May 02, 2011
Jeremy Grantham: Peak Everything?

Will depleting resources become an obstacle to economic growth? Jeremy Grantham, co-founder of money manager GMO with $106 billion under management, has developed an interest in resource limitations as obstacles to economic growth. It is disturbing to read that he doesn't just think Peak Oil is near. He's closer to a Peak Everything position. See his article on GMO's web site PDF), on The Oil Drum or on The Energy Bulletin (and easiest to read).

The purpose of this, my second (and much longer) piece on resource limitations, is to persuade investors with an interest in the long term to change their whole frame of reference: to recognize that we now live in a different, more constrained, world in which prices of raw materials will rise and shortages will be common. (Previously, I had promised to update you when we had new data. Well, after a lot of grinding, this is our first comprehensive look at some of this data.)

Accelerated demand from developing countries, especially China, has caused an unprecedented shift in the price structure of resources: after 100 hundred years or more of price declines, they are now rising, and in the last 8 years have undone, remarkably, the effects of the last 100-year decline! Statistically, also, the level of price rises makes it extremely unlikely that the old trend is still in place. If I am right, we are now entering a period in which, like it or not, we must finally follow President Carter’s advice to develop a thoughtful energy policy and give up our carefree and careless ways with resources. The quicker we do this, the lower the cost will be. Any improvement at all in lifestyle for our grandchildren will take much more thoughtful behavior from political leaders and more restraint from everyone. Rapid growth is not ours by divine right; it is not even mathematically possible over a sustained period. Our goal should be to get everyone out of abject poverty, even if it necessitates some income redistribution. Because we have way overstepped sustainable levels, the greatest challenge will be in redesigning lifestyles to emphasize quality of life while quantitatively reducing our demand levels. A lower population would help. Just to start you off, I offer Exhibit 1: the world’s population growth. X marks the spot where Malthus wrote his defining work. Y marks my entry into the world. What a surge in population has occurred since then! Such compound growth cannot continue with finite resources. Along the way, you are certain to have a paradigm shift. And, increasingly, it looks like this is it!

In terms of how bleak a picture Grantham paints about resource limitations and other factors restraining growth he falls between Tyler Cowen's The Great Stagnation and Chris Martenson's The Crash Course: The Unsustainable Future Of Our Economy, Energy, And Environment. I've read and recommend Tyler's book. I'm not yet far enough into it to offer a take on Martenson's book.

Grantham says China's rapid growth has put an enormous demand on resources.

As I wrote three years ago, this growth process accelerated as time passed. Britain, leading the charge, doubled her wealth in a then unheard of 100 years. Germany, starting later, did it in 80 years, and so on until Japan in the 20th century doubled in 20 years, followed by South Korea in 15. But Japan had only 80 million people and South Korea 20 million back then. Starting quite recently, say, as the Japanese surge ended 21 years ago, China, with nearly 1.3 billion people today, started to double every 10 years, or even less. India was soon to join the charge and now, officially, 2.5 billion people in just these two countries – 2.5 times the planet’s entire population in Malthus’ time – have been growing their GDP at a level last year of over 8%. This, together with a broad-based acceleration of growth in smaller, developing countries has changed the world. In no way is this effect more profound than on the demand for resources.

Grantham says "peak everything" is our greatest challenge. Effectively he's predicting a return to the Malthusian Trap where death due to insufficient resources was a common occurrence. The rate of innovation will determine whether that's to be the fate of humanity. Faster rates of innovation could produce the technological innovations that would allow us to develop replacements for depleted resources.

If I am right in this assumption, then when our finite resources are on their downward slope, the hydrocarbon-fed population will be left far above its sustainable level; that is, far beyond the Earth’s carrying capacity. How we deal with this unsustainable surge in demand and not just “peak oil,” but “peak everything,” is going to be the greatest challenge facing our species. But whether we rise to the occasion or not, there will be some great fortunes made along the way in finite resources and resource efficiency, and it would be sensible to participate.

Annual gains in agricultural productivity have fallen from 3.5% to 1.25%. That growth rate is even worse than it looks because Asians with rising affluence are spending more on meat and therefore driving up prices for others whose earnings are still much lower.

Exhibit 10 shows that at the end of the 1960s, average gains in global productivity stood at 3.5% per year. What an achievement it was to have maintained that kind of increase year after year. It is hardly surprising that the growth in productivity has declined.

