Canada faces two deep-seated, increasingly debilitating economic weaknesses: chronically low productivity growth and a lagging transition away from carbon-based energy sources. Both arise from our poor performance harnessing technological innovation.
This research involves a system map of Nouriel Roubini’s argument that the world is heading into a Greater Depression.
A presentation at the Annual Conference of the Institute for New Economic Thinking, Toronto
Complexity science isn’t a fad. I will offer a brief survey of some core concepts and ideas, and I will make a strong case that . . . they can help us develop new strategies for generating solutions and prospering in this world.
Humanity has made great strides over the past 2,000 years, and we often assume that our path, notwithstanding a few bumps along the way, goes ever upward. But we are wrong: Within this century, environmental and resource constraints will likely bring global economic growth to a halt.
Physics was the master science of the 20th century. Ecology will be the master science of the 21st century.
Fear is bad, according to conventional wisdom. Our economy is in trouble, we hear, because banks are too afraid to lend and consumers and companies too afraid to spend. Less lending and spending further depresses the economy, which begets more fear. And to top it all off, some analysts irresponsibly exploit these fears for their own ends, by arguing that the crisis may get far worse before it gets better, and in the process sensationalize and exaggerate the problem.
But, in this case, conventional wisdom is wrong. The truth is that fear is good. The economic crisis we’re facing is not at root the result of too much fear but of too little.
In the worst case, deflation becomes its own cause. People become afraid their incomes might fall in the future. Or they see their savings being ravaged by the stock market collapse. So they stop spending and instead hoard their money. As demand for goods and services drops, companies’ profits plummet, leading to layoffs, reduced working hours, and yet more declines in stock prices. The fear of lost income becomes a self-fulfilling prophecy, and people cut their spending further. Once the downward spiral starts, it’s maddeningly hard to stop. People expect prices will keep falling, so they decide to put off their spending, because they think things will be cheaper in the future.
Most of us want to believe that our institutions are rational, durable and fair, directed by experts who have a grip on bedrock reality and understand how things work, who will take care of severe problems when they arise. The possibility that no one knows enough to protect us is terrifying, almost unthinkable.Now, as we’ve watched the deal-making in Washington, we’ve looked into the abyss of the unthinkable.
with Sarah Wolfe | Self-sufficiency isn’t a sexy idea. At best, people who say they’re interested in being self-sufficient are stereotyped as dour, old-fashioned rural-types. At worst, they’re seen as fanatical survivalists planning for an apocalypse. Economists also tell us that self-sufficiency is an anachronism. Instead, it’s specialization that produces wealth, and economies – including the world economy – produce the most wealth when everyone, including countries, specializes in what they do best and then trades their products for the other things they need. The more specialization, the more connectivity among specialists, and the more trade along those connections, the better.
But there are problems with this model.
