The MoneyWeek Podcast: climate change, global population and inflation

Merryn and John talk about the COP climate change summit; why the short-term answer to our energy needs is be nuclear (and why it's a lot safer than people think); plus the myth of global overpopulation and why our current high inflation isn't going away.

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Merryn Somerset Webb: Hello, and welcome to the MoneyWeek Magazine podcast. I am Merryn Somerset Webb, and with me today, as usual, well, not as usual but as occasionally, on the good days, is John Stepek. Morning, John.

John Stepek: Morning, Merryn.

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Merryn: What shall we talk about?

John: Well, you’ve been frolicking with the green classes, haven’t you, over the past couple of weeks, because you’ve been up in Glasgow?

Merryn: There is absolutely no frolicking. Frolicking with green people, green people don’t frolic. I did go to COP for a day, I spoke on a panel, I had a little look around. There was, as one of my friends said, given the amount of hot air at COP, it’s surprising the whole world isn’t burnt to a crisp already, an awful lot of do-goodery talking, a lot of shiny, well-off people who I think spend all their time flying round the world going to conference after conference after conference to talk about how other people shouldn’t fly around the world, a lot of that sort of thing.

So, mmm, not as edifying as one might like, shall we say? Shall we say? And also, not much talk about the consequences of the kind of action that people would like to take. A lot of talk about the potentially positive consequences, i.e. dealing with climate change, reducing global warming, etc., but very little talk about the downside of that for people’s living standards and lives, which again I find kind of unattractive, in that if we are going to talk about doing very extreme things, or feel like extreme things, to deal with the probleMerryn: brought about by climate change, we should also talk about the effect that those things will have on ordinary people.

And one of the obvious ones there is something we’ve talked about before, inflation. And I tweeted something the other day about how a lot of the actions we may or may not take to deal with climate change will be both very disruptive and very inflationary, to which I got a whole load of push-back with people saying, well, what is the alternative, what do you expect them to do? And said, I’m not even talking about alternatives, I’m just saying that we need to be ready for the inflationary and lifestyle disruptive consequences of what we’re doing.

This is not an argument about what we should or shouldn’t do, I’m just saying that what it looks like what we are going to do is going to be inflationary and is going to be disruptive and is going to change the way a lot of people live, and we should be honest about that, upfront about it, explain it, and also prepare for it.

John: Yes, it’s yet another one of these topics where you’re not allowed to say anything but pure positivity about it. It’s interesting, because it sounds like you actually agree with Greta Thunberg, that it’s all blah, blah, blah, just from the different side of the spectrum.

Merryn: Well, there’s a lot of blah, blah, blah, but let’s not forget how far this has gone already. The UK’s emissions are falling, have been falling for some time, and the same is true about quite a lot of other developed countries. And you may say, well, we’re just outsourcing our emissions to China or whatever it is, but nonetheless you can’t pretend that Greta goes there and she acts like absolutely nothing has happened so far and everyone’s just sitting there pretending it hasn’t happened.

But talk about pushing on an open door, right? She’s arguing for things that everyone appears to agree with. She gets absolutely no push-back at all, everyone’s going, yes, Greta, we agree with you and we’re going to do this, this, this and this. It’s a bit like Oxfam, isn’t it?

John: No, she doesn’t have a hard sell. The thing that I’m finding interesting though, talking about things that you can’t talk about, nuclear is coming out as finally being something that we can actually move from condemning.

I thought it was interesting that Gillian Tett, a well-known FT writer that has been on the podcast before, came out this weekend and has said that actually I was wrong on nuclear, and after I’d spoken to this guy from the Nuclear Energy Association, I kind of looked at it and realised that Fukushima was nowhere near as disastrous in terMerryn: of deaths from actual radiation rather than all the other stuff that happened, and that nuclear’s actually quite safe.

Merryn: Well, it is. Gillian and I were talking about this this weekend, as it happens, because she was at COP as well, and when you talk about Fukushima, everyone thinks that people died as a result of the nuclear accident. But of course, they didn’t. Nobody died as a result of that. 20,000 people died in the tsunami, but the reactor itself didn’t kill anybody. Yet.

John: Yes, honestly, I think if you go back to Chernobyl as well, the statistics on that are surprisingly low too. And also I think it’s a good sign Rolls-Royce got these small, modular reactor go-ahead, and we’ve written about that in MoneyWeek quite recently, Dominic did a good piece on it, but it does feel like it’s the natural bridge between fossil fuels and whatever kind of future we actually think that we need. And presumably, as long as you can deal with the waste, there’s no reason why you can’t have nuclear permanently.