It runs now at about one-third of the rate of increase of the 1960s. It is, at 1.25% a year, still an impressive rate, but the trend is clearly slowing while demand has not slowed and, if anything, has been accelerating. And how was this quite massive increase in productivity over the last 50 years maintained? By the even more rapid increase in the use of fertilizer. Exhibit 11 shows that fertilizer application per acre increased five-fold in the same period that the growth rate of productivity declined.

What's worth noting here: First off, advances in genomics have not (at least so far) reversed this slowing rise in agricultural productivity. This makes sense intuitively. A lot of productivity-boosting changes to crop plants amounts to lowering their defenses (whether to insects, other species of plants, or other enemies and conditions) while substituting other measures for those defenses (e.g. pesticides, herbicides, measures to keep away birds). Well, there's a limit to how low the defenses can be lowered. Plus, there's a limit to how efficiently plants can convert sunlight into sugars, oils, and proteins. Diminishing returns on investment are to be expected.

As Grantham points out, we've continued to deplete aquifers, shift prime agricultural land into housing and commercial areas, and overfarm in ways that cause loss of quality topsoil. In theory if we only had really cheap energy we could run massive desalination plants along coast lines and pump the water hundreds of miles inland to grow crops in dry areas. But if some non-fossil fuel energy source does not become super cheap then food supplies in much of the world

Natural gas is used to make nitrogen fertilizers (hydrogen atoms from CH4 methane get bound to nitrogen to reduce it). We've been very fortunate that, unlike oil, natural gas prices have stayed low since collapsing in 2008 due to natural gas produced by fracturing shales deep underground. For any areas with cheap shale gas (and hopefully that will continue to be the case for the United States for a few decades) we'll continue to have that cheap source of energy to reduce nitrogen to make assorted nitrogen fertilizers. Whether most of the world will have cheap natural gas for some decades remains to be seen. As oil production declines the shift toward natural gas for transportation and chemical production will increase the demand and consumption rates of natural gas. Not clear what that'll do to its price.

After having read the full article upon reaching the end some of his conclusions are surprising. Running out of natural resources? For the United States he only expects a slowing of growth, not a contraction.

The slowing growth in working age population has reduced the GDP growth for all developed countries. Adding resource limitations is further reducing it. If our GDP in the U.S. grew 2% for the next 20 years, I think we would be doing very well. Dropping to 1.5% would not surprise me, nor would it be a disaster. In the past 28 years, we have increased our GDP by 3.0% per year with only a 0.9% increase in energy required. That is, we increased our energy efficiency by 2.1% without a decent energy policy and despite some very inefficient pockets like autos and residential housing. This would suggest that at a reduced 2% GDP growth rate, we might expect little or no incremental demand for energy, even without an improved effort. If in addition we halved our deficit in energy efficiency compared with Europe and Japan in the next 20 years, then our energy requirements might drop at 1.5% a year. Given the plentiful availability of low-hanging fruit in the U.S., this is achievable.

For countries less endowed with natural resources the prospects are more grim as their costs of inputs go way up. For the poorest countries the prospects are especially bleak because the world's poorest spend such large fractions of their incomes on food. Higher food prices for most Americans are an annoying inconvenience. But for someone who spends half his income on food a doubling of prices means hunger.

The bright spot with fossil fuels lately has been natural gas, which has the potential to serve as a substitute transportation fuel once oil prices get too high. Current natural gas prices are below the level that makes gas-to-liquid plants economically viable.

Deutsche Bank analyst Jarrett Guldenhuys figures a U.S. GTL plant could be profitable at gas prices as high as $4.70 per mmBTU and oil as low as $64.

With Brent oil around $120 per barrel and natural gas near $4 per mmBTU the prospects for more GTL plants seem favorable. But this depends on low natural gas prices as we've witnessed in the last few years.

If we could develop ways to get energy cheaply from non-fossil fuel sources then I'd be more optimistic about Peak Oil and Peak Everything. We can substitute cheap energy for minerals in many ways. Future energy costs will do much to determine whether we can handle the declining supplies of other commodities. It is not clear to me how this will turn out.

Update: As I point out in the comments, there's enough iron, aluminum, and magnesium in the Earth's crust that given very cheap energy we could get plenty of those materials for structural use. Our future pivots on the price of energy. Rising energy costs will make it even more expensive to extract minerals from the remaining lower grade ores. But a huge breakthrough in some method to very cheaply generate electricity (e.g. if Andrea Rossi's energy catalyzer really worked would make the declining ore concentration problem much easier to deal with.

