Saturday, February 20, 2010

Julian Simon: More Right Than Lucky

Paul Kedrosky re-visits the famous Simon-Erlich bet. Alex Tabarrok responds here. Paul wrote:

"It will surprise no-one that the bet’s payoff was highly dependent on its start date. Simon famously offered to bet comers on any timeline longer than a year, and on any commodity, but the bet itself was over a decade, from 1980-1990. If you started the bet any year during the 1980s Simon won eight of the ten decadal start years. During the 1990s things changed, however, with Simon the decadal winners in four start years and Ehrlich winning six – 60% of the time. And if we extend the bet into the current decade, taking Simon at his word that he was happy to bet on any period from a year on up, then Ehrlich won every start-year bet in the 2000s. He looks like he’ll be a perfect Simon/Ehrlich ten-for-ten."

MP: It should also surprise no one that a commodity bet's payoff is not only highly dependent on the starting and ending dates, but also on the specific commodities chosen. In the famous bet, Ehrlich chose the five commodities that he thought would become scarcer, but a more complete analysis of commodity scarcity and prices over time shouldn't be restricted to only those five commodities, and the time periods evaluated shouldn't be restricted to just decades.

The chart above shows the monthly, inflation-adjusted Dow Jones-AIG Commodity Index back to January of 1934 (data from
Global Financial Data, paid subscription required, adjusted for inflation using BLS data). The DJ-AIG index is composed of futures contracts on 19 physical commodities (e.g. natural gas, live cattle, zinc, nickel, copper, silver, cotton, etc., see the full list and current weights here). (Note: According to Global Financial Data, data in the index from 1933 to 1989 are from the Dow Jones Futures Index, and data from 1990 are from the Dow Jones-AIG Commodity Index.)

The red line in the graph shows the statistically significant (p = .0000) downward trend in inflation-adjusted commodity prices since the 1930s.

Paul Kedrosky: So, what does all this mean? A few things. First, and most importantly, it means Simon was right but fairly lucky. There is nothing wrong with being lucky, of course, but compulsive Simon/Ehrlich-citers need to be reminded that it is no law of nature (let alone of rickety old economics) that commodity prices (inflation-adjusted or otherwise) trend inexorably downward, even over a decade.

MP: I'm not so sure that Simon was just lucky. If Simon's position was that natural resources and commodities become generally more abundant over long periods time, reflected in falling real prices, I think he was more right than lucky, as the graph above demonstrates.

Stated differently, if Simon was really betting that inflation-adjusted prices of a basket of commodity prices have a significantly negative slope over long periods of time, and Ehrlich was betting that the slope of that line was significantly positive, I think Simon wins the bet.

Update: By request, data available here.

46 Comments:

At 2/20/2010 2:23 PM, Blogger Tom said...

Julian Simon's observation has been lucky for at least 200 years.

I discovered Simon by reading Bjorn Lomborg's "Skeptical Environmentalist" in which Lomborg used Simon's summary of human history as the book's starting point - for most people, in most places, most of the time, things are getting better; but many people will believe things are getting worse.

Lomborg tried to disprove Simon, but ended up being converted.

See also Indur Goklany "Improving State of the World" and Gregg Easterbrook "Properity Paradox".

A paradox of commodity pricing is that bursts of intense worldwide growth will raise commodity prices, as the markets scramble for resources. The huge, powerful long term trend of price decline is impossible to dispute.

 
At 2/20/2010 3:07 PM, Anonymous Benny "Tell It LIke It Is Man" Cole said...

Hat's off the Perry on this one.
Man creativity and innovation is endless. Today, the knowledge envelope is knitted together instantly by the web.
Expect even deeper declines in commodity prices, adjusted for wealth and inflation, as man's capabilities increase.
Basically, except for military hardware and services, look for goods and services to become cheaper and cheaper, continuously.

 
At 2/20/2010 4:13 PM, Anonymous Lyle said...

To take one data point and run it back futher. I have a letter my grandfather wrote that cites gasoline prices in 1921 at .21 cents per gallon (with no gas tax btw). If you run that gasoline prices have be consistently below that since,except for a bit in 2008. The Bls inflation calculator says that .21 in 1921 is the same as 2.54 today, so subtract the 40 to 60 cents and gasoline is historically cheap at that data point. (1921 may be a high point for gasoline not sure).
Over the very long term the items that drove down commodity prices are transport, i.e. rails and steam ships and communication. Starting in 1850 these were the drivers of the 50 year deflation in pricing of commodities as the world became one market for commodities.

