Climate

The Global Economy Is A Ponzi Scheme: Black Friday, The Pope And The Paris Climate Talks

CREDIT: AP

Black Friday has become an orgiastic celebration of unbridled consumerism.

Last year, the Pope warned world leaders that “unbridled consumerism” was assaulting the natural environment “and this will have serious consequences for the world economy.” In his powerful June climate encyclical, the Pope went further, writing of “extreme consumerism” and “compulsive consumerism” and “an unethical consumerism bereft of social or ecological awareness.”

The “pace of consumption,” the Pope asserts, “can only precipitate catastrophes.” Francis offered this blunt warning:

“Obsession with a consumerist lifestyle, above all when few people are capable of maintaining it, can only lead to violence and mutual destruction.”

Black Friday has become a sort of reverse “Hunger Games,” an annual ritualized competition, but one built around overabundance, rather than scarcity. It is perhaps the inevitable outcome of a country whose citizens are commonly referred to as “consumers.”

So with the Paris climate talks just days away, what better time to think about how the global economic system is a Ponzi scheme.

A Ponzi scheme, such as the one Bernie Madoff ran, is “a fraudulent investment operation where the operator … pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator,” as Wikipedia notes. It is unsustainable because it “requires an ever-increasing flow of money from new investors to sustain the scheme.” Eventually people catch on, and the whole thing collapses.

Our current global economy is a Ponzi scheme in this sense: It is an utterly unsustainable system that effectively takes wealth from our children and future generations — wealth in the form of ground water, arable land, fisheries, a livable climate — to prop up our carbon-intensive lifestyles. To avoid collapse, we must rapidly transition to a sustainable low-carbon economy.

We cannot stop catastrophic climate change — in the long term and possibly even the medium-term — without a pretty dramatic change to our overconsumption-based economic system. We have already overshot the Earth’s biocapacity — and the overshoot gets worse every year.

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“A quarter of the energy we use is just in our crap,” physicist Saul Griffith explains in his detailed discussion of our carbon footprint. You can watch the MacArthur genius award winner soberly dissect his formerly unsustainable lifestyle here.

Or you can read the Onion’s black humor, “Chinese Factory Worker Can’t Believe The Shit He Makes For Americans.”

The tragic irony is that much of this holiday shopping is supposedly for our kids — and yet this overconsumption is a core part of our climate inaction, which, as President Obama has said, “would betray our children“!

Now it’s true, as I’ve said, that if we ever get really serious about avoiding catastrophic climate change, we could dramatically cut national and global emissions for decades under the auspices of our basic economic system. You could use a high and rising price for CO2 plus smart regulations to encourage efficiency at a state and national level.

Also, the end to hyper-consumerism is not something amenable to legislation. It is most likely to come when we are desperate — when the reality that we are destroying a livable climate is so painful that we give it up voluntarily, albeit reluctantly, like a smoker diagnosed with early-stage emphysema. Bill Clinton didn’t become vegan until after he experienced serious heart trouble — twice.

Climate science is clear that inaction is suicidal. That’s why “virtually all” climatologists “are now convinced that global warming is a clear and present danger to civilization,” as Lonnie Thompson has put it.

That’s why a stunning 2012 World Bank climate report warned that, “A 4°C [7°F] world can, and must, be avoided’ to avert ‘devastating’ impacts,”

“The choice is a clear one. We can continue acting as if tomorrow will be just like yesterday, growing less and less prepared for each new disaster as it comes, and more and more desperately invested in a life we can’t sustain,” as an Iraqi war veteran, explained in a 2013 New York Times op-ed. ” Or we can learn to see each day as the death of what came before, freeing ourselves to deal with whatever problems the present offers without attachment or fear.”

Tom Friedman interviewed me for a NY Times column on this subject, six years ago:

“We created a way of raising standards of living that we can’t possibly pass on to our children,” said Joe Romm, a physicist and climate expert who writes the indispensable blog climateprogress.org. We have been getting rich by depleting all our natural stocks — water, hydrocarbons, forests, rivers, fish and arable land — and not by generating renewable flows.

“You can get this burst of wealth that we have created from this rapacious behavior,” added Romm. “But it has to collapse, unless adults stand up and say, ‘This is a Ponzi scheme. We have not generated real wealth, and we are destroying a livable climate …’ Real wealth is something you can pass on in a way that others can enjoy.”

The adults, in short, are not standing up. Sadly, most still haven’t even taken the time to understand that they should.

And so every generation that comes after the Baby Boomers is poised to experience the dramatic changes in lifestyle that inevitably follow the collapse of any Ponzi scheme, a point that bears repeating on Black Friday.

In our version of a Ponzi scheme, 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.

See also the study “The Monetary Cost of the Non-Use of Renewable Energies,” which finds that “every day we delay substituting renewables for fossil fuels,” every day “fossil raw materials are consumed as one-time energy creates a future usage loss of between 8.8 and 9.3 billion US Dollars.” Oil and coal are essentially too valuable to burn even ignoring the cost of their climate-destroying emissions.

We aren’t all Madoffs in the sense of people who have knowingly created a fraudulent Ponzi scheme for humanity. But given all of the warnings from scientists and international governments and independent energy organizations over the past quarter-century — it has gotten harder and harder for any of us to pretend that we are innocent victims, that we aren’t just hoping we can maintain our own personal wealth and well-being for a few more decades before the day of reckoning. Après nous le déluge.

Certainly the upcoming Paris climate talks are an important step to take us off the road to unimaginable 11°F warming, but we will need to do a great deal more for decades to come to avoid catastrophic 7°F warming. Switching off of coal and onto carbon-free sources of energy is an essential first start. But we are still going to have to end our hypermaterialism to avoid collapse.