The global economy has become increasingly, perhaps
chronically, unstable. Since 2008, we have heard about
the housing bubble, subprime mortgages, banks ''too big
to fail,'' financial regulation (or the lack of it), and
the European debt crisis. Wall Street has discovered
that it is more profitable to make money from other
people's money than by investing in the real economy,
which has limited access to capital--resulting in slow
growth and rising inequality. What we haven't heard much
about is the role of natural resources--energy in
particular--as drivers of economic growth, or the
connection of ''global warming'' to the economic crisis.
In The Bubble Economy, Robert Ayres--an economist and
physicist--connects economic instability to the
economics of energy. Ayres describes, among other
things, the roots of our bubble economy (including the
divergent influences of Senator Carter Glass--of the
Glass-Steagall Law--and Ayn Rand); the role of energy in
the economy, from the ''oil shocks'' of 1971 and 1981
through the Iraq wars; the early history of bubbles and
busts; the end of Glass-Steagall; climate change; and
the failures of austerity. Finally, Ayres offers a new
approach to trigger economic growth. The rising price of
fossil fuels (notwithstanding ''fracking'') suggests
that renewable energy will become increasingly
profitable. Ayres argues that government should redirect
private savings and global finance away from home
ownership and toward ''de-carbonization''--investment in
renewables and efficiency. Large-scale investment in
sustainability will achieve a trifecta: lowering
greenhouse gas emissions, stimulating innovation-based
economic growth and employment, and offering long-term
investment opportunities that do not depend on risky
gambling strategies with derivatives. |
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