 
At 2/20/2010 4:58 PM, Blogger juandos said...

From Cato: The two trends that Simon believed best captured the long-term improvement in the human condition over the past 200 years were the increase in life expectancy and the decline in infant mortality. Those trends, Simon maintained, were the ultimate sign of man’s victory over death....

 
At 2/20/2010 5:24 PM, Blogger Michael said...

Where's the hockey stick. There's a consensus out there that these things always end in a hockey stick.

 
At 2/20/2010 5:37 PM, Blogger QT said...

Juandos,

Thanks for the great article.

We live in an interesting age when men like Julian Simon and Milton Friedman singlehandedly defend ideas against overwhelming odds...both economists. Guess it's harder to fool an economist...they tend to look at the data rather than buying the rhetoric.

Unfortunately, misguided ideas like those in the Population Bomb, Limits to Growth and Silent Spring remain intact and fully capable of influencing public policy. The most recent IPCC fiasco is just another twist on an old theme.

 
At 2/20/2010 6:50 PM, Blogger indur goklany said...

Check out this paper: "Have increases in population, affluence and technology worsened human and environmental well-being?" Electronic Journal of Sustainable Development, vol. 1, no.3 (2009)at: http://www.ejsd.org/docs/HAVE_INCREASES_IN_POPULATION_AFFLUENCE_AND_TECHNOLOGY_WORSENED_HUMAN_AND_ENVIRONMENTAL_WELL-BEING.pdf, for a longer term view for several commodities. It also tries to factor in increases in people's buying capacity, admittedly crudely.

 
At 2/20/2010 7:14 PM, Blogger juandos said...

Hey QT, yes there's nothing like the common sense coming from a non keynesian economist...

RE: HAVE INCREASES IN POPULATION, AFFLUENCE AND TECHNOLOGY WORSENED HUMAN AND ENVIRONMENTAL WELL-BEING?


Hmmm, now this is some very interesting reading though I've not finished yet...

The dissection of the IPAT equation is enlightening to say the least...

Questioning Neo-Malthusian concepts is always welcomed...:-)

Thanks for posting it...

 
At 2/20/2010 11:16 PM, Anonymous frost said...

Two questions:

1) Do BLS numbers represent inflation accurately?

2) It would be interesting to know what correlation exists between commodities prices and energy usage. I would expect a negative correlation (higher energy usage leads to lower costs) but has anybody run the numbers?

 
At 2/21/2010 12:29 AM, Blogger Michael said...

Energy is an artificially, government induced, scarce resource so we're not taking about a free market.

Businesses can lower their costs though. It was discovered here in Ohio that Duke was giving large kickbacks to companies to support rate increases on residential consumers.

 
At 2/21/2010 9:45 AM, Blogger Dave Gardner said...

Commander of Spaceship: Our crew has been very busy reproducing. Congratulations to our two most recent happy couples. How is our oxygen supply?

Chief Resourc Officer: My calculations indicate we are now overwhelming the capacity of the ship's oxygen supply system. We will begin to asphyxiate soon.

Chief Economist: We had plenty of oxygen yesterday. We've never in our history run out of oxygen. Therefore we can never run out of oxygen. If the air gets a little thin up here, we'll charge crewmembers more, and therefore we will have more. Get back to humping; we can't have too many innovators!

Dave Gardner
Producing the documentary
Hooked on Growth: Our Misguided Quest for Prosperity
www.growthbusters.com

 
At 2/21/2010 10:17 AM, Anonymous Pingry said...

Mark,

Would you pass along the data you used?

A p-value of 0.0000, despite the clear decision to reject the null hypothesis, really means nothing without the data available.

--Pingry

 
At 2/21/2010 10:52 AM, Anonymous getttingrational said...

From Bespoke via Seeking Alpha are the year to year trendlines for leading commodities. My basic perception is that things that grow trend down and things that don't trend up. Commodities are tricky and I respect traders that can make a long term income from them. BTW Corn prices had an interesting journey this last year.

 
At 2/21/2010 11:21 AM, Blogger bix1951 said...

Kudos to DAVE GARDNER

too many people is the problem
family planning is the solution

love the impossible hamster
and there are more starving people today then ever before in history
where does that fit with declining commodity prices?

