Insolvent?

Part of getting older means that you start worrying about your future. What’s the job market going to look like when I graduate? Will there be functioning social systems to support me as I become a citizen? And finally, how do I make sure that there’s something waiting for me at the end of my professional career?

The latter is a particularly contentious topic these days. Few people think highly of the way we are organising pensions today. Contributive defined-benefit schemes were designed a century and a half ago for a growing population, but current population dynamics make them increasingly unfeasible. Countries around the world have therefore been looking for alternatives that can keep society’s support system for the elderly solvent. In many places, like in the Netherlands, private pension funds invest workers’ defined contributions in stocks and bonds (at least I hope that’s where my FlexDelft money goes).

Much concern is therefore directed at the solvency of our financial systems. And I agree with this – it’s good practice to make sure that you live within your means. But if you take a broader look at the human endeavour, is that really what we are doing?

I have been reading a worrying report from the UK’s Institute and Faculty of Actuaries, which finds that society is careening towards planetary insolvency. This means that, just as a pension fund risks collapse due to bad investment, we risk enormous social and economic damage because of our destabilisation of the planetary system. Shockingly, the Institute predicts that the most likely trajectory with current policies is decimation – in the traditional sense. And all the while states are backing down from current policies – just in the Netherlands alone, the initial target of 50MW offshore wind deployment by 2040 has been revised down to 30-40MW.

Our return on investment is catastrophe

The most up-to-date understanding of climate science shows that we are most likely to breach the 1.5 degrees of warming by 2030 and possibly even reach two degrees by 2050. Climate tipping points, breadbasket failures, risks all the way down. Our return on investment is catastrophe.

I believe that this is why younger generations say they have little to look forward to. Not despite, but because we were born with all the creature comforts of modern civilisation. Our standard of living has only been achieved because we overspent our ecological allowance. And every minute we keep our account on overdraft, our debt increases. Therefore, for the first time in a long while, there is increasingly little reason to believe that things will get better. Who’s to say that your educational, professional, and financial investments won’t be wiped out by some extreme weather event?

In every financial crisis, some say that they won’t be personally affected. Others try to make sure they’re the ones left winning at the end. My advice? Don’t try to short-sell the climate crisis. If Earth Inc. goes bankrupt, nobody wins.