Remember Enron? That paragon of turn-of-the-century new-economy triumphalism, gushed over by pundits, lauded by investors, celebrated by the cognoscenti — until it turned out to be a roadside bomb in disguise? The cause of its demise, ultimately: overstating benefits and understating costs. The result, of course, was a spectacular flameout, today the stuff of legend.

So here’s a question. Is the global economy going Enron? Just like Enron, does it systematically and chronically overstate real benefits (consider just how vanishingly little “profit” reflects trust, happiness, joy, delight, inspiration, passion, wisdom, or a sense of meaning) and understate real costs (like damage to nature, the future, communities, society, or human achievement itself)? And is that, perhaps, the prime mover of what both Tyler Cowen and I have termed a Great Stagnation?

You might say, “Well, if it does I can see how it’s unfair, but so is life, you big girl’s blouse. Grow up!!” So here’s why I ask.

The Enron effect is highly hazardous because it lethally poisons incentives. Incentives shape human behavior — and overcounting benefits and undercounting costs is a surefire way to blunt our incentives to innovate, to take on ambitious goals, and create real value. In fact, understating costs and overstating benefits creates disincentives to do that, and creates, instead, incentives to at best rest on your fading laurels forever — and at worst, extract, exploit, purloin, loot, glad-hand, and pass the buck.

Let’s take a moment and imagine what might happen in an economy that consistently, chronically undercounted real costs and overcounted real benefits, poisoning the incentives for the creation of authentic, enduring wealth. Let’s call it Enronia, for short.

Innovation atrophy. In Enronia, companies would tend to produce mediocre products and services, if not downright self-destructive, harmful ones. You know how your mobile operator manages to slyly slide hidden costs past you — and the service you get is patchy and unpredictable? That’s the Enronian economy in a microcosm. When an economy undercounts costs and overcounts benefits, the result is a surfeit of fundamentally uninspiring, drab uncompetitive stuff.

In Enronia, companies would tend to produce mediocre products and services, if not downright self-destructive, harmful ones. You know how your mobile operator manages to slyly slide hidden costs past you — and the service you get is patchy and unpredictable? That’s the Enronian economy in a microcosm. When an economy undercounts costs and overcounts benefits, the result is a surfeit of fundamentally uninspiring, drab uncompetitive stuff. Unemployment. Enronian companies would be chronically unable to create jobs (especially higher quality jobs). “Jobs” ignite when there are costs to be paid: one party’s “expenditure” is another’s “work”. When capital circulates amongst economic actors, jobs result. But in an economy where costs aren’t priced or paid, capital fails to circulate, and the result must be growing unemployment (think back a few centuries: when companies didn’t have to “pay” for “labour,” and economies had a lot fewer “jobs” — and a lot more indentured servitude and slavery). Once companies have to account for the costs they’ve been externalizing, new jobs to manage new competencies will emerge. But in Enronia, companies don’t have to pay 21st century costs — nor does any other industry — and the result is a lack of 21st century jobs.

Enronian companies would be chronically unable to create jobs (especially higher quality jobs). “Jobs” ignite when there are costs to be paid: one party’s “expenditure” is another’s “work”. When capital circulates amongst economic actors, jobs result. But in an economy where costs aren’t priced or paid, capital fails to circulate, and the result must be growing unemployment (think back a few centuries: when companies didn’t have to “pay” for “labour,” and economies had a lot fewer “jobs” — and a lot more indentured servitude and slavery). Once companies have to account for the costs they’ve been externalizing, new jobs to manage new competencies will emerge. But in Enronia, companies don’t have to pay 21st century costs — nor does any other industry — and the result is a lack of 21st century jobs. Deep debts. The more Enronian GDP “grows,” the steeper the eventual bill of underpaid costs and overbought benefits to be paid. In an economy with undercounted costs and overcounted benefits, growth in “output,” instead of reflecting tangible gains to people, communities, society, and nature, merely reflects costs shifted to — or benefits borrowed from — them. It resembles a zero-sum game, empty of real prosperity. In such an economy, GDP might “recover” from a “recession” (over and over again) even as the average household watches its income, net worth, and opportunities flatline or plummet. And as the costs shifted away from businesses accumulate, the costs born by society increase. In Enronia, the food industry reduces their own costs by making food with ever cheaper — and less nutritious — inputs, while consumers become less and less healthy, and taxpayers and the federal government pay ever more for health care.

