Why the Global Economy Is a Ponzi Scheme and We Are All Bernie Madoffs

By Joseph Romm, Climate Progress. Posted March 10, 2009.

Yes, homo “sapiens” sapiens have constructed the grandest of Ponzi schemes, whereby current generations have figured out how to live off the wealth of future generations. Yes, we are all in essence Madoffs (many wittingly, most not) or at least his most credulous clients. What comes next will be the subject of a multipart series.

I had been planning to write something on this for a while when NYT columnist Tom Friedman interviewed me for “The Inflection Is Near?” which appears in today’s New York Times:

“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.”

A few years ago I thought that aggressive action by governments around the world to push clean energy could spare the public dramatic lifestyle changes in the coming decades, but I have been convinced otherwise by

• the failure of U.S. leadership [thank you George W. Bush and the conservative movement stagnation]
• the remarkable shift in our understanding of climate science in the past two years (here, here, and here)
• China’s decision to join the Ponzi scheme full throttle and emulate our rapaciousness (see here and here), and
• a recent, brilliant talk I heard (a teaser for a future post).

The adults, in short, are not standing up. Sadly, most haven’t even taken the time to understand that they should (see “Most opinion leaders just don’t get global warming“).

And so 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 (see “The greatest thing by far is to be a master of metaphor”), but for me a central organizing narrative of how to think about the fix we have put ourselves in (see How Lincoln framed his picture-perfect Gettysburg Address, 4: Extended metaphor).

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