Why save money for the long term if there isn’t going to be one? That question, posed by a young, highly educated woman was sent to me by Larry Siegel, my most recent guest on the Top Traders Unplugged podcast. What they mean by “not long term” is that the effects of climate change will be so severe that the Earth will be a 50-year-old thing. So, yes, the current current advice is something like this.
Stories like these, and the frustration that fueled them, inspired Siegel to write Less, Richer, Greener: Human Expectations in an Age of Abundance. His opinion – not there to be a long time, but demographics, economics and ecology indicate that it will be a good time to live.
If Siegel were to hire me as a business consultant I would suggest changing the system to Richer-Fewer-Greener. The reason is related to his brief summary of how the economy works – people respond to incentives.
Capitalism, the great development of economic freedom, combined with the ability to acquire and distribute power, has led to enormous wealth in the last two centuries. The content below, is amazing. And again and again as communities become more affluent, economic advantages shift to smaller families and, well, people respond to having smaller families. The world is still moving forward and this means that (eventually) there will be fewer people.
Rich = Green
This brings us to the “Greener” sub-section of the book. As people grow richer, human pollution increases. Siegel provides evidence that this happens surprisingly quickly – somewhere between a per capita income of $7,000 (current Indian standards) and $15,000 (Brazilian).
Combine this idea with the tendency to increase the global economy and we end up with a “green” world. A few caveats. First, the world’s population continues to increase for several decades, so that even if each person pollutes a little, there will still be total pollution until the world’s population decreases. Second, this growth will be concentrated in the poorest region of the world – sub-Saharan Africa. Those finances will take a heavy toll on any person over time as they grow up. So, even though the trend has long been for a greener world, we still need to take steps to reduce the impact of the process.
What actions will lead to greater contributions?
The Four Horsemen of Weather Events
The growth of cities. It’s easy to see cities as bad for the environment, but consider what we just discussed – more wealth leads to less pollution. Cities allow people to be creative and trade efficiently, which increases the economy and this leads to a better place. This is especially true in developing countries where small-scale agriculture has a major impact on natural resources. When people are able to move away from unproductive agriculture and live in cities, the environment improves.
Nuclear Power. Growing up with the cool towers of Three Mile Island visible behind me, I took this idea back. I was there because of the accident in 1979 and I know people who have worked in the factory all their lives. Let’s just say that the conversations I’ve had over the years have made me very skeptical about nuclear security. I have seen that there is danger that cannot be calculated. But Siegel told me not to leave.
They believe that the French model of small, simple, stable plants leads to improved efficiency and safety. And he’s right – we’re going to need all the energy we can get to keep the planet rich (which keeps it green). Nuclear is a better option than coal for power generation when solar and wind sources are depleted, which they must be.
It is also possible to say that nuclear energy can make the world safe. For example, imagine how much Russian power and influence would have been greatly reduced if Germany (and Italy) had supported their economy by using domestic nuclear power instead of Russian gas.
Genetic And Ecosystem Engineering. Genetic engineering helps by allowing us to grow food more efficiently – higher yields, lower transport costs and greater flexibility in climate. There are many interesting, interesting stories; read Siegel’s book to find out what is possible. One new, “game changing” model that was discovered since the book is a Chinese art that will allow rice to be planted in salt water, opening the way to be able to feed yourself there.
Ecosystem engineering – the direct control of the environment – is the most speculative field. There is no shortage of wild ideas – artificial “trees” that act like carbon dots, giant mirrors of the earth. Siegel is right to be careful about his impact. But, before you dismiss them, remember technology almost always surprises us. If you were on the beach in North Carolina watching the Wright brothers fly their hovercraft 10 meters off the ground for 59 seconds, you probably wouldn’t have predicted that humans would fly to the moon 66 years later.
Is there a paradox in the message of this book? In other words, if we make guarantees that we can reduce and reverse climate change, is there a risk that we become complacent and take our foot off the gas (sorry, I couldn’t resist) regarding the necessary changes?
No, I don’t believe that is dangerous. Indeed, too much skepticism and indifference is a serious risk and Siegel’s book is an excellent way to deal with it. Don’t spend all your money just yet.