Merryn: Yes, that’s an interesting one, isn’t it, because we used to worry about the waste, well, we still do worry about the waste, what do you do with it, where do you bury it, etc., but the volume of waste chucked out by the nuclear industry is actually very small. It’s got to be very securely buried and taken care of, etc., that’s not my area, but put it next to the waste from, say, wind turbine blades… I don’t know if you’ve ever seen the photographs of the burying of the blades? Because there’s a huge part of the turbine which cannot be recycled, which is obviously very difficult, and those blades are simply laid down and buried.

John: I didn’t actually realise that. I just assumed you could have done something, like melted them down or something like that.

Merryn: No, go look up the photos. They just get buried.

John: I did see one getting used as a bus shelter, recently, but…

Merryn: Well, that’s one way to use them, but that’d take an awful lot of bus shelters. An awful lot of bus shelters. So that’s interesting.

John: But yes, the footprint of all the rare earth metals, etc., etc., etc., that you need for them as well… Because actually, this week, I was at a dinner for Amati’s new fund, which is investing in a lot of the things like rare earth metals that we need for the green transition, and the thing is a lot of the other journalists, they’ve basically just focusing on the fact that this is the mining industry and therefore it’s basically just bad. But that’s the point, you need to dig this stuff out of the ground if you’re going to make the Tesla battery and all the rest of it. So actually, yes, that’s a good point about nuclear.

Merryn: This is one of the things that we do keep talking about, that you cannot have a renewables industry without a mining industry. The renewables industry is, in many ways, filthy, absolutely filthy. It uses these rare earth metals that are both politically difficult, difficult to mine. None of this is ideal.

So nuclear definitely does fit into the equation and really should be more adopted. The problem of course is that it’ll take quite a long time to set up reactors, and the Rolls-Royce discovery period is going to take quite a long time as well. Because we’ve neglected it for so long, it’s going to be quite a long time before we can properly rely on it.

John: Yes, but at least it’s a start.

Merryn: It’s a start. Now, here’s the other interesting thing from COP. I’ve written about this in the FT this week, actually. There was a big inflatable baby knocking around, there’s a group called population matters, going on and on and on about the population explosion and the elephant in the room, or the inflatable baby in the room, is the fact that all this is caused by too many people and the population is soaring and we’re going to be at 10-point-something billion by 2100, and this is a real problem and everyone must be forced to have fewer babies.

And this is one of those things, it has momentum behind it, this idea the world is not just overpopulated but getting increasingly overpopulated, and actually when you stop and look at it, you say, that’s nonsense. It is nonsense. Everyone at COP and everyone working inside the climate change industry, because let’s not forget this is an industry, is using as their denominator for their forecasts 10.9 billion people.

They’re using the wrong denominator because we already know, the UN is, bit by bit by bit, dropping their eventual population peak forecasts, but there are now a lot of forecasts saying, hold on a tick, the global population is going to peak maybe in 2050, maybe 2060, maybe 2070, maybe even earlier, and it may well peak at 8.9 billion. Maybe it’ll peak at a lower level. Because you have to look at the fertility rates around the world.

And the UN has this list of nine countries from whom the majority of population growth over the next 50 years is going to come from, and these are the countries they look at and they go, terrible, we must make people have fewer babies. Now, on that list is India. Now, guess, go on John, what the fertility rate in India is? How many babies, on average, does each Indian woman have?

John: I would say, what, three?

Merryn: Oh, no, no, no-no.

John: Is it less than that?

Merryn: Yes. Yes, it is.

John: I just thought, because India’s obviously got a lot of poverty still, that it’d be higher. What is it?

Merryn: It is 2.17. It is barely above replacement rate. So if you’re looking at India and saying, it’s them, they’re driving population growth, it’s them, it’s not. It’s not. There are actually very few countries, two or three countries, Nigeria, and I can’t remember who else, where the fertility rate is still very significantly higher than the replacement rate. And across Europe, it’s either at or below replacement rate.

So these forecasts of where population is going to go are, at the higher end, obviously wrong. And even at the lower end, you’re like, I don’t know, that could change too. The truth is that the world is changing so fast, and the way women behave is changing so fast, the way families are constructed is changing so fast, that we just don’t know what the population is going to be in 50 years. But I think what we do know is it probably isn’t going to be over 10 billion.

And that’s partially about… I went to a great session on this actually on the very, very fringe of COP, because COP has fringes as well and you can say things on the fringes you can’t say in the middle. I went to a very good one, the Longevity Forum, and they had one on population decline potential, and of course no one really quite knows why fertility rates are falling so fast.

