nauru and the free market

The BBC ran a story recently (3/15) on the fortunes of the Republic of Nauru. Nauru is a small island in the Pacific that had the good fortune of being covered by bird droppings for centuries on end. That built up a layer of the world's purest phosphate and provided a tremendous source of income for the population. Phosphate is a key ingredient in fertilizer. Nauru quickly became very rich. So rich that the population did not know what to with all its money. In that sense it is much like America today. The Nauru spent money on sports cars even though there are few roads. You get the picture. The story is fascinating.

Nauru is also a great example of free market economy and its story clearly shows that the "market is always right" is not a smart idea. The inhabitants of the tiny island would have been much better off had they done some thinking ahead and some planning. Government regulation would have been very beneficial. No doubt some of the Nauru population got very rich and a few may have become especially rich. Those few probably would not have liked government intervention. But there is no doubt that as a whole the population would have been better off. Nauru is a microcosm of what happens when humans discover wealth.

It is also a good example of what happens when the party ends. And the more quickly and efficiently people mine their resources, the more trouble they are in for when the bubble finally collapses. You may argue this could never happen here. But it already has. The US economy is a string of bubbles, each one bigger than the previous one. And each one leaving more trouble in its wake.

For sure, we live on a much larger island. And we have many more options and more resources. But ultimately, the planet is just Nauru on a grander scale. It would behoove us to learn these lessons before it is too late. Because this planet is all we have. Unlike the Nauru, who will surely recover by relying on others, once we create a planet-wide bubble there will be no place to turn to. No alternative. Not like so many other civilizations. Take the Icelanders, who turned to the sea for a second chance, after they destroyed the land. We will not get a second chance.

And planet-sized bubbles are nearby. It is time to take the warnings seriously instead of debating the finer points of the science behind global warming. Because global warming is but one of the many problems we are faced with. Overpopulation, pollution, resource depletion, unsustainable practices, etc. It won't last. Now is the time to do something about it. And "letting the market handle it" is the dumbest thing we can do. Because that amounts to doing nothing. It is what the rich and greedy like because it fills their pockets more quickly and more efficiently. No obstacles in my way ! No need to slow down me getting richer every day !

Unfortunately, when that happens we will all lose.