Ehrlich, Simon and Technology
Tuesday, November 19, 2013
Daron Acemoglu and James Robinson

A new book by Paul Sabin, The Bet: Paul Ehrlich, Julian Simon and Our Gamble over Earth’s Future, revisits the famous wager between Ehrlich and Simon.

Many scholars and commentators over the years have publicly, and sometimes very loudly, worried that we will outgrow our planet’s ability to support us. One of the most colorful was the environmentalist Paul Ehrlich, who repeatedly predicted over the 1960s and 70s widespread resource scarcities and consequent demographic catastrophes. He became more than a public intellectual, almost a household name as a result.

But Ehrlich was challenged by economist Julian Simon, who believed that technological ingenuity would overcome any scarcities before these would have much of an impact on human welfare.

Simon challenged Ehrlich to a bet about the prices of a bundle of commodities that Ehrlich would choose.

Ehrlich picked chromium, copper, nickel, tin, and tungsten as five commodities that would experience increases in their inflation-adjusted prices between 1980 and 1990. The wager ended with a victory for Simon when the prices of all five commodities fell.

But as Sabin recounts, the story would have been different if the bet was extended two more decades.

The next figure shows that indeed Simon’s victory may have been premature.

 

Before the Great Recession prices had reached and surpassed their 1980 level.

That of course neither proves nor disproves Simon’s broader point: technology will respond to scarcities.

That being said, revisiting this bet and the preceding and ensuing debate is interesting for several reasons as we will discuss in the next several posts.

To give a preview, in the next post, we will suggest that the oft-drawn interpretation of the wager between Ehrlich and Simon, repeated by Sabin, as the facing off of liberal and conservative views about growth and technology misses the point.

We will then review some of the economics literature on how technology responds to scarcities and the implications of this for climate change.

We will conclude with a final post on the role of politics in technological change. 

Article originally appeared on Why Nations Fail by Daron Acemoglu and James Robinson (http://whynationsfail.com/).
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