We know it’s a lot about women being empowered and women going to work, the more likely a woman is to have an economic role, a paid economic role should I say, rather than a smallholding economic role, the more likley they are to have fewer children. So we know that and it’s a little bit a function of childcare, although apparently not nearly as much as you’d think, and then of course actual medical fertility rates are falling very fast, so sperm counts are falling very fast.

All that kind of thing is fascinating. Is that about plastics, is that about diets, is it about some kind of hormonal thing? Who knows, but… Interestingly, this is all so interesting, I wish I was a biologist, I really do, apparently fertility rates are falling in animals as well, so it’s not just us, it’s other mammals.

John: Seriously?

Merryn: Yes. The sperm count in all sorts of mammals is falling, not just us.

John: Have they just not got better at measuring sperm counts? That’s what I wonder about.

Merryn: John, I have no idea. That takes me so outside my area of competence.

John: Neither have I, but you sort of think, how…? Sorry, carry on.

Merryn: No, hang on, I’m just looking at my notes. There’s nothing here about measurement. No, it’s all about – we don’t know and we’re looking at it – but fertility is really falling very fast.

John: Do you know what surprises me about this lot, because this isn’t new, none of these people who were tossing the giant inflatable baby about actually read newspapers, because even the BBC has had headlines about this, talking a couple of years ago. I actually thought this argument had been kind of settled.

Merryn: No. There is still a lot of conversation at COP26 about the nightmare of population explosion. So readers, listeners I should say, I would like you to all go away and read about… I have recommended so many times, I can’t believe the whole world hasn’t read it already, Empty Planet, The Shock of Global Population Decline by Darrell Bricker and John Ibbitson, and it’s really, really good and it runs through all the reasons why population is set to decline and what that means.

Because the absolutely vital thing is that if we don’t take on board that it’s not just about ageing populations, it’s about declining populations, if we don’t recognise what the future will look like, we will have all the wrong policies. Yes?

John: Yes.

Merryn: And it also looks to me as if it’s incredibly inflationary, not deflationary. One of the things that people always say is that an ageing population is deflationary. They look at Japan and they say, look, see, shrinking, ageing population, deflationary. But is it really, or has Japan just been a function, like everybody else, and you said this the other day, last time we talked, of the fact that we’ve been in a hugely disinflationary environment for 20 years, nothing to do with how old the population is?

John: I honestly think it always strikes me as strange that we have this idea of an over-65s population, and we immediately forget all of the generational progress that we’ve made over the last 30, 50 years, and we start to assume that whenever you turn 65, you turn into your own grandparents. So it’s like suddenly you’re living in a smaller house and you’re buying discount shopping.

And honestly, wait a minute, no, that’s not what’s going to happen. We’re going to be even more selfish and spend even more the older we get and the more free time that we’ve got. So this idea that we’re suddenly going to become parsimonious because our grandparents were, it strikes me as just incredibly stupid.

Merryn: Yes, but it’s not even just about whether we’re parsimonious not, it’s about the peak time for state spending, and this is really important as well because state spending is about as inflationary as you can get, peak period of childhood, of course, but then over 80. You’re not particularly expensive to the state in your 60s and 70s, but hit 80 and the number of 80-year-olds in the world is going to go up 148% maybe, who knows, I’m not going to get into the business of pretend forecast, but say it’s definitely going to go up a lot, a lot, a lot over the next 50 years.

Those over-80s, they are expensive. Someone’s going to have to print the money to look after them, it’s not coming from anywhere else, is it? And if the working age of the population, at the same time, goes up just a tiny percentage, or falls, and your dependency ratio changes very dramatically, everyone goes, well, that’s disinflationary. How can that possibly be disinflationary? Surely, that is hugely inflationary. If you’re a young person going into that environment, your wages are going to be off the charts, fantastic for the young.

John: Well, yes, as soon as you get past all the taxes that they’ll have to pay to pay for all the older people.

Merryn: I think they’ll just confiscate our houses for that, that’s fine. That’s fine.

John: That’ll take a revolution. Yes, I wouldn’t be surprised to see that happening. Inflation, inflation, inflation, we should probably talk about actual current inflation, as opposed to future inflation because of old people, because it’s not quite as transitory as everyone has been frantically saying.

Merryn: John, that depends what you mean by transitory. In some people’s minds, transitory can be up to, I don’t know, say, 15 years.

John: Exactly, the 70s was transitory.

Merryn: Totally transitory.

John: They ended. They did end.

Merryn: Exactly. It ended, therefore it was transitory. Therefore, no policy reaction required, right?

