Lots of you have got in all probability learn in regards to the well-known wager in 1980 between Julian Simon and Paul Ehrlich. I wrote about it right here. The wager was primarily based on their underlying views of the world. Ehrlich, the pessimist, thought inhabitants progress would run up towards useful resource constraints, driving the costs of assorted supplies larger. Simon, the optimist, thought that people would advance know-how in order that extra items might be produced with out growing costs and possibly even dropping them. Simon, by the best way, all the time admitted that it was a wager he may lose. The wager was in regards to the motion of costs of 5 supplies between 1980 and 1990.
He gained.
I’m writing a biography of Julian Simon for my Concise Encyclopedia of Economics as a result of I believe extra individuals ought to find out about him and that he was extra essential than some Nobel Prize winners.
As I’ve been writing, I’ve been paying extra consideration to the literature on the wager. It seems that there’s a brand new article and the article is illuminating.
It’s Hannah Ritchie, “Who would have gained the Simon-Ehrlich wager over totally different many years, and what do long-term costs inform us about useful resource shortage?” Our World in Knowledge, January 5, 2024.
Ritchie goes decade by decade, declaring that inside a decade there have been typically large swings in costs in order that in some many years Simon would have gained an identical wager and in different many years Ehrlich would have gained.
However, she factors out, Simon particularly and Ehrlich considerably had been involved about the long term and 10 years is hardly the long term. The issue, in fact, is that it’s exhausting to make bets about the long term as a result of not less than one of many bettors won’t be round to pay up or obtain the winnings. Keynes had one thing to say about that.
So Ritchie appears to be like at costs from 1900 to 2022 and concludes:
The important thing takeaway for me is that, over the long term, costs didn’t change dramatically. Loads has modified since 1900, however the costs of the 5 metals are, surprisingly, not a lot totally different from what they had been in 1900. Chromium is, maybe, the one exception the place common costs in the previous few many years have been larger than they had been within the early twentieth century (though costs in 2020 had been precisely the identical as they had been in 1900).
She then writes:
Crucially, that is even supposing the world produces far more of those supplies. The chart under reveals the change in world manufacturing of every of the 5 supplies since 1900.
Right this moment, the world produces 40 occasions as a lot copper yearly and 250 occasions as a lot nickel because it did in 1900.
The truth that we produce way more supplies than we did up to now, but costs have barely modified, means that opposite to Ehrlich’s prediction, we’re not near working out of those supplies any time quickly. That’s what brings me nearer to Simon’s worldview.
By the best way, I provided Paul Krugman a model of the Simon/Ehrlich wager in 1997. He didn’t reply.
The pic is of Julian Simon.
