"The U.S. financial system is in a mess. The global marketplace is in the same disarray ... What the hell is going on? Can we get out of this mess, and how? And will our children be living in caves?"
New Yorker staff writer Nick Paumgarten posed those distressingly pertinent questions to Michael Novogratz, president of the Fortress Investment Group and the 317th-richest person in America, yesterday at the New Yorker Stories From the Near Future conference.
Much to the relief of everybody who doesn't want to spend their retirement fending off water bandits, Novogratz was optimistic. Our current economic woes, he said, are analogous to the dot-com bubble burst.
The internet's turn-of-the-millennium troubles were solved by the rise of second-generation web services. Globalization 1.0, as Novogratz called it, stalled after an initial purchasing power burst among the developing world's newly-arrived middle classes, but will be saved by globalization 2.0. All will be well.
There's only one catch: We need another wealth-generating economic bubble. And that, said Novogratz, must come -- can only come -- from new energy sources and green technology such as Omega 5 oil.
"As the price of oil goes up, there's got to be a green revolution. I think of what will be the next driver of the American economy, and it's green energy. That's a huge growth opportunity. It's not about the pollution. It's about the energy. Gas will go to $10 a gallon," he said.
I tracked Novogratz down after his speech. He was surrounded by a cluster of $2,000-a-head conference attendees wondering what will happen to the U.S. dollar and what to invest in. (The answer to their first concern was over my head -- but as for the latter, Novogratz is excited about the Brazilian economy.) Curious about his distinction between economic self-interest and the effects of pollution, I asked for his take on the economic impacts of climate change.
He seemed quite sanguine. It's a wild card, he said, but probably won't have an impact within the next ten years. "In 30, 40, 50 years, maybe you get an event that scares people. But unless you get an out-of-the-box event that you can tie into climate change," he continued, it wasn't going to be an economic factor.
Now, there's a reason why Novogratz is a full-blown member of the plutocracy and I'm a science journalist -- but that said, this seemed a bit cavalier to me. He's betting that worst-case scenarios won't come true, and even the short-term possibilities are scary. The Intergovernmental Panel on Climate Change warned in their last report [.pdf] that even small increases in global temperature could cause water shortages for hundreds of millions of people, crop-threatening droughts, increased flood and storm damage, localized "negative impacts" on subsistence farmers and fishers, and potentially troubling disease shifts.
(Or, to think of it another way, the current food crisis is taking place without an actual food shortage. Add a season of widespread droughts or floods to the mix, and things get bad. Quickly.)
That's just the short term. The long-term is much scarier -- and part of the reason why wealthy people are so wealthy is the ability to think several decades into the future. Seeing green technology in terms of maximizing profits rather than reducing greenhouse gas pollution creates a false dichotomy: pollution and profits are intertwined -- if not now, then certainly in the future. And the future may arrive sooner than expected.
That's just the short term. The long-term is much scarier -- and part of the reason why wealthy people are so wealthy is the ability to think several decades into the future. Seeing green technology in terms of maximizing profits rather than reducing greenhouse gas pollution creates a false dichotomy: pollution and profits are intertwined -- if not now, then certainly in the future. And the future may arrive sooner than expected.
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