John Tierney wonders if Dr. Holdren learned anything from his misguided bet with Julian Simon:
Dr. Simon’s victory was not (as some Lab readers suggested) a fluke based on exceptionally lucky timing, as you can see from this Wikipedia graph showing the inflation-adjusted prices for the five metals in the bet from 1950 to 2002. (Since 2002, metal prices rose sharply for several years but have since plummeted back to familiar levels.) Prices do sometimes shoot up for natural resources, but people react by finding new sources and substitutes, and prices come back down. If you look back over the past several centuries, as Dr. Simon demonstrated in his book, “The Ultimate Resource,” you’ll see that the trend was downward long before 1950, too.
What lessons Dr. Holdren learn from that bet? The only one I’m aware of is: Don’t test your theories by betting on them. After Dr. Simon collected his winnings in 1990, he offered to make another bet not just on natural resources but also on any measure of human welfare, like life expectancy or food per capita. Once again, Dr. Simon predicted that humans would adapt to new problems (like global warming) and end up better off in the future — by any measure at any future date that Dr. Holdren or Dr. Ehrlich cared to name. They refused his offer. They did, however, go on making more gloomy predictions and calculations about the problems of sustainability, as in this 1995 essay discussing how to avert future shortages of resources.
I find this particular appointment disquieting. As one of my commenters said earlier, I’d much prefer a “science advisor” who sees technology as a solution, rather than a problem. And, again, I have no idea what the implications of this pick are for space policy.
The Messiah’s cabinet would never see technology as the solution.
For them, More Goverment is ALWAYS the solution.
You’re racist if you don’t think so.
What elements of Human quality of life got better between
the Fall of the Roman Empire and the Opening of the Silk
Road by the Mongols in 1190.
(Since 2002, metal prices rose sharply for several years but have since plummeted back to familiar levels.)
There you have it. In one parenthetical sentence, Tierney slips in why Julian Simon was not as correct as he thought he was. If the bet had been made in 1997, Ehrlich would have won. But Tierney makes equally clear that he doesn’t care.
Since 2002, metal prices rose for exactly the reason that Ehrlich and Holdren thought that they would: a high world population. Their bet was foolish because it doesn’t have all that much effect on world commodity prices to have billions of impoverished people. People who live in thatch huts don’t need chromium. But now that India and China are finally climbing out of the Middle Ages, they want the chromium as much as we want it. And there are 8 of them for every American.
Yes, prices fell again this year, but not because of Simon’s model of human innovation. Commodity prices fell off of a cliff because of the worldwide recession. But the recession will end in a few years and then a lot of commodities will be expensive again. Yes, human innovation plays a big role; Simon was right about that. But there is also a big mistake in his thinking. Human innovation does not work at infinite speed, and at the moment it lags well behind the vast demands of the populations of China and India.
Maybe Simon’s cornucopia will be true in 100 years — and since Simon himself is gone it’s only a question for his ghost — but his rosy predictions aren’t useful for people who live in the present. In one respect, Simon’s advice is never useful. Part of his message was that you never have to worry about the future because there will always be someone else to worry for you. Why credit people for foresight when you can take their efforts for granted.
Both Simon and Ehrlich were arrogant people who could convince themselves that they were 150% right when they were only half-right. Tierney copies his thinking from Simon and equates Holdren’s thinking with Ehrlich’s. But Holdren is not the same person as Ehrlich; and Tierney is foolish to take sides.
Jim, so you’re saying that a recession completely cuts off developing world demand? I don’t buy it. It should just slow the rate of increase a little.
Jim, so you’re saying that a recession completely cuts off developing world demand?
No, that’s not what I’m saying. Short-term demand for many commodities has a highly inelastic core, so that beyond a certain point, a moderate increase in demand will lead to a large increase in prices. But because of the world recession, the inelastic core has fallen back below the threshold, mostly because of lower demand in the developed world.
You’re right that demand for commodities continues to march forward in the developing world, but at a slower rate. A slowed rate of increase also affects prices, because there is less reason to save these metals for the future.
Peak oil is a good example of what I’m talking about. World oil production per person peaked 30 years ago and there are no credible plans to boost production back to that level any time soon. But it did not feel like a peak because the relevant ratio is not oil per person, it’s oil per driver. The number of drivers in the world is increasing at a rapid clip, but that is currently masked by many drivers in the developed world losing their jobs.
Peak oil – well, electric cars are just becoming possible due to battery technology improvements. One more generation of battery tech – inside 5 years – and you will be looking at a range of 400-500 miles rather than the current best of 240 (Tesla). Prices are coming down on the batteries very rapidly – inside 5 years you will see sub-30,000 dollar electric cars with kind of performance.
There will be a big incentive for China and India to head this way – they have see the cost of oil dependency. China in particular would see building a few more nukes as a simple way to beat the oil issue.
I’ll obsess over chromium here, but most of its features should apply to other raw materials.
Looking around, I don’t think we have evidence one way or another about recent chromium demand. There are two effects that I think confuse the issue. First, there is lag between a change in the price of chromium and the mining of chromium. A price jump in chromium doesn’t result in a prompt increase in the supply of chromium.
