JEREMY GRANTHAM: We Are In A Race To Prevent The Collapse Of civilisation

Judgement dayJudgement Day

Jeremy Grantham, the well-known head of investment firm GMO, has become increasingly vocal about his concerns for the fate of the world.

“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,” writes Grantham in his new quarterly letter titled “The Race Of Our Lives.”

In 10 pages, he compiles some key points we’ve heard him discuss at length in his recent media tour.  He spends most of his message on what makes him optimistic.  We summarize is letter here.

Civilizations Fall

Even the greatest civilizations like Rome eventually fell.  Citing research, Grantham told Charlie Rose that civilizations have an average lifespan of around 250.

He hammers on this topic at length in his letter.

“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,” he writes.

Fortunately, we might not be doomed.  Grantham sees two things that might save us.

Declining Fertility

Economist Thomas Malthus warned us that the growing population would eventually outpace the earth’s ability to feed it.

“Malthus, however, completely missed declining fertility, a potentially very long-term and hence much more critical factor to the survival of our species,” writes Grantham. “Neither he nor anyone else before 1960 even dreamed that we would voluntarily decide to have fewer children even as we became richer. In his day and until the early twentieth century, rich families routinely had eight or more children.”

In nearly every major economy, fertility rates have been falling.  He includes five charts showing this, including one that stood out.

grantham fertility population

Here’s Grantham:

Exhibit 3 shows selected important and sometimes spectacularly unexpected examples. At the top of the unexpected list is Iran, which has dropped from a fertility rate of 7 – children per woman! – in 1960 to an almost unbelievable 1.6 today. Another remarkable example of a large Islamic country is Bangladesh, which has also fallen from 7 in 1960 to 2.2. This is extraordinary given their extreme poverty. The particularly important India, with its 1.2 billion people, has fallen from 6 to 2.6. This is quite remarkable in absolute terms, but given the previous two examples and given India’s pressure from overpopulation, it’s almost a disappointment.

In addition to fertility rates falling, the world population could see an inflection point.  This is according to the United Nations’ scenario analysis.

grantham population

“The lower population track… holds out a strong hope of survival – that is, of maintaining a reasonably stable global civilisation and continuing to improve the quality of the average life,” writes Grantham. “The return, therefore, to helping encourage a lower population everywhere is incredibly high.”

Cheaper Renewable Energy

Renewable energy sources are expensive. 

But that’s quickly changing.  Here are some projections.

grantham renewable energy

Meanwhile, we’re also learning to live with less energy.

“For once, all of the innovations, corporate start-ups, and risk taking – the best part of the capitalist system – work to decrease our use of depleting hydrocarbons and therefore to increase our chance of stabilizing our civilisation before the cliff edge is reached,” writes Grantham.


There’s still a long way for renewable energy technologies to go. And it’ll take a lot of money to finance to the need research and development.

But that’s where China — Grantham’s secret weapon — comes in.

Grantham believes a smart 25-year plan by China could have huge implications.  And China has the money and the incentive to make big moves in renewable energy development.

“Such a massive broadbased program would potentially give them global dominance in the most important industries of the future and would relieve them of their greatest single worry: energy security,” writes Grantham.  “It would also relieve them of what will surely become their greatest societal irritant: the incredible air pollution of their major cities, which must already be reducing life expectancy in those cities by several years, as well as substantially increasing health costs.”


“The bottom line is that if we put our minds to it we can overcome normal inertia and abnormally powerful vested interests that oppose necessary change,” he writes. “Whether we can move fast enough on these fronts and at the same time reduce the output of greenhouse gases to avoid going off the cliff is simply not knowable for certain, but every minute saved and improvement made, betters our odds. Let the race begin.”

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