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The Bubble Economy: Is Sustainable Growth Possible?

Author

Listed:
  • Ayres, Robert U.

    (INSEAD)

Abstract
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.

Suggested Citation

  • Ayres, Robert U., 2014. "The Bubble Economy: Is Sustainable Growth Possible?," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262027437, April.
    • Handle: RePEc:mtp:titles:0262027437
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    Citations

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    Cited by:

    1. Wysokiński, Marcin & Gromada, Arkadiusz & Golonko, Magdalena & Trębska, Paulina, 2020. "Energy Intensity Of Economies In The European Union And The World," Roczniki (Annals), Polish Association of Agricultural Economists and Agribusiness - Stowarzyszenie Ekonomistow Rolnictwa e Agrobiznesu (SERiA), vol. 2020(2).
    2. Marcin Wysokiński & Bogdan Klepacki & Piotr Gradziuk & Magdalena Golonko & Piotr Gołasa & Wioletta Bieńkowska-Gołasa & Barbara Gradziuk & Paulina Trębska & Aleksandra Lubańska & Danuta Guzal-Dec & Ark, 2021. "Economic and Energy Efficiency of Farms in Poland," Energies, MDPI, vol. 14(17), pages 1-21, September.
    3. Ebeling, Francisco, 2022. "Can fossil fuel endowments steer economic development? Evidence from the linkages approach," Resources Policy, Elsevier, vol. 78(C).
    4. Garcia, Luis Enrique & Illig, Aude & Schindler, Ian, 2018. "Oil Cycle Dynamics and Future Oil Price Scenarios," TSE Working Papers 18-969, Toulouse School of Economics (TSE).
    5. Luis Enrique Garcia & Aude Illig & Ian Schindler, 2020. "Understanding Oil Cycle Dynamics to Design the Future Economy," Biophysical Economics and Resource Quality, Springer, vol. 5(4), pages 1-17, December.

    More about this item

    Keywords

    global economy; financial crisis; wall street; bubble economy; energy; environmental economy;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-

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