Second, recycling of chromium confuses the short term a lot. As I understand it, recycling metal from scrap is much cheaper than mining it. So if there’s a short term drop in demand, especially if, as in the current economic downturn, it is coupled with an increasing supply of scrap, I think we should see a sudden drop in chromium price. Similarly, when sudden increases in demand occur, we should see a sharp rise due to the combination of increased demand and much lower supply of scrap metal containing chromium.
This is what bothers me with the current 2002-2008 observations of the chromium market. We have this slight rise in chromium prices (adjusted for inflation) from 1950 to the near present (with substantial peaks in price during the 70’s) despite the presence of high population. What makes the recent increase in chromium prices the result of high population? I think it’s a simplistic analysis of the market.
Moving on, I find it interesting that oil consumption per capita has declined so signficant. I don’t know what Jim means by “credible plans”. Maximizing profit is a goal most agents engage in. Hitting an arbitrary production figure is not. It appears to me though that oil consumption per capita has declined without significant impact on life style, a prediction made by the Simon camp.
Finally, Jim mentions “job loss” in the developed world. Sure there has been over the past three months, significant job loss. But this doesn’t explain history more than three months old.
Explaining the recent rapid decline in oil prices as due to job losses is simplistic, in my opinion. A more reasonable explanation to me would be a combination of a self-sustaining bubble during the run-up, which then burst as bubbles always do, combined with accumulation of efficiency investments and incremental changes in behavior. It’s a system with momentum both on the upside and the downside.
Simon always knew that his bet wasn’t a sure thing, that it was possible for the other side to catch a period of time when the prices would be high. The reason it doesn’t matter that 1997 would have been an unlucky year for Simon to start his bet is that such times are exceptional and not typical. If you believe that conditions have now changed so that the bet would favor the Ehrlichists over the Simonists, why not make your own bet today? Buy up some chromium or whatever at today’s prices, wait until the price goes up faster than general inflation, then sell and make money.
Explaining the recent rapid decline in oil prices as due to job losses is simplistic, in my opinion.
Fine, it was just an off-hand characterization anyway; there is no sense in trying to nit-pick the point away. There has been a rapid decline in oil prices because the world economy first slowed down, then contracted outright. Oil prices peaked in July, 2008; and by then the Dow had already fallen from 14,000 to 11,000.
I don’t think we have evidence one way or another about recent chromium demand.
There is one thing that’s very clear from either common sense, or from looking at how much chromium is bought in India and China and who in these countries buys it. Namely, subsistence farmers who live in thatch huts don’t need very much chromium. There is no demand for chrome-plated faucets among people who don’t even have running water. Not much for stainless steel either.
What makes the recent increase in chromium prices the result of high population?
It’s no mystery at all, Karl. I’ll rephrase it one more way. Prices of metals depend on the world’s economic population and not on its biological population. It was not that long ago that only about a billion people in the world had any serious economic interest in chromium, nickel, tungsten, copper, or tin. (Maybe a little more in tin since shanties are often made of it.) Now the economic population of the world catching up to its biologial population. And, except for the worldwide recession, here come the shortages.
It’s all well good to talk about abstractions of incentives and market solutions and changes in consumer behavior. So that we don’t need the un-fun solutions from those dreary enviro-pessimists such as John Holdren. But if you open your eyes to the truly vast populations of India and China (and Bangladesh and some other countries), you can see that population control is the “market” solution. Imagine what the US would be like if, in addition to the 300 million affluent people who live here, there were another billion dirt-poor Americans in huts and shanties. That is where China is right now.
Jim, I don’t buy it. The “economic population” has been increasing for centuries and the past 60 years in particular has seen a huge growth in the wealth of the world. Yet we are to believe that the effects of this global growth only have manifested in the past few years?
Instead, why not consider the obvious? Namely, that this is a short term increase due to a sharp rise in demand followed by a lagged increase in supply?
I do believe there will eventually be resource depletion (more accurately that current high consumption resources like oil won’t be indefinitely supplied at current amounts from terrestrial sources), assuming we don’t obtain new sources in space. But I don’t think that’s responsible for the recent increase in commodities.
It’s all well good to talk about abstractions of incentives and market solutions and changes in consumer behavior. So that we don’t need the un-fun solutions from those dreary enviro-pessimists such as John Holdren. But if you open your eyes to the truly vast populations of India and China (and Bangladesh and some other countries), you can see that population control is the “market” solution. Imagine what the US would be like if, in addition to the 300 million affluent people who live here, there were another billion dirt-poor Americans in huts and shanties. That is where China is right now.
If you “open your eyes”, you’d see that the US was in the situation that China currently is in back in the 30’s. Incentives, market solutions, etc got the US where it is now. There was no need to control population or embrace poorly thought out “un-fun” solutions.
Sure, I don’t see that 6 billion people are going to enjoy the same lifestyle that suburbia in the States does. Land area alone nixes that and I think there will be genuine resource depletion long before it happens.
