Ponzi vs. environment – who wins?

The following is borrowed and adapted from greenheartglobal blog

The common understanding amongst too many movers and shakers in our modern world, and those who blindly follow them, is that no matter how much garbage, pollution and climate altering gases we throw at it, the planet can absorb it - the natural systems of biodiversity will absorb the impact of our expansionism without damage and no matter how many resources we use up, there will always be more. Unfortunately, this is a grossly false understanding, the consequences of which will increasingly bite us in the very near future - not that the nibbling hasn't already started... This is why we’re now facing climate change and looming environmental devastation, resource shortages, famine etc.

David P. Barash’s, from The Chronicle of Higher Education had a very interesting article discussing how our relationship to the environment is akin to a Ponzi Scheme.

He makes the case that modern civilization’s exploitation of the natural environment is not unlike the way Madoff exploited his investors, predicated on the illusion that it will always be possible to make future payments owing to yet more exploitation down the road: more suckers, more growth, more GNP, based on the fraudulent idea of hope.

Here is a photo of the man after whom Ponzi schemes are named.

Here is the Wikipedia definition of a Ponzi Scheme to give you some context:

A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned. The Ponzi scheme usually offers returns that other investments cannot guarantee in order to entice new investors, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors in order to keep the scheme going.

The system is destined to collapse because the earnings, if any, are less than the payments. Usually, the scheme is interrupted by legal authorities before it collapses because a Ponzi scheme is suspected or because the promoter is selling unregistered securities. As more investors become involved, the likelihood of the scheme coming to the attention of authorities increases.

When you have read and digested this definition, see how closely the basic modus operandi of a Ponzi scheme matches that of the ideology of unending, ever-expanding economic growth. This is what our entire civilisation has been based on since the industrial revolution. Everything we know, every mainstream way of doing things is based on a set of beliefs that have passed their “use-by” date. Try reading “Collapse” by Jared Diamond to get an idea of how stupid humans can be in large numbers. To those who scoff at the idea that we could ruin the environment sufficiently to sabotage our civilisation – GET REAL!! Diamond’s book clearly shows that societies have done this very thing many times in the past at their local level. It’s just that now we’re again headed the same way but on a much larger scale that is entraining the whole planet.

Greenheart global finish off by saying:

Economy and Ecology follow the same fundamental principles. And one of those is that growth and development are finite. The naïve assumption of an infinite, resource rich environment is dangerous and must be addressed… It is widely assumed that a healthy, clean environment is affordable only when a country’s economy is strong. The reality is precisely the opposite: A strong economy is possible only when the environment on which it depends is healthy and strong. A related reality is that endless growth is literally impossible, for economies no less than for organisms, just as Ponzi schemes that depend on an endless supply of new subscribers are certain to be unsustainable. No one is innocent, and no one gets off the hook.

In the end, “we are also Ponzis and Madoffs who profit from economic schemes that are fundamentally unsustainable and thus, in the deepest sense, frauds. Madoff eventually got 150 years in the slammer and worldwide derision. What’s in store for the rest of us?”