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Free Minds & Free Markets

Changes in Commodities Prices Since 1960 Show a Richer World

The World Bank recently updated the "Pink Sheet."

Today, a post short on words, but full of good news. The World Bank has updated its famed "Pink Sheet," which tracks the prices of 72 commodities going back (in most cases) to 1960. I have eliminated some repetitive datasets (for example, there are four crude oil prices—West Texas Intermediate, Dubai, Brent and "average") and some datasets that contain data for only very short periods of time. As such, I was left with 42 commodity prices, which are included in the chart below.

Out of those 42 commodity prices, 19 have declined in absolute terms, which is to say that, adjusted for inflation, they were cheaper in 2016 than in 1960. Twenty-three commodities have increased in price over the last 56 years. However, of those 23 prices, 20 rose less than global per capita income (177 percent). Only three commodities (crude oil, gold and silver) rose more than income, which is to say that in a vast majority of cases commodities became cheaper—absolutely or relatively—in spite of population growth of 142 percent.

So, what's the moral of the story? Eighteen years after his untimely and much lamented passing, Julian Simon's wisdom continues to shine. As Simon argued in his 1981 book The Ultimate Resource, human beings, unlike other animals, innovate their way out of scarcity by increasing the supply of natural resources or developing substitutes for overused resources. Human ingenuity, in other words, is "the ultimate resource" that makes all other resources more plentiful.

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  • Fist of Etiquette||

    Too bad lower prices for all is not as desirable as jobs for a few. That would be the chart for the day.

  • UnCivilServant||

    Does Marian Tupy write any other kind of article?

    It's always "be optimistic - here's a poorly laid out chart or graph!"

  • CampingInYourPark||

    You mean the cost of population vs platinum is confusing?

  • CampingInYourPark||

    Not doubting the average human isn't able to afford more stuff these days, but commodity prices don't mean much to a person not buying a commodity. I can probably buy a bale of tobacco cheaper than I could in 1960, but I doubt the same is true for a pack of cigarettes.

  • sarcasmic||

    Cigarettes are a poor example because most of the price is tax.

    I imagine though that the people who make stuff with those cheaper commodities are selling that stuff for less money. So that means people can buy more stuff with less money.

  • UnCivilServant||

    You might think that...

  • Libertarian||

    Everyone bitches about how expensive gas is, so I looked up the following online:

    Gal of gas in 1960 = $0.31
    Gal of gas adjusted for inflation to 2016 - $2.51

    This does not include an adjustment for income, nor a change in quality. People complain about things being expensive while conveniently forgetting that they are making more than $5000/year as they could have in 1960.

  • Mr. Flanders||

    Crazy, my local gas station is selling gas for $2.39 this morning. Pretty cool.

  • Lord_at_War||

    Meanwhile, your Federal Govt. is now $20 trillion in debt, with $75-100 trillion in unfunded entitlements- and your state's pension plan for the parasites is in an equally unfavorable situation.
    .
    The city I grew up in did not even have a "local income tax" until 1971. They finally got one by threatening to charge for garbage collection- it was 0.5% and they promised to never charge for garbage service.

    It's now 2.5%- and new developments have to arrange for (and pay for) their own garbage sevices- not to mention the extra fees for the "mandatory" recycling.

  • CampingInYourPark||

    Cigarettes are a poor example because most of the price is tax

    Are you saying the price of a finished good isn't necessarily correlated to it's base commodity price?

  • JFree||

    Commodity prices mean a lot to that very large portion of the world that sells commodities. And that is overwhelmingly semi/unskilled folks at the bottom of the ladder. Commodity prices rising less than average income simply means that inequality has risen and that the rural poor have been driven off the land and into urban slums - and off the semi/non-cash economy (where they are irrelevant to statistical measures) and into the cash/propertyless economy (where they are screwed).

    No surprise either that the two commodities that have risen most in price (oil/gold) are the two with virtually no price connection to unskilled poor but with big connections to financial elites.

  • marshaul||

    It does not follow. The poor could (and indeed, in many cases are) selling greater quantities of commodities with a marginal cost of production which has decreased faster than the unit value of the commodity. In this case, their net earnings are up.

    Also, you're completing ignoring inflation, which further renders your point desperate and strained.

    Please try harder.

  • Swiss Servator||

    Only three commodities (crude oil, gold and silver) rose more than income

    HAHAHAHAHAHAHAHA!

    The only thing better would have been some sort of 8% rise in adjusted price.

  • Swiss Servator||

    Oh this is awesome....to the right of the comments, on my screen at least....is an ad for "Mesosilver" True Colloidal Silver. When your health demands the best. "Makers of colloidal gold, platinum, copper & zinc".

    What, no flask of quicksilver, feathers and lancets?

  • UnCivilServant||

    This was the best I could find for quicksilver

  • UnCivilServant||

  • robc||

  • DiegoF||

    None of these was an X men character from the comic books or boardshorts from the 80s and I am sad.

  • ||

    Nano, nano.

  • UnCivilServant||

    Third floor, past the pickled toads.

  • Alan Vanneman||

    The most interesting figure here is crude oil, which, compared to income, appears to have doubled since 1960--a growth of about 350% compared to a growth of about 180%. Is the much-bruited "decline" in the rate of growth of productivity simply a function of the increase in the cost of energy? Just, you know, speculatin'.

  • Lord_at_War||

    I like the use of "GDP per capita" as a proxy for income without any mention of the increase in public debt.

  • Set Us Up The Chipper||

    This type of article is always good to see. Another topic I would like to see covered here is the new FCC chairman, what the down stream effects will be etc. But I guess to the hyperventilating/TDS will continue unabated around here for a while.

  • Bra Ket||

    I see the cost of humans has gone up quite a bit however.

  • kenzy9||

    Out of those 42 commodity prices, 19 have declined in absolute terms, which is to say that, adjusted for inflation, they were cheaper in 2016 than in 1960. Twenty-three commodities have increased in price over the last 56 years. However, العاب
    العاب فلاش 69 of those 23 prices, 20 rose less than global per capita income (177 percent). Only three commodities (crude oil, gold and silver) rose more than income, which is to say that in a vast majority of cases commodities became cheaper—absolutely or relatively—in spite of population growth of 142 percent.

  • Justin C||

    Though I would agree that commodity prices are dropping in absolute terms, I will offer the caveat that using "inflation adjusted" figures does not actually account properly for actual monetary "inflation" (properly defined as an increase in the money supply.)

    You will notice that the three commodities here that have actually served as money and are best suited to that task (gold, silver and oil) have seen their priced increase in so-called "inflation adjusted" terms.

    If you use gold, silver or oil as the monetary measuring stick, which is far more appropriate, you'll find that other commodities have dropped in price in real terms even further!

    (And may be due for a short-term upward price correction in their long march down in absolute price.)

    Just don't mistake the use of consumer price indexes as a true adjustment for monetary inflation. It's not.

    Fortunately, the use of real, non-inflationary money as the measuring stick confirms in even brighter picture than the one presented here in terms of declining commodity prices.

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