The Greatest Depression

The so-called Great Recession that has dogged the world for the past two years has reminded us just how quickly our well-laid plans can be turned upside down when economic forces turn ugly. Suddenly, our jobs are at risk, our homes threatened and our retirement savings halved. For millions of families in the United States, the financial crisis has been a personal disaster. But on the national level, it may have changed the direction of our country forever, undermining centers of power, redirecting wealth and apparently altering savings rates of that once eternally-unphased animal, the American consumer. Globally, as a result of the Great Recession, the United States is now so indebted to foreign powers that it wields considerably less power. In sum, the party is over.

Yet, compared to what lays ahead, the Great Recession will a mere blip on the economic juggernaut that will eventually lead over the cliff of climate change. Indeed, what is forecast is something even worse than the Great Depression of the 1930s, which had an even greater impact on world history than our current plight.

Consider the trajectory that the Great Depression put the world on after the financial collapse of 1929. In Europe, deleterious economic straights radicalized large numbers of its population, contributing to Fascist take-overs in Germany, Italy and Spain. In turn, this radicalization led to world war and the institutionalized genocide of millions. The British Empire which had straddled the world for centuries was by 1949, spent by the war, unstable and falling away forever. And whereas the communist state of the Soviet Union had been an anomaly in world politics before 1929, its revolution spread to encompass most of the Eurasian landmass, from Berlin to Beijing in just two decades. And as for the United States, that once isolationist and pacifist nation emerged transformed as an interventionist-militarist, super power that would use nuclear weapons against its enemies.

In an alternate reality, where the financial and political leaders of the 1920s could foresee the long-term changes that the Great Depression would bring, those leaders might attempt to lay plans to avoid such earth-shaking events. But of course, how could they foresee any of it? They were blind just as most were in the mid 2000s.

Today, however, we do have such foresight into the threats posed by the Greatest Depression ever known. Climate models are telling us loud and clear that we are altering the world upon which our financial stability is built on. We have leading economists like Nicholas Stern calculating the costs. We have testimonies and forecasts from experts in the oil industry, hydrology, agriculture and insurance, all warning that we are fast approaching the worst crisis in economic history.

Collectively, they warn that sometime before the middle of this century, climate change will catch up to the economy, undermining the very foundations of our economic system, right down to our ability to provide enough water, food and safety for ourselves. The shock to the world economy cannot be understated, for billions of lives will be at risk.

And like the radical changes that have come with all other major economic crises, the repercussions we might expect from a climate-driven economic crisis will be equal in proportion to the power that only mother nature can deliver. What is being imagined, then, is more than just an economic disaster, it is a tsunami that will drown the world.

On the ground, the pressure will likely build in the background as a confluence of crises force fuel, food and water prices upwards for several years, putting a drag on the overall economy. In Part I of this series, I began by discussing the underlying issue of Peak Oil and how we will someday have to cope with that on top of the problems posed by climate change. In developed nations, Peak Oil will mean that more and more disposable income will go toward the rising costs of goods produced with oil…essentially everything plastic, everything made with machinery and all products that are shipped over any distance. In turn, less of this disposable income will go into purchasing goods produced in developing countries, where local incomes are already inadequate to provide basics like food and clean water. In 2007, we saw how the impact of rising fuel costs can lead to riots and instability in developing countries. Take that story and let it play out for decades and you will approach the seriousness of the Peak Oil problem alone.

Overlaying the problems associated with Peak Oil, climate change is forecast to adversely affect some of the most basic aspects of our economy such as those associated with food production and access to water. Rising sea levels, disappearing glaciers, stronger storms and shifting rain patterns and temperatures will impact the economy in increasingly debilitating ways. Large swaths of necessary grain-growing regions will disappear under the sea (Lester Brown, 2008). Farms will need to be relocated to cooler climates (Stephan Faris, 2009). Age-old water resources for billions of people will disappear (Lester Brown, 2008).

Meanwhile, on top of all this, the financial world be sputtering as the insurance industry first begins to suffer ruinous losses from mounting storm and flood damage and then totally collapses, bringing down financial centers around the globe (Andrew Dlugolecki, 2009; Evans, 2006).

The order in which these problems manifest is impossible to know with any precision. But they are all but inevitable absent the kind of dramatic action that the public and its leaders are apparently not yet ready to support. But by not acting, not only are the direct consequences of these changes a real threat, but so are all the indirect, and often more profound and longer-lived consequences, like those spurred by the Great Depression: Social upheaval, revolution and war.

Recently, there was growing hope that the world was finally beginning to take seriously the threats posed by climate change outlined in this series. The great powers in North America, Europe and Asia were all signaling that they were finally ready to get to work. But then, late last year, as the climate summit in Copenhagen drew closer, posturing by various powers, such as China and many developing countries, along with delaying tactics in the US Senate began undermining confidence that even a weak agreement could be reached. In the end, the Americans proposed inadequate solutions and the Chinese chose to snub President Obama and point fingers. And in that moment of petty gamesmanship, the world took one more step into a nightmare century of economic ruin.

Once again, the worst case scenario became the likely scenario.

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