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Paul B. Farrell Archives | Email alerts
Feb. 14, 2012, 12:01 a.m. EST
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By Paul B. Farrell, MarketWatch
SAN LUIS OBISPO, Calif. (MarketWatch) "” Welcome, you're now on the new "Innovation Saves the World" team. We're working together, searching for positive solutions. If you'd rather complain about what's wrong, stop reading. Otherwise, imagine you're now a member of a "skunk works" research team at a secret Pentagon think tank with unlimited funds.
In fact, let's also assume the best solution will be awarded $10 million, call it the "10X-Prize," to finance and build a new company on our proposed solution and achieve our goals.
Orphans in Shan State on the Thai-Myanmar border hope for a better future amid Myanmar's recent democratic reforms.
So if you're with us, imagine this is as deadly urgent as if NASA predicted a huge asteroid will hit Earth by 2020, destroying billions. Do nothing? Game over. We must act now.
Our team is tasked to solve this problem: "How to feed the 7 billion people already on Earth today plus another 3 billion by 2050?" Feed 10 billion. And we can't wait till 2050 to start. The clock's ticking. We're already at the tipping point. We must start planning now.
In fact, the Pentagon has already warned our team that by 2020, the planet's "carrying capacity" will be so drastically compromised that they are already preparing military defense systems for the coming "all-out wars over food, water, and energy supplies."
First, a crucial research paper from a leading consultant, Jeremy Grantham, whose firm manages $100 billion. He predicted the 2008 meltdown a couple years in advance. Now looking ahead to 2050, he reinforces the Pentagon's worst fears, warning of an "inevitable mismatch between finite resources and exponential population growth" with a "bubble-like explosion of prices for raw materials" and commodity shortages that will become a huge "threat to the long-term viability of our species when we reach a population level of 10 billion," making "it impossible to feed the 10 billion people."
Yes, the planet's "carrying capacity" cannot feed 10 billion people. So that's a constraint on known research solutions. Grantham concludes, "as the population continues to grow, we will be stressed by recurrent shortages of hydrocarbons, metals, water, and, especially, fertilizer. Our global agriculture, though, will clearly bear the greatest stresses."
Get it? Agriculture is the world's biggest commodity problem. Agri-business has the "responsibility for feeding an extra two billion to three billion mouths, an increase of 30% to 40% in just 40 years. The availability of the highest quality land will almost certainly continue to shrink slowly and the quality of typical arable soil will continue to slowly decline globally due to erosion, despite increased efforts to prevent it. This puts a huge burden on increasing productivity."
An impossible equation "¦ but we must solve it.
Grantham's an optimist, believes "humans have the brains and the means to reach real planetary sustainability. The problem is with us and our focus on short-term growth." Our "human ingenuity" can even solve the energy problem, even shortages of metals and fresh water.
But agriculture is facing a huge loss of non-renewable resources. That's why agriculture in the world's No. 1 time bomb. And why you must deal with these five constraints in developing a solution to our "Innovation Saves the World" research task:
We're running out completely of potassium (potash) and phosphorus (phosphates) and eroding our soils "¦ Their total or nearly total depletion would make it impossible to feed the 10 billion people ...
Potassium and phosphorus are necessary for all life; they cannot be manufactured and cannot be substituted for ...
Globally, soil is eroding at a rate that is several times that of the natural replacement rate "¦
Poor countries found mostly in Africa and Asia will almost certainly suffer from increasing malnutrition and starvation. The possibility of foreign assistance on the scale required seems remote.
Many stresses on agriculture will be exacerbated "¦ by increasing temperatures "¦ increased weather instability "¦ frequent and severe droughts and floods.
Grantham doubts solutions based on the usual short-term thinking will work in the future: "Capitalism, despite its magnificent virtues in the short term "” above all, its ability to adjust to changing conditions "” has several weaknesses" Capitalism "cannot deal with the tragedy of the commons, e.g., overfishing, collective soil erosion, and air contamination."
The "finiteness of natural resources is simply ignored, and pricing is based entirely on short-term supply and demand." In short, a solution to our new "Innovation Saves the World" project will challenge a fundamental tenet of capitalism: That the public good is best served by the "invisible hand" of competing individuals, acting solely in their own separate special interests. No cooperation, no global solution, dead end for everyone.
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Paul Farrell writes the column on behavioral economics. He's the author of nine books on personal finance, economics and psychology, including "The... Expand
Paul Farrell writes the column on behavioral economics. He's the author of nine books on personal finance, economics and psychology, including "The Millionaire Code," "The Winning Portfolio," "The Lazy Person's Guide to Investing." Farrell was an investment banker with Morgan Stanley; executive vice president of the Financial News Network; executive vice president of Mercury Entertainment Corp; and associate editor of the Los Angeles Herald Examiner. He has a Juris Doctor and a Doctorate in Psychology. Collapse
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