As the famous environmentalist bet showed, Malthusians are always wrong.
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.
Since the conclusion of the bet, several analysts have observed that Simon got lucky as the initial date coincided with historically high commodity prices (although he obviously didn’t know this at the time) and that different timeframes, say a different decade, would have put Ehrlich on the winning side on more than one occasion. While this is true, these comments detract from Simon’s larger point and more sophisticated arguments, for he was well aware of the volatility of the commodity markets and ultimately betted on the knowledge that the odds were in his favour, though by no means absolutely certain.
Looking back, his ‘astonishing offer’ was arguably the clever ploy of a serious poker player with a background in marketing and statistical analysis who sought to draw attention to a perspective then shunned by most environmentally minded academics, activists and public intellectuals. Indeed, prominent critics of overpopulation rhetoric were then mostly limited to old-fashioned Marxists who, following (mostly) Engel’s writings, believed that scientific advances would overcome natural limits (3); the Vatican whose doctrine opposed population control on (mostly) theological grounds; and a few free-market economists and think-tank analysts who also believed in scientific advances, but guided by the price system rather than central planning.