GMO First Quarter Letter: "The Race of Our Lives" By Jeremy Grantham (Resources, Population, Climate Change etc.)

I will be referring back to this, for now it's my weekend read.
Mr. Grantham is far too pessimistic about fertilizer availability (Phosphorus and potassium [potash])
In addition this is the first time he has written at length about population and while he doesn't go as far as the Voluntary Human Extinction Movement (Après vous) he doesn't address the totalitarian policy response that is the natural outgrowth of his argument.

See also: the spectacularly wrong and wrong-headed forecasts made by Paul Ehrlich for which he has been rewarded with an endowed chair at Stanford-definitely a mark against Stanford.

Via Advisor Perspectives:

Summary

Our global economy, reckless in its use of all resources and natural systems, shows many of the indicators of potential failure that brought down so many civilizations before ours. By sheer luck, though, ours has two features that might just save our bacon: declining fertility rates and progress in alternative energy. Our survival might well depend on doing everything we can to encourage their progress. Vested interests, though, defend the status quo effectively and the majority much prefers optimistic propaganda to uncomfortable truth and wishful thinking rather than tough action. It is likely to be a close race. 

The Fall of Civilizations

The collapse of civilizations is a gripping and resonant topic for many of us and one that has attracted many scholars over the years. They see many possible contributing factors to the collapse of previous civilizations, the evidence pieced together shard by shard from civilizations that often left few records. But some themes reoccur in the scholars’ work: geographic locations that had misfortune in the availability of useful animal and vegetable life, soil, water, and a source of energy; mismanagement in the overuse and depletion of resources, especially forests, soil, and water; the lack of a safety margin or storage against inevitable droughts and famines; overexpansion and costly unnecessary wars; sometimes a failure of moral spirit as the pioneering toughness and willingness to sacrifice gave way to softer and more cynical ways; increasing complexity of a growing empire that became by degree too expensive in human costs and in the use of limited resources to justify the effort, until the taxes and other demands on ordinary citizens became unbearable, so that an empire, pushed beyond sustainable limits, became vulnerable to even modest shocks that could in earlier days have been easily withstood. Probably the greatest agreement among scholars, though, is that the failing civilizations suffered from growing hubris and overconfidence: the belief that their capabilities after many earlier tests would always rise to the occasion and that growing signs of weakness could be ignored as pessimistic. After all, after 200 or even 500 years, many other dangers had been warned of yet always they had persevered. Until finally they did not. 

The bad news is that as I read about these varied scenarios – and I have missed listing several – they all appear plausible and each seems to be relevant to several earlier collapses of empires and civilizations both large and small. Very recently, one of these scholars, William Ophuls, wrote a new book, Immoderate Greatness² (a quote from Gibbons’s Decline and Fall of the Roman Empire), with the subtitle Why Civilizations Fail. It is a straightforward summary and synthesis of all of the ways to fail in 70 small pages, yet with extensive notes and references. It is written in remarkably accessible, simple language and divides the causes of failure into six categories. Unfortunately, all six seem to apply to us today in varying degrees, and where one factor might be manageable – although often has not been – he makes the chances of our managing all six seem slight. It is persuasive and needs to be read. It takes about two hours.

William Ophuls’s conclusion is that we will not resist the impressive list of erosive factors and that, in fact, we are in the fairly late stages of our current civilization’s race for the cliff edge with nothing much to head us off. His study of history leads him to believe that civilizations are actually hard wired to self-destruct: programmed to be overconfident, to keep on pushing for growth until limits are overstepped and risks accumulated to the breaking point. His offer of good news is that after the New Dark Ages, when civilization again rears its head, presumably with a much smaller population, we will have acquired the good sense to be less overreaching, less hubristic, a lot humbler about growth and our use of resources, and more determined to live in balance with the natural energy we receive from the sun and the heat, food, and water with which we can sustainably be provided.

I have just two comments about our current problems. First, that there is one particular pressure this time that seems particularly serious: aversion to bad news. The investment business has taught me – increasingly as the years have passed – that people, especially investors (and, I believe, Americans), prefer good news and wishful thinking to bad news; and that there are always vested interests to offer facile, optimistic alternatives to the bad news. The good news is obviously an easier sell. Good news in investing in particular is better for business; good news on resource limitation is better for the suppliers of resources; and good news on climate change – that it basically does not exist and is even a hoax – is better for energy companies, among the biggest and most profitable of all companies. Historians have pointed out the bias against the need for change: there are always clear beneficiaries of the current state of affairs but the benefits of a changed world in contrast will look vague and uncertain to the likely beneficiaries. That is always the case. What is less common, although not unique in history, is what we have today: the near complete control of government by the powerful beneficiaries of the current system.

The second point is that although I find Ophuls’s argument well-reasoned and although I must acknowledge the strong possibility of a very negative outcome, I feel it is too pessimistic (which, sadly, is a rare occurrence for me on this topic). Yes, we are taking extreme risks with resource depletion and with the environment, especially concerning climate damage and ocean acidification. Yet I believe the case for the near certainty of our running off the cliff misses the existence of two extraordinarily lucky (and, one could argue, undeserved) gifts that were not available to any prior stressed civilization. They may arrive like the U.S. Cavalry, just in time to turn us away from the cliff edge. But at best, as Wellington is famously paraphrased as saying about the Battle of Waterloo, it will be a “damn closely run thing.”³   It will be the race of our lives.

Our Last Best Hopes: Declining Fertility and Improving Technology for Renewable Energy

Declining Fertility

The first of the two incredibly fortunate factors that might enable our current world to avoid at least partial collapse is declining fertility. Malthus correctly analyzed the main problem of our then history (in 1800): population had always kept up with food supply, leaving even successful societies only a few bad growing seasons away from starvation. He predicted that this would always be the case and he was wrong on two counts. The first is a short-term factor – only existing for 200 or 300 years and therefore irrelevant for the longer term of our species – and that is the increased ability to extract previously stored energy in the form of coal and oil. This hydrocarbon interlude will end either when that share of hydrocarbons that can be extracted economically is used up, or more likely when the tyranny of the second law of thermodynamics imposes its will: enough of the higher forms of convenient compact energy like coal and oil will have been converted into heat, waste, and especially carbon dioxide to ruin our climate in particular and our environment in general....MORE