Wednesday, February 13, 2008

Would Julian Simon Have Won a Second Bet?

Source: Global Financial Data

George Mason economist Don Boudreaux, writing today ("
The Ultimate Scholar") in honor of resource economist Julian Simon, on the 10th anniversary of his death, revisits the famous bet in 1980 (it even has its own Wikipedia listing: "The Simon-Ehrlich Wager") between scientist Paul Ehrlich and economist Simon:

Stanford University's Paul Ehrlich -- author of "The Population Bomb," foretelling disaster from population growth -- found economist Julian Simon's optimism about population growth to be so absurd that he famously accepted a bet from Simon in 1980.

The essence of Simon's position in the bet was that, despite the population growth that was sure to occur during the 1980s, the effective supply of natural resources would increase during this decade because human beings would figure out how to find, extract and use such resources more efficiently.

And the surest measure of this increased supply would be lower inflation-adjusted prices of resources.

Convinced that higher population is a curse, Ehrlich accepted the $1,000 bet. He chose (for Simon gave Ehrlich the choice of which resources to bet on) a bundle of copper, chromium, nickel, tin and tungsten and bet Simon that the real price of this bundle of resources would be higher in 1990 than in 1980.

In 1990 the prices in September of that year were compared to the prices of these resources in September 1980. Simon won convincingly. The real price of each of these five resources had fallen over the course of that decade, indicating that their supplies had grown even though human population had also grown by more than 800 million during that same time.

Julian Simon wanted to enter into a second wager, based on either the same commodities, or a different group of commodities, but the terms of a proposed second wager were never agreed upon. Simon died in February 1998.

What if the original bet had been extended for another ten-year period, from 1990-2000? Simon would have won again (see chart above), since all of the metals declined in real price except for tungsten, and the average price decline of the 5-commodity group was -19%.

58 Comments:

At 2/13/2008 10:01 AM, Anonymous Machiavelli999 said...

Umm, not to rain on your parade, but can you extend those results to 2008. As we all know, the last few years have seen an explosion in commodity prices.

I am not saying we are about to enter periods of material shortages because the higher prices will encourage more exploration and more conservation, but you are ignoring an important time period when it comes to commodity prices.

 
At 2/13/2008 2:09 PM, Anonymous Anonymous said...

What was tungsten used for in 2000 that it wasn't used for in 1990? Julian Simon, I believe, would have qualified his wager for changes in innovation/manufacturing/etc. I've read quite a bit of his writing, and never encountered any such caveats, but it makes some sense to adjust for those chAnges.

skh.pcola

 
At 2/13/2008 6:28 PM, Anonymous Anonymous said...

Machiavelli: Don't forget to ignore the depreciation of the U.S. dollar. Just because our corrupt politicians and fed chairmen are purposefully destroying our currency, doesn't mean that global commodity prices rise in global real terms.

 
At 2/13/2008 6:40 PM, Blogger Arthur said...

Ehrlich argued that the price rise would be due to supply side factors. The current (post-2000) commodity price rise is due to demand side factors. The "bet" does not distinguish the cause of price rises, but if the 2000-2010 price increase (assuming current trends continue and someone redoes the bet)continues, it is far from the reason that Ehrlich claimed would occur.

 
At 2/13/2008 9:11 PM, Blogger Thomas said...

machiavelli999, has there been an explosion in commodity prices in constant dollar terms?

 
At 2/14/2008 10:06 AM, Blogger Dave Gardner said...

While Ehrlich's timetable was off, I wouldn't be too quick to celebrate. The next 50 years will introduce the concept of humility to Julian Simon fans.

Dave Gardner
Producer/Director
Hooked on Growth: Our Misguided Quest for Prosperity
www.growthbusters.com

 
At 2/14/2008 10:37 AM, Anonymous Anonymous said...

Dave Gardner do you wanna bet?

 
At 2/14/2008 11:23 AM, Blogger Shawn said...

Unfortunately, Dave, the history of human progress and ingenuity have failed to introduce the concept of humility to growth-fear-mongers such as yourself.

 
At 2/14/2008 11:53 AM, Anonymous Machiavelli999 said...

Forget 50 years, 500 years probably wouldn't be enough to change your mind.

 
At 2/14/2008 11:54 AM, Blogger Dave Gardner said...

All the things you and Simon celebrate have been present for a mere blip in the history of mankind. If you want to hitch your entire understanding of how the universe works to something that has served us for less than 200 years, and ignore the mounting evidence lately that indicates the honeymoon is ending, feel free.

I wish I could understand why you cling so fiercely to your paradigm.

I love the humor of offering up a bet. LOL Thanks for that. However, you are already betting! You're betting the health and welfare of our grandchildren. I hope you're right.

Dave Gardner
Producer/Director
Hooked on Growth: Our Misguided Quest for Prosperity
www.growthbusters.com

 
At 2/14/2008 12:51 PM, Blogger Shawn said...

Unfortunately, Dave, the history of human progress and ingenuity has failed to introduce the concept of humility to growth-fear-mongers such as yourself.

 
At 2/15/2008 11:53 AM, Anonymous Greg N. said...