The more Enronian GDP “grows,” the steeper the eventual bill of underpaid costs and overbought benefits to be paid. In an economy with undercounted costs and overcounted benefits, growth in “output,” instead of reflecting tangible gains to people, communities, society, and nature, merely reflects costs shifted to — or benefits borrowed from — them. It resembles a zero-sum game, empty of real prosperity. In such an economy, GDP might “recover” from a “recession” (over and over again) even as the average household watches its income, net worth, and opportunities flatline or plummet. And as the costs shifted away from businesses accumulate, the costs born by society increase. In Enronia, the food industry reduces their own costs by making food with ever cheaper — and less nutritious — inputs, while consumers become less and less healthy, and taxpayers and the federal government pay ever more for health care. Megafailure. What might ultimately happen to the Enronian economy? Markets would fail at allocating capital — and misallocate and malinvest it in low-worth stuff instead. Corporations would fail at innovating, creating, and engaging. Governments would fail at fiscal rectitude. Currencies would fail at storing value. People would fail at making wealth maximizing decisions. Prices would fail at carrying meaningful information. Investors would fail at seeding tomorrow’s disruptive companies and disruptive technologies. Banks would fail at lending and borrowing. Communities and ultimately society might even fail — and grow more polarized, riven, and fractious.

Here’s Enronia’s really big problem. It’s an economy plagued by more violent and more harmful vicious cycles. The more its corporations “profit”, the emptier prosperity becomes. The more “shareholder value” is “created,” the more people, communities, society, nature, and the future struggle to flourish. The more intense and fierce “competition” gets, the less awesome, inspiring, compelling, and meaningfully better stuff becomes. The more it “grows,” the less that growth matters in human terms: the more trust, happiness, shared values, bigger purpose, and a sense of meaning dry up and stagnate — and the more social and political tensions boil and bubble, as squabbles over dividing up a shrinking pie flare into full-blown fistfights.

That sounds less and less like some Twilight Zone counterfactual and more and more like our own Great Stagnation. The global economy as we know it systemically, chronically undercounts real costs, and overcounts real benefits. As a result, the global economy’s incentives are broken; the incentives to take on the challenges of authentic prosperity, to create stuff of enduring worth, to ignite real, lasting value — all are distorted. The real crisis isn’t a transient, passing event (“the great crash of 2008”), but a persistent, enduring, deeply flawed relationship that produces crashes ever faster, and ever more violently.

All of which might just hold a powerful lesson for the future of advantage — national organizational, and personal. Industrial-age advantage was about understating costs or overstating benefits slightly harder and faster than the next guy. But in a tiny, fragile, crowded world, yesterday’s paths to advantage might just be sources of disadvantage. It’s not just that in a hypercompetitive world, yesterday’s competitive edges are as dull as a plastic spork. Rather, it’s what Hosni Mubarak just learned the hard way: that in a hyperconnected world, the people formerly known as “consumers,” “employees,” “investors,” and “subjects” have rarely been more powerful — and more unpredictable, critical, or exacting.

The bogus prosperity that imbalanced institutions create never lasts forever — and in a hyperconnected world, where people can not only instantly pierce the shabby veil of empty promises, glib spin, and cheap talk, but also actively, furiously besiege yesterday’s most imperiously powerful institutions and oust their so-called leaders, it’s probably worth less than a three dollar bill. Sure, you can continue to (or at least try to) overstate your real benefits, and understate your real costs — but today anyone with a Twitter account and a conscience more highly developed than Hannibal Lecter’s probably won’t buy it. Instead, they might just revolt against it. Sure, you can stay put in dismal, decrepit Enronia — but today, the rest of the world’s probably itching to tear down the iron curtains and move out.

Think it’s impossible? Think again. Wal-Mart’s pioneered a ground-breaking Sustainability Index. UK Uncut is self-organizing demonstrations against mobile operators and banks. The Acumen Fund is investing to make a difference, not merely a “profit.” Pepsi’s aiming for water-neutrality. Unilever, to make micronutrient-enriched food that helps end global malnutrition. Nike’s shooting not just to manufacture shoes — but to remanufacture them. They’re just a small smattering of a larger movement: a cadre of radical innovators taking the first tiny steps to healing our imbalanced economy by living and breathing real costs and real benefits.

Sure: you can probably earn a near-term profit this year by becoming, metaphorically, the latest dismal denizen of Enronia — and, ultimately, going down with that listing global economic ship. Or you can take a deep breath, steel yourself, and learn to swim. I don’t think the world’s going to get less connected, competitive, critical, emancipated, sophisticated, self-aware, or demanding — it’s my bet that it’s going to get (much) more so.

That’s why the future of advantage hinges on discovering the full weight of your real costs, and the meanness of your real benefits — because that brutal self-honesty is the only way to reboot yesterday’s self-destructive, stulltifying incentives, transcend the banal, trivial, tedious, pifflingly mediocre — and do better.