The Simon-Ehrlich wager 25 years on

[Valin]

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As the famous environmentalist bet showed, Malthusians are always wrong.

Pierre Desrochers

Sept. 29 2015

 

In 1980, economist Julian L Simon challenged Paul R Ehrlich, the biologist and author of the best-selling Population Bomb, to put his money where his catastrophist mouth was by staking $10,000 on his belief that ‘the cost of non-government-controlled raw materials… will not rise in the long run’, with the minimum period of time over which the bet could take place being one year (1). If, as Ehrlich believed, the store of valuable resources was absolutely finite and subject to ever-increasing demand, the resources’ price would rise. Simon, however, argued that in a market economy characterised by freely determined prices and secured property rights, a rise in the price of a valuable resource could only be temporary as it would provide incentives for people to look for more of it, to produce and use it more efficiently, and to develop substitutes. In the long run, even non-renewable resources would become ever-less scarce as they are ultimately created by the always renewable and ever-expanding human intellect.

 

Ehrlich, along with his regular collaborators John P Holdren and John Harte, accepted ‘Simon’s astonishing offer before other greedy people’ jumped in and offered ‘to pay him on September 29, 1990, the 1990 equivalent of 10,000 1980 dollars (corrected by the CPI) for the quantity that $2,000 would buy of each of the following five metals on September 29, 1980: chromium, copper, nickel, tin and tungsten’ (2).

 

Between Ehrlich’s chosen dates, the world’s population grew by more than 800million individuals while standards of living rose. In spite of this, the prices of all these commodities fell – from a 3.5 per cent fall for copper to a 72 per cent fall for tin – as, just as Simon had predicted, new deposits were brought into production and new substitutes created. Ehrlich honoured his financial engagement by mailing Simon a check to the amount of $576.07, but never acknowledged the superiority of his intellectual opponent’s outlook.

 

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That the perspective put forward by the likes of Julian Simon or the social and environmental benefits of fossil fuels remain mind-boggling to a general audience is to be expected. That so many well-meaning academics and public intellectuals remain enthralled by scenarios of doom after two centuries of debates in which the depletionists’ projections were repeatedly crushed by human creativity is more puzzling. In the end though, one suspects that Paul Ehrlich, David Attenborough, Jane Goodall and other prominent messengers of gloom who have lived long and productive lives must, deep down, be grateful for living in Julian Simon’s world.