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

Originally posted on The Reluctant Geek:

Just wanted to pin down a couple of resources on the topic of peak oil — the idea that world demand for oil will bump up against the limit of what can be extracted, refined and distributed, resulting in catastrophic shortages. Most advocates I have encountered think this will happen soon.
This is an item that aired on NPR today on Weekend Edition:
Here is a report from energy consulting firm CERA taking serious issue with the peak oil argument:
Chris Martensen’s Crash Course in Economics lays out much of the reasoning behind peak oil thinking, as well as some very interesting ideas about the broader economic environment and limits to growth. Martensen’s course is also an interesting approach to presenting information.
AB — 12/13/08