My Conversation with Jeremy Grantham

Lots of semi-sparring, engaging throughout.  Here is the audio, video, and transcript.  Here is part of the episode summary:

He joined Tyler to discuss the most binding constraint on the green transition, why we need an alternative to lithium, the important message sent by Biden’s Climate and Taxes Act, the marginal cost basis of green energy, the topsoil crisis in the Midwest, why estimates of the cost of global warming vastly underestimate its effects, why he distrusts economists, the overpricing concentrated in the US stock market, the consequences of Brexit, the revolutionary tactics of Margaret Thatcher, how his grandparents shaped his worldview, why he’s optimistic about American venture capital, the secret to Boston’s success in asset management, how COVID changed his media diet, the political difficulty of passing carbon taxes, and more.

Here is one excerpt:

COWEN: Now, you mentioned major flooding in Jackson, Mississippi. That’s a problem. Right now, as we speak on September 1st, 2022, how much do you think real estate values will decline there as a result of the flooding? What would your prediction be?

GRANTHAM: The history so far on early flooding is that it has little or almost no effect. It’s a bit like going bankrupt: very, very slowly at first and then quite sudden. When you need to buy insurance one day, you will not be able to get it except from government subsidy, and on that day, the house prices will start to decline. Then quite possibly, there’ll be some sort of panic — we do panics pretty well — and the prices will drop like a stone, more than they should. And then, of course, they will rally, and so on and so forth. Business as usual.

COWEN: If I try to seek out the most serious efforts to estimate the costs of global warming, say, by 2200, I end up at the papers of Esteban Rossi-Hansberg. He comes up with figures somewhere between 5 percent and 10 percent of global GDP, which, as you know, is an enormous amount of money, especially come 2200. Now, does that strike you as a fair estimate or an underestimate?

GRANTHAM: It strikes me as utterly trivial and only producible by economists. When economists try, they can be absolutely nitwitted. The guy who got the Nobel Prize for it [William Nordhaus], for his work on climate change — actually he spelled it out. He said, “Even if there was 10 degrees centigrade, it would only cost something in the range of 10 percent of GDP.”

To which I say, “Dudes, we will be long gone as a species at 10 degrees centigrade.” It is quite obvious at 1.1 that we are already having trouble. At 2, we will be struggling and societies will fail here, there, and everywhere. At 3, in a sense, forget about it, and we may have to deal with it, but it will be grievous. At 10 degrees . . .

I also ask him why, if bubbles are so easy to spot, he isn’t richer than he already is…


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