Update: See Alan Fletcher on what it would take to prove Rossi's reactor is the real deal.

Share |      Randall Parker, 2011 May 02 03:12 PM  Energy Peak Oil Adaptations


Comments
back40 said at May 2, 2011 12:38 AM:

Ag productivity in developing countries is still very much lower than in developed countries. That their productivity is increasing more slowly than in the recent past is not an indication of resource constraints, it is an indication of agronomic defect. Their methods are inefficient and less productive.

India is an instructive example. In the past when the green revolution began for them the government made fertilizers available to small holders at heavily subsidized rates. This was unsustainable since they ran out of money, and unwise in any event since growers had no incentive to use fertilizer effectively. The government then dropped subsidies for all but nitrogen fertilizers.

You can't grow crops on nitrogen alone. Using more nitrogen - as much as 5 times what a US grower would use - doesn't help. Worse, the form of nitrogen matters since some forms are volatile. Ammonium Bicarbonate was often used (especially in China) though it decomposes and drifts away on the wind very rapidly unless kept in sealed containers and rapidly worked into soil once spread. Urea, it's replacement, is not as bad but can still deplete at a rate of 10% a day since urease enzymes that are ubiquitous in soil break in down into ammonia, a gas, and CO2.

You must have balanced fertility to get the benefit of any given nutrient. You must apply it in the right way, at the right time, in proportions suited to a particlular crop in order to get full benefit. Other soil chemistry factors such as PH and soil structure matter as well. With improved methods a great deal more food could be grown with a great deal less fertilizer.

Lobo Solo said at May 2, 2011 8:55 AM:

Is he a member of the Club of Doom that has been predicting "peak everything" for decades now?

Methanol (not ethanol) can be made from nearly any biomass as well as natural gas. It currently is cheaper per BTU than gasoline ... without a subsidy. You just need a flexible-fuel vehicle (FFV) to use it.

At these prices, TDP (thermal depolymerization) becomes profitable to convert biomass into products made from oil.

Is there enough biomass around? I don't know.

As for minerals ... Well, if it gets that tight then we have a whole solar system that can be exploited if the money is right.

Chris T said at May 2, 2011 10:59 AM:

The only truly sustainable path for humanity is to constantly expand its technical and resource base (which require one another).

We grow because the alternative is guaranteed extinction.

Bruce said at May 2, 2011 11:37 AM:

The Oil Drums cover charity was started with a mysterious 100,000 dollar cash donation.

The "Institute for the Study of Energy and Our Future" which is the charity front for The Oil Drum was started up with a 100,000$ cash donation. None of the principles could explain it (or so they said).

I found out about the donation because charities have to fill in Form 990's and there are numerous websites where you can take a look at the filed Form 990.

http://dynamodata.fdncenter.org/990s/990search/esearch.php

http://dynamodata.fdncenter.org/990_pdf_archive/261/261233189/261233189_200712_99


There are billions to be made by unscrupulous Doom and Gloomers.

Chris T said at May 2, 2011 11:47 AM:

Exhibit 10 shows that at the end of the 1960s, average gains in global productivity stood at 3.5% per year. What an achievement it was to have maintained that kind of increase year after year. It is hardly surprising that the growth in productivity has declined. It runs now at about one-third of the rate of increase of the 1960s. It is, at 1.25% a year, still an impressive rate, but the trend is clearly slowing while demand has not slowed and, if anything, has been accelerating.

Absolute yield increases have been fairly steady. The relative decline in productivity is less alarming than it's made out above:

http://2.bp.blogspot.com/-hR12MqUGK7Y/TVvP542dYVI/AAAAAAAABjM/EHp-NUMSDoQ/s1600/Screen+shot+2011-02-16+at+8.18.36+AM.png

Doug said at May 2, 2011 11:55 AM:

Color me skeptical. Grantham is a perma bear, on markets, and now in everything it seems. I would suggest that what it all does mean is technological change, at least where governments get out of the way and let change happen. Life in a time of technological change may seem bumpy, not smooth. Thorium reactors, etc. Ironically for Grantham and his ilk, there should be good opportunities in investing, except for the buggy whip companies.

