The sound bites and news clips from politicians and economics meisters of the world about the Greek debt crisis—seemingly the epicentre of the current economic turmoil—defy logic. To avoid defaulting on its debt, Greece needs more bailout money. Without it, say the financial experts, Greece will be bankrupt.
Isn’t needing to borrow more money just to pay the interest on your existing loans a definition of bankrupt?
Last weekend, the G20 met in Washington. Soon after that, Canadian Prime Minister Harper, Finance Minister Flaherty and Bank of Canada Governor Mark Carney conferred—a “historic” meeting.
What links all these? Their common goal: restoring economic confidence. The turmoil in the stock, commodity market and currency markets is causing a lack of confidence among consumers and investors; without confidence, we don’t buy stuff. And if we don’t buy stuff, the factories and shipping lines around the world grind to a halt, which leads to a recession, which leads to job losses, so we consumers won’t be able to ... buy stuff.
Other than Somalia, there are no major famines in the world. Food shortages are typically caused by war, crime or grossly unjust distribution of wealth. In the West, obesity is a greater problem than hunger.
The point is, there is enough of what everyone needs to go around. There is enough food for everyone in the horn of Africa; the challenge is in getting it to them.
Even if a recession were to quell factories in China, India, Mexico and North America, even if workers were unemployed, I doubt there would be mass starvation. There would just be more debt.
The other side of the debt coin, as Margaret Atwood pointed out, is that someone is lending all this money.
Something that no one ever mentions is that there is a lot of money that somebody wants to lend, even at ridiculously low interest rates. In North America, at least, it’s easy for almost anyone to get a credit card. The capacity to produce money and goods of all kinds is huge.
Perhaps part of the problem now is that the economy produces more than we can consume. That would explain rising obesity rates.
Forty years ago or so, the Club of Rome published a book called Limits to Growth. It predicted that the world’s economy could only grow so much until it depleted Earth’s resources. The book was pooh-poohed by those in power. But maybe the Club of Rome was just looking at the question from the wrong end: maybe the problem isn’t the limit of production, but of consumption.
No one needs a new iPhone, big-screen TV, diamond-encrusted watch or SUV. But if we all want to have comfortable retirements, we have to make sure other people keep consuming at the level they used to. Or we have to change our dreams.
In the 40s and 50s, science fiction author Frederick Pohl wrote a series of satiric stories about the problem of over-production: in the future, the economy produces so much that people use robots to consume the over-production of other robots. In this particular dystopia, the upper classes don’t have to consume as much, while the lower classes are plagued with consumption quotas.
Like hand-held communicators, lasers and space travel, this may be one science-fiction ideas that could come true.
What do you think?