World of dif­fer­ence

Hu­man in­ge­nu­ity is in­fi­nite, un­like our nat­u­ral re­sources

The Daily Telegraph - Business - - Front Page - Ryan Bourne

It was in Malaysia that I first ex­pe­ri­enced what I now dub “anti-hu­man en­vi­ron­men­tal­ism”.

Sit­ting in the coun­try’s min­istry of en­ergy, tech­nol­ogy, science, cli­mate change and en­vi­ron­ment, a gov­ern­ment sci­en­tist pre­sented us with a two-axis di­a­gram. The lines rep­re­sented “the nat­u­ral world” and “hu­man ac­tiv­ity.” As he laboured over all the en­vi­ron­men­tal de­ple­tion we were pur­port­edly re­spon­si­ble for, I ten­ta­tively asked: “Do you as­sume, then, that hu­man be­ings are just not part of the nat­u­ral world?” The si­lence spoke vol­umes.

Hu­man­ity faces huge chal­lenges re­lat­ing to our co­ex­is­tence with wildlife, forms of pol­lu­tion and risks as­so­ci­ated with a chang­ing cli­mate. As econ­o­mists might say, our ac­tiv­i­ties do in­deed pro­duce “ex­ter­nal­i­ties”. But dooms­day anti-hu­man thinkers, who see us as mere leeches on Earth, have been ut­terly wrong in one cru­cial re­spect: the idea that growth is rapidly de­plet­ing nat­u­ral re­sources.

The bi­ol­o­gist Paul Ehrlich is per­haps the most fa­mous pro­po­nent of this idea. In his 1968 best­selling book,

The Pop­u­la­tion Bomb, he ad­vanced the idea of re­source de­ple­tion. He re­newed this at­tack at a 2017 Vat­i­can con­fer­ence, say­ing: “You can’t go on grow­ing for­ever on a fi­nite planet. The big­gest prob­lem we face is the con­tin­ued ex­pan­sion of the hu­man en­ter­prise … Per­pet­ual growth is the creed of a can­cer cell.” The Prince of Wales thinks sim­i­larly. He has lamented that Earth just doesn’t have the ca­pac­ity to “sus­tain us all” if more and more peo­ple con­sume nat­u­ral re­sources at “Western lev­els”.

This no­tion, that hu­mans are like pigs eat­ing from a fi­nite trough, is in­tu­itive. The Earth, log­i­cally, ap­pears to have lim­ited nat­u­ral re­serves. If one ac­cepts this, it fol­lows that big­ger pop­u­la­tion or higher con­sump­tion lev­els will de­plete the Earth’s riches. The im­pli­ca­tions are ob­vi­ous: first, in­fi­nite growth is im­pos­si­ble due to these con­straints on phys­i­cal re­sources; sec­ond, to avoid the rapid de­ple­tion of the Earth’s re­sources, we must limit pop­u­la­tion growth, re­duce con­sump­tion, or both.

Such think­ing is re­mark­ably com­mon among sci­en­tists. But it is un­eco­nomic. What it ig­nores, as the great Univer­sity of Mary­land econ­o­mist Ju­lian Si­mon high­lighted, is the ca­pac­ity of hu­man in­ge­nu­ity to find new recipes and ideas. An­ti­hu­man thinkers fail to ap­pre­ci­ate that our brains are also a re­source. When toil­ing un­der the right in­sti­tu­tions and mar­ket-based in­cen­tives – i.e. prices – we con­stantly dream up new ways of mak­ing or do­ing things, in­clud­ing new meth­ods of dis­cov­ery or means of ex­ca­vat­ing raw ma­te­ri­als.

Yes, con­sump­tion and pop­u­la­tion growth put pres­sure on re­source avail­abil­ity. But mar­kets pro­vide us with in­cen­tives to change our be­hav­iour or in­no­vate. High prices caused by higher de­mand en­cour­age us to shift to con­sum­ing sub­sti­tutes in the short term. In the longer term they en­cour­age us to seek out new sup­ply or to re­think our whole ap­proach. If this sec­ond ef­fect dom­i­nates, the prices of nat­u­ral re­sources could fall with pop­u­la­tion growth. More hu­mans, after all, means a greater brain ca­pac­ity for ideas to en­gen­der abun­dance.

