 First edition | |
| Author | Julian Simon |
|---|---|
| Country | United States |
| Language | English |
| Subject | Natural resources |
| Publisher | Princeton University Press |
Publication date | 1981, 1996 |
| Media type | Print (hardcover & paperback) |
| Pages | 734 (1996 edition) |
| ISBN | 0-691-00381-5 (Revised 1996 edition, paperback) |
| OCLC | 39842255 |
The Ultimate Resource is a 1981 book written by Julian Lincoln Simon challenging the notion that humanity was running out of natural resources. [1] It was updated in 1996 as The Ultimate Resource 2. [2]
The overarching thesis on why there is no resource crisis is that as a particular resource becomes more scarce, its price rises. This price rise creates an incentive for people to discover more of the resource, ration and recycle it, and eventually, develop substitutes. The "ultimate resource" is not any particular physical object but the capacity for humans to invent and adapt.
The work opens with an explanation of scarcity, noting its relation to price; high prices denote relative scarcity and low prices indicate abundance. Simon usually measures prices in wage-adjusted terms, since this is a measure of how much labor is required to purchase a fixed amount of a particular resource. Since prices for most raw materials (e.g., copper) have fallen between 1800 and 1990 (adjusting for wages and adjusting for inflation), Simon argues that this indicates that those materials have become less scarce.
Simon makes a distinction between "engineering” and "economic" forecasting. Engineering forecasting consists of estimating the amount of known physical amount of resources, extrapolates the rate of use from current use and subtracts one from the other. Simon argues that these simple analyses are often wrong. While focusing only on proven resources is helpful in a business context, it is not appropriate for economy-wide forecasting. There exist undiscovered sources, sources not yet economically feasible to extract, sources not yet technologically feasible to extract, and ignored resources that could prove useful but are not yet worth trying to discover.
To counter the problems of engineering forecasting, Simon proposes economic forecasting, which proceeds in three steps in order to capture, in part, the unknowns the engineering method leaves out (p 27):
# Ask whether there is any convincing reason to think that the period for which you are forecasting will be different from the past, going back as far as the data will allow
- If there is no good reason to reject the past trend as representative of the future as well, ask whether there is a reasonable explanation for the observed trend
- If there is no reason to believe that the future will be different from the past, and if you have solid explanation for the trend—or even if you lack a solid theory, but the data are overwhelming—project the trend into the future
Perhaps the most controversial claim in the book is that natural resources are infinite. Simon argues not that there is an infinite physical amount of, say, copper, but for human purposes that amount should be treated as infinite because it is not bounded or limited in any economic sense, because:
The ever-decreasing prices, in wage-adjusted terms, indicate decreasing scarcity, in that it takes less time for the average worker to earn the money required to purchase a set amount of some commodity. This suggests, Simon claims, an enduring trend of increased availability that will not cease in the foreseeable future, despite continued population growth.
A plurality of the book consists of chapters showcasing the economics of one resource or another and proposing why this resource is, for human purposes, infinite.
Simon argues that for thousands of years, people have always worried about the end of civilization brought on by a crisis of resources. Simon lists several past unfounded environmental fears in order to back his claim that modern fears are nothing new and will also be disproven.
Some of the "crises" he notes are a shortage of tin in the 13th century BCE; disappearing forests in Greece in 550 BCE and in England in the 16th century to 18th century CE; food in 1798; coal in Great Britain in the 19th century; oil since the 1850s; and various metals since the 1970s.
Based on preliminary research for The Ultimate Resource, Simon and Paul Ehrlich made a famous wager in 1980, betting on a mutually agreed upon measure of resource scarcity over the decade leading up to 1990.
Ehrlich was the author of a popular book, The Population Bomb , which argued that mankind was facing a demographic catastrophe with the rate of population growth quickly outstripping growth in the supply of food and resources. Simon was highly skeptical of such claims.
Simon had Ehrlich choose five of several commodity metals. Ehrlich chose five metals: copper, chromium, nickel, tin, and tungsten. Simon bet that their prices would go down. Ehrlich bet they would go up.
The basket of goods, costing US$1,000 in 1980, fell in price by over 57 percent over the following decade. As a result, in October 1990, Paul Ehrlich mailed Julian Simon a check for US$576.07 to settle the wager in Simon's favor.
A large section of the book is dedicated to showing how population growth ultimately creates more resources. The basic argument echoes the overarching thesis: as resources become more scarce, the price rises, creating an incentive to adapt. It suggests that the more a society has to invent and innovate, all else being equal, the more easily the society will raise its living standards and lower resource scarcity.
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The Simon–Ehrlich wager was a 1980 scientific wager between business professor Julian L. Simon and biologist Paul Ehrlich, betting on a mutually agreed-upon measure of resource scarcity over the decade leading up to 1990. The widely-followed contest originated in the pages of Social Science Quarterly, where Simon challenged Ehrlich to put his money where his mouth was. In response to Ehrlich's published claim that "If I were a gambler, I would take even money that England will not exist in the year 2000" Simon offered to take that bet, or, more realistically, "to stake US$10,000 ... on my belief that the cost of non-government-controlled raw materials will not rise in the long run."
