While this blog is predominantly interested in long-term structural challenges faced by humanity such as climate change, resource constraints and technological disruption, it is the interface between the short term and the long term that brings such issues directly into people’s homes. For example, the problem of peak oil generally doesn’t move from the abstract to the concrete through the gasoline or petrol queue but rather through helping tip a country into recession (or depression), so eliminating jobs and reducing incomes. Rarely do we see the smoking gun of peak oil at the scene of the crime.
Similarly, my sense is that the unfolding crisis in the eurozone is far less a result of macroeconomic policy failure than the debilitating effects of a change in demography, technology and energy availability in Europe’s southern periphery. True, many of these structural changes are mirrored in the north of the continent; however, Germany, Holland and the other stronger members of the eurozone possess institutional strengths that are sufficient to offset—for a time—trends that are undermining the postwar paradigm of uninterrupted economic growth. Continue reading