Guest Post by Charles Pierce: Financial Crisis and ERE

Tuesday, I posted an introduction by Charles Peirce of his book, “Economics for a Round Earth”. Today, I have another guest post by Charles talking about the current economic situation.

In ‘Economics for a Round Earth’ it will seem that the world economy must be put in some kind of strait-jacket. This is opposite to the prevailing ‘wisdom’ of recent decades, that what the world needs is free-wheeling unregulated free markets. The current financial crisis shows what happens when this ‘wisdom’ is applied to a limited world where the pressure of the limits is bearing down ever more strongly.

The drive for ever more consumption in a world of limited resources gave rise to the problems which formed the economic environment in which ‘Economics for a Round Earth’ was originally written – stagflation, high unemployment, high levels of debt. Now it has given rise to the current financial crisis. Vast amounts of money which can now never be repaid, were lent so that people could keep their consumption levels high and rising. The huge scale of this crisis, and the unprecedented financial irresponsibility that helped create it, are a warning sign of how the world’s limits are becoming impossible to ignore as we have continued to ignore them.

In the current presidential election in the United States, it may be irrelevant which party or person wins, since whoever becomes president will be constrained in their policy choices by the nature of the problems to be faced and the limited range of options available in dealing with them. What will be important will be the nature of the person who becomes president. If Governor Palin were to be elected vice-president and subsequently, by way of a sad event, become president, she is young, energetic, confident, articulate and attractive, which might be more important than her perceived political biases and values. Obviously Senator Obama is a person of similar qualities. Either of them would be as good as the other in this situation.

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