 
At 2/21/2010 11:35 AM, Blogger Michael said...

Commander of Spaceship to Chief Horticulture Officer: Have all crew member below E-6 killed and feed to plants.

Commander of Spaceship to Chief Medical Officer: Round up all NCOs and surviving general crew and have them sterilized.

Commander of Spaceship to Chief Propaganda Officer: Make film saying this is in the best interest of the crew.

 
At 2/21/2010 11:48 AM, Blogger Dave Gardner said...

Michael, OR just exercise a little self-control, plan your family size with the best interests of your children in mind, and evolve!

Dave Gardner
Producing the documentary
Hooked on Growth: Our Misguided Quest for Prosperity
www.growthbusters.com

 
At 2/21/2010 12:18 PM, Anonymous Daigle said...

Hello Mark,

Thanks for the data!

What about the possibility of autocorrelation?

 
At 2/21/2010 12:24 PM, Blogger Mark J. Perry said...

You can put in one or two lagged dependent variable terms to correct for autocorrelation, and the time trend is still signifcant at the 1% level.

 
At 2/21/2010 12:36 PM, Anonymous What Am I Bid? said...

Sorry to channel Bill Clinton here, but what "is" price? There are thousand different answers to this, but one is that price is the nominal value a market places on a good or service.

So, yes, there is no doubt that market places less and less value on pieces of the disassembled eco-sphere (aka natural resources) as time goes on.

We knew that already.

We also know the market is so relatively infantile and unsophisticated it can not even begin to price the Earth as a (eco)system within which it is nested and dependent upon. Nor can it price the ecological debit enacted by dis-assembling the system. This would require a time frame beyond the instant of the next transaction.

Trying to prove abundance by market price? A ridiculous, red herring diversion. Example:

Pinnacle Data Systems float of common stock is 7.8 million shares, its price is .57 cents.

Google's float is 244 million shares, while its price is $540 per share.

By the logic being paraded here, GOOG should be far less than .57 cents, or Pinnacle should be well in excess of $540.

Trying to argue this away will only prove my point. Price is a nominal, essentially arbitrary value concocted by imperfect humans from instant to instant. If they are blind to complete and perfect information, the price will reflect their ignorance. Hence the downtrend in prices for the corpses of the ecosphere.

 
At 2/21/2010 12:59 PM, Blogger Michael said...

Dave, Is your issues with population growth or economic growth? The two aren't dependent on each other.

Developed countries birth rates trend around replacement levels. It's the people in poorer countries breeding like hamsters that are driving population growth in the developed countries.

It seems to me that the anti growth movement is only going to keep the world's population growing.

 
At 2/21/2010 1:34 PM, Blogger Dave Gardner said...

Michael, you seem confused. Are population growth and economic growth related, or not? You seem to flip flop from paragraph 1 to paragraph 2. I believe they are, in very complex ways.

If I read between the lines of your latest post correctly, you believe economic growth in underdeveloped populations will resolve overpopulation issues. Unfortunately we are at or near the end of global net economic growth. The consequences of continued liquidation of resources and destruction of the ecosystem that services our economy are non-linear and will likely put a big period on the end of the era of irrational exuberance very soon.

The rapidly growing populations you are counting on economic development to slow, cannot follow in the footsteps of the high-consuming, economic powerhouses. We've done used up or put dibs on too much of the oil, climate, fresh water, fertile soil, etc. The only way they can grow their economies is for the overdeveloped populations to shrink theirs (which seems only fair, but I expect a lot of resistance).

So, we are still stuck with the responsibility of finding our way to a sustainable economic system (one that does not liquidate natural capital), and stabilizing and eventually shrinking our population to a level that allows us a reasonable balance between use of resources and number of users.

Dave Gardner
Producing the documentary
Hooked on Growth: Our Misguided Quest for Prosperity
www.growthbusters.com

 
At 2/21/2010 1:59 PM, Blogger Michael said...

Kind a sounds like your a peak everything maoist malthusian.

 
At 2/21/2010 2:10 PM, Blogger Russ Nelson said...

Dave, I agree that we need to shrink the population. Let's start with you. If you seriously believe your ideas, then you will kill yourself.

But oh, wait, we need you to convince us to save ourselves, so YOU are too important to die. Or not exist because your mother agreed with you that she needed to have one less child than she really did.