Dentin said at May 2, 2011 12:18 PM:

I personally see 'business as usual' for pretty much the next hundred years - at least 'business as usual' as I define it. Yes, we'll quickly run out of oil as a primary energy source, but there's plenty of room for energy expansion. Various stopgaps such as coal and nuclear, wind and geothermal can help offset the loss of oil, but at the end of the day we'll be relying on the sun for expansion, and at some point we'll go into space to get it. That in itself will give us at least another century of business as usual.

One of the biggest problems I have with energy proponents of all kinds is a ridiculous sort of 'short term' thinking: stop thinking about the next decade, stop thinking about the next 25 years. Think about a century, think about a millennium. Nuclear isn't going to last for a thousand years any more than oil will last for a hundred; but the sun will still be there, probably even if we come up with a way to starlift most of it.

Nick G said at May 2, 2011 12:53 PM:

Grantham's analysis is almost entirely about Peak Oil, and I'd say it's spot on: The US will face reduced growth during a transition away from oil, and many poorer countries will be in deep trouble.

The idea that we face Peak Everything is unrealistic on it's face: most of our resources, like sun, wind, uranium/thorium, iron, aluminum, silicon, carbon, (etc, etc) are effectively unlimited, and will be substituted for the small minority of commodities that truly face limits, like copper.

He talks about the move away from the trend line being too large to be random - well, that kind of technical chart analysis is silly. We know the fundamentals of what happened...China happened. Just because China dramatically raised the price of iron ore, cement, gold and silver doesn't mean that iron ore or cement supplies face any kind of limit. It's an old fashioned short term boom and bust event, which will go bust when China can no longer sustain 50% of it's economy going into capital investment. They're close now, with a lot of underutilized real estate sitting around waiting for buyers/tenants that aren't coming any time soon. Japan did the same thing..

Chris T said at May 2, 2011 1:51 PM:

People really do not understand the sheer size of the Earth or the relatively insignificant fraction we've explored of it. There's a considerable amount of land that we have yet to seriously explore (we forget the United States is something of an anomaly). We've barely touched the oceans or much more than a couple kilometers beneath the surface.

Yes resources get tougher to extract, but this is precisely why growth must be maintained.

Prophesies of collapse from limited resources must take care not to become self fulfilling.

Kim said at May 2, 2011 5:45 PM:

People have predicting peak everything for a long time now, and have always been proved wrong. Even if they're right, humanity will adapt, as it always does.

Randall Parker said at May 2, 2011 8:36 PM:

Nick G,

Yes, China happened. So did India. So mines are getting exhausted that much faster. But while I can see Chinese demand dipping in a big economic contraction I think ultimately China still has another doubling or two or three to its economy if it can only get enough energy to run the doublings. Then throw in India, Vietnam and some other places.

Unlimited metals: At what price? If energy is cheap then, yes, we can continue to extract minerals down to very low concentrations. If energy is cheap we can get huge amounts of aluminum (8.1% of Earth's crust), iron (5%), and magnesium (2.1%).

So here's my question: How much more energy per ton of iron (or aluminum or other element) if we extract it from average dirt rather than from from a mine with the current highest concentrations of these metals? Mining companies are not just processing any random soil to get iron or aluminum.

To put it another way: at what price of energy can we afford to desalinate the oceans, extra minerals from randomly chosen soil, or fix nitrogen from the air to make N fertilizer? Given that price when will technological advances deliver that price?

PacRim Jim said at May 2, 2011 11:37 PM:

Anyone consider moving wealth to virtual reality. One could escape into one's private mansion, which is chock-full of every imaginable possession.
Once VR becomes real enough (i.e., with a direct neural connection), one will be able to live two lives. One more satisfying than the other, no doubt. (I'm not yet sure which it will be.)

Chris T said at May 3, 2011 9:10 AM:

Given that price when will technological advances deliver that price?

If I knew the answer to that, I would be out buying stock, not posting here.

Mile High Mike said at May 3, 2011 11:32 AM:

Remember that "peak" means that "trouble begins not when we "run out" of a resource, but when production peaks"

I'm not so much worried about peak oil worldwide (with China and India growing) as the US has ample resources to fall back on for ourselves. I'm more worried about peak phosphorus and also with peak water from the Ogallala Aquifer.

I'm looking at permaculture techniques to help reduce the amount of irrigation and fertilizer needed on the acreage I recently purchased.

