I attended and economic update last week. I attend these from time to time, as it is part of my job to understand what is going on in the economy. This one featured two economists from a large Canadian bank. As they were talking about the forecast for the price of oil, gold, silver and copper – my mind started wandering. The price structure of these commodities can help predict the future strength of the economy, the employment rate, interest rates. The economist told us that the price of silver was irrationally high, and that there should be a correction.
It left me feeling conflicted. Why will the price of silver come down? What is the true cost of silver, the true environmental cost? When I think of silver and gold now, I don’t see it as pretty sparkling piles. I think of the mine, the vast amounts of earth that must be moved to pull out tiny portions of precious metals. I think of the forest destroyed, the water used. I feel heavy. Why do we need all this silver and gold anyway? What is it all used for?
So the price of silver will come down, perhaps. Prices for gold, oil, copper, gas, food – these will also fluctuate on the global commodity markets. But all these things came from somewhere, somewhere from our Earth. Stuff was disturbed, even destroyed, to get them. I feel like I have an emotional investment in these things now. I cannot just talk about them nonchalant like this economist does, without thinking about where they came from. As he was talking, I find myself feeling sad.
He went on to say that the US economy will not be able to fuel global demand for consumer goods in the long term. Household debt is too high. Unlimited debt fueled spending is not sustainable. However, to get out of the recession, that is exactly what US consumers need to do. They need to start spending.
I don’t know the answers. Economists measure a healthy economy by growth in GDP. But what if we have reached our limits to growth? If the US cannot spend their way out of the recession, who is going to pick up the slack? Who is going to buy all the gadgets and gizmos that China makes?
Walking out of that session, I wished I had asked that question. Are there limits to growth – limits to how much consumers can spend, limits to the ability of the Earth to give up resources?
If there are limits to growth, what does the new economy look like?
What will be the new economic model?