Betting on the Apocalypse
Paul Sabin
Opinion - The New York Times, 8/09/2013
ONE day in October 1990, the iconoclastic economist Julian L. Simon walked out to get the mail at his house in the Washington suburb of Chevy Chase, Md. In a small envelope sent from Palo Alto, Calif., he found a sheet of metal prices, along with a check for $576.07 from the biologist Paul R. Ehrlich. There was no note.
Ten years earlier, Mr. Simon and Mr. Ehrlich, joined by two scientific colleagues, had made a wager on the future prices of five metals: chromium, copper, nickel, tin and tungsten. The bet — in which the loser would pay the change in price of a $1,000 bundle of the five metals — was a test of their competing theories of coming prosperity or doom.
For years Mr. Ehrlich, the author of the landmark 1968 book “The Population Bomb,” had warned that rising populations would cause resource scarcity, even famine, with apocalyptic consequences for humanity. Mr. Simon, who died in 1998, optimistically countered that human welfare would flourish thanks to flexible markets and our collective ingenuity.
Mr. Ehrlich believed the metal prices would rise over the decade; Mr. Simon thought the prices would stay stable or even drop. Mr. Simon won: the prices of the five metals in 1990 hovered at around 50 percent of their 1980 levels, even as the world population grew by 800 million.
Conservatives have celebrated Mr. Simon’s victory ever since, using it to denounce environmentalists for alarmism and to criticize environmental regulation. The columnist George Will recently used Mr. Simon’s triumph to illustrate how “ingenuity thwarts doomsday.” In a sign of the bet’s symbolic value, the Competitive Enterprise Institute created the Julian L. Simon Memorial Award in 2001 to celebrate his “vision of Man as the Ultimate Resource.” The award trophy: a statue of a leaf with its veins made from the five metals featured in the bet.
Environmentalists, in contrast, have tended to deny the significance of the Ehrlich-Simon bet, arguing that commodity prices illustrate little about real environmental threats. Also, they say, Mr. Simon just got lucky: indeed, when economists later ran simulations for every 10-year period between 1900 and 2008, they found that Mr. Ehrlich would have won the bet 63 percent of the time. These sweeping declarations of triumph and insignificance miss the point — and the true lessons of the bet for each side.
Environmentalists need to better understand the ways in which markets for natural resources function. There is rarely a simple linear path from abundance to scarcity.
Mr. Ehrlich’s view of looming scarcity was hardly radical in the years after the 1970s oil shocks. Many investors in the late 1970s shared his faith that rising metal prices reflected finite supply and impending shortages. The Hunt brothers, for example, famously gambled billions of their oil fortune on the rising price of silver, and then lost their shirts in 1980 when prices faltered and they failed to corner the market.
During the 1980s, macroeconomic factors, including falling oil prices and economic slowdowns, far outweighed new pressures from population growth and drove down the prices of many metals. Everyday market forces — technological change, price-driven competition and new sources of supply — also helped reduce prices. The international tin cartel collapsed under pressure from new Brazilian mines. Aluminum, plastic, fiber-optic cables and satellites began to replace copper, even as copper production soared in response to 1970s highs; by 1985, the copper industry struggled to create demand.
This dynamic relationship between scarcity and abundance matters for public policy. Exaggerated fears of resource scarcity can lead to stifling price controls, panicked efforts to limit production or consumption, and public investment strategies predicated on high prices that turn out to be ephemeral.
The same thing is true in business. Solyndra, the now-bankrupt solar-panel company, failed in part because its model depended on the price of polysilicon, used by its competitors, remaining high. When prices instead collapsed, so did its competitive strategy and the company.
YET if environmentalists need to better account for human creativity and adaptability, conservatives, in turn, should better understand the limited nature of Mr. Simon’s victory.
Setting aside the vagaries of market forces, can we continue to increase resource production and adapt to unprecedented environmental changes like global warming? Our past experience should give us some hope, but that hope should be greatly tempered by the realization that climate change is an unprecedented threat, and we really might not keep pace.
Mr. Simon liked to argue that new problems prompt solutions that ultimately leave people better off than before. But we cannot surmount our challenges if we simply deny that they exist.
Instead of using science as a resource for human betterment, conservatives who reject the evidence of human-caused global warming prevent the very creative problem-solving that Mr. Simon advocated. And if environmentalists like Mr. Ehrlich hadn’t urged action back in the 1970s, would all that creativity have been channeled into the cleaner air and water that we enjoy today?
We face choices about our future direction. As Mr. Ehrlich and many other environmental scientists have documented, by pouring carbon dioxide into the atmosphere, we put things we value and love in danger, from the coral reefs to the Jersey Shore, from homes threatened by wildfire to farms endangered by drought.
And even if Mr. Simon is right that humans can adapt and prosper on this rapidly changing planet, we have to ask ourselves whether the risks and inequalities of this change are desirable.
Ultimately, humanity’s course will be determined less by iron laws of nature or by unbounded market powers, Mr. Ehrlich and Mr. Simon’s dueling lodestars, and more by the social and political choices that we make. Neither biology nor economics can substitute for the deeper ethical question: what kind of world do we want to live in?
A note from a friend followed by a comment from me regarding the ill-fated bet.
ResponderExcluir"This simply shows that rational people should not let themselves be sucked into playing on the turf of the irrational. Scientists deal with what is while economists specialize in gambles, bets and hope in the unsupportable. Unfortunately this has just given more non-evidence to support the denialist lie."
The gambling that occurred between a scientist and an economist was idiotic. Even though the scientist has been proven to be correct in many respects, the scientist lost the bet. Perversions of science such as those by economists have served to distract, mislead and set back the science of human population dynamics and overpopulation for too long. Similarly, a widely shared and consensually validated, preter-natural demographic transition theory (DTT) promulgated by demographers served a common purpose. This theoretical perversion of science ignored, avoided and denied apparently unforeseen and admittedly unwelcome research related to the diminishing prospects for future human wellbeing and environmental health on a planet with the size, composition and ecology of a finite and frangible planet like Earth.
On our watch many too many people listen to and act upon what the economists and demographers say because their pseudoscience is politically convenient, economically expedient, legally rationalized, socially accepted, religiously tolerated and culturally syntonic. Their fabrications and optical delusions have acquired the imprimatur of science at least in large part because too many people with scientific knowledge refuse to stand up and speak out in affirmation of the best available scientific evidence. Too many scientists will not speak truth, according to the lights and science they possess, to those with the great wealth and power.
All that is actively and wrongheadedly being done by those who are few in number to massively extirpate global biodiversity, to recklessly dissipate finite resources, to relentlessly degrade the environment and to threaten the future of children everywhere is bad enough. The elective mutism perpetrated by so many knowledgeable people is even worse. The masters of the universe along with their sycophants and minions, all of whom act as if “greed is good” and money rules the world, are but a few; those with ‘feet of clay’ are many. Thank you to everyone here and elsewhere with feet of clay for speaking out as if you are a million voices. By so doing we educate one another to what science discloses to all of us about the placement of the human species within the order of living things on Earth and the way the blessed world we inhabit works. Otherwise, the silence of so many and the greedmongering of so few kill the world.