I mean, if you SERIOUSLY believe the population should be X% smaller, then you should pick
X% of your friends, and tell them "I truly believe that you shouldn't exist, so I'm never going to speak to you, do anything with you, or even acknowledge your existance. You are dead to me. Or, more accurately, you are unborn to me."

If you'll do that to your friends, then I might take you seriously.

 
At 2/21/2010 2:25 PM, Blogger QT said...

Juandos,

Left wing loons never seem to be in short supply. Dave is living proof...the one I really love is that we are running out of agricultural land?...even though we are able to produce greater yields today than at any time in the history of mankind and gee, only about 2% of the U.S. population is able to grow sufficient food for the country as well as adjacent countries. Thanks to the U.S., we no longer have to eat tree bark, root veggies, and pemican in Canada..thanks, never cared for pemican!

Isn't it nice to know Koolaid kids will be limiting their family size? Thank you, Dave! Keep up the good work.

Thanks for the article. Look fwd to reading it.

 
At 2/21/2010 2:37 PM, Blogger Michael said...

QT, I was rather partial to the running out of climate. That kind of takes the worry off of anything else.

 
At 2/21/2010 3:12 PM, Blogger Dave Gardner said...

Peak everything Malthusian? Yes, and proud of it. Cornucopian Pollyanna, you?

Seems most of this debate has degenerated into name-calling, so I thought I'd be immature and go along.

But really, for those still interested in the logic and the facts, I'll address the agricultural land issue. IF you want to get your soil facts from an economist, that's your business. But provide us all with a reference to even one credible scientific resource that indicates we are not mining our fertile soil (that means using it up at an unsustainable rate, in case that use of the word is not in the cornucopian vernacular). And even while we're doing that, there are a record 1 billion hungry and starving people on the planet. I fail to see this as inspiring confidence that we can continue growing our populations and economies.

But we are only human, so until the shelves in YOUR local grocery store are empty, you will have a difficult time grasping that Earth is a spaceship. It's just a little too big for some of us to wrap our tiny heads around.

Dave Gardner
Producing the documentary
Hooked on Growth: Our Misguided Quest for Prosperity
www.growthbusters.com

 
At 2/21/2010 4:23 PM, Anonymous Lyle said...

To take Russ's point a bit further, those who say the population is to high and have children are not putting their money where their mouth is unless they decided fortutitiously that the population is to high after they reproduced. If they have children are they educating their children in favor of being childfree?
Recall that Johnathon Swift felt the population was to high so in A Modest Proposal he suggested cooking and eating babies.
It may be that a collapse is coming that Gia has decided that homo sapiens is a blot on her existance, but if thats the case we can't do a thing about it, so we had best eat drink and be merry as the bible suggests. (See sermon on the mount)

 
At 2/21/2010 6:01 PM, Blogger Dave Gardner said...

Again, I will encourage the debate to stick with the facts and the logic. I stopped at two children specifically because I felt that was in the best interest of society and of my children.

But alas, not enough of us have done that, so we are in quite the predicament if Julian Simon can't magically reincarnate and pull a rabbit out of his hat.

While the safest thing for our children might be for us to off ourselves in order to achieve rapid population reduction, I, too, am an optimist. I hope we might have a shot at a decent future if we all just voluntarilty limit our family size going forward. If we eliminated unwanted pregnancies, and if those who want families limited their offspring to one, global population would drop surprisingly quickly.

But it won't if all the dialogue about this is dominated by BS - whether that is suggesting someone be the first to commit suicide or suggesting we just party on because we can't change it and Mother Nature ultimately will.

Dave Gardner
Producing the documentary
Hooked on Growth: Our Misguided Quest for Prosperity
www.growthbusters.com

 
At 2/21/2010 6:13 PM, Anonymous morganovich said...

you could certainly win this bet by picking the correct commodity.

rhodium, for example, was up 300% from 1970 to 1979 and then another 100% from 1980-89 for a 20 year gain of 700%.

even today it's about $2350/oz up from less than $200 in 1970 despite having lost 75% of its value since 2008 when it was $10,000/oz.

the trick is to pick something relatively rare that gets picked up for industrial applications.

you could have done the same with rubidium in the late 80's, as well as things like cerium, lanthanum, neodymium, praseodymium, or indium which has tripled since the mid 80's.

this does not invalidate the overall thesis that most common commodities seem to be getting cheaper,but it does show that this is, with a bit of imagination and foresight, quite a winnable bet if you can identify something scarce that is about to become important to new technology.

lithium has been going up on an inflation adjusted basis since the mid 70's.