TheAbstractor said at May 3, 2011 11:33 AM:

So the grand argument here is that because the price of everything is going up, everything is becoming scare. There's only one thing they neglected in discussing the dollar price of "everything", and that's the dollar itself. The monetary policies of the developed world--microscopic interest rates, cornucopian entitlement spending, rejection of specie-backed currency--have put us all on a crash course with massive inflation, if not outright hyperinflation.

We haven't reached Peak Everything; we've reached Peak Fiat Currency.

Nick G said at May 3, 2011 11:47 AM:

Yes, China happened. So did India.

China is a lot more important than any other country, as far as I can tell - it's bigger than anyone besides India, and building much more.

So mines are getting exhausted that much faster.

This is a classic boom-bust commodities cycle: prices rise sharply because current production capacity is exceeded. That has little to do with long-term trends for things like iron and aluminum.

But while I can see Chinese demand dipping in a big economic contraction I think ultimately China still has another doubling or two or three to its economy if it can only get enough energy to run the doublings.

China is consuming more right now in the way of iron, cement, etc than it ever will in the future, in order to catch up. It's investing 50% of it's economy in capital construction!!

Unlimited metals: At what price? If energy is cheap then, yes, we can continue to extract minerals down to very low concentrations. If energy is cheap we can get huge amounts of aluminum (8.1% of Earth's crust), iron (5%), and magnesium (2.1%).

As you note, the average is large, much larger than the concentrations mined for things like copper. It's not hard to find good ores for these things. The harder part is building the facilities.

How much more energy per ton of iron (or aluminum or other element) if we extract it from average dirt rather than from from a mine with the current highest concentrations of these metals?

It's not that much to begin with. TOD focuses way too much on energy for things like mining and manufacturing.

at what price of energy can we afford to desalinate the oceans, or fix nitrogen from the air to make N fertilizer?

Water is harder, because agriculture needs so much at low prices.

For both of these things, it's far cheaper and easier to increase the efficiency with which we use them. Only then should we extract them from expensive sources, and at that point the cost won't matter that much. For example, why are we growing rice in the CA desert?? I watched Chinatown recently...

Jay said at May 3, 2011 12:40 PM:

Great analysis, except you said switching to LNG for transportation will be a “bright spot”?

But we are using the NG to reduce nitrogen and make the fertilizer, remember?

When you start burning food and inputs needed for food for other purposes, food will get more expensive. When people are starving all over the world because we are burning “clean natural gas” for transportation instead of agriculture, will you feel good about that?

Is ethanol which is burning our food crop another “bright spot”?? The perceived need to be “green” can kill people.

Acksiom said at May 3, 2011 1:31 PM:

"Our goal should be to get everyone out of abject poverty, even if it necessitates some income redistribution." -- Jeremy Grantham, from the linked article.

As a rule of thumb, anybody who argues for income redistribution can be reliably disregarded as an incompetent, and their arguments likewise dismissed as a waste of time.

not anon or anonymous said at May 3, 2011 2:30 PM:

"As a rule of thumb, anybody who argues for income redistribution can be reliably disregarded as an incompetent, and their arguments likewise dismissed as a waste of time."

Could not disagree more. Grantham is talking about extreme poverty on a global scale, i.e. folks living on $2/day or even less. The amount of redistribution required to address this kind of poverty is very modest. Of course, improvements in political institutions or changes in immigration policies would be better, but its not clear that these are feasible solutions.

Jim Glass said at May 3, 2011 2:43 PM:

"Rapid growth is not ours by divine right; it is not even mathematically possible over a sustained period."

Increasing economic growth **reduces** material consumption.

During 1965-2005 as US GDP per capita grew 125% per capita, mineral consumption *declined* 40% per capita (75% per dollar of GDP). Since the 1940s material waste produced by the 8 million people of NYC has declined by more than 50% in absolute terms, as real income has tripled -- a decline of 83% per dollar of income.

To save the earth, grow the economy faster.

http://www.scrivener.net/2009/04/save-earth.html

Does this Gratham guy think growth is constrained because material consumption can't fall below zero?

M. Report said at May 3, 2011 2:57 PM:

Population control is the only way to avoid Parson Malthus' prediction;
Advances in technology only postpone and magnify the eventual collapse.
Yes, I know that the developed world is in decline, but the 2nd and 3rd
worlds will not be able to stop growing before they exceed the carrying
capacity of the planet.

