Minds beat stomachs

Most of you will know of the famous Paul Erhlich v Julian Simon bet.   For a decade beginning in 1968, Ehrlich insisted the population is exploding, resources are running out, and we're all gonna die. Our time is up, he reckoned:

• The battle to feed humanity is over. In the 1970s, the world will undergo famines. Hundreds of millions of people are going to starve to death in spite of any crash programs embarked upon now. Population control is the only answer.
  —Paul Ehrlich, in The Population Bomb (Ballantine Books 1968)
• I would take even money that England will not exist in the year 2000.
  —Paul Ehrlich in (1969)
• In ten years all important animal life in the sea will be extinct. Large areas of coastline will have to be evacuated because of the stench of dead fish.
  —Paul Ehrlich, Earth Day (1970)
• Before 1985, mankind will enter a genuine age of scarcity…in which the accessible supplies of many key minerals will be facing depletion.
  —Paul Ehrlich in (1976)

Ehrlich was taken seriously at the time, and his arguments are taken seriously still by Russel Norman and the Greens.  Economist Julian Simon was one of the few at the time to call Ehrlich's bluff. Simon maintained that more people meant more opportunities, not less, the reason being (as Owen McShane summarises) "that minds outperform stomachs" -- as we get more minds with access to more knowledge and producing more and more innovations, then minds win by an ever growing margin. 

Ehrlich was so outraged by Simon's argument that in 1980 (by which time the paucity of dead fish should already have told him something) he accepted a bet with him.  Simon invited Ehrlich to choose a basket of goods that he insisted would rise in value by 1990 due to their increasing scarcity. Wikipedia summarises:

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.

So over the decade of 1980-1990, Ehrlich was proved comprehensively wrong -- which in the way of such people hasn't stopped him mouthing off since. (On the release of Bjorn Lomborg's book Skeptical Environmentalist: Measuring the Real State of the World in 2001, Ehrlich ranted, "If Lomborg had done some arithmetic, he could have . . . spared us a book as thick as a brick and almost as intelligent." And if Ehrlich had spared us his comment, he might have spared us forming for ourselves the fairly obvious conclusion about himself...)

There are some who still insist the result of the bet was just bad luck.  That the decade chosen was unfortunate. That concern has now been summarily dismissed by economist Don Boudreaux, who wondered recently what would happen if the same bet had happened over the decade from 1990-2000.

As Mark Perry summarises, the result would have been the same:

Simon would have won again (see chart below), since all of the metals declined in real price except for tungsten, and the average price decline of the 5-commodity group was -19%.

Case closed.  Again.  Minds still beat stomachs.  Always will.