 
At 2/21/2010 6:21 PM, Blogger QT said...

David,

Do you honestly believe that linking to a film is credible? Where is the comprehensive analysis of global land use and soil fertility?...oops, there isn't one.

"provide us all with a reference to even one credible scientific resource that indicates we are not mining our fertile soil"

Pardon me for finding your simplistic analogies of spaceships less than intellectually compelling. Then, asking me to disprove arguments that you failed prove through the presentation of any credible supporting data?...isn't that a logical fallacy?

I am open to being persuaded but so far, you have assumed facts not in evidence. Ok, I got your attention by pulling a punch on you, now get mine. Show me the beef, Dave.

 
At 2/21/2010 7:10 PM, Blogger Dave Gardner said...

QT, do you read the news?

I'm not even going to present much of the evidence in the film, because it is hard to miss, unless you stick with Fox News. Rather than spend another 90 minutes reviewing what is in the news every day, I'm going to spend 90 minutes exploring WHY people would rather believe we can always innovate our way out of the problems created by our ever-expanding footprint, than practice a little self-control.

Having said that, I've spent much more time here today than I can afford. I would love to give you a list of references, but I expect the name-calling would start all over again. In the end, apparently we all believe what we want to believe.

Watch my film when it comes out. Throw tomatoes if you want. I'm just glad we're at least thinking about these things.

Take Care!

 
At 2/21/2010 7:32 PM, Blogger QT said...

Dave,

I don't really consider the "news" to be a very reliable source of information. I agree that our positions are unlikely to converge however, I am still interested in reading your references. Are they available on your website?

Thank you for taking the time to reply. Good luck with your film.

 
At 2/23/2010 10:05 AM, Blogger OBloodyHell said...

> Guess it's harder to fool an economist...

Unless the economist is a fool.

One word: "Krugman".

Easy test: "Keynes?" if the response isn't some variant of "an idiot", the "economist" is a fool.

Juandos -- one thing that I consider particularly telling is that those two figures for the poorest nation on earth today are better than those same figures for either the USA or the UK (take your pick which was the "best off") a century ago. In short, the people of the poorest nation today are better off than those of the richest nation a century ago. I'd say that rapid improvement, across the board, around the world, is unprecedented in human history.

 
At 2/23/2010 10:14 AM, Blogger OBloodyHell said...

Dave Gardner: NeoMalthusian stupidity is not impressive. Bunk is still bunk, no matter how you sell it.

"Economics" is one of the more counter-intuitive endeavors humans have attempted in their history. This is one reason there are so many foolish pitfalls, and one reason which there has been very limited progress in it until the advent of computers (and even there, there are limits). It is filled with "unobvious" properties which fly in the face of things that seem completely obvious how they "ought" to work but don't.

Hint: What is the "broken window fallacy"? What is "the principle of comparative advantage"?

If you don't already know the answer to these really, really trivial questions, you are too economically incompetent to produce any economically centered documentary worth watching.

When you ascribe abysmal stupidity onto your "Chief Economist", there's a term for that: "projection".

NeoMalthusianism is one of those blatantly faulty ideas -- it is based on the idiotic notion that humans are no different than stupid cattle, that we cannot adapt, change, or alter our behavior to suit changing conditions.

"All other animals do this, why should humans be different?"

Because of the fact that adaptation has been our strong suit throughout the entire history of human development. Hence, it seems like a particularly stupid and blatantly faulty notion.

And the evidence bears this out:

Humans, despite abundant resources allowing us to procreate far beyond current levels (ignoring any rational concern for "sustainability"), have already begun to lower our population growth rate. Rather than being on the exponential growth curve inherent to Malthusian precepts, human population growth is already on track to peak out at around 8.5 billion and drop steadily back to around where it is now.

In short, "Soylent Green isn't people -- it is, was, and always has been bullshit."

Knowledge is power. Ignorance isn't. Learn which is which.

While your little "documentary" may well be popularly received, it's almost certainly (from your little screed) going to be as factually bereft as "Fahrenheit 911". It's fairly clear from your little inner dialogue that you aren't even aware that the population growth rate IS trending downward, or that the population IS going to peak far -- very far -- below any rational limit to the carrying capacity of the planet.

So, frankly, that's not a documentary, it's "short fiction", no matter how much it takes on the trappings of the former.

