2 May 2011 – Jeremy Grantham is chief investment officer of GMO Capital which has more than US $106 billion in assets under management. In this article for The Oil Drum he catalogues many of the issues related to resource depletion. As the publication said in its introduction, he is doing so as the “head of a firm whose objective it is to increase financial capital.”
“Rapid growth is not ours by divine right; it is not even mathematically possible over a sustained period,” Grantham says.
The sooner we develop a “develop a thoughtful energy policy and give up our carefree and careless ways with resources..the lower the cost will be.”
According to Grantham: “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 eight 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.
“Because we have way overstepped sustainable levels, the greatest challenge will be in redesigning lifestyles to emphasise 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.”
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