The Eternal Return of Malthus—The End of Ingenuity Again

Way back in 1991, when I submitted the proposal for my book, Eco-Scam: The False Prophets of Ecological Apocalypse, my editor looked at me and said, "Ron, we're going to publish this book and we'll both make a bit of money from it, but I just want to tell you that if you'd given me a proposal for a book that said that the end of the world was nigh, I could have made you a rich man." Eco-Scam did earn out its advance and sell over 30,000 copies, but my editor was right, I am not a rich man.

A person is considered wise and taken seriously only when he predicts that the world is about to come to an end due to the hubris of heedless humanity. The careers of Paul Ehrlich, Lester Brown, and most recently Jared Diamond are built on predictions of imminent doom. Whenever something goes wrong--oil prices go up, hurricanes increase, another famine breaks out in Africa--it is a sign that the end has finally arrived. In that sad silly tradition, the New York Times published yesterday a supersized op/ed by Thomas Homer-Dixon, director of the Trudeau Center for Peace and Conflict Studies at the University of Toronto, asserting that human ingenuity has come to an end.

Homer-Dixon notes the famous bet between Julian Simon and Paul Ehrlich in which Simon bet that mineral prices would decline between 1980 and 1990--they did drop by 57 percent. But Homer-Dixon argues that it's different this time. True, commodity mineral and oil prices are up, but I wouldn't bet that they are going to stay up--in other words, I'd be happy to make another 10 year Simon-Ehrlich wager on commodity minerals. As for oil prices, the International Energy Agency believes that they will be in the range of $34 to $96 per barrel by 2030. Right now I would be real happy to take part of the bet between the New York Times reporter John Tierney and peak oiler Matthew Simmons. Simmons bet that oil would be $200 per barrel or more in inflation-adjusted dollars by 2010.

There's nothing original about Homer-Dixon's doom-laden op/ed, but this one paragraph is particularly irritating when he baldly asserts:

Without a doubt, mankind can find ways to push back these constraints on global growth with market-driven innovation on energy supply, efficient use of energy and pollution cleanup. But we probably can't push them back indefinitely, because our species' capacity to innovate, and to deliver the fruits of that innovation when and where they're needed, isn't infinite.

I fully realize that fueling the future is an enormous challenge, but Homer-Dixon asserts, without evidence, that humanity's capacity to innovate is finite. In fact, the opposite is the case. A point made by New Growth Theory economists like Stanford University's Paul Romer. I explained Romer's insights about economc growth in my article "The Law of Increasing Returns." It usually takes more explanation to refute simpleminded errors like those being propounded by Homer-Dixon, so at the risk of trying the patience of Hit & Run readers I quote my article at some length:

We make ourselves better off, then, not by increasing the amount of resources on planet earth--that is, of course, fixed--but by rearranging resources we already have available so that they provide us with more of what we want. This process of improvement has been going on ever since the first members of our species walked the earth. We have moved from heavy earthenware pots to ultrathin plastics and lightweight aluminum cans. To cook our food we have shifted from wood-intensive campfires to clean, efficient natural gas. By using constantly improving recipes, humanity has avoided the Malthusian trap while at the same time making the world safer and more comfortable for an ever larger portion of the world's population.

In fact, increasing, rather than diminishing, returns characterize many economic activities. For example, it may cost $150 million to develop the first vial of a new vaccine to prevent Lyme disease. Yet every vial after that is essentially free. The same is true for computer programs: it may cost Microsoft $500 million for the first copy of Windows 98, but each subsequent copy is merely the cost of the disk on which it is stored. Or in the case of telecommunications, laying a fiber optic network may cost billions of dollars, but once operational it can transmit millions of messages at virtually no added cost. And the low costs of each of these inventions make it possible for the people who buy them to be even more productive in their own activities--by avoiding illness, expediting word processing, and drastically increasing the tempo of information exchanges.

What modern Malthusians who fret about the depletion of resources miss is that it is not oil that people want; they want to cool and heat their homes. It is not copper telephone lines that people want; they want to communicate quickly and easily with friends, family and businesses. They do not want paper; they want a convenient and cheap way to store written information. In short, what is important is not the physical resource but the function to be performed; and for that, ideas are the crucial input. Robert Kates notes that technological discoveries have "transformed the meaning of resources and increased the carrying capacity of the Earth"; economist Gale Johnson concludes that history has clearly confirmed that "no exhaustible resource is essential or irreplaceable"; and economist Dwight Lee asserts that "the relevant resource base is defined by knowledge, rather than by physical deposits of existing resources." …

We cannot deplete the supply of ideas, designs and recipes. They are immaterial and limitless, and therefore not bound in any meaningful sense by the second law of thermodynamics. Surely no one believes that humanity has already devised all of the methods to conserve, locate and exploit new sources of energy, or that the flow of ideas to improve houses, transportation, communications, medicine and farming has suddenly dried up. Though far too many of our fellow human beings are caught in local versions of the Malthusian trap, we must not mistake the situation of that segment as representing the future of all of humanity and the earth itself; it is, instead, a dwindling remnant of an unhappy past. Misery is not the inevitable lot of humanity, nor is the ruin of the natural world a foregone conclusion.

But it is still the case that affirming humanity's capacity to solve problems will not make me a rich man. Maybe I should arrange for some bets with neo-Malthusians?