Chicken "Gardner" Little can film all the people he can find who will tell him "The Sky Is Falling!" -- and yet, it just ain't so....

 
At 2/23/2010 10:18 AM, Blogger OBloodyHell said...

... and here's your audience, Dave:

> and there are more starving people today then ever before in history

Here's a clue, moron: THERE ARE MORE PEOPLE THAN EVER BEFORE YOU IDIOT.

What there are is FEWER starving people as a percentage of the population. That's the CORRECT metric.

Geez. There are some people who are too stupid to count to twenty-one with their underpants on.

While I don't advocate post-natal abortion, there are some people who test that ethical code.

 
At 2/23/2010 10:25 AM, Blogger OBloodyHell said...

"What Am I Bid" is the other type of idiot for you to appeal to, Dave.

The kind that thinks their ability to assemble a lot of specialist terminology into a very vague goulash of apparently (but not actually) relevant notions means they understand jack sh**.

The kind of person who tosses around phrases like "superstring theory" and "event horizon", and thinks they understand physics, all the while their concept of an electron is a small ball about the size of a pea.

 
At 2/23/2010 10:44 AM, Blogger OBloodyHell said...

> Unfortunately we are at or near the end of global net economic growth. The consequences of continued liquidation of resources and destruction of the ecosystem that services our economy are non-linear and will likely put a big period on the end of the era of irrational exuberance very soon.

OK, so, you have an actual BASIS for this "opinion", Dave, or are you just blathering, as I'm pretty sure you are?

Your ignorance of the actual amount of resources available to us, the actual level of "destruction of the ecosystem" which there is any mensurable grasp of, and so forth suggest it's blathering.

Your suggestion to "stick to facts and logic" is interesting, considering that you express neither. Don't confuse wordplay with logic, or unjustified statments with facts. The two aren't the same, no matter how much your postmodernist English and Film School professors assured you to the contrary.

That would be the same sort of idiotic wordplay that "What Am I Bid" was using, just a bit less obtusely.

... (continued)...

 
At 2/23/2010 11:03 AM, Blogger OBloodyHell said...

Here's an example:

We've done used up or put dibs on too much of the oil, climate, fresh water, fertile soil, etc. The only way they can grow their economies is for the overdeveloped populations to shrink theirs (which seems only fair, but I expect a lot of resistance).

OK, let's start by pointing out that he completely ignores the substitutabilty of resources. An example of this was copper in the 60s and 70s, which was trending much higher as a result of its use in phone wiring in particular. So what did we do? We substituted glass (that would be: "Sand", one of the most cheap and plentiful commodities on earth) to do the job that copper was doing. Copper prices plummeted.

But wait, we're not done yet -- you see, thanks to the development of technology, any nation that wants to create a phone/data network doesn't need to even lay down glass fiber any more. They can just build cell-phone towers wherever they think they need them, and service millions without a single piece of glass being laid, not a fraction of the needed manpower to wire and layout and bury and protect and repair cables at all.

So for a fraction of the cost of the system that existed even thirty years ago, a totally undeveloped nation can become, at least in data/communication terms, as connected and efficient as EVERY OTHER NATION ON EARTH.

You see, that's one thing Dave Just Doesn't Get: costs==resources.

Lowering costs means more is getting done with the resources that are available. The efficiency of human development is up over a century ago by orders of magnitude The "undeveloped nations" don't NEED to go through all the pollution, the false steps, the intermediate resource usages that were required to get from 1910 to 2000. They can leapfrog ALL THAT, and pay only what resources it takes to make it NOW. Which really, really isn't all that much on a national scale, esp. since they can buy it piecemeal and upgrade/expand slowly as they build their own resource base.

...(continued)...

 
At 2/23/2010 11:03 AM, Blogger OBloodyHell said...

...(continued from above)...

Second factor: "used up all the fertile soil"? Geez, you moron. We've not even "used up" a fraction of it. The USA/Canada alone is using its own soil so effectively that it's RETURNING farmland to forest usage.

YES, the amount of North American land covered with trees is not DOWN from a century ago, it's UP. The area devoted to farmland is DOWN because we produce so damned much food that, even selling it on the world market it doesn't PAY farmers to actually keep the soil *cleared*, much less tilled... so it goes back to woodlands.

From that it's a pretty damned obvious bet that we won't be having any problems with producing enough food for all the people of the world when it peaks out at 8.5 billion four decades from now, since there are few areas of South America or Africa which are even a fraction as fecund as the USA is solely due to less effective farming.

