Zero zero zero

growth

Jeremy Grantham is a capitalist. Of the rentier kind, even. His credentials in this regard are impeccable. He runs a global investment management firm that as of December 2012 had US$106 billion under management. He’s been around for a long time and in 1977 co-founded the company that partially bears his name. Before that he was an economist for Royal Dutch Shell. Well—how about we hear how he puts it: “I am a capitalist and have co-founded two firms that today employ about 600 people in total. Like most capitalists (and most humans) I prefer to please myself than to be told what to do. I am willing, though, to part with some of that personal freedom to advance an important or even a vital public good.”

What’s vital about Grantham—hair long gone white, company photo hiding the lines that must have crawled all over the place by now—is that this multi-millionaire capitalist, of all people, says we are at the end of growth.

Here is what Grantham wrote in GMO’s quarterly letter, dated November 2012. And here in the second-to-last sentence is the core of why this whole business ends badly for all of us.

Other self re-enforcing feedback loops such as the melting of the Arctic Tundra and release of methane, a hundred times worse than CO2, may start up anytime and run out of control. We might well destroy the planet as livable for all but a small fraction of us in extreme latitudes. It is not worth taking the risk and it may not be too late. Yes, it will hurt our future growth. Either considerably or enormously. And we just had two candidates for President who both must have known all of the above yet said nothing. On television ads and in Presidential debates we often heard the expression “clean coal,” two words worthy of Goebbels, the infamous Nazi propagandist who recommended the “Big Lie.” It would make him proud that his idea had legs. Coal used to be utterly poisonous and is now still moderately poisonous, hurting our health even as it ruins our planet. It never was and almost certainly never will be clean in any sense. I have studied quite hard and long the unwillingness of ordinary, often reasonable, people to process bad news. By the standards of refusing to recognize an overpriced stock market in 2000 at 35 times earnings or an overpriced U.S. housing market in 2006 at statistically a 1-in-1200-year outlier level, this climate issue is very, very easy to ignore. Personally, I think that as badly led as we are and surrounded by capitalists with very much to lose and much to defend with, we are quite likely to lose this game. If so, rest assured it will eventually hurt our growth more than all of the other factors that we have discussed added together.

—”On the Road to Zero Growth,” Jeremy Grantham, November 2012

Surely this fearless honesty has to go up on the wall.

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