New sources of energy buy time to persuade, and/or compel people
to control their breeding; If Polywell fusion pans out the sudden,
drastic drop in energy cost may allow the more benevolent option
to be implemented by the US; If not, China is likely to take the
other one.

M. Simon said at May 3, 2011 3:12 PM:

First off there is the Wave Engine Which could double or quadruple our effective inventory of oil:

http://powerandcontrol.blogspot.com/2011/04/catching-wave.html

And then there is the asteroid belt for everything else.

Chris T said at May 3, 2011 3:21 PM:

Could not disagree more. Grantham is talking about extreme poverty on a global scale, i.e. folks living on $2/day or even less. The amount of redistribution required to address this kind of poverty is very modest. Of course, improvements in political institutions or changes in immigration policies would be better, but its not clear that these are feasible solutions.

It has become increasingly clear poverty is not simply a lack of adequate material wealth. Extreme poverty is but a symptom of the problem - a lack of functional social institutions and capital (ie: trust). Ending poverty requires creating or repairing the necessary social structure.

Rick said at May 3, 2011 3:52 PM:

I want to make sure I understand the last part correctly: We could make LNG useful, but NG is too cheap (ie: TOO PLENTIFUL) to do so, and make money, and that is why we are going to run out of NG? I don't think it actually works that way....

The malthusians have been wrong...well, forever, and logic like this does not help them gain any credibility....

Acksiom said at May 3, 2011 4:31 PM:

"Could not disagree more."

You can disagree all you want, but unless and until you actually present some actual kind of actual reasoning to the actual contrary, you're just vanity posting.

"Grantham is talking about extreme poverty on a global scale, i.e. folks living on $2/day or even less."

[shrug] So? And that is supposed to validate his collectivist nonsense. . .how, again, exactly?

Oh, right. There is no answer to that. There never is. It's just. . ."because". Or rather, to be explicit, "Just because I want it to."

"The amount of redistribution required to address this kind of poverty is very modest."

[shrug] So? It's still fundamentally wrong. Why exactly should any amount, regardless of how modest it is, be acceptable to the rest of us? And particularly those of us who strongly disagree with Grantham's propositions?

"Of course, improvements in political institutions or changes in immigration policies would be better, but its not clear that these are feasible solutions."

They're clearly more feasible than institutionalizing income redistribution, which the historical record clearly shows to eventually result in the deaths of tens of millions and the oppression of hundreds of millions.

"Because we have way overstepped sustainable levels, the greatest challenge will be in redesigning lifestyles to emphasize quality of life while quantitatively reducing our demand levels. A lower population would help." -- Jeremy Grantham, again, from the linked article.

That's right, folks: "A LOWER POPULATION WOULD HELP."

You don't have to be a history professor to read between those lines and parse the similarities to mass murdering statist authoritarians throughout history in general and the eugenicists in particular. Or recognize the inevitability of acceding to, again, collectivism in general, and income redistribution in particular.

No. You can't have my consent, so you can't have my resources. It's just that simple, and that makes it blatantly evident that all that's left to you is taking other people's things by force.

MrJest said at May 3, 2011 8:47 PM:

Chris T said at May 3, 2011 3:21 PM:

Could not disagree more. Grantham is talking about extreme poverty on a global scale, i.e. folks living on $2/day or even less. The amount of redistribution required to address this kind of poverty is very modest. Of course, improvements in political institutions or changes in immigration policies would be better, but its not clear that these are feasible solutions.

It has become increasingly clear poverty is not simply a lack of adequate material wealth. Extreme poverty is but a symptom of the problem - a lack of functional social institutions and capital (ie: trust). Ending poverty requires creating or repairing the necessary social structure.

Precisely. The overall problem with the planet is a vast majority of primitive, non-trust based social structures... that people cling to nonetheless, because "that's the way it's always been". Progress, in the real form - not the nonsense the anti-progress "Progressives" spout - has been very slow these past few centuries in terms of planetary populations. Over 4/5ths (or perhaps 3/4 if one is being charitable) population-wise of the planet still lives in vastly backwards and pathological societies.

But WRT technological solutions, I'm suprised nobody has yet mentioned nano-tech, and the promise of energy-cheap (almost free) infinite recycling. I believe that will be the "next big thing" in terms of resource use. In a decade or two, there will be no such thing as "garbage". Just a box we toss our waste into that either feeds a city grid or runs independently, and 5 years of household waste can be converted into a new Mercedes with a license fee for the assembly software and a couple hundred dollars worth of energy.