Dave,

The whole point of the bet is to put one's money where one's mouth is. We know you can talk a big game, Dave, but somehow "put up or shut up" seems apt right about now. If you truly believe that you're right about these things, why not accept the bet and make a little extra money?

I guess the rationale might be: "I'll be successful in my quest for environmental justice, and therefore I will make myself lose" or some such. But that's a small price to pay, right? Really, it's win-win for you.

I'd offer the same bet, but I'm not sure my wife is as confident as I am. In any event, a fear-monger unwilling to take a bet like this doesn't really inspire much fear. You're like the preacher shouting about Armageddon while contributing to a 401k.

 
At 2/15/2008 12:20 PM, Blogger Dave Gardner said...

Greg, I'm not trying to "inspire fear." I'm trying to jump-start the thinking, reasoning, logical part of your brain.

Do you think you can take a 1,000-acre ranch and continue to increase the number of cattle you run on it indefinitely? Apparently. Therefore, the prospects of success in the above exercise are pretty slim.

If I thought a bet would do the trick, I might try it. Frankly, I believe I'll focus instead on some brains that might actually offer some chance of success! :-)

All the best to you, however, as you drive your Hummer off the cliff. Enjoy the comfortable ride!

Dave Gardner
Producer/Director
Hooked on Growth: Our Misguided Quest for Prosperity
www.growthbusters.com

 
At 2/15/2008 12:37 PM, Blogger Shawn said...

Dave...we couldn't feed the population if we farmed according to methods used in 1900.

Guess what? Methods change. They become more efficient, or, and here's another thing: when items get too expensive (if, in your example, we can't find a way to raise more cattle on a ranch in a way that is financially viable), people will just substitute other items that are cheaper and meet their needs. Voila! Problem solved!

The world can never continue to grow based on current methods, at a current rate. Methods will continue to change, and that change will come both gradually and in spurts, but there is no reason to fear that what has always happened will somehow not work in the future: namely, that innovative, profit-seeking individuals will find a new and better way to meet needs, and they'll make money off of that ingenuity, and we'll all be better off.

You'll always have a market for your fears, though, because it's easy to say "the way it is can never last forever!!" We're not saying it will. In fact, we're agreeing that it won't, most likely. But it doesn't matter in the slightest. So, as I've heard a wise man say, "you're absolutely right in every insignificant way."

 
At 2/15/2008 12:45 PM, Blogger Dave Gardner said...

Shawn, you don't get it. WE are the cattle. Technology can only do so much to make 1,000 acres accommodate more and more cattle sustainably. The Earth is our ranch and we are the cattle. Until you can offer any plausible scenario under which that ranch doesn't have to wisely recognize it can NOT cram in more cattle than the resources can handle, you have absolutely no argument to make for the Julian Simon mass-suicide approach.

I have faith in human ingenuity - the ingenuity to figure out how to be happy without constantly, perpetually having MORE of everything.

Dave

 
At 2/15/2008 12:58 PM, Blogger Shawn said...

What is it, then, that has changed, Dave? what is it that makes you sure that *now*, *this time*, we're doomed if we don't repent?

What is new under the sun? when was the 'tipping point' (to use that overused expression) when our Hummer crested the hill and started rolling towards the cliff?

As I'm sure you realize, these fears have been continually voiced, and have continually been shown lacking. Smarter men than you and I have perenially been certain that *now* (then) was the time of disaster.

My point of view has prevailed every time...what is the new evidence that your overpopulation scenario is worth paying any attention to?

 
At 2/15/2008 1:19 PM, Blogger Shawn said...

Mr. Simon himself on the issue:

More people, and increased income, cause resources to become more scarce in the short run. Heightened scarcity causes prices to rise. The higher prices present opportunity, and prompt inventors and entrepreneurs to search for solutions. Many fail in the search, at cost to themselves. But in a free society, solutions are eventually found. And in the long run the new developments leave us better off than if the problems had not arisen. That is, prices eventually become lower than before the increased scarcity occurred.

Via Wikipedia article on the Ehrlich/Simon wager.

 
At 2/15/2008 1:22 PM, Blogger Dave Gardner said...

Hey, Shawn. Paul Ehrlich, a brilliant scientist, was indeed wrong when he predicted "now" was the time back in 1968. I don't know for sure that NOW is the time in 2008, though - as I mentioned - the evidence seems to be mounting.

But let's say we don't know. What we do know is that there ARE limits. Technology can only do so much. We absolutely know there is no way to sustain a million cattle on a 1,000-acre ranch without importing food and exporting waste. And even then we would probably face other challenges like disease, air quality, etc. Apply this to the Earth, and we know that it simply must have some hard limit for sustaining mankind without importing food from Mars and exporting our waste into space. Maybe these are the technological rabbits you are hoping we can pull out of our hats. I think that's a fool's bet.

So, whether we reached Earth's limits in 1986, 2006, or will reach that point in 2026 or even 2106, we can be sure that at some point, we cannot continue doubling our population and/or doubling our economic throughput every few decades or even every few centuries.

Knowing that, why insist on taking all the risks that come with pushing the edge of that envelope? We will have to stabilize population and economic throughput sometime. Do you simply lack the courage to begin implementing sanity on your watch?

