Biosphere 2 is a research facility in the Arizona desert. It was designed as a closed environment to test whether humans could create self-sustaining colonies in outer space. It revealed some unexpected results. For example, trees in Biosphere 2’s 7.2 million cubic feet of sealed greenhouses grew unnaturally fast, but collapsed before maturity. Eventually, the scientists realised that, without the wind and the elements, the trees failed to develop the stress wood and deep-root systems that make them resilient in the wild. Unnatural environmental stability was breeding instability.
Biosphere 2’s completion in 1991 also coincided with the end of the Cold War, which helped usher in a period of historically unprecedented peace, stability and prosperity for the world. A powerful confluence of mega trends created a three decade-plus era of falls in inflation, interest rates and economic volatility, which became known as the Great Moderation.
Drivers included China’s liberalisation, which added hundreds of millions of low-cost workers to the global economy, keeping a lid on prices. Similarly, the countries of the former Soviet Union provided masses of cheap natural resources and labour. The small-state revolution spearheaded by Margaret Thatcher and Ronald Reagan in the 1980s reduced state interference in the economy and promoted free trade.
Technology increasingly enabled firms to make the most of this newly open world order with cheaper and more efficient supply chains. More independent central banks focused on controlling inflation. And the world was surfing the biggest demographic wave of all time, with a record ratio of workers to old-age dependents. That meant more producers and consumers.
