Lots of you may have in all probability learn concerning the well-known wager in 1980 between Julian Simon and Paul Ehrlich. I wrote about it right here. The wager was based mostly on their underlying views of the world. Ehrlich, the pessimist, thought inhabitants development would run up towards useful resource constraints, driving the costs of varied supplies increased. Simon, the optimist, thought that people would advance expertise in order that extra items may very well be produced with out rising costs and possibly even dropping them. Simon, by the way in which, at all times admitted that it was a wager he might lose. The wager was concerning 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 learn about him and that he was extra vital 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 completely 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 huge 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 laborious to make bets about the long term as a result of no less than one of many bettors may not be round to pay up or obtain the winnings. Keynes had one thing to say about that.
So Ritchie appears 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. So much has modified since 1900, however the costs of the 5 metals are, surprisingly, not a lot completely different from what they had been in 1900. Chromium is, maybe, the one exception the place common costs in the previous couple of many years have been increased 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 although the world produces a lot extra of those supplies. The chart beneath exhibits the change in international manufacturing of every of the 5 supplies since 1900.
Right now, 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 previously, but costs have barely modified, means that opposite to Ehrlich’s prediction, we’re not near operating out of those supplies any time quickly. That’s what brings me nearer to Simon’s worldview.
By the way in which, I provided Paul Krugman a model of the Simon/Ehrlich wager in 1997. He didn’t reply.
The pic is of Julian Simon.