Now, THAT'S the future!

-Mr. Jest

PacRim Jim said at May 3, 2011 11:16 PM:

And everybody in the world would be a telephone operator, extrapolating based on the rate of growth of operators in 1960. The point is that new technologies will enable economic replacements for these 19th-century resources.
(If not, a major war or two should bring population nicely into line with resources.)

not anon or anonymous said at May 4, 2011 4:13 PM:

Acksiom, redistribution may be "fundamentally wrong" according to your values, and you may want to withhold your consent to it. But this does not imply that Grantham "can be reliably disregarded as an incompetent".

Keep in mind that wealthy nations are currently violating the basic human rights of billions of people living in extreme poverty, by preventing them from immigrating and entering into mutually favorable trades in the wealthy nations' labor-markets. If this is not "mass murdering statist authoritarian[ism]" on a vast scale, I don't know what is.

MrJest, "primitive, non-trust based social structures" are political institutions (in the broadest sense) and yes, they are very important.

Engineer-Poet said at May 5, 2011 5:58 AM:
Nuclear isn't going to last for a thousand years any more than oil will last for a hundred
The USA has enough uranium in inventory to run the nation for several hundred years given any type of FBR.  We can mine uranium from seawater at a small multiple of current prices, and then there's thorium.  Nuclear is one of the few things which can last not just a thousand years, but tens of thousands.
Grantham is talking about extreme poverty on a global scale, i.e. folks living on $2/day or even less. The amount of redistribution required to address this kind of poverty is very modest.
Redistribution does nothing to make such people more productive.  Giving them more money/resources just exacerbates the problem.  What they need is to stop breeding until they can address their fundamental issues.  To the extent that dysfunctional governments are enabled by teeming masses of needy people who'll put up with anything to get their next meal, just stopping breeding will bid up the price of human capital relative to everything else and force the system to change.
The overall problem with the planet is a vast majority of primitive, non-trust based social structures...
HBD suggests that advanced, trust-based structures may not be amenable to global application (particularly in tribe- and clan-based societies with high degrees of consanguinity).  This capability is part of the human capital which needs to be advanced.
wealthy nations are currently violating the basic human rights of billions of people living in extreme poverty, by preventing them from immigrating and entering into mutually favorable trades in the wealthy nations' labor-markets.
This assumes that people are interchangeable "blank slates".  If the billions in extreme poverty can build the structures and institutions which characterize the wealthy, why haven't they?  If they can't, importing them to wealthy nations just impovershes the latter (or worse).
not anon or anonymous said at May 5, 2011 7:22 AM:

Engineer-poet, I agree that investing in human capital and better social/political institutions is preferable to merely redistributing money or resources. But redistribution would also help: for instance, resource transfers would deter people living in extreme poverty from breeding excessively, by promoting investment into basic healthcare and education.

'This assumes that people are interchangeable "blank slates".'

No, it doesn't. Disallowing people from immigrating to richer countries is a restriction of a fundamental human right, viz. the right to travel. Whether that restriction is justified by other concerns is immaterial: as a matter of principle, the people whose rights are being thusly infringed are arguably entitled to fair compensation.

Engineer-Poet said at May 5, 2011 8:12 AM:

There is no such thing as "a fundamental human right to travel".  If 1.1 billion Indians tried to go to Europe, it wouldn't be "travel", it would be an invasion.  Invasions, wholesale or piecemeal, are things that humans and their societies have a fundamental right to refuse and resist.

Chris T said at May 5, 2011 4:15 PM:

Non anon - So your solution is allowing several billion people who do not have the experience of living in a trust based society to immigrate into wealthy countries? You do realize that, even disregarding value mismatches, having such a large number of people over a short period of time would so utterly overwhelm the local infrastructure and resources that it would destroy those countries, right?

Ronald Brak said at May 7, 2011 4:22 AM:

Natural gas is used as a source of hydrogen in the production of nitrogen fertilizer. A few months ago I did a rough estimate of how much it would cost if the hydrogen came from the electrolysis of water instead. It worked out that it would only add about a few pennies a day to an average person's food bill. In the developed world we wouldn't even notice the difference. And even for the poorest quintile of people in the world, for most of them a few pennies a day is less than a year's average - dare I say it? - growth.

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