Resource Pressures

Back in 1980 Paul Ehrlich made a famous bet with Julian L. Simon. They bet $1,000 that five resources (of Ehrlich’s choosing) would be more expensive in 10 years. Ehrlich lost: 10 years later every one of the resources had declined in price by an average of 40 percent.

The wager reached legendary proportions among conservative economists and pundits. Stephen Moore of the Cato Institute gloated that "Julian Simon’s views on population and natural resources are so triumphant that they are almost mainstream. No one can rationally look at the evidence today and still claim, for example, that we are running out of food or energy."

But now it appears that Ehrlich was not wrong, only two decades too early. Since 2000, the price of energy and metal resources have been soaring. Prices for copper, iron ore, lead, crude oil, and uranium have more than doubled in five years. Others have shown significant gains as well. The markets are signalling that we are reaching the limits of growth.

	Aluminum, US$/ton	Coal, US$ /ton	Copper, US$/ton	Iron Ore, US cts /ton	Lead, US$ /ton	Nickel, US$ /ton	Crude Oil US$/bl	Tin, US$ /ton	Uranium, US$/lb	Zinc, US$ /ton
1/80	2054	39.6	2592	28.1	1111	6584	35.63	16973	40	773
1/90	1528	38	2365	32.5	707	7056	20.59	6592	9	1294
1/00	1679	25	1843	28.8	471	8315	25.20	5926	9.5	1178
12/05	2250	39.4	4577	65	1120	13,490	56.47	6762	35	1819
% incr over 1980	9.5	-0.5	76.6	131	0.8	104	58	-60	-13	135
% incr over 2000	34	58	148	125	137	62	120	14	268	54

As Stephen Moore notes,

Among the many prominent converts to the Julian Simon world view on population and environmental issues were Ronald Reagan and Pope John Paul II. Despite howls of protest from the international population control lobby, in 1984 the Reagan administration adopted Simon’s position—that the world is not overpopulated and that people are resource creators, not resource destroyers—at the United Nations Population Conference in Mexico City. The Reaganites called it "supply-side demographics." Meanwhile, in the late 1980s, Simon traveled by invitation to the Vatican to explain his theories on population growth. A year later Pope John Paul II’s encyclical letter urged nations to treat their people "as productive assets."

While I would contend that it is not so much population growth that is driving the problem as it is consumption, and therefore very much a western problem, the almost unbelievable naivety of the "supply side demographics model is going to come back to haunt us soon.