Dave Gardner
Producer/Director
Hooked on Growth: Our Misguided Quest for Prosperity
www.growthbusters.com

 
At 2/15/2008 1:48 PM, Blogger Shawn said...

...there it is.

Dave, you're wanting to plan the unplannable. There is no amount of decisions that could be made that would "fix" a problem that we can't even define with information that we don't even have. This is classic top-down thinking at work here, and suffers from the same impossible notions of complete or sufficient knowledge that soviet planners sought to overcome in Moscow when they set prices for the country. They couldn't determine scarcity or future needs correctly to set limits on certain products, or preserve resources in particular areas to save for a 'rainy day', so to speak.

You can't have enough information to determine what to do, what resources to 'preserve' (as if it's somehow better to use them 25 years from now, vs. right now), what technologies to pursue, what ways to limit growth 'strategically'.

The only thing you can do is *stop* growth altogether, and I'm afraid I care far too much not only about myself, but about the people living in third world countries to stop growth.

Again...you seem to think (with your Hummer illustration) that things will be fine until *poof* all of a sudden, we're over the cliff, and screaming/wishing we'd listened to the enlightened. I say that as resources taper off, and prices are allowed to rise, people will switch to alternative resources gradually, allowing the initial, now more costly resources to go to their most valued uses. There is no looming precipice with resources, because prices will send very clear signals to the people who value the resources the least to find other alternatives.

So, why is there nothing to worry about? Because of the magic of prices.

 
At 2/15/2008 3:42 PM, Blogger Dave Gardner said...

Shawn,

I'm sure the third world is grateful for your selfless dedication to improving their lives. I'm surprised you can find time to comment here while your tirelessly sacrificing to improve their lot.

I'm smart enough to stop knocking when there's no one home. Beam me up, Scotty. There's no intelligent life here.

Dave

 
At 2/16/2008 3:18 AM, Blogger Gary Klockarman said...

I also would like to offer to bet Dave Gardner. I realize that Simon's contrarian ideas seem ridiculous to those who are not familiar with economics. Before anyone rejects Simon's ideas, I'd suggest you read the book - all 800+ pages. I have. It is probably the best book I've ever read after The Bible. I'd even put it above Adam Smith's The Wealth of Nations and Milton Friedman's Free to Choose.
To those who comment that Simon is examining too short of a time period, his theory works from the dawn of man to the present, AND WILL CONTINUE TO FOR THE FORESEEABLE FUTURE. There is nothing unique about the present. In fact, it's just like the past: more progress, more inovation, more creativiy, more resources (yes MORE resources, not less).
Read the book! The Ultimate Resource II.

 
At 2/16/2008 9:28 AM, Blogger Shawn said...

the script of the conversation, readers digest version:

dave: "end coming!" "Repent!"

shawn: "[historical faultiness of dave's points]"

dave: "if you don't support my agenda, you hate your grandchildren," "end coming!" "Repent!"

shawn: "[rudimentary economics explanation]"

dave: "end coming!" "Repent!"

shawn: "[continued historical faultiness of dave's points]"

dave: "I am omniscient! end coming! Repent! Give the reins to me or you will all perish" (ed: note the thinly veiled power play)

shawn: "[refute central planning basis of dave's claims], [further economics refuting notion of a problem]"

dave: "you're a stupid poopyhead, Shawn. And you're...stupid."

(ed: you'll note the complete lack of any substantive points made by mr. gardner to this point, as well as his continued assertion that anyone not believing in his view of reality is apparently stupid and unworthy of conversing with, but only of being talked down to and patronized.)

 
At 2/16/2008 9:57 AM, Blogger Dave Gardner said...

Yes, and your dad can beat up my dad. I'm off to converse with the open-minded who are up on current events, like fisheries in decline (who cares, they're full of mercury anyway, right?), coral reefs dying, species extinction, ice melting, smog killing. Didn't realize I needed to recite all the facts for you.

I wrote early on that I would focus on the minds that offer some hope for exercise of logic. I then failed to do that. So I can't complain about the cerebral vacuum here.

But it's been entertaining. And I am, indeed, guilty of finally posting that I have little respect for the intelligence of those posting here in defense of the continuing orgy of self-indulgent consumption and overpopulation. Thank you for helping me realize just how petty, narrow-minded, and misled are the fans of Julian Simon.

Seriously outta here! (Yes, I know, you will now gloat that you kicked my butt. The self-delusion continues.)

Dave

 
At 2/16/2008 10:15 AM, Blogger Dave Gardner said...

Having second thoughts here, guys. I hate to leave it like this. You really ticked me off and I'm ashamed I let that happen. I stooped. Why don't you let me know when you work this out:

Let's say we resurrect Julian Simon and give him a 1,000-acre ranch. And he is to pretend it is the entire planet. There is no "away" for him to throw his waste, and he cannot import feed or water from poor third-world countries. He has to make that ranch self-sufficient (just like planet Earth). BUT, he still wants to grow ever fatter and richer, never stopping, never satisfied. How will he do it?

He is certainly free to procreate till the cows come home, so he can have as many humans as he wants, creating cattle feed and water (resources) out of thin air. Show me, oh wise ones, how the brilliant Julian Simon will make this ranch into a perpetually expanding economy.

