Today the phrase “Bubble Economics” occurred to me as a way to describe the kind of over-valuation and ‘irrational exuberance’ that occurred during the recent real estate bubble and the previous Internet bubble.
One of the disappointing aspects of Internet search is that you can find out very quickly that you were not the first person to come up with a brilliant term like Bubble Economics. For example, here is a Slate article on the topic.
However, the idea that came to me this morning is that Bubble Economics possibly applies at a much bigger and higher level than isolated bubbles like real estate and Internet stocks. (Oh yes, I just thought of the 17th-century tulip bubble in Holland as another example, although interestingly the Wikipedia entry introduces some doubt into this old story.)
My thought, disturbing as it is, is that the entire growth-oriented globalizing economy can be seen as an unsustainable bubble. If true, that would imply that the widespread aspirations for a continually-expanding global middle-class might be ultimately unattainable.
Recent thinking around the peak oil issue speaks to this question. Going back further in time, E. F. Schumacher’s “Small Is Beautiful” book is interesting as well.
AB — 26 January 2009