BUT living standards are a moving target. There’s no reason to think that we can’t have a superior living standard using less resources and better technology. We manage to get by without a couple of manservants, whale oil lamps, and beaver fur velvet. We no longer have streams loaded with gold nuggets or vast open ranges for giant herds of cattle (well, we do a little). Europe no longer has vast tracts of forest. Yet we still manage to get by with a superior standard of living to historical times when these resources were much more prevalent.
Here’s my prediction. By the end of the 21st Century, virtually everyone in the world will have a living standard comparable to or superior to the US’s at the end of the 20th century. By this, I mean wealth, lifespan, and education (that is, at least a GDP per capita of $35,000 in 2000 USD, life expectancy of roughly 77 years, and at least 25% of the local population has a college degree).
We won’t need population “control”. We won’t need current amounts of oil or chromium to achieve this standard of living. The developed world probably won’t need more stringent environmental regulations.
Yet we are to believe that the effects of this global growth only have manifested in the past few years?
On the contrary, until the Industrial Revolution, every country in the world was kept poor from overpopulation. In economics there is a concept called a Malthusian trap, which is when a country’s economy cannot expand as quickly as its population expands. Most of the world’s people lived in the Malthusian trap until the end of the 20th century. That is a clear difference from the rest of history.
Namely, that this is a short term increase due to a sharp rise in demand followed by a lagged increase in supply?
Well, you’re really taking the long-term view. As Keynes said, the long run is a misleading guide to current affairs. In the long run, we are all dead. That said, you’re technically correct. We can expect a sharp rise in demand from China, India, etc in the short term: the next 30 years. Then there will be a lagged increase in supply, maybe in the 50 years after that.
Sure, I don’t see that 6 billion people are going to enjoy the same lifestyle that suburbia in the States does.
Then I’m glad that you and I agree on my main point. If you’re main point is that we can still have a superior lifestyle, then yes, I mostly agree with you — but not necessarily a lifestyle that includes cheap chromium.
We won’t need population “control”.
It depends on who you mean by “we”. If you mean the United States, then the reason that we don’t need population control is that essentially we already have it. The birth rate in the United States is only slightly more than replacement parity. But if you mean the rest of the world, including in particular India, then yes India sure does need better population control. There are 6 babies born in India for every 1 in the United States. What kind of life do you expect these 25 million Indians born each year to have? Do you think that they were created for the sake of their own well-being?
http://www.cs.colostate.edu/~malaiya/india.html
Fertility rate per woman in India dropped from 3.1 in 1997 to 2.6 in 2005, which strongly suggests that it will be at the replacement rate (2.1) within 5 years.
Malthus is in rapid retreat. There will be more technological advance in the next 20 years than there would be in a century at the current rate. Populations are nowhere near keeping up. Extrapolations of resource shortages in 2030, let alone 2100, are mindlessly conservative. Julian Simon was not only right, he’s more right with every passing decade.
Fertility rate per woman in India dropped from 3.1 in 1997 to 2.6 in 2005, which strongly suggests that it will be at the replacement rate (2.1) within 5 years.
Of course that’s a relief, although it hardly comes too soon. It’s a good thing that India didn’t listen to Julian Simon on population growth. On the other hand, Simon would probably have said, “See, things are getting better in India, so that proves me right.” Again, why thank people for planning for the future when you can instead take their prudence for granted?
Jim, you wrote:
On the contrary, until the Industrial Revolution, every country in the world was kept poor from overpopulation. In economics there is a concept called a Malthusian trap, which is when a country’s economy cannot expand as quickly as its population expands. Most of the world’s people lived in the Malthusian trap until the end of the 20th century. That is a clear difference from the rest of history.
1950 is the cutoff I’d use.
Well, you’re really taking the long-term view. As Keynes said, the long run is a misleading guide to current affairs. In the long run, we are all dead. That said, you’re technically correct. We can expect a sharp rise in demand from China, India, etc in the short term: the next 30 years. Then there will be a lagged increase in supply, maybe in the 50 years after that.
Nonsense, if you had looked at previous demand spikes, you’d see that they settled out within a few years. Not 30 or 50 years.
Then I’m glad that you and I agree on my main point. If you’re main point is that we can still have a superior lifestyle, then yes, I mostly agree with you — but not necessarily a lifestyle that includes cheap chromium.
Your assertion was that resource prices rose because of “high population”, ignoring that we’ve had a growing economic population for many, many decades, yet have seen a substantial decline in commodity prices over the past 30 years.
It depends on who you mean by “we”. If you mean the United States, then the reason that we don’t need population control is that essentially we already have it.
Name the sentient party that is “controlling” the size of the US population. We don’t say that a hill is “controlling” a marble merely because the marble is rolling down the hill. Population control means that someone is controling population growth. That isn’t the case in the US nor is it needed.
What kind of life do you expect these 25 million Indians born each year to have? Do you think that they were created for the sake of their own well-being?
I don’t know. Most will probably have a good life. And their children will prosper, barring nuclear war or other demicide.
Again, why thank people for planning for the future when you can instead take their prudence for granted?
Exactly right. Prudence is expected.