In economics, stagflation or recession-inflation is a situation in which the inflation rate is high or increasing, the economic growth rate slows, and unemployment remains steadily high. It presents a dilemma for economic policy, since actions intended to lower inflation may exacerbate unemployment.
The Population Bomb is a 1968 book co-authored by former Stanford University professor Paul R. Ehrlich and former Stanford senior researcher in conservation biology Anne H. Ehrlich. From the opening page, it predicted worldwide famines due to overpopulation, as well as other major societal upheavals, and advocated immediate action to limit population growth. Fears of a "population explosion" existed in the mid-20th century baby boom years, but the book and its authors brought the idea to an even wider audience.
The Limits to Growth is a 1972 report that discussed the possibility of exponential economic and population growth with finite supply of resources, studied by computer simulation. The study used the World3 computer model to simulate the consequence of interactions between the Earth and human systems. The model was based on the work of Jay Forrester of MIT, as described in his book World Dynamics.
Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate of increase in the real and nominal gross domestic product (GDP).
Julian Lincoln Simon was an American economist. He was a professor of economics and business administration at the University of Illinois from 1963 to 1983 before later moving to the University of Maryland, where he taught for the remainder of his academic career.
Paul Ralph Ehrlich is an American biologist known for his predictions and warnings about the consequences of population growth, including famine and resource depletion. Ehrlich is the Bing Professor Emeritus of Population Studies of the Department of Biology of Stanford University, and President of Stanford's Center for Conservation Biology.
Liebig's law of the minimum, often simply called Liebig's law or the law of the minimum, is a principle developed in agricultural science by Carl Sprengel (1840) and later popularized by Justus von Liebig. It states that growth is dictated not by total resources available, but by the scarcest resource. The law has also been applied to biological populations and ecosystem models for factors such as sunlight or mineral nutrients.
Cornucopianism is the idea that continued progress and provision of material items for mankind can be met by similarly continued advances in technology. It relies on the belief that there is enough matter and energy on the Earth to provide for the population of the world, which appears adequate to give humanity almost unlimited room for growth.
The Hubbert peak theory says that for any given geographical area, from an individual oil-producing region to the planet as a whole, the rate of petroleum production tends to follow a bell-shaped curve. It is one of the primary theories on peak oil.
A scientific wager is a wager whose outcome is settled by scientific method. It typically consists of an offer to pay a certain sum of money on the scientific proof or disproof of some currently-uncertain statement. Some wagers have specific date restrictions for collection, but many are open. Wagers occasionally exert a powerful galvanizing effect on society and the scientific community.
Artificial scarcity is scarcity of items despite the technology for production or the sufficient capacity for sharing. The most common causes are monopoly pricing structures, such as those enabled by laws that restrict competition or by high fixed costs in a particular marketplace. The inefficiency associated with artificial scarcity is formally known as a deadweight loss.
Malthusianism is the theory that population growth is potentially exponential, according to the Malthusian growth model, while the growth of the food supply or other resources is linear, which eventually reduces living standards to the point of triggering a population decline. This event, called a Malthusian catastrophe occurs when population growth outpaces agricultural production, causing famine or war, resulting in poverty and depopulation. Such a catastrophe inevitably has the effect of forcing the population to "correct" back to a lower, more easily sustainable level. Malthusianism has been linked to a variety of political and social movements, but almost always refers to advocates of population control.
Human overpopulation describes a concern that human populations may become too large to be sustained by their environment or resources in the long term. The topic is usually discussed in the context of world population, though it may concern individual nations, regions, and cities.
Green accounting is a type of accounting that attempts to factor environmental costs into the financial results of operations. It has been argued that gross domestic product ignores the environment and therefore policymakers need a revised model that incorporates green accounting. The major purpose of green accounting is to help businesses understand and manage the potential quid pro quo between traditional economics goals and environmental goals. It also increases the important information available for analyzing policy issues, especially when those vital pieces of information are often overlooked. Green accounting is said to only ensure weak sustainability, which should be considered as a step toward ultimately a strong sustainability.
The Simmons–Tierney bet was a wager made in August 2005 between Houston banking executive Matthew R. Simmons and New York Times columnist John Tierney. The stakes of the bet were US$10,000.00. The subject of the bet was the year-end average of the daily price-per-barrel of crude oil for the entire calendar year of 2010 adjusted for inflation, which Simmons predicted to be at least $200. The bet was to be settled on January 1, 2011.
In economics, scarcity "refers to the basic fact of life that there exists only a finite amount of human and nonhuman resources which the best technical knowledge is capable of using to produce only limited maximum amounts of each economic good." If the conditions of scarcity didn't exist and an "infinite amount of every good could be produced or human wants fully satisfied ... there would be no economic goods, i.e. goods that are relatively scarce..." Scarcity is the limited availability of a commodity, which may be in demand in the market or by the commons. Scarcity also includes an individual's lack of resources to buy commodities. The opposite of scarcity is abundance. Scarcity plays a key role in economic theory, and it is essential for a