Julian Simon

Simon Abundance Index Launch on Monday at the Cato Institute

Mark the 49th anniversary of Earth Day by celebrating human ingenuity.

|

The Limits to Growth in 1972 featured calculations of "exponential reserve index" for important nonrenewable resources that assumed exponential growth rates in consumption while multiplying known reserves of each resource fivefold. After crunching the numbers, the authors reported, "The effect of exponential growth is to reduce the probable period of availability of aluminum, for example, from 100 years to 31 years (55 years with a fivefold increase in reserves). Copper, with a 36-year lifetime at current usage rates, would actually last only 21 years at the present rate of growth, and 48 years if present reserves are multiplied by five."

Let's consider copper. The World Bank reported that world reserves of copper stood at 154 million tons in 1960, rising to 451 million tons in 1976. At constant levels of consumption, the World Bank calculated that 1960 reserves would have lasted only 37 years and the 1976 reserves would be exhausted in 59 years. At a 2 percent annual growth rate, reserves would be depleted 28 and 40 years respectively.

The U.S. Geological Survey (USGS) reports, 47 years after the publication of The Limits to Growth, that world known reserves of copper stand at 830 million tons as of 2018. Furthermore the USGS notes that identified resources contain about 2.1 billion tons of copper, and undiscovered resources contain an estimated 3.5 billion tons. Evidently, the book's calculation that humanity should have been about to run out of copper in the next year or so turned out to be completely wrong.

Economist Julian Simon from the University of Maryland understood that the authors of The Limits to Growth were vastly underestimating human ingenuity operating under the rule of law in free markets to solve problems such as impending resource exhaustion. Simon challenged the gloomy prognostications made by the authors of The Limits to Growth in his brilliant books The Ultimate Resource in 1981 and the magisterial The Resourceful Earth, co-authored with Herman Kahn, in 1984.

This led to Simon's famous bet with population doomster Paul Ehrlich. In October 1980, Ehrlich and Simon drew up a futures contract obligating Simon to sell Ehrlich the same quantities that could be purchased for $1,000 of five metals (copper, chromium, nickel, tin, and tungsten) 10 years later at 1980 prices. If the combined prices rose above $1,000, Simon would pay the difference. If they fell below $1,000, Ehrlich would pay Simon the difference. In October 1990, Ehrlich mailed Simon a check for $576.07. There was no note in the letter. The price of the basket of metals chosen by Ehrlich and his cohorts had fallen by more than 50 percent.

Inspired by Simon's pioneering analyses, Marian Tupy,* editor of Human Progress at the Cato Institute, and Professor Gale Pooley from Brigham Young University-Hawaii have devised the Simon Abundance Index. Tupy and Pooley use data on 50 different commodities to track their price trajectories over the past 37 years from the World Bank and International Monetary Fund. The index measures the timeprice of commodities and change in global population to estimate overall resource abundance. They find that the planet's resources became 379.6 percent more abundant between 1980 and 2017.

At 11:00 a.m on Monday, April 22, to mark the 49th anniversary of Earth Day, the Cato Institute is holding a public event to unveil the Simon Abundance Index. Besides Tupy and Pooley, the event will feature as speakers Julian Simon's son David M. Simon and techno-utopian George Gilder, author of Life after Google. Folks in the Washington, D.C. area can go here to register to attend the event or sign up to see it online.

Happy Earth Day!

*Disclosure: Marian Tupy and I are working together on book that tracks and explains nearly 100 global population, income, commodity, and environmental trends.

NEXT: It's Problematic to Accuse Ancestry's Interracial Ad of Whitewashing Slavery

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Gosh, I can’t imagine any possible reason why the Cato Institute would roll out an Orwellian “index” that will speciously be cited to suggest that there’s no reason to believe that a critical global shortage of any nonrenewable resource is imminent, other than pure intellectual virtue and good-faith commitment to libertarian principles.

    1. Correct.

      1. Embrace the doublespeak.

        1. Nah. Just treat such comments as reverse irony.

          1. “Reverse” irony being what, exactly? Somehow not irony, but ironic?