Dave

 
At 2/16/2008 11:41 AM, Anonymous ad said...

I guess your test subject will have to invent ways to use the resources available to him better, if he is to get richer. It might be difficult for one single person to innovate fast enough.

But there are six thousand million people on the Earth.

So it should be six thousand million times easier for us to do the necessary innovating.

 
At 2/16/2008 12:00 PM, Blogger Dave Gardner said...

Nope. Not buying that one. But your answer wasn't unexpected. Is this the best you can do? Go back and re-read it. We won't count off for that incorrect answer if you can turn in a valid response!

Next...

Dave

 
At 2/16/2008 12:42 PM, Blogger Shawn said...

dave, you've done nothing to this point to warrant respect, certainly nothing to qualify you to speak as a professor to your students. You've shown nothing but arrogance and disdain. I ask, though I have no right to do so, that you attempt to have a conversation with people, rather than speaking down to them.

With that said, you may very well choose to "not buy" something that has a great deal of truth included in it, but that does not make it any less true, and you would do well to actually refute points made, rather than dismissing them out of hand.

Comparative advantage, division of labor, and profit-seeking enterprise is what will increase the productivity of this ranch, as it has always and everywhere in the past, though those aspects of capitalism be continually sneered at and maligned by people, even while they enjoy the fruits of them.

You say that this ranch is at 99% capacity, or perhaps 110%, and is currently running on borrowed time. I say that you simply can not know what capacity is, because you use a metric that is based on how things have happened in the past, or how they are currently happening. I say that, as innovations are made, we learn how to do more with less, and move beyond self-sufficiency through trade with others into prosperity.

In your example, then, let us pare this 1000 acre ranch into 1000 one-acre homesites. Now, every individual/family living on their 1 acre homesite certainly is free to be self-sufficient/completely contained within their own acre. They may catch their own rainfall as drinking water (assuming there is no stream), grow their own corn, trees, and sheep for wool. This is possible, and even feasible, and will definitely allow this family to remain alive, though at a subsistence level.

The magic, glorious thing is that by employing their particular gifts/resources/abilities, and specializing what they produce on their own parcel, and trading the surplus with people from other parcels, more will be created in the aggregate than could have been created in the individual parts.

Are there problems with this system? Of course there are. You've mentioned some of them: fisheries, coral, air quality, etc. These problems are very real, and very worth dealing with. Personally, I believe that there are ways to deal with these problems through a market mechanism (and have listened to smarter-than-myself people explaining the steps that may get us there).

You believe, unless I am mistaken, that the only way to remedy these problems is to put a cap on growth (both of property and prosperity). As I stated before, this approach is detrimental to people who don't have the great advantage of living in the U.S., or elsewhere in the west.

Julian Simon, and I hope that I do not misrepresent him...unlike Gary, I have not yet read 'the ultimate resource', though I know that that resource, according to Simon, is the human mind, human ingenuity, to solve problems as they arise.

I have great faith in this ingenuity, and I have the history of progress of mankind to back me up. You have a history of failed assertions, doomsday prophecies, and chicken-little-isms.

It is you, sir, who have the burden of proof, not Julian Simon nor those of his mind.

 
At 2/16/2008 12:48 PM, Blogger Shawn said...

unfortunately, I can't edit my comment...but here is a revised paragraph that makes more sense than the comma-ridden mess that it's replacing.

------

Julian Simon, and I hope that I do not misrepresent him...(unlike Gary, I have not yet read 'the ultimate resource'), believed that the ultimate resource is the human mind, human ingenuity, to solve problems as they arise, and this ingenuity will find ways to solve problems as they arise. You are seeking, in a roundabout way, to solve problems. I applaud that, but as I said, I believe your methods are faulty, and will lead to more poverty rather than less.

 
At 2/16/2008 1:01 PM, Blogger Dave Gardner said...

Okay, Shawn. Let's say, incorrectly, that 1,000 acres CAN support 1,000 families with no external inputs. The average ecological footprint of a single American is currently 24 acres, by the way.

I guess that explains why you've already indicated that just putting 1,000 families on that 1,000 acres will require them to live at subsistence level. But you also apparently believe that, according to your growth-god Simon, fifty years later we can have 2,000 families living comfortably on that 1,000 acres because all those minds will innovate and replace the limited and soon-depleted natural resources (which you don't even consider resources).

Will these people stir-fry each other's brains for food? Is that how they become "resources?" Do you honestly believe they will INVENT a way to feed 2,000 people in 50 years on that land, and process their waste, and then 4,000 people 50 years after that, and then 8,000 people 50 years after that? That is just steady population growth at a rate of 1.4% annually. It's difficult to imagine even keeping that population steady at 1,000 and having 3% GDP growth every year.

 
At 2/16/2008 1:08 PM, Blogger Gary Klockarman said...

Shawn,
You are definitely not misrepresenting Simon's book. In fact, it sounds as if you've read it. But, you don't need to read the book to understand the concepts, but you probably do need to have studied economics, or read many economics books (as I have) to be receptive to Simon's ideas.
Shawn, you can read the entire book here... http://www.juliansimon.com/writings/Ultimate_Resource/
Dave, I invite you to read this book too. If you don't want to read it all on-line, you can probably check it out at your local library - that's what I did.

