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« A Previously Unknown Part Of The Spectrum | Main | I Don't Get It »

Economic Fallacy

Dennis Wingo asks a question that I often pose:

...we need to focus on what our “sense of purpose” is in this exploration program. What is our purpose in doing this? Is it science? International prestige? Educational inspiration? All these reasons are bandied about, but history shows that none really capture the public’s broad support.

He thinks that the answer is to open up the resources of the solar system to humanity.

Looks like a space post, right? So why have I categorized it under "Economics"?

It is said by many in the environmental movement that the U.S. consumes far more than its share of resources.

Yes, it is said by many in the environmental movement. Of course, it's also said by many that man never walked on the moon. "Many" saying something doesn't make it so.

What does this mean? What is "our share of resources"?

People who make this claim generally mean that we consume a greater proportion of the world's "resources" than would be justified by our proportion of the global population. We are less than ten percent of the world population, yet we consume (make up whatever number) percent of the world's "resources."

There are two fallacies here. The first is that the word "resources" is ill defined for the purpose of the discussion. Most of the proponents of this point of view tend to have a dim understanding of capitalism, and the mechanisms of wealth creation. In fact, they often think, or at least act and argue as though they think, that the wealth of the world, or the country, is a fixed quantity, to simply be divvied up according to some nebulous scheme of "social justice." But (to get to the second fallacy), wealth and "resources" themselves are not fixed quantities--they are created by activities both natural and artificial.

If "resources" are simply a static quantity of stuff, lying around waiting for someone to pick them up, then it might make sense to allocate them by percentage of the population (e.g., ten percent of the population should get ten percent of the "resources"). Even then, it doesn't make a lot of sense--for example, I would think that these types would argue that single mothers should get more?

But since they're not a fixed quantity, it's actually perfectly reasonable for a small proportion of the world's population to consume a larger proportion of those "resources," since they are making a major contribution--in capital and knowledge--to creating them.

Is undiscovered oil a "resource"?

No. For practical purposes, it doesn't even exist. It only comes into existence in any useful way after modern technology finds it, and then drills for it and pumps it. How much of it should the country under which it sits, or its population get? Well, that should be a matter of negotiations, but most oil-producing countries realize that they would produce no oil without western capital and technology, so they do deals which are both moral (assuming that the government is the owner of the "resources"--a dubious ethical assumption, but one for another day) and legal. So if Americans consume more oil, it's because they're willing to pay enough for it, either directly by purchasing it, or indirectly through taxes that subsidize research and provide the military means to keep shipping lanes open.

I'm all in favor of extending space technology to utilize and create new resources off the planet, but I don't feel morally obligated to do so because I "consume more than my share."

Posted by Rand Simberg at February 24, 2005 06:28 AM
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Resources and Development
Excerpt: Dennis Wingo argues in favor of resource discovery and extraction as the proper focus of space exploration efforts:Starting with water and oxygen on the Moon and the exploitation of high value metallic asteroid impactors on the Moon, we can shift...
Weblog: MarsBlog -- News and Commentary on Space
Tracked: February 24, 2005 08:51 PM
Comments

Nice.

What would happen to the water if I used less of it? Conserve water. Yeah right. Stop subsidizing the water and sell more of it. Desalinate if you have to, but don't whine about my usage. Just charge me my fair share.

Same with just about every other commodity. If you want to give more bucks to the less fortunate, tax my consumption. But discouraging me from consuming at all will make everyone worse off because I will no longer be paying, earning and being taxed. That means I buy fewer services and provide fewer services. There is definitely not a zero-sum game going on in economics. Everyone gains from trade by definition else why would they do it? Telling people to do less means less waste, but also less of the myriad cascading benefits of spending.

Posted by Sam Dinkin at February 24, 2005 09:02 AM

Yea but...there is a point when the cost of the resources makes them unavailable to some. Although I may be able to afford $3/gal gas, the guy in the trailer park on the other side of the tracks can't get to work.

Posted by Shredder at February 24, 2005 09:13 AM

Rand Sindberg, the Thomas Sowell of space exploration: explaining the elementary principles of economics to refugees of postmodern ignorance.

Rand, I don't know if you've read either of Sowell's economic books, (Basic Economics and "Thinking beyond stage one"
but you right a lot like him.

Posted by Tom Cuddihy at February 24, 2005 09:34 AM

Ive heard the resource/population ratio arguement for
the last 30 years, but no one making it ever considers that
maybe the third world is simply over-populated.

Posted by greg at February 24, 2005 10:01 AM

In short, maybe the "fair" ratio isn't consumption/population but consumption/production.