And your position ALSO ignores the lack of widespread usage of better food crops -- most poorer nations aren't using Golden Rice, yet, which will massively improve crop yields year in and year out, even as they ADD to overall health by providing Vitamin A for people who currently have limited sources of it in their diet.

Back to substitutability of resources -- Energy is certainly needed for economic growth. What about oil?

Well, the blatant falsehood of rumors of "peak oil" notwithstanding, it does seem inevitable that, at some point, we will run out of the stuff. not in 50 years, not in 100 years, but sometime -- what will we do?

Well, it's hardly the case that oil is the only source of energy. It's just, at the moment, the cheapest and most convenient.

The supplies of coal in the USA alone are massive, and there hasn't been anywhere near the same degree of search for them as there has been in the USA. No doubt there are vast deposits of THAT waiting to be discovered in Africa, for example, and there are a lot of uses -- not just "gasoline" -- for which coal can be altered to substitute.

Then there's nuclear. The available nuclear power, given breeder reactors, is not less than many thousands of years at much, much higher levels than the entire planet is using right now.

Ergo -- energy ain't a problem for any developing nation for the foreseeable future.

Oh, and you might notice we're working on producing the tools for a "hydrogen" economy here in the USA. Not hard, because we don't need it yet, but when it comes it will allow all those other developing nations to GET WHERE WE ARE WITHOUT ANY OIL AT ALL. Because everything that we currently do with oil -- assuming it runs out sooner rather than later -- will be something we can do with coal and/or nuclear power.

The fact is, the cost of resources are going to keep going down because the price of everything goes down as humans become more adept at using, inventing, and devising things that improce the efficiency of usage of the resources available to us.

 
At 2/23/2010 11:15 AM, Blogger OBloodyHell said...

> I would love to give you a list of references, but...

How convenient. Tell ya what, Dave, I'll actually give YOU a chance to convince me when you show me your list of sources, and I'm convinced that they aren't people who have a specific axe to grind.

Paul Ehrlich, and or his cronies, is one of them, I'm sure. The fact that Ehrlich hasn't made a single accurate prediction in his entire life is irrelevant to people like Dave, because "it's GOT to be so! It 'only makes sense!'"

For the rest of us, Dave has no faith in human beings, seeing he has so little of worth in himself, and recognizes it...

One quality I've noted among liberals is their widespread inherent self-loathing.

 
At 2/23/2010 11:39 AM, Blogger OBloodyHell said...

> the trick is to pick something relatively rare that gets picked up for industrial applications.

morganovitch, I believe there was an implicit, unstated notion that the commodities in question would be reasonably common and in widespread use, not some specifically tailored material that had a narrow range of applications. Certainly that is inherent in the choices Ehrlich made.

In the real world, if there is a material which moves into heavy use (say some new use for rhodium that has widespread uses), the increased price signals that there is a market for it -- this does two things:

1) it spurs a wider search for sources of it.
2) it spurs the investigation of alternatives.

These two factors lead to greater supply and/or reducing demand by substitution. An obvious example is one I gave several entries above -- copper. The rising price of copper spurred both an expansion of the development of sources of it, as well as the research into use of glass fibers along with lasers for communications and switching -- lasers have moved far, far beyond where they were when invented as a result, which has led to secondary techs like CD/DVD/BR data storage. As a result, the understanding of physics of "lasing" is such that they can make pretty much anything, not just exotic materials like rubies but bread "lase". Yes, you heard that correct: You can make a "bread laser", LOL. And yeah, note how that also is yet another example of substitutability: You don't need exotic materials like "rubies" any more to make lasers.

Also, note the fact that the rise in copper prices almost certainly assisted the development of the CD/DVD/BR storage medium, by spurring a deeper understanding of lasers and "lasing"... So the amount of wealth in effect created by the *rise* in copper prices goes far, far beyond just the end resulting savings by direct substitution of glass for copper -- it had secondary and even tertiary (the rise of the market for DVDs and CDs, for instance) effects.

The problem with fools like Dave is that they only see a tiny aspect of the thing, and think that they can say something about the whole system as a result.

It's all interlinked. Solving one problem creates others, but it also solves still more of them.

