We Are Doing Two Things Right and Both Sound Crazy

Travels have led me to the top of Mayan temples in Guatemala, along patches of Roman Roads in Turkey and inside cliff-dwellers’ homes in Mesa Verde New Mexico, remnants of thriving civilizations that awe me with their grandeur and haunt me with their collapse.

All major civilizations have declined, just as all economic bubbles have burst. Now the question arises whether we’re living with seven billion people in a global civilization approaching the tipping point toward collapse because vital commodities are dangerously dwindling and costs are relentlessly rising.

Amidst this ominous cacophony come optimistic statements that we are creating two escape routes from doom. They are made by Jeremy Grantham, who is the chief investment advisor for GMO, a financial services firm, and who has predicted the collapse of every economic bubble. He is cheered by trends most people, including me, see as problems: declining populations and governmental subsidies for alternative energy.

The UN predicts declining fertility rates in Europe and East Asia are leading to population declines and aging populations by 2050, conditions already existing in Japan, Germany, Lithuania and Ukraine.

Those countries face slower economic growth and financial burdens on younger workers, so analysts and politicians are trying to reverse them. Grantham believes our societies must encourage declining fertility rates and work out the problems because we’ve already overpopulated our planet.

For thousands of years, as Thomas Malthus described in his book, An Essay on the Principle of Population, the global population had never reached one billion because people were repeatedly trampled by the Four Horsemen of the Apocalypse, famine, disease, death and war.

Malthus’ 1798 prediction of doom proved premature because the technological revolution increased food yields, reduced disease and deferred death. In a mere two hundred years population has soared above seven billion with predictions it could reach twelve billion by 2050.

Grantham explains the technological revolution was generated by the discovery of hydrocarbons in coal and oil, harnessing the productivity to propel the population explosion.

“A gallon of gasoline is worth somewhere around 200 man hours of labor,” he said recently on the Charlie Rose show.

The problem is the growth is not sustainable and hydrocarbons are becoming scarcer and more expensive, but the good news is we produced a vast wealth to prepare for alternatives.

“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,” he said in his April 2011 quarterly report.

Grantham’s optimistic we also have time to build alternative energy sources.  Recent discoveries of natural gas and production of oil reserves from hydraulic fracking and horizontal drilling should produce energy at relatively low costs for the U.S. for several decades.

Oil prices are fluctuating around $80 per barrel versus the $16 per barrel we paid in the 1960s and the $30 per barrel in the 1970s. Grantham’s sources in the oil industry tell him exploration and development costs are a minimum of $80 per barrel today.

“It’s never going down again,” he said on the Charlie Rose show.

Grantham acknowledges alternative energy needs subsidies to be competitive, but also believes investments should lower costs like the investments in microchip technology continuously lowered the cost of computing power. For example, he told Rose that Duke Power’s recent discoveries should make the solar panel more competitive.

“The alternative renewable energy of the sun that suppresses demand for coal and oil and other sources such as solar, wind power, storage and grid systems are happening faster than people realize,” Grantham told Charlie Rose.

To be sure other problems haunt our global civilization’s survival, such as violent weather that disrupts food production, declining reserves of irreplaceable essential minerals such as phosphate and phosphorous and agricultural production techniques that deplete soils.

But population declines and alternative energy are two essential pathways that should help us solve those problems.

About Russellsclearskies

Writing to poke fun at a retired klutz like me who's curiously exploring the absurdities and complexities of the good life. .
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