Umair Haque / Bubblegeneration
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Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.

Monday, August 09, 2010

The State of the Ponziconomy

Could there be a clearer--and perhaps more heart-rending--picture of an economy in deep, systemic, structural decline? Probably not.

What people are spending more on, in relative terms, as incomes dwindle--what they're substituting spending for, as budgets decline in real terms--are the most basic of necessities.

Oh, and goods for which monopoly power allows incumbents to reap fat profits, sans meaningful innovation of any kind (hi, telcos).

Needless to say, consumption patterns like these bode (very) ill for the next decade--because they fail to support a single one of the structural changes (new industries, new institutions, new markets, the localization of capital flows, risk sharing, etc) necessary to spark the rebirth of prosperity. Instead, they point to a Ponziconomy--where people and societies run harder and harder, only to move backwards.

It's a vicious circle, a bad equilibrium, a game of musical chairs--a masquerade of wealth creation. Except the masks are coming off.

-- umair // 11:35 PM // 0 comments


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