Copper rises, spurs development of fiber and lasers. lasers split off and become CDs, then DVDs, then BRs. This spurs the development of digital storage technologies, and compression algorithms. Compression algorithms allow much faster communications over a smaller bandwidth, which allows data transmissions to occur using a far smaller, weaker signal than before. Which means that you can have wireless data transmission over cell phones. Which means you no longer even need the glass fibers to create your communications network!!

I'm not claiming that's a direct, actual network of connectivity and "causal relationships", mind you.

But it speaks to the interconnectedness of development and how things Work Out even in The Face of Certain Doom that some corners of humanity are so concerned with.

It's why having faith in human ingenuity to solve our problems in the Long Run is not only a good idea, It's The Sure Way To Bet.

 
At 2/23/2010 12:41 PM, Anonymous What Am I Bid? said...

Oh Bloody Hell,

Your welcome to disprove my point, rather than bluster out a purely ad hominem attack. Ask anybody who has actually worked in the market what price is and then ask them if it is rational.

Academics will tell you yes, traders will tell you no.

A market is made by a seller and buyer; they'll price the good or service in question according to their arbitrary viewpoint. Increasing the size of the market participant pool does nothing to change the capricious nature of pricing.

Its the most pure form of poetic irony that people continue to devalue, as measured in nominal price, the pieces of the ecosystem they rip off and sell to each other.

 
At 2/23/2010 3:41 PM, Blogger juandos said...

"But alas, not enough of us have done that, so we are in quite the predicament if Julian Simon can't magically reincarnate and pull a rabbit out of his hat"...

What a truly amazing statement that both smacks of massive hubris and the inability to understand that Julian Simon didn't do anything magical or otherwise except to use common sense...

Malthusians have never gotten on the factually correct side of history...

Brendan O'Neill makes short work of Malthusians: Too many people? No, too many Malthusians


Since 200 AD, scaremongers have been describing human beings as ‘burdensome to the world’. They were wrong then, and they’re still wrong today.

Thursday 19 November 2009

 
At 2/23/2010 4:22 PM, Anonymous The hairless ape killed me said...

"The 6.7billion people on Earth have not raped and destroyed this planet, we have humanised it."

To the species we have sent into extinction, "How is that humanization working for ya?"

 
At 2/23/2010 4:34 PM, Anonymous Yeah, well they should work harder said...

"The 6.7billion people on Earth have not raped and destroyed this planet, we have humanised it."

To the 3 billion that live on a $1 dollar a day, "Can't you feel that humanised love? Lord, I sure can sitting here on my bourgeois butt proclaiming how smart people are -- especially me!"

 
At 6/27/2012 4:03 AM, Blogger OBloodyHell said...

>>> Your welcome to disprove my point, rather than bluster out a purely ad hominem attack.

Long after the event (Perry posted a link back to this article):

what are you, a moron?

No, wait, you've just proven that by the fact that you managed to utterly ignore the hundreds of lines I wrote directly refuting the whole Malthusian doomsayer scheme that was anything but an "ad hominem" attack.

NAW. "tl;dr". No one has to refute anything for you, you already know all the answers.

Nitwit. Buffoon...

That's pretty much the only level you're actually capable of doing anything on.

P.S., "You're". Art major, huh? Clearly not English.


To the species we have sent into extinction, "How is that humanization working for ya?"

To Mother Nature: Show us humans the vast array of species salvation efforts you've produced to deal with your own catastrophic species extinction events.

To the 3 billion that live on a $1 dollar a day, "Can't you feel that humanised love? Lord, I sure can sitting here on my bourgeois butt proclaiming how smart people are -- especially me!"

Gee, sorry we can't make enough so fast that ALL of you are brought up to our level all at once, but that's just not the way the universe works.

Right now, we're working on the Chinese and the Indians, who have been brought up consistently from that $1 a day (adjusted for inflation) quite a hell of a lot since 2000 alone... Two billion down, another 3 to go.

P.S., it would help one hell of a lot if you'd assist us in not following barbaric, back-assward memes like Islam, and do everything you can to not support dictators (not claiming you always have a choice in this, mind you)... but if you pay attention to who our president is, you can often get varying levels of support for overthrowing a dictator... but you need to also plan ahead for how the transition to a modern society from the stone ages is going to go for you AFTER you get rid of the dictator. We can certainly help, but we can't do it all, no matter how much we'd like to. In the end, you have to strive for it, just as we did. Sustained prosperity can't be a gift. One need only look at what happens to almost all "big" lottery winners to understand this.

 

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