 
At 2/16/2008 1:54 PM, Blogger Gary Klockarman said...

All,
Shawn is completely right in his analysis of the 1,000 acre farm posed by Dave.
The inhabitants of the farm would solve their problems using their imaginations, creativity, and they'd be helped along by basic economic principles: supply and demand, division of labor, comparative advantage, free trade, the miracle of prices, Adam Smith's "invisible hand", and even a little of Joseph Schumpeter's "creative distruction" among others. These are mostly just a bunch of old tried and true Econ 101 lessons that Simon applies to analyzing the history, present, and future of population and natural reasources.
A note to those who do want to read the book. I recommend just reading The Ulimtate Resource II. There's nothing wrong with the first book, but the second just has more detail and documentation, as Simon had become more of an expert in the subject matter, and had more time to research and footnote supporting data.

 
At 2/16/2008 1:58 PM, Blogger Dave Gardner said...

Thanks, Gary. Here are a couple of reads I would recommend:

Bartlett on Sustainability

Shoveling Fuel for a Runaway Train

 
At 2/16/2008 2:05 PM, Blogger Dave Gardner said...

Oops, just now saw Gary's solution to the 1,000 acre farm puzzle:

"The inhabitants of the farm would solve their problems using their imaginations, creativity, and they'd be helped along by basic economic principles: supply and demand, division of labor, comparative advantage, free trade, the miracle of prices, Adam Smith's "invisible hand", and even a little of Joseph Schumpeter's "creative distruction" among others."

I'm sorry, but this just looks like blind faith to me. Where is the logic? If the population of this ranch behaves even modestly compared to the planet today, growing just its population at 1.4% annually (to say nothing of growth in economic throughput) in 500 years there will be over 1,000 people on each acre. Do you really believe imagination and creativity will provide solutions that allow this to happen at all? And that supply and demand will result in this being a pretty sight?

 
At 2/16/2008 2:43 PM, Blogger Gary Klockarman said...

Dave,

I'm making an assumption that the people on this farm are real flesh-and-blood people with brains and not just a brainless mob that multiply like a bunch of bunny rabbits procreating furiously with out a care or thought about future consequences.

I have faith that people will creatively solve their own problems. Yes, faith. I'm not afraid of that word, but it appears you are.

Maybe a better way to explain it is in your own terms: "sustainability". People through their creativity and innovation will find ways to "sustain" themselves, their families, their neighbors, and the world they live in - and it all happens without the government intervening.

If people with your views want to practice the "precautionary principle" on your own free will, be my guest. It's a very personal choice, and one that should not be imposed on others by some governmental entity.

 
At 2/16/2008 3:13 PM, Blogger Dave Gardner said...

It turns out we agree. Please don't assume I've proposed any government intervention. I'm just proposing the same thing you are: that we are capable of waking up and smelling the coffee. If it appears that we don't have enough clean air, arable land, and fishable oceans to keep multiplying like a mindless mob of bunnies, we'll wise up and stop - hopefully voluntarily if we are all aware of the situation and the impacts of our choices.

In order to do that, we would have to have some intelligent conversations about it. One of us says, "Hey, this might be a good point to be creative and respond to the evidence that it is time for progress (rather than sticking to old paradigms just because they always worked before). We might want to have smaller families if we want a high quality of life going forward. We might want to look for ways to enrich our lives that don't require continuing liquidation of fish and other species, oil, coal, and fertile soil. That is what's happening today.

Now, correct me if I'm wrong, but the sense I've been getting is that your response to the above is, "Don't worry, be happy. We'll be creative when we need to be." I just can't figure out what you're waiting for.

I suppose we can disagree about when the circumstances are significant enough for us to act. But I don't think you can expect this creative response to occur while everyone is saying, "Don't worry, be happy, we'll innovate our way out of this." At some point the innovation must begin. And that innovation may not involve continuing to increase GDP or population.

Make any sense?

 
At 2/16/2008 4:38 PM, Blogger Gary Klockarman said...

"Don't worry, be happy". That's pretty close to the phrase I use constantly: "Life is good...and getting better all the time."

Dave, you don't need to worry about when the innovation to solve our problems starts, because it's happening right now, and has been for a long time (although many would obviously like it to happen much faster).

They don't call it the "invisible hand" for nothing, and that is one of the difficulties for me in getting people to see the benefits of Simon's book, or the benefits of free markets.

The other difficult concept that people like myself have getting across to people is Joseph Schumpteer's concept of "creative destruction" - which most people just perceive as "destruction". Alan Greenspan (who is a big fan of Schumpeter & creative destruction) made this same point in his latest book. An example of creative destruction (and there are literally millions of examples) would be that Kodak has layed of many thousands of employees who manufacture film in the past ten years or so because of the move to digital cameras. It's too bad if you are one of those employees, but it's hard to deny the net benefit to society. Hey, it just occured to me that the natural resources that used to be consumed to make the plastic film has now reduced demand for those resources, thereby increasing existing supplies, and reducing prices of those commodities - which perfectly dovetails with Simon's theories.

