Are we going to run out of food, resources and green space? Does trade make one party worse off? Is inequality the root of the world's problems? Is the world going to overheat and cause catastrophe?
Matt Ridley answers these questions and more in the best writing on the relationship between resources, markets and well-being since Julian Simon. What's superb about Ridley's work is that he not only slays the doommongers with flair, but he explains the beautiful processes set in motion by people serving each other creatively.
Kids are cute. Birk Baehr's little Buncombe County, NC accent is cute, too. But what he is saying isn't very cute at all. It shows that indoctrination -- bad-economics-cum-eco-religion -- is getting to the young. And you better believe this has been the plan all along.
But, honestly, what's so objectionable about what this kid is saying?
Remember "The Story of Stuff?" It's Annie Leonard's Malthusian ode to backwards economics. Perhaps you shook your head at how something so dumb could get so much traction. I know I did. But green religion runs deep. Well, she's back with another: "The Story of Broke."
When Julian Simon said we'll never run out of resources, people thought he was crazy. Thomas Malthus had predicted resource depletions and mass starvations back in the 18th century. And this was echoed by the likes of Paul Ehrlich and the Club of Rome in the 1970s. But the more we began to understand Professor Simon's lessons, the crazier the Malthusians started to sound. And just when we thought we'd put Malthusianism into a grave, it came back -- specter-like -- in different forms. The latest is a fetishistic obsession with recycling.
By now readers will have noticed a glass-half-full orientation to Ideas Matter. That's because we take our Julian Simon, our market fundamentals (not fundamentalism) and our facts seriously.
In the video above, Steven Horwitz explains why the cost of living, broadly speaking, is going down. Now, who knows what miseries the market manipulations of central banks and legislatures are likely to bring us in the short term. Printing money may cause our currencies to lose purchasing power. National debts may bring whole nations to their knees -- and soon.
But zooming out from justifiable pessimism in the short-to-medium term, things are looking better all the time on the hundred-year timescale. These data also show that markets work. Competition among firms who want to serve customers better yields continuous improvement. And much of the really big gains are difficult to quantify.
Take Horwitz's calculation of labor hours to buy a good or service today as compared with 50 years ago: that's impressive. But consider that there are millions of goods and services available today that were not available to people fifty years ago. So it's not only cheaper to buy a chicken with your labor, it's possible (and inexpensive) to buy a mobile communications and computing device. Or to read the words on this blog.
We've discussed what happens when economists attempt to act like 18th century physicists. (For more on this unfortunate trend, see my piece for the Library of Economics and Liberty.) What happens when a theoretical physicist acts like an 18th Century economist?
We don't usually go in for this sort of thing on Ideas Matter. But sometimes you just have to point out when bad ideas collide with reality. This company's bankruptcy (with attendant job losses) is a real, direct consequence of government policy.
Bjorn Lomborg suggests we find the "middle position" on the subject of climate change. It sounds like a fairly reasonable area to stake out. Lomborg is even willing to stave off Letterman's make-work nonsense about building "hydro-electric plants." (Yeesh.) And I'm frankly surprised Cool It has gotten so much traction, since controversy sells better than middle positions. Maybe Lomborg's middle ground is just what people have been looking for next to all the doomsaying.
But when Lomborg suggests governments spend money on research and development, should we take him seriously? Yes and no.
Is regulation cleaning the environment? The definite answer is maybe. But one thing is clearer: besides the water and the air, the contribution of business to the cleanliness of the environment. This is the "war on waste" Pierre Desrochers refers to above. Of course all this goes counter to environmental orthodoxy, which has corporate greed being the root of all environmental evil.
So why do companies want to eliminate waste? Is it corporate social responsibility? Is it ethical business practice? Naw. It's the profit motive. It's the positive unintended consequence of greed.
Finding innovative ways to turn trash into treasure is the essence of capitalism. That there are ancillary environmental benefits is a good thing. What environmentalists don't like about this is manifold: first, they almost always prefer good intentions to good consequences; second, demonizing corporations is good business for them, so they extent to which businesses go green for green means less hysteria to be drummed up and fewer CEOs to villianize; and third, it makes it more difficult to create a crisis du jour. Companies are the ones solving all the problems. I think they just don't like that at a fundamental level, a level that I'm not sure can be engaged with reason.
Steven Horwitz channels the late Julian Simon in this great little video. Horwitz ably debunks concerns about resource depletion -- concerns that often drive irrational regulation and rationing. Let's see if we can add any value to the video by breaking down Horwitz's story into a kind of process.
Prices of some good are "knowledge wrapped in an incentive."
Prices thus signal to producers and entrepreneurs whether it will be profitable to innovate, to substitute, or even to innovate a substitute.
Producers begin innovating and/or substituting.
The market for the good becomes more efficient and the resource becomes more available over time (once a paradox).
Prices of the good often trend down over time, as well. Innovative producers continuously compete to bring more of the good to the marketplace at the lowest possible price and highest quality.
Consumers win.
A system of free exchange and free prices allows consumers to enjoy the fruits of increased productivity, new innovation and greater availability. Ain't capitalism great? What's more, we'll never run out of oil.
Note: for our new readers Julian Simon is pictured in the banner at the top of the page, center square.
