GreenHeart Global

The common understanding amongst the modern world is that no matter how much garbage we throw at it, the planet can absorb it, and no matter how many resources we use up, there will always be more. Unfortunately, this is a false understanding that will come to light in the very near future. This is why we’re now facing climate change and shocking 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 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.

Barash points out that “Americans have used up as much of the earth’s mineral resources since 1940 as all previous generations combined; and in the process, in the last two centuries the country has lost half of its wetlands, 95 percent of its old-growth forests, and 99 percent of its tall-grass prairies. Nor are those trends uniquely American or simply a result of advertising-driven consumerism: Over the last three decades, to take just one example, the pace of soil loss in Africa has increased twentyfold, with topsoil disappearing 20 to 40 times more rapidly than it is being replaced.” Often, our Ponzi scheme derives less from proactive attempt to rip off Mother Nature but more in a largely innocent effort to get ahead, or merely to stay alive. But pyramid schemes aren’t sustainable. Eventually they fail. It isn’t possible to keep recruiting a never-ending supply of suckers.

Economy and Ecology follow the same fundamental principles. And one of that growth and development are finite. This naïve assumption of an infinite, resource rich environment is dangerous and it must be addressed. If we keep taking value that our environment provides we will soon see this “infinite” supply of resources diminish.

One great point he makes is the illusion that once we find other resources, this problem will be void. He says, “let’s imagine, say, that tomorrow someone discovers a source of cheap, pollution-free, and inexhaustible energy. Even that extraordinary advance wouldn’t diminish the fundamental Ponzi-nature of economic activity; it would, for example, be cheaper to build and operate cars, home appliances, and so forth, which in turn would increase the demand for doing so, thereby increasing the rate at which nonrenewable resources used in their construction are consumed.” The main point here is that it is not a matter of resources; it is our way of thinking that needs to change.

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?”