You, my friend, are even part of the innovation process that is at work right now: you make movies about these things you care about, and it likely will have some effect. I actually think it's good to have people on both ends of the rope in the tug-of-war (they keep each other honest and maintain a sort of equilibrium).

Regarding your point on the size of families - they are getting smaller. My wife and I have two kids. My ancestors that lived in Finland had between 4 to 10 or more children in their families in the 18th and 19th centuries (and this was the rule rather than the exception in Europe in these times). They did not have that many children because they didn't have a clue about the birds and the bees (trust me, they knew), it was a rational decision. In my ancestors' families about 1/4 to 1/3 of the children died before the age of 4 due to poor health care, so if tragedy struck and a child became sick and died. They also traditionally left the farm to the oldest male, so they needed one of those. If you had three girls in a row, well you better keep going. Also, due to a lack of adequate transportation, trade was minimal. Therefore, your farm was your means of subsistance, and you needed labor, i.e. children to work on the farm. Since we have better health care, and the transportation improvements and increased trade has made it unecessary for me to have a farm, I've chosen to have only two kids.

I'm glad that you are not for government intervention on these issues - I believe there are many with your point of view that have a Fabian style socialist agenda, and my role is to be the guy tugging on the other end of the rope keeping them honest.

 
At 2/16/2008 4:51 PM, Anonymous Michał Gancarski said...

The problem with all of you discussing Dave's fallacies is that you too assume that we are living on a 1,000 acre farm. We are not. In fact, we constantly grow the farm by adding additional acreage.

Technological and scientific progress does not only allow us to use each acre more efficiently. It lets us grow the farm. Huge part of today's resources were not resources at all two hundred years ago. We did not know how to use them. The same applies to the future. We will continue to grow the farm by finding ways to treat things now completely useless as resources of the future.

Of course there is need for more market in environment in order to provide the entrepreneurial people with incentives to solve problems of scarcity we will face. But we have been facing them anyway and nothing is going to change it. Even Dave's dreams on preservation enforced using guns and force.

Excuse my English if it is not to clear or correct. I am not a native speaker.

 
At 2/16/2008 6:30 PM, Blogger Dave Gardner said...

Mical, it's still one Earth, my friend. I used the 1,000 acres to help folks wrap their head around a finite environment. It's easy to live it up when you can export your waste and import your caviar. But all the concepts and limits are the same. You might pee in the ocean, but you wouldn't pee in the swimming pool in your backyard. Well, now we have nearly 7 billion people peeing in our pool, and it's beginning to be hard to ignore.

 
At 2/17/2008 8:38 AM, Blogger Brishen Hoff said...

To all the Julian Simon fans and growthists: Read www.growthism.com they mention your hero in a not so positive light. Also see my article: http://ecologicalcrash.blogspot.com/2008/02/growthism-and-questions-that-growthists.html

Now answer some simple questions:
1)Do you agree that the earth and its resources are finite?
2)Do you agree that each person on earth has to consume resources in order to survive?
3)Is it fair to say that when the population grows, the amount of space and natural resources per person declines?
4)Would you agree that any growthist advocating more population growth, consumption per person growth or the product economic growth should be required to state when will be enough?
5)What are you advocating? Population growth? Consumption per person growth? Economic growth?
6)Would you classify the species extinctions caused by humans as a market failure?
7)What would you say is more valuable: having so few people that even a poor family could afford 10,000 acres with their own potable stream, forest, and private lake full of fish in a nice climate or having so many people that technology has made available electric toothbrushes, cellphones with downloadable ringtones, remote starters for their cars, but are confined to highrise condos in polluted cities with no land of their own?

 
At 2/17/2008 2:37 PM, Anonymous Michał Gancarski said...

I don't know what "growthism" is but:

ad 1. Yes
ad 2. Yes
ad 3. No
ad 4. No. I would not. I am not that stubborn to tell other people what they should do with their money.
ad 5. I would advocate all of them.
ad 6. As lack of market (every "market failure" is simply lack of market)
ad 7. People leaving comfortably wherever they want. People vote using their feet - they prefer cities. Increasing urbanization is a global phenomenon.

We are talking economics here, not astronomy. As I said, there are no "1000 acres" or "only one Earth". There are resources available. Some of them become more scarce, some of them become less scarce, some of them we even do not know right now. But they are there. Even today's waste constitutes tomorrow's resources. Recycling can be profitable and when it is - it becomes business.

 
At 2/17/2008 2:42 PM, Anonymous Michał Gancarski said...

ad 7. People living comfortably, of course :-)

 
At 2/17/2008 5:29 PM, Blogger Brishen Hoff said...

Michal Gancarski: You said you are advocating more population growth.

Do you think population growth can go on forever?

At what point would you advocate stopping population growth?

What would the earth look like when you, Michal Gancarski advocated an end to population growth?

 
At 2/17/2008 10:21 PM, Blogger Frat Dude said...

Just jumping in here with my two cents after reading this debate. I can't speak for anyone else, but I will answer those questions with what I think and in what I hope is the spirit of Michal Gancarski's responses.

