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The Intergenerational Ponzi Scheme
Alex Steffen, 8 Mar 09

Kim Stanley Robinson makes some excellent points in support of the idea that in our current planetary crisis doing the right and doing the smart thing are by and large the same thing:

Am I saying that capitalism is going to have to change or else we will have an environmental catastrophe? Yes, I am. ... The main reason I believe capitalism is not up to the challenge is that it improperly and systemically undervalues the future. I’ll give two illustrations of this. First, our commodities and our carbon burning are almost universally underpriced, so we charge less for them than they cost. When this is done deliberately to kill off an economic competitor, it’s called predatory dumping; you could say that the victims of our predation are the generations to come, which are at a decided disadvantage in any competition with the present.

Second, the promise of capitalism was always that of class mobility—the idea that a working-class family could bootstrap their children into the middle class. With the right policies, over time, the whole world could do the same. There’s a problem with this, though. For everyone on Earth to live at Western levels of consumption, we would need two or three Earths [more like 5 planets if we mean middle class North American affluence- ed.]. Looking at it this way, capitalism has become a kind of multigenerational Ponzi scheme, in which future generations are left holding the empty bag.

You could say we are that moment now. Half of the world’s people live on less than $2 a day, and yet the depletion of resources and environmental degradation mean they can never hope to rise to the level of affluent Westerners, who consume about 30 times as much in resources as they do. So this is now a false promise. The poorest three billion on Earth are being cheated if we pretend that the promise is still possible. The global population therefore exists in a kind of pyramid structure, with a horizontal line marking an adequate standard of living that is set about halfway down the pyramid.

The goal of world civilization should be the creation of something more like an oval on its side, resting on the line of adequacy. This may seem to be veering the discussion away from questions of climate to questions of social justice, but it is not; the two are intimately related. It turns out that the top and bottom ends of our global social pyramid are the two sectors that are by far the most carbon intensive and environmentally destructive, the poorest by way of deforestation and topsoil loss, the richest by way of hyperconsumption. The oval resting sideways on the line of adequacy is the best social shape for the climate.

This doubling of benefits when justice and sustainability are both considered is not unique. Another example: world population growth, which stands at about 75 million people a year, needs to slow down. What stabilizes population growth best? The full exercise of women’s rights. There is a direct correlation between population stabilization in nations and the degree to which women enjoy full human rights. So here is another area in which justice becomes a kind of climate change technology. Whenever we discuss climate change, these social and economic paradigm shifts must be part of the discussion.

It's worth reading the whole thing yourself.

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Interesting, but if the end result of our massive consumption is the discovery of cheap, renewable energy ... wouldn't it all be worth it?

Scientific discovery is driven by the wealth created by capitalism. Research and development comes from the promise of future profit potential.

Posted by: AW on 8 Mar 09

The Roman Civilisation.

Posted by: passerby on 8 Mar 09

Man. Great stuff, Alex. Since the Madoff fiasco, I've been drawing some similar thoughts on the notion of Ponzi schemes turning up everywhere in our lives, economy and politics. Passing the buck and ignoring the debt until the whole thing falls apart.

I blogged about this here:

Increasingly, I think we might start understanding the environmental crisis as the social justice crisis that it is. A Copernican shift to place the health of people and planet at the center of our politics and economics-- as opposed to financial wealth-- is ultimately what's needed, I think.

Posted by: Scott Gast on 8 Mar 09

Raivo Pommer


Auf Druck der amerikanischen Steuerzahler, die AIG bereits mit etwa 180 Milliarden Dollar gestützt haben, musste der einst weltweit größte Versicherungskonzern offenlegen, wohin das Geld geflossen ist. Rund 100 Milliarden Dollar gingen an Kunden im In- und Ausland. Auch andere Banken, von denen es bisher hieß, sie seien gut durch die Krise gekommen, wie Goldman Sachs und Société Générale, sind wie die Deutsche Bank in den Genuss von mehr als elf Milliarden Dollar an AIG-Hilfen gekommen.

Ist das ein Skandal? Nein. Die Zahlen zeigen aber zweierlei: Erstens gibt es wohl auf der ganzen Welt keine größere Bank mehr, die nicht direkt oder indirekt von Staatshilfen profitiert. Ja, vermutlich würde es das ganze Bankensystem so nicht mehr geben, hätten die Regierungen nicht massiv eingegriffen. Dies ist aber - zweitens - gerade der Grund, weshalb Finanzkonzerne wie AIG und hierzulande die Hypo Real Estate gerettet werden.

Posted by: ben mosley on 16 Mar 09

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