Jeremy Grantham: belief

Transcript context

…Sure, but we probably won’t see a 5-degree or 10-degree hike in the temperature. If we look at what is most likely — it’s not just economists who say this, but these are papers co-authored with climate scientists, and markets seem to agree with them — that costs of global warming, climate change will be highly significant but not existential, not a complete disaster for civilization if you look, say, at prices for coastal property, prices in Florida, prices in the Hamptons. So, it’s the market and economists broadly agreeing, and you just think they’re wrong? Absolutely. I think it’s par for the course for markets to be wrong. On a horizon that’s over two years, I count on the markets being wrong. As for economists, I typically count on them being wrong for anything that is long-term, anything to do with the commons, anything that requires a lot of common sense. Economists have an ability to build models and get off into abstractions and assumptions so profound that after a while, they need to pinch themselves and remind themselves where they live in the real world. I think the economics profession on the topic of resource limitations — energy in particular, but metals and climate change — has been extravagantly poor, I mean remarkably lacking, with the one or two notable exceptions here and there, where economists have actually made a big point of resource and energy as key to the long term, but they’re all marginalized. James Galbraith. These are not pillars of the establishment, the people who see energy for what it is. Energy, obviously, is the driver of civilization. Now, just yesterday, you published a piece called “Entering the Superbubble’s Final Act,” where you described our current situation as being a 2.5- to 3-sigma event in terms of being an overextended bubble. When I think of other 2.5- to 3-sigma events, say, 9/11, I feel I’m very poorly placed to predict how they will evolve in the future. If our current situation is something like a 3-sigma event, why should we be so confident that we know how it will evolve? Why think we’re so good at spotting bubbles at those margins?…

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