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Will ingenuity save us from doom?
Thomas Malthus (1766-1834) was known for his theories on the dangers of population growth.
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TEXT OF INTERVIEW
Bill Radke: The debate in Copenhagen suggests an ancient question: Is humanity doomed, or will our ingenuity provide? You could ask that about the environment, our food supply, our natural resources. Marketplace's Economics Correspondent Chris Farrell has been thinking about this debate. Hi, Chris.
Chris Farrell: Good morning.
Radke: Now you have a story to set this up.
Farrell: Well we have to go back to 1980. Now remember, in the 70's, oil prices went up, food prices went up, and the population pessimist, Paul Ehrlich, made a bed with the eternal economic optimist, Julian Simon. Ehrlich picked five metals that he thought would rise in price, and he figured that there would be this Mathusian squeeze that would just send natural resource prices soaring throughout the decade.
Radke: Now let's explain Mathusian, this is the theory that humanity's threatened by disappearing resources.
Farrell: That's right. So Ehrlich was a Mathusian, and he bet Simon, the optimist, that metal prices would rise over the next decade after you adjust for inflation, that's the right way to make a bet. Well, the 1980's came, and the price of metal fell. So Ehrlich had to pay Simon almost $600
Radke: And why did the prices of the metals drop?
Farrell: Well for one thing, do you know what a high price does? It attracts every minor in the world to start drilling and find some more metals. Also, as some metals got more expensive, people would come up with alternatives that could do the same thing, or maybe do something better, 'cause a lot of metals are used in machinery, for example.
Radke: OK, so this is the anti-Mathusian idea, right? That humans innovate our way out of these shortages?
Farrell: That's right, and this is real practical implications for how you think about your investment portfolio. And this newsletter writer that I liked, he called it the battle between the Shumpertarians and the Malthusians.
Radke: And, wait, who are the Shumpertarians?
Farrell: The Shumpertarians believe in that famous phrase, "creative destruction." That you always come up with some new and better way of organizing life, there's technological innovation. So, high price of commodities is going to attract a lot of innovation. Think about the high price of oil and everything that's going on with alternative energy. The Malthusians, they're far more skeptical.
Radke: Who's right, Chris?
Farrell: Ah, well the true answer is no one knows. But I'm the kind of guy that believes the glass is always half full, and also since the Industrial Revolution, the right bet to make is to be on the side of innovation.
Radke: OK Malthusians, if you want to take him up on his bet, his name is Chris Farrell, he's Marketplace's economics corresponsdent. Chris, thank you.
Farrell: Thanks a lot.
About the author
Christopher Farrell is economics editor of Marketplace Money, a nationally syndicated one-hour weekly personal finance show produced by American Public Media.
I have been thinking about this, the reason that Malthus has proved to be so wrong when his argument seems so logical and powerful,for a long time. I too have arrived at the conclusion that the Malthus theory doesn't take into account the impact of human ingenuity. I have gone a little further than Chris was willing to do, and now postulate the hypotheses that Malthus is so wrong, that the opposite of what he thought is actually true, and that is that without continued population growth, the human situation is doomed to stagnation.
It seems to me that progress depends on human ingenuity, and the amount of human ingenuity at work at any given time is a function of the number of people. Further that the amount of ingenuity also is a function of the amount of connectivity between people. What I am saying that one averabe person might have one unit of human ingenuity, but if he gets in contact with another person with one unit of human ingenuity and they have a common interest, that by talking about it, they could bring a great deal more human ingenuity to bear on that interest than either of them could by himself.
I've probably gone on too long and lost just about anybody who might have started this comment, but I think this is a very interesting subject, and I haven't every seen or heard anyone discuss it before Chris took it on.
Your "discussion" with Chris Farrell took your smirky and smarmy style to a new low. Mr. Farrell's assertion that the only "correct" way to measure the commodity prices for this bet was to assess the commodity price plus inflation. Wrong! Note to Mr. Farrell and his "classical economist" ilk, the "correct" measure is to also factor in "externalities". Yeah, its messy. But if radio-economist spent more time discussing true costs of things we could still have stories with glasses half full - it just wouldn't be glasses half full of hot unhelpful air. Now that would be an innovation!
The correct answer is not 'no one knows' because that implies that one of these extremes is correct. In the worst case, ingenuity will certainly save many. But a Shumpertarian could win the bet despite a die-off of 5 billion people, depending upon how you define 'doomed.' Many people in our country take extreme positions such as given here according to various ideological truths. This question is fun as entertainment, but is indicative of our new way of using politics to decide scientific questions.
Interesting piece. I will try to be less Malthusian in the future. But your piece reminded me that was Newt Gingrich's answer to Global Warming: "I'm sure we'll think of something that will get us out of this jam and won't cost us lots of money." And my argument to Mr. Farrell is with our current Education System in such bad shape, where are those new ideas, the innovations that we need, going to come from?
