Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. But I can't by law give you advice, and I do make mistakes. Remember: the unexpected sometimes happens. Oddly enough, the expected does too, but all too often it takes longer than you thought it would, or on the other hand happens more quickly than you expected. The Goddess of Markets punishes (eventually) greed, folly, laziness and arrogance. No matter how many years you've served Her. Take care. Be humble. And don't blame me.

BTW, clicking on most charts will produce the original-sized, i.e., bigger version.

Thursday, January 1, 2015

The best of centuries

An excellent speech by Nicholas Stern.  There's a video and for those who hate videos, like me, a transcript of the speech.

We are at a remarkable moment in time. We face over the next two decades two fundamental transformations that will determine whether the next 100 years is the best of centuries or the worst of centuries.
0:27Let me illustrate with an example. I first visited Beijing 25 years ago to teach at the People's University of China. China was getting serious about market economics and about university education, so they decided to call in the foreign experts. Like most other people, I moved around Beijing by bicycle. Apart from dodging the occasional vehicle, it was a safe and easy way to get around. Cycling in Beijing now is a completely different prospect. The roads are jammed by cars and trucks. The air is dangerously polluted from the burning of coal and diesel. When I was there last in the spring, there was an advisory for people of my age — over 65 — to stay indoors and not move much.
1:19How did this come about? It came from the way in which Beijing has grown as a city. It's doubled over those 25 years, more than doubled, from 10 million to 20 million. It's become a sprawling urban areadependent on dirty fuel, dirty energy, particularly coal. China burns half the world's coal each year, and that's why, it is a key reason why, it is the world's largest emitter of greenhouse gases. At the same time, we have to recognize that in that period China has grown remarkably. It has become the world's second largest economy. Hundreds of millions of people have been lifted out of poverty. That's really important.But at the same time, the people of China are asking the question: What's the value of this growth if our cities are unlivable? They've analyzed, diagnosed that this is an unsustainable path of growth and development. China's planning to scale back coal. It's looking to build its cities in different ways.
2:28Now, the growth of China is part of a dramatic change, fundamental change, in the structure of the world economy. Just 25 years ago, the developing countries, the poorer countries of the world, were, notwithstanding being the vast majority of the people, they accounted for only about a third of the world's output. Now it's more than half; 25 years from now, it will probably be two thirds from the countries that we saw 25 years ago as developing. That's a remarkable change. It means that most countries around the world, rich or poor, are going to be facing the two fundamental transformations that I want to talk about and highlight.
3:09Now, the first of these transformations is the basic structural change of the economies and societies that I've already begun to illustrate through the description of Beijing. Fifty percent now in urban areas. That's going to go to 70 percent in 2050. Over the next two decades, we'll see the demand for energy rise by 40 percent, and the growth in the economy and in the population is putting increasing pressure on our land,on our water and on our forests.
3:43This is profound structural change. If we manage it in a negligent or a shortsighted way, we will create waste, pollution, congestion, destruction of land and forests. If we think of those three areas that I have illustrated with my numbers — cities, energy, land — if we manage all that badly, then the outlook for the lives and livelihoods of the people around the world would be poor and damaged. And more than that,the emissions of greenhouse gases would rise, with immense risks to our climate. Concentrations of greenhouse gases in the atmosphere are already higher than they've been for millions of years. If we go on increasing those concentrations, we risk temperatures over the next century or so that we have not seen on this planet for tens of millions of years. We've been around as Homo sapiens — that's a rather generous definition, sapiens — for perhaps a quarter of a million years, a quarter of a million. We risk temperatures we haven't seen for tens of millions of years over a century. That would transform the relationship between human beings and the planet. It would lead to changing deserts, changing rivers, changing patterns of hurricanes, changing sea levels, hundreds of millions of people, perhaps billions of people who would have to move, and if we've learned anything from history, that means severe and extended conflict.
And we couldn't just turn it off. You can't make a peace treaty with the planet. You can't negotiate with the laws of physics. You're in there. You're stuck. Those are the stakes we're playing for, and that's why we have to make this second transformation, the climate transformation, and move to a low-carbon economy. Now, the first of these transformations is going to happen anyway. We have to decide whether to do it well or badly, the economic, or structural, transformation. But the second of the transformations,the climate transformations, we have to decide to do. Those two transformations face us in the next two decades. The next two decades are decisive for what we have to do. Now, the more I've thought about this, the two transformations coming together, the more I've come to realize that this is an enormous opportunity. It's an opportunity which we can use or it's an opportunity which we can lose. And let me explain through those three key areas that I've identified: cities, energy and land. And let me start with cities. I've already described the problems of Beijing: pollution, congestion, waste and so on. Surely we recognize that in many of our cities around the world.

Read the rest here.

No comments:

Post a Comment