Perpetual Impending Doom Gets Tiresome

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Posted: Feb 25, 2020 9:49 AM
Perpetual Impending Doom Gets Tiresome

Source: AP Photo/Jeff Chiu

We will soon run out of affordable energy, and industrial society is going to implode. Just ask William Stanley Jevons, an economist who wrote The Coal Question in 1906. Through his careful calculations, he proved that the rate of coal use would outstrip supplies in the near future and there would be economic disaster. The world is going to run out of food because the population is outstripping our ability to produce it. Just ask Thomas Malthus of the 1800s, or better yet, Paul Erhlich, the 1960s academic rock star whose 1968 book, The Population Bomb, predicted mass starvation within a decade. With Peak Oil, Jevons’s ghost was resurrected, with predictions of running out of petroleum.

That we have not faced any of these disasters in market societies is not a surprise. There hasn’t been a single famine where markets are free to adjust to conditions. That is pretty amazing. There have been crop failures, but famines result only from politics. We have not run out of a single natural resource, even though usage has increased tremendously since the predictions were made. When you understand market processes, that idea isn’t too difficult to get your head around.

The late Julian Simon, an economist and a contemporary of Dr. Erhlich, wrote a systematic response to all of the doomsayers with his in-depth analysis, The Ultimate Resource. In Simon’s mind, the ultimate resource is human intelligence. Stuff in the ground remains stuff in the ground until someone finds a use for it and transforms it into something else that serves a human need, something to which people assign value. It is not just single human minds, however, but rather the collection of human minds, the complex adaptive systems that make up markets and economies. The interactions between what people want and what people are willing to provide are mediated by prices in a market. Relative scarcity and the resulting high prices encourage not only the search for better or alternative sources, but also a restriction of consumption by engaging new technologies or finding other ways to satisfy needs. These alternatives on each side increase production and decrease consumption, which both tend to bring prices back in line. We have seen this multiple times with the energy industry. It is notable with energy because adjustments take years to make, but the effects are felt far into the future. High prices might bring an extended period of low prices.

We still hear of impending disaster almost every day, with the shrill global warming hysteria being but one example. I suppose that is to be expected, because death and mayhem sell news stories, but we are not experiencing a period of continuous disaster. In fact, statistically, things are getting better in most respects. Poverty has declined significantly in the world as more regions embrace markets and economic freedom. Food production continues to rise. As nations develop, actual pollution, which they neglect when they are struggling just to survive, suddenly becomes a major concern, and people with more wealth are willing to expend more resources to prevent it. Tree cover around the globe actually appears to be increasing, according to a study of satellite data.

Of course we need to take real threats seriously, and there are many of them, mostly in the form of wars, devastation, and dislocation, caused primarily by governments and politicians. Even with something like terrorism, the real level of threat to ordinary people in most areas of the world is minuscule. Crying “Wolf” does not help anyone other than those who get wealthy from doom and gloom. It would do us well to figure out how to turn it off or ignore it. We’ll all be better off if we do.