Millions of years ago, a Neanderthal man would not be able to comprehend the techniques of farming used by our ancient ancestors in Mesopotamia. Similarly, none of our ancestors that discovered agriculture and irrigation could imagine a huge tractor plowing fields in our modern times. These same examples can be extrapolated to all other resources being consumed. Just because we cannot imagine what resource harvesting technology may look like in the future, does not mean that market driven innovation will suddenly stop. People stopped traipsing around in the woods looking for berries and deer because farming provided them with a better life and more utility.

If our choices lead to a life where we live in even more dense communities, that is not necessarily a “good” or “bad” thing. It is just a reflection of our choices as a society. If you would prefer to live in the wide open spaces, I suggest moving to a state with cheaper land and not New York City. I would never advocate for any intervention in your choice of living there and having a lot of land for you and your family (Don't get me started on eminent domain).

I guess what I'm getting at, is yes, I do think population growth of some kind can continue forever because of new technology. And furthermore, if it ever reaches to point where technology cannot support further population growth, market forces will increase the cost of having children substantially so that reproduction is curtailed. I've done rudimentary population modeling experiments in my biology courses and it is certainly true that family size declines with increased per capita GDP. I hope that helps shed some light on our side of the argument, Brishen. My questions for you are:

How would you propose population growth be limited?

If government intervention is required, should certain people be given preference based on genetic traits?

My only worry in that comparing us to cattle on a 1,000 acre farm, is forgetting that the farmers only allow reproduction by the best cattle to increase the milk and meat production of the herd. Food for thought.

 
At 2/17/2008 10:24 PM, Blogger Carl Beyer said...

Haha, I forgot my display name was listed as Frat Dude from a joke on a different blog. I don't post comments very much. The above post is from me, please have mercy on making fun of the name.

 
At 2/18/2008 12:04 AM, Anonymous Anonymous said...

It would have been most interesting to be a fly on the wall just before each of the many failures of past civilizations on this planet (Ronald Wright "A Short History of Progress," as one example of the documentation of those failures).

I'm betting that we would have seen excesses, denial, acrimony toward those who dared to suggest that what was happening was unsustainable, and an abiding faith that divine intervention, or technology, or the intellect would save each civilization from collapse.

Yet civilizations whose consumption of resources reached orgiastic proportions invariably failed.

Are we any the wiser for it? From what I see here, the answer is a resounding "NO."

Hasta la vista.

Rick.

 
At 2/18/2008 9:03 AM, Blogger Brishen Hoff said...

How would I propose to limit population growth?

I would start with a worldwide 1 child per family policy making effective use of incentives and disincentives.

Right now the government is controlling population, just in the wrong direction with baby bonuses and mass immigration.

"Frat Dude" AKA "Carl Beyer" when you said "I do think population growth of some kind can continue forever because of new technology." you later contradicted yourself by saying: "And furthermore, if it ever reaches to point where technology cannot support further population growth, market forces will increase the cost of having children substantially so that reproduction is curtailed."

Do you really want to see what the world would look like when market forces begin to limit growth?
How much variety, quality and quantity of other species will be left by that time?
I guess you don't care too much about quality of life.

 
At 2/18/2008 9:28 AM, Blogger Dave Gardner said...

I would have to add that it's a sad world where people are expected to fail to act nobly even when the evidence is clearly pointing to the right path. Only when it is too expensive to continue down a destructive path are we expected to choose more wisely? This is a philosophy that aspires to occupy the slime at the bottom of the pyramid.

Dave Gardner
Producer/Director
Hooked on Growth: Our Misguided Quest for Prosperity
www.growthbusters.com

 
At 2/18/2008 9:42 AM, Anonymous Michal Gancarski said...

@Brishen Hoff

"(...)
You said you are advocating more population growth.
(...)"

In fact I should have said "I advocate giving the decisive power to families. If they want to grow, they should do so, if they do not, then let them not to".

"(...)
At what point would you advocate stopping population growth?
(...)"

Why should I "advocate stopping population growth" at any point?

"(...)
What would the earth look like when you, Michal Gancarski advocated an end to population growth?
(...)"

I do not know since there would be no such point in time.

"(...)
I would start with a worldwide 1 child per family policy making effective use of incentives and disincentives.
(...)"

Great idea, why would anybody want to live more prosperous life? Limit the population and you limit the extent of the market. Limit the extent of the market and you limit the division of labor and produce poverty. Not talking about the necessary corruption and terror implicated by such ideas.

"(...)
Right now the government is controlling population, just in the wrong direction with baby bonuses and mass immigration.
(...)"

There is no significant economic difference between immigration and trading with foreigners. Why would you want to limit the single mechanism responsible for today's prosperity?


"(...)
Do you really want to see what the world would look like when market forces begin to limit growth?
(...)"

It is doing it at the moment and nothing wrong is happening. Many European countries have steady or decreasing population. No policy needed, just social change produced by growing wealth.

"(...)
How much variety, quality and quantity of other species will be left by that time?
(...)"

And why are they even important, apart from being potential resources?

"(...)
I guess you don't care too much about quality of life.
(...)"

Most people migrate to cities. Apparently, they do not think that having more other species around is so important for the quality of their lives. Living in complete wilderness and having more natural enemies is not what I would call "quality of life" either.


@Rick

Care to give some examples instead of writing short fiction?