John: Exactly. But yes, US inflation has come out, and that was about 6% this week, and even if you just take out food and energy, it was still 4.6%, which is extraordinarily high, actually. If it hangs about at that level for any prolonged period of time, that’s starting to nibble at the point at which equities usually stop performing well.

And I just wonder how much longer it is before it gets to the point where we actually see some sort of reaction. Because we already saw one of the democrat MPs in America said, actually, we need to do something about this, and I think it’s that point where politicians start worrying about inflation as opposed to worrying about recessions that will market the point at which central banks start to do something.

Merryn: Well, didn’t Joe Biden even say hiMerryn: elf that we need to do something? I don’t know what he thinks he can do. What can he do?

John: I think he’s worried about petrol prices, though, mostly, which means that they’ll have to start letting the frackers pump out more oil, presumably, because every time he meets OPEC, OPEC says, actually, we don’t really want to print more oil just to keep American’s petrol prices down.

Merryn: Fair.

John: So it’s an easy solution, it’s just whether he can get over the green propaganda stuff before… Because they’ve got the mid-term elections next year, again, which presumably means that they’ll end up having the whole American system back into gridlock, and then, at that point, I don’t know how much more he can get done.

Merryn: It’s a reminder to all of us that fossil fuels are a really great thing in terMerryn: of energy production as opposed to anything else.

John: Yes, this is the tricky thing, isn’t it? Because this goes back to what we were talking about with the green move being inflationary. Ultimately, the economy is entirely based on how much we have to pay for energy, and so I guess that’s the other reason why this inflation’s more structural than temporary. Because if we are going to pursue this transition, and it looks as if, of all the political imperatives, that’s still the dominant one, then we can just expect to see energy prices continuing to go up.

Merryn: Yes, there is no other way. We talk a lot about how solar energy is getting cheaper and cheaper and all this kind of thing, the panels are getting cheaper, that may be so but solar can only ever be part of the mix until battery technology is significantly superior to where it is now. So it doesn’t really matter how cheap…

John: It’s not getting cheaper anymore.

Merryn: Oh, OK, well, that doesn’t help then.

John: No, they stopped getting cheaper at the start of this year. So yes, it’s not like Moore’s Law. They’ve gone up for the same reason as everything else has gone up, because the supply chain constraints and the price of silicon has shot up and all the rest of it. So I think this idea that we’ll have the same sort of exponential evolution of solar technology as we had in microchips is basically just wishful thinking, unfortunately. And it is very much the battery stuff that it affects, and again I think that’s still waiting on a breakthrough rather than…

Merryn: It’s not incremental, it’s not going to get there with incremental change, we need one big breakthrough to take us through the next bit.

John: Yes. And that seeMerryn: to be… I suppose it’s like nuclear fusion as well.

Merryn: Why is it like nuclear fusion? Because it’s often talked about, never happens?

John: Exactly, it’s one of these things that’s miles away. And I think it’s also interesting that fusion’s come back into the news cycle again, because every time fusion comes into the news cycle, that’s yet another top-of-the-market indicator, I tend to find.

Merryn: Must go back, actually, and have another look at nuclear. I remember, years and years ago, we wrote that if the nuclear industry were to hugely expand it would use thorium not uranium. Do you remember that conversation?

John: Yes.

Merryn: Thorium, not dangerous, much easier to dispose of, recyclable. Listeners, someone write in and correct me on this, I only have vague memories of it. And there was always confusion between great fans of thorium as to why the industry ever used uranium. But that was connected to weaponry, I think. Anyway, it’s an interesting one. We’d better go back to that. We’d better go back to that.

John: Yes, we still get regular emails from readers talking about thorium, every so often.

Merryn: Do we?

John: I think one of the things with thorium though was it was just one of a range of alternatives, so I’m assuming that it just wasn’t as economically easy as another one. But we should look at it, we should definitely look at it again.

Merryn: OK, we’ll go back to that. So there we go, lots of interesting news in the world of energy. COP26 ends this week, so obviously we’ll be writing about it more in the magazine next week, rounding up what’s happened, and we’ll also be having a good look at nuclear energy in the next couple of weeks. Thank you very much for listening. Thank you, John.

John: Thanks, Merryn.

Merryn: And if you want to hear more from us, of course go to our website, and sign up for our fabulous daily newsletter, written by John most of the time. Talk to you again next week when we have some very interesting guests. Oh, John has something more to say. What is it, John?

John: Don’t forget the MoneyWeek Wealth Summit as virtual this year, which means it’s even easier for you to attend. Go to and get your ticket now. It’s much cheaper if you’re a subscriber, so subscribe to MoneyWeek first, if you haven’t already. Thanks.

Merryn: Perfect.