That is ex­actly what my Cato col­league Mar­ian L Tupy, and Gale L Poo­ley of Brigham Young Univer­sity, find in a fas­ci­nat­ing new pa­per. The facts speak for them­selves. Look­ing at a bas­ket of 50 global com­modi­ties be­tween 1980 and 2017, they find real prices fell by an av­er­age of 36pc. That hap­pened de­spite the global pop­u­la­tion in­creas­ing by 69pc over the same pe­riod.

A more ac­cu­rate way to as­sess the “cost” to hu­mans of these com­modi­ties is to cal­cu­late their “time price” – the amount of time an av­er­age hu­man must work to earn enough to buy them. On that met­ric, the cost of these com­modi­ties fell much fur­ther – by a whop­ping 65pc. If it took 60 min­utes of work to buy this bas­ket in 1980, it only took 21 min­utes of work to af­ford them in 2017. A con­tin­u­a­tion of that trend would see prices of these nat­u­ral re­sources halve ev­ery 26 years.

This ut­terly re­futes the anti-hu­man nar­ra­tive and shows that Ju­lian Si­mon was right. Pop­u­la­tion growth, far from ex­haust­ing re­sources, seems to be Rare earth: The planet’s nat­u­ral re­sources are nei­ther fully known nor fixed in any mean­ing­ful sense mak­ing them more plen­ti­ful. In fact, our cur­rent sit­u­a­tion in­di­cates a “su­per abun­dance”: prices (in terms of work­ing time) are fall­ing at a rate pro­por­tion­ally faster than the in­crease in pop­u­la­tion.

How does this make sense, phys­i­cally, on a planet of no­tion­ally fixed re­sources? Tupy and Poo­ley use a beau­ti­ful anal­ogy. They state: “The world is a closed sys­tem in the way that a pi­ano is a closed sys­tem. The in­stru­ment has only 88 notes, but those notes can be played in a nearly in­fi­nite va­ri­ety of ways. The same ap­plies to our planet. The Earth’s atoms may be fixed, but the pos­si­ble com­bi­na­tions of those atoms are in­fi­nite. What mat­ters, then, is not the phys­i­cal lim­its of our planet, but hu­man free­dom to ex­per­i­ment and reimag­ine the use of re­sources that we have.”

It is wrong, in other words, to think of hu­man ac­tiv­ity as a pure con­sump­tion of our phys­i­cal in­her­i­tance. Our ex­is­tence, pro­vided we are gov­erned by sound in­sti­tu­tions, en­cour­ages new and in­no­va­tive ways to ful­fil wants and needs by com­bin­ing and ex­plor­ing the re­sources avail­able to us. Ear­lier this year, for ex­am­ple, sci­en­tists dis­cov­ered a 16m-ton patch of deepsea mud rich with “rare earths” al­most 800 miles off the coast of Ja­pan. They es­ti­mate it could serve the planet’s need for those rare earths for be­tween 400 and 800 years. The earth’s nat­u­ral re­sources are nei­ther fully known nor fixed in any mean­ing­ful sense.

Nei­ther, there­fore, are the op­por­tu­ni­ties for growth. As former US pres­i­dent Ron­ald Rea­gan sum­marised suc­cinctly: “There are no such things as lim­its to growth, be­cause there are no lim­its to the hu­man ca­pac­ity for in­tel­li­gence, imag­i­na­tion and won­der.” Pro­vided we main­tain sound eco­nomic poli­cies, wor­ry­ing about hu­mans de­plet­ing re­sources amounts to un­founded hys­te­ria.

‘Pop­u­la­tion growth, far from ex­haust­ing re­sources, seems to be mak­ing them more plen­ti­ful’

RYAN BOURNE

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.