The latest from Jeremy Grantham below:
“You and I, and our government must avoid the impulse to live only for today, plundering, for our own ease and convenience, the precious resources of tomorrow.” Dwight D. Eisenhower, 1961
“[They] would have us believe that there is no cause for anxiety, that reserves [of oil] will last thousands of years, and that before they run out science will have produced miracles. Our past history and security have given us the sentimental belief that the things we fear will never really happen – that everything turns out right in the end. But prudent men will reject these tranquilizers and prefer to face the facts so that they can plan intelligently…” Admiral Hyman Rickover, 1957
“The nation that destroys its soil destroys itself.” Franklin Delano Roosevelt, 1937
Introduction
Last quarter I tried to make the case that the inevitable mismatch between ?nite resources and exponential population growth had ?nally shown its true face after many false alarms. This was made manifest through a remarkably bubble-like explosion of prices for raw materials. Importantly, prices surged twice in four years, which is a most unbubble-like event in our history book. The data suggested to us that rarest of rare birds; a new paradigm. And a very uncomfortable one at that. (In general, though, I have tried here not to repeat arguments or data used last quarter.)
This quarter, I would like to focus on the most dangerous parts of the coming shortages. I will try to separate those that, for us rich countries, are merely going to slow down the growth rate of our wealth through rising prices, and those that will do not only that, but will actually be a threat to the long-term viability of our species when we reach a population level of 10 billion. In all cases, poorer countries will be the most threatened. Situations that will irritate some of us with higher prices will cause others to starve. Situations that will cause some of us to go hungry will be for others a real disaster, and I believe this, unfortunately, will not be in the dim and distant future.
Obviously, experts have written books on subtopics that I reduce to one sentence. I might add that these books and a myriad of articles by these experts – who have decades of experience – absolutely do not agree with each other. In fact, they differ probably as widely as any scienti?c topic around, often by a literal order of magnitude and often with heat. Unlike many scienti?c differences, some of those concerning our resources in the long run may actually be a matter of life and death. I have tried to start from a weighted-average position and then have allowed for a safety margin tilted in favor of protecting our long-term well-being. By de?nition, plenty of experts will disagree with each statement made here. My hope is that “our” experts are those that are more rigorous, intelligent, and protective.
Jeremy Grantham GMO //
