"Theoretically, we all gain through global trade as China grows. But with limited resources, the faster they grow and the richer they get (and, particularly, the more meat rather than grain that they eat), the more commodity prices rise and the greater the squeeze on the poorer countries and the relatively poor in every country.”Well that sounds as it comes from one of these tedious critiques of capitalism, one of those lefties that believe the economy is a zero sum game, somebody that hasn't understood that there are no limits to growth....
But it comes from Jeremy Grantham who the head of GMO (just chosing a name like that indicated how little he cares about perception) LLC, a hedge fund with $100 billion under management. Mr Grantham has written an insightful paper about the future of commodities. Grantham concludes that we have entered a new era: we are on the cusp of what he calls The Great Paradigm Shift, “one of the giant inflection points in economic history”—the moment, he warns, that lies at “the beginning of the end for the heroic growth spurt in population and wealth caused by…the Hydrocarbon Revolution.”
Eric Sencey writes in the Daly News
the Industrial Revolution is more properly called the Hydrocarbon Revolution. Economic history changed when we began systematically to exploit a new stock of energy, the stored fossil sunlight of coal and oil, with its historically unprecedented rate of energy return on energy invested (EROI)—as high as 100:1 for oil in the early part of the twentieth century. “Hydrocarbon Revolution” reflects the reality that the enormous productivity gains of the machine age are rooted in that very favorable EROI. It also implicitly includes the warning that the modern economic miracle must end when this stock of thermodynamically cheap energy is used up.This coincides with my analysis in Garden Earth, where I say that oil is the currency of the capitalist economy.
We often forget that the reality is even more grim than the graph shows. In the perspective of the big divide of income between the rich and the poor countries, most commodities have NOT become cheaper in the previous period either. All charts are from the rich countries, but the reality from the perspective of the poor countries is quite different. There people still earns just 400 dollars (or considerably less) and their terms of trade have deteriorated over the century. So while gas and electricity prices have fallen for a US average worker, for large parts of the global population it has increased, which is why there is still some 2 billion without electricity..
No comments:
Post a Comment