We are currently having a debate in this country. On one side we have the Republicans saying that we must institute a strict austerity program or else we will leave our children a crippling debt. On the other side we have (largely) Democrats that emphasize the need to provide for our children by protecting our environment and transitioning our energy system, etc. for the future. Who is right? I think we can get some lessons from history.
As you all likely know, Weimar Germany is the poster child for run-away hyperinflation. It started in 1921 and was a traumatic time for Germany in which its economy was devastated. Some say that it led to the accession of Hitler to power. I think that is a bit overstated and that the Versailles Treaty and the 30’s depression were bigger factors. But the Weimar hyperinflation was an undoubted economic disaster.
Ephesus was a once thriving port city in Asia Minor. Bible readers should recognize it from the bible book Ephesians written by St. Paul to the city’s Christians in the first century AD.
At that time it was a thriving Roman city with amphitheaters, baths, a large port, libraries, temples, and a large Christian community. During the Byzantine Empire, the formerly beautiful port was silted up due to environmentally disastrous activity of its residents. It is thought that the deforestation of the surrounding hills caused erosion. The eroded soil filled the port’s bay with silt.
They repeatedly dredged the bay, but all for naught. The silt now fills the bay to 5Km from the original port. This killed Ephesus and it is now a ruin that is visited only by tourists.
The Lesson From History
So, how is this instructive for the 21st century? Both Weimer Germany and Ephesus represent disastrous examples from history. But look at the regions now. Germany is a thriving economy and in many ways better off than the US which did not suffer a hyperinflation. It did suffer in the early part of the 20th century, but it recovered.
But Ephesus has not recovered. It destroyed a resource that it depended on for its success, namely its port. It has collapsed essentially forever.
The lesson seems clear to me. The Weimar-Germany example was a problem with a fiat currency. Fiat currency is by definition just a legal device to make money and this money is not wealth. The Ephesus example shows what happens when you destroy something which provides real wealth, namely the environment. You do not recover. A destroyed environment is forever.
I am not suggesting that we have a hyperinflation. I am saying that protecting the environment and preparing for a future without less fossil fuels is much more important that a balanced budget. Let’s work for a sustainable future.