and growing’. It quoted the view of an American think-tank (the New America Foundation) that the US population could grow to 1 billion by 2100. For a country that is already over consuming resources at a rate that is 100% greater than its ecological capacity, this seems impossible. Now, America could reduce consumption to the average European level to live within the capacity of the resources within its own borders. A population of 1 billion will need to walk on the planet with very small ecological boots. The Economist has chosen its words well – Ponzi schemes always appear to be sound until they collapse and the underlying logic is exposed as a scam.

I am not accusing the US of knowingly running a scam, but the US needs to learn that it is in the midst of a Ponzi scheme of huge proportions. It would be better to spear it now, than to await the reckoning that must follow later this century. I admire America, and many Americans, but the American way is not the direction for the world to follow.

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