 
At 2/18/2008 10:50 AM, Blogger Shawn said...

Dave,

"Only when it is too expensive to continue down a destructive path are we expected to choose more wisely? "

...why do you think Simon and Ehrlich made the bet in the first place? Why did they agree to use price as an indicator? (I just gave away the answer, but oh well...)

 
At 2/18/2008 1:28 PM, Blogger Brishen Hoff said...

Michal Gancarski:
What about the people that don't want growth?

Do they have any freedom of choice?

What if they choose to not have their community ruined by growth?

Can that choice they made be fulfilled in the system that you advocate?

What if these people don't want to have to keep moving to more harsh climates whenever their community gets ruined by growth?
(growth brings: landfills, crime, air pollution, species extirpations, litter on your own land, traffic, noise, etc.)

 
At 2/18/2008 3:58 PM, Anonymous Michał Gancarski said...

There is not a single system that can make everybody happy and every implementation of so called paradise has failed miserably producing poverty, mass murder, war and totalitarian terror.

And yes, they do have choice. Buying a piece of land and isolating yourself from others is not too complicated, especially for a determined community.

BTW, growth does not create crime. Crime has existed for all of human history. It persists now and is likely to persist in the future.

 
At 2/18/2008 11:17 PM, Anonymous Robert Burns said...

A couple of comments

1.There are two measurement problems in making a commodity based bet. One is inflation in the currency used, and the other is that the commodities are international and the currency is national so exchange rates must come into the calculation.

2. The second comment is basic ecocomics. The doom and gloomers do not understand that people are factor of production...more people means possible production. They also do nor understand that natural resources are a function of existing technology. There was oil for thousands of years, but it is a natural resource for only the last 100+ years.

 
At 2/20/2008 11:47 PM, Blogger J Carlton said...

Dave,
Tell us what your right path is. If you think growth is so bad tell us what your alternatives are. Don't just call names and make noise. don't keep your true path a mystery and tell us how stupid we are. Tell us what your plan is to get us out of the mess.
I also want to know what you are personally doing to forward the cause. As far as I am concerned if you can't walk the walk you have nothing to talk about. How, in the course of your film making do you avoid flying to destinations needed for your work. With all that heavy equipment, you must have a real problem getting on the bus. As far as I can tell Colorado Springs doesn't have electric rail but I suppose you must be doing something to save gas. Have you cut back your lifestyle. You have a computer, so you must use electricity. Do you have a wind turbine? I don't see how , living the life you have, where you live that you can continue to rail against growth and not be a hypocrite.

 
At 2/26/2008 11:26 AM, Blogger James Hanley said...

Brishenhoff wrote: "Do you really want to see what the world would look like when market forces begin to limit growth?"

To clarify, he was talking about population growth.

So, Brishenhoff, I suggest you look at western Europe, where market forces are already limiting population growth.

The assumption of some that people will always keep having large families, regardless of economic changes, only shows that they refuse to look at the data.

 
At 4/13/2009 7:26 PM, Blogger Neil' said...

Sorry for me coming in late, but this is important: That bet between Julian Simon and Paul Erlich about resource prices (that they'd go up, and Julian won saying "no") was a red herring: "supply" in economics is how much is on the market right now, not how much is left to get out of the ground etc. later. Hence, the issue of how much "there is" etc. can be a disaster waiting to happen, and "the market" doesn't notice because it's about current happenings and supply-in-play.

tyrannogenius

 
At 4/13/2009 10:34 PM, Blogger Shawn said...

well lizard-genius...or giant-genius, whichever...keep checking out economics. Pay particular attention to the interaction between supply and demand, and the notion of limited knowledge with constrained dispersion: few people know "how much" is in the ground, but prices are the best way to determine that. Incidentally, that's why the bet was more than one item: that discards random luck and gets at the general point of whether materials are used more judiciously if prices increase or not.

 
At 10/03/2012 6:53 PM, Blogger Jack said...

That infamous bet highlighted the artificial value of money more than anything. Entire species have been wiped out for the sake of money. Dollars are far too abstract and anthropocentric to measure true value. Monetary bets don't make the Earth any less finite, nor do they save countless species being forced into extinction by human needs and numbers.

Simon's worldview was extremely narrow, focusing mostly on human well-being (and not even honestly). Ehrlich has stated that he regretted the bet due to its misleading parameters. The bet also didn't take Peak Oil into account. Rising global transport costs are having big effects on many materials, including food. Anyone who really understands the population problem knows it's a developing situation. You can't take a narrow time-frame and declare it a non-issue just because some particular resource happens to seem plentiful. Many people can't grasp the difference between something large and something infinite.

 
At 10/03/2012 6:57 PM, Blogger Jack said...

Oil is already peaking, so what difference does it make whether we didn't exploit it until later? In a few centuries we're burning energy that took millions of years to form! You think that's no big deal?

You describe the world as if physical resources are a non-issue, and that's the whole problem with money-centric types. The financial industry acts as if nature is just some dirty annoyance, not the core of life itself. They can only do that because they have (had) the temporary luxury of cheap energy.

Ask them to show any concern for Man's impact on wilderness, the climate, etc., and they'll slough it off as collateral damage. Greedy, soulless and mindless.

 

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