Ponzi Economics

Charles Ponzi is the namesake for a money-making swindle that was perpetrated in 1920. The so-called Ponzi Scheme involves promising very attractive payoffs to investors and then actually paying them off initially. Word-of-mouth spreads quickly and people soon come begging to invest. The subsequent investments are used to pay off early investors to fan the flames until it gets out of hand and the last ones to invest are left holding worthless paper.

The structure of this resembles a pyramid and similar ploys are called pyramid schemes. There are countless such examples which are often successful because it relies on human greed and general mathematical ignorance. There has been some talk lately that social security programs are actually legitimized Ponzi schemes. It is feared that by the time most of the present youth reach retirement there won't be much left since the ever surviving baby-boomers will have used up most of it.

I think such a scenario could very well play out but I would contend that much of the growth obsessed economics of recent years have been Ponzi schemes at heart. Corporate culture worships at the alter of growth. Stock values are based on discounted projections of future growth. If a company fails to project steady future growth then the stock of that company will drop even if it makes a healthy profit in the present. Someone once said that the view that infinite growth is possible in a finite world can only be held by a madman or an economist.

Ever larger populations are needed to fuel this promised growth. That's why it's not surprising that the Conservative friends of corporations are in bed with the Evangelicals and of course they're not using any condoms. Likewise gay marriage seems a complete waste of conjugal association to these people since it will not create any more consumers for us to peddle our sugar waters and SUV's. But to what end is this growth directed?

The Earth cannot sustain the vast Ponzi scheme that is presently under way. The West has enjoyed dramatic growth and reaped vast riches over the past century mainly by stripping the world of its resources and promising endless growth. Now that developing nations want to enjoy their own sustained growth we are telling them that there's no more resources left for them to exploit. They are the rubes at the bottom of the pyramid.

Fueled as it is by greed, it is unlikely that we can gain enough perspective to stand back and decide to change the game. Historically we have proved that there will not be any motivation to change until a crisis or crash occurs. Only then will we finally admit that unlimited growth may not be the best way to approach human wealth and begin to consider GPI over GDP.

When I was a child I remember being scared by a barrage of warnings about over-population. We never seem to hear that message any more because everyone is now addicted to growth. Our governments actually worry about our low birth rates because it keeps economic growth from being maximized. George W. Bush sides with increased immigration not because of soft-hearted altruism but because corporations demand it for continued growth.

Some people say that we needn't worry about over-population since Nature will eventually correct that. But that's precisely what I worry about because nature's preferred method of correction historically has been starvation. Make no mistake Nature will correct eventually but her plans might not include the human virus. I found an organization that advocates voluntary human extinction as the only path to save the Earth. While I wouldn't want to follow their approach I find it hard to argue with some of their logic.