            No, listen – assuming that you’re not just an intellectually dishonest stooge – there’s no objective way to avoid admitting that an “abundance index” is a patently silly, value-laden term. It’s also hard to avoid the obvious inference that an index designed to provide some kind of metric for the past several decades of improving exploration and extraction technology, generally showing how “abundance” has increased over time, has been designed with an eye towards the oft-invoked “peak oil” scare. To pretend otherwise is, like I said, Orwellian.

            And I say that even while acknowledging those trends. Yes, I’ll say, “capitalism uber alles,” R&D improves where scarcity looms, economic and political development promotes exploration of ever-newer reserves, and so on. Those are objective phenomena and counsel against premature doomsday scenarios. At the same time, past trend lines by no means determine future output, and we shouldn’t pretend otherwise, in service of short-term rent-seeking. Yet that seems that all this “think tank” seems interested in doing.

  2. ” Evidently, the book’s calculation that humanity should have been about to run out of copper in the next year or so turned out to be completely wrong.”

    This is true but I think it’s safe to say that thieves stripping houses solely for their copper wiring was rare in the early 1970s when the book was written, and now it’s a lot more common. The scramble for the tantalite, needed for our electronic equipment, has been so intense that it has fueled a civil war in the Congo that has lasted decades and killed millions. Whatever the estimated reserves are, ‘abundance’ doesn’t seem to fit the facts. The air we breathe exists in abundance. Thieves don’t steal it, warlords don’t fight over it.

    1. We need to open up mines and allow heavy logging in developed, Western nation, especially America. Even the dirtiest mines and worst logging operations in the US are far cleaner than the same resource extraction in the developing world, and most of our wilderness is already heavily altered by man, unlike many of the virgin areas being destroyed in the developing world. Privileged idealistic Western environmentalist zealots are one of the greatest forces for environmental destruction in the world, by opposing any and all development and resource extraction in Western nations, forcing the world to get those materials from countries with no environmental or labor regulations whatsoever, likely powered by dirty coal.

      1. I think Ron would agree with you. He wants the Western nations to scrap environmental and safety regulations as well, making resource extraction or nuclear power generation more profitable. Personally, I think the idea of a Western politician campaigning to adopt the regulatory regime of places like the Congo or China is a non starter.

    2. You’re just not very good at economic thinking. Food is ridiculously abundant, globally and locally, and yet Venezuelan soldiers are acting as bandits to take food from rural villages and Congolese tribes fight each other for it. Recreational drugs are also more abundant, but the Taliban and Mexican drug cartels have become extremely violent at the same time.

      Your faulty thinking is because the actual tie between resources and conflict is marginal value, not abundance. In Central Africa, it’s more profitable for individuals to fight for resources to sell rather than work, while in Australia (another tantalum producer) it’s better to work rather than fight.

      The Congo is also not a very good example. Tantalum doesn’t fuel any civil war; the wars are happening because of tribal conflict and corrupt governments, not to mention foreign occupation by Rwanda. The resource conflicts are about more than just tantalum and if there weren’t any tantalum, gold, or diamonds the residents would still be killing each other. The slaughter of 900 people last December was about tribal rivalry and land claims.

      As for copper, it’s an indication that copper has grown more valuable, with billions in Asia and Latin America now buying products that use it. It’s also less risky than taking identifiable items and trying to launder them. If you had bothered to read the article, you would even see that copper reserves are up.

      1. “Your faulty thinking is because the actual tie between resources and conflict is marginal value, not abundance.”

        I think this was my point. People will still fight and kill each other over scarce resources even if global reserves are increasing.

        “The resource conflicts are about more than just tantalum and if there weren’t any tantalum, gold, or diamonds the residents would still be killing each other. ”

        Probably true. But Americans kill each other every day for any conceivable reason, or no reason at all. No reason to expect the Congo to be any different in that regard. The difference lies in the scale of the killing, into the millions over decades. It’s the money from the mining that sustains the violence. To claim that the people of Congo would fight such a conflict regardless seems overly cynical.

  3. […] Bailey writes for Reason.com about a new tool designed to celebrate human […]

Please to post comments

Comments are closed.