I can live with that.

Posted by at February 24, 2005 10:33 AM


> Ive heard the resource/population ratio arguement for
> the last 30 years, but no one making it ever considers that
> maybe the third world is simply over-populated.

Huh? The people who say "the US consumes more than its fair share" are the same people who invented the population myth: people who see human beings only as mouths to feed and not hands to work or minds to create.

Posted by at February 24, 2005 10:46 AM

The question of what constitutes a resource is an interesting one.
Was crude oil a "resource" in 1800 ? And, is He-3 actually a resource today ? What about all the sunlight that we dont use as long as we dont have SPS-s ?

Posted by kert at February 24, 2005 10:56 AM

Shredder wrote:

Yea but...there is a point when the cost of the resources makes them unavailable to some. Although I may be able to afford $3/gal gas, the guy in the trailer park on the other side of the tracks can't get to work.

But if I drive an SUV, that makes a greater market for gas/oil -- then the oil companies can realize greater economies of scale and can produce at a LOWER price. (Whether that is manifested in the sale price is another matter).

In fact, there is a truism that the more widgets get made, (in the entire history of production of said widgets) the cheaper it is to make the last widget. So it is critically important that there be consumers of the initial "expensive" versions of widgets in order to provide the initial market for widgets.

Now replace "widgets" with "hybrid cars" in the above and realize why it is good that americans are prodigeous consumers that use lots of the worlds "resources" and thus are able to afford expensive hybrid cars.

Go Capitalism. ;-)

--Fred


Posted by Fred K at February 24, 2005 12:03 PM


Moreover, Mr. Wingo's solution doesn't address the "problem" he's identified.

If Americans consume an "unfair share" of resources, then Americans going into space and harvesting more resources will result in even more "unfairness."

To be consistent, Mr. Wingo should advocate that the US hold off going into space until China and India get there and manage to bring their consumption up to "fair" levels.

Posted by at February 24, 2005 12:52 PM

I'm with you, Rand.

Buckminster Fuller pointed out that advances in technology are constantly allowing us to do more with fewer resources. The electroics industry is the best example: We've gone from room filling computers, using tons of silicon and copper, etc., that consumed lots of wattage to computers that do far more than therir ancient counterparts that weigh ounces and run on small batteries.

So much for Thomas Malthus's economics.

I picked up a ballcap at the Kennedy Space Center a few years back. It's got an Apollo style footprint and the words "Hike the Moon" across it.
I point that out as my "ultimate fantasy vacation". I just want to go out there. It's exotic. Different. Real exploring.

Mind you, Iwouldn't turn down a boring 9 to 5 job watching a robot suck up lunar regolith, or watching the gauges in a regolith processing plant. The off hours would be well worth it!

Posted by Andy Robson at February 24, 2005 01:23 PM

I worked this out back in my university days. At that time "The Limits To Growth" was a big deal. For those who don't know, some folks created a classic GIGO computer model of the world. It was incredibly simplistic, and even a quick examination demonstrated very biased assumptions, but it was taken very seriously by the college crowd. The basic idea was that unless we stopped econonic and population growth then, the world was doomed - we would overshoot resources, and civilization would collapse. They made absolutely ridiculous assumptions about what constitute resources and pollution, and ignored technological advancement, economic processes, resource development, and substitution. Yes, there are clearly theoretical limits to population growth. Yes, we need to look beyond fossil fuels. But there are no hard resource limits or specific numerical population caps.

Posted by VR at February 24, 2005 03:45 PM

"population myth: people who see human beings only as mouths to feed and not hands to work or minds to create."

and when there's not enough work to go around, the hands
pick up guns and take the resources they need. By this logic,
the richest countries on earth should be the ones with the most
people. I agree the "too many goldfish in the tank" analogy
isnt directly applicable to humans, but having guys standing
5 deep on the side of the road waiting for day jobs cant be
good for the community theyre in and it certainly cant be good
if you're one of those guys.

Point 2: In industrialized countries, we have water meters, gas
pumps ect. Im betting a lot of the consumption in the non-
industrialized countries is "off the books". How do you know
when someone cuts down a tree for firewood or pulls a bucket
of water out of a river? The remote sensing crowd will get a
better handle on that in coming years.

Posted by greg at February 24, 2005 05:57 PM

I would be surprised if Dennis actually agreed with those who say we are consuming more than our fair share. It looks to me like he is pointing a finger in their direction to help make a point, but he doesn't say he agrees with them.

Posted by Alfred Differ at February 24, 2005 06:22 PM

and when there's not enough work to go around, the hands pick up guns and take the resources they need.

Because of course there's only a finite amount of work, apportioned to the population by some all-powerful administrator who, strangely enough, can't ever seem to guarantee there's enough work to go around.

Or the hands could find work to do that they hadn't previously looked for, instead of snubbing it because it's too menial. Yeah, getting themselves killed restaging the Haymarket Riot makes a lot more sense than that.

Posted by McGehee at February 24, 2005 07:06 PM

I would be surprised if Dennis actually agreed with those who say we are consuming more than our fair share. It looks to me like he is pointing a finger in their direction to help make a point, but he doesn't say he agrees with them.

I would be equally surprised, but he didn't say he didn't agree with them (though I also suspect that he wouldn't). I'm simply picking up the ball and pointing out what he didn't.

Posted by Rand Simberg at February 24, 2005 07:15 PM


> and when there's not enough work to go around, the hands pick up guns and take
> the resources they need. By this logic, the richest countries on earth should
> be the ones with the most people.

Most densely populated countries? Macau, Monaco, Hong Kong, Singapore, Gibraltar, Vatican City, Malta, Bermuda, Maldives, Bahrain -- are these the poorest nations on Earth? The population density in Monaco is 16 times what it is in Bangladesh -- are there a lot of people with guns in the streets?

Posted by Edward Wright at February 24, 2005 08:21 PM

I would be surprised if Dennis actually agreed with those who say we are consuming more than our fair share. It looks to me like he is pointing a finger in their direction to help make a point, but he doesn't say he agrees with them.

I would be equally surprised, but he didn't say he didn't agree with them (though I also suspect that he wouldn't). I'm simply picking up the ball and pointing out what he didn't.

= = =

. . . snark on . . .


Maybe Dennis is trying to win allies for funding space exploration in preference to winning the all Intarweb Debate-team award.


. . . snark off . . .



Posted by Bill White at February 24, 2005 08:53 PM

If the US is "consuming" resources disproportionate to its population size, perhaps the reason is that the freedom to access resources is more plentiful in the US than elsewhere.

To speak of the consumption of resources accurately describes only a portion of industry, which produces both durable and non-durable goods. (Never mind the issue of intellectual property.) It insinuates that industry makes all those resources disappear forever - or, more precisely, that they are permamently transformed into solid, liquid, and/or gaseous toxins.

Posted by Alan K. Henderson at February 24, 2005 10:03 PM

A point about petroleum or any other "resource." It is valuable only to the extent that someone is willing to pay for it. Americans consume X% of the world's resources -- so if we didn't, who would be using them? If we didn't buy petroleum from the Mid East, who would buy our share? Africa?

That black stuff underground is good only because we want it. Otherwise, it's just useless liquid that you can't drink.

Posted by Class-factotum at February 25, 2005 09:03 AM

"Americans consume X% of the world's resources -- so if we didn't, who would be using them? If we didn't buy petroleum from the Mid East, who would buy our share? Africa?"

No, China.

Posted by Kevin Parkin at February 25, 2005 07:32 PM

Hey Rand

How about dropping me an email when you do an article like this.

1. In the book I define resources, and specifically zero in on oil.

Also, you state that an undiscovered resource does not exist but that is not how the oil companies and national programs like the Saudi's do their accounting. Undiscovered oil resources make up a signficant portion of total planetary reserves. Read the book more carefully and you will see that. The same thing is true of Platinum Group Metals. This accounts for some of the disparity between the U.S. Geological Survey's estimate of South African PGM reserves (63 million kilos) versus the SA governments own estimate of 26 million kilos. This makes a HELL of a lot of difference when trying to develop the logistics of the hydrogen economy.

2. Alfred was right.

Many does not include me, many is "other". Also, I would kinda agree with the Limits to Growth crowd on one thing that a poster brought out, that is China and India. The LTG crowd (which is a MUCH larger crowd than say, oh space advocates), says that in a resource limited world there is no way that China and India can not be ALLOWED to reach the level of affluence of Western nations.

I agree that the earth does not have the resources to support 2.5 billion people at the level of affluence of the U.S. However, I laugh at their notion that China and India cannot be ALLOWED to aspire to this level of affluence. This is a recipe for war that these people never consider.

I think that China and India can reach our level but only by the massive importation of extrterrestrial resources and a focused technology development program to develop fusion power sources.

Energy is the key to life for all of us.

Dennis

Posted by Dennis Ray Wingo at March 22, 2005 07:15 PM


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