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The Inflection is Near

You know something is afoot when respected and influential columnists for the NY Times are beginning to question the effectiveness of the growth model around which we have structured our economy over the last 50 years.

This column by Thomas Friedman notes, correctly, that the growth spurt of recent decades in industrialized countries has been almost entirely dependent upon a cheap supply of abundant energy – namely, fossil fuels. As the price of oil rises and supplies diminish in coming decades (perhaps years?), how will this change the way we live and interact with each other? We currently have not yet discovered any other energy source that even remotely rivals the many advantages of oil: cheap, easily transported, not too volatile, and abundant (until recently). 

As Friedman says, “We have created a system for growth that depended on our building more and more stores to sell more and more stuff made in more and more factories in China, powered by more and more coal that would cause more and more climate change but earn China more and more dollars to buy more and more U.S. T-bills so America would have more and more money to build more and more stores and sell more and more stuff that would employ more and more Chinese …”

These sentiments are reinforced by economist Jeff Rubin’s recent book Why Your World Is About To Get A Whole Lot Smaller: Oil and the End of Globalization. Interestingly, Rubin used to be one of CIBC’s most well-known economists, not exactly a wild-eyed radical, but firmly in the mainstream of the economics profession. Yet now even he is embracing the idea that our globalized economic system will change, not because of environmental crisis mind you, but because we simply don’t have the energy supplies to fuel the economic system we have built. Could the economy of the future see a return to local, community economies as it will no longer be economically feasible to ship goods halfway around the world? 

The renowned environmentalist, Bill McKibben, thinks so and his latest book Deep Economy: The Wealth of Communities and the Durable Future makes a convincing case for just this revitalization of community-based economics as the path to genuine prosperity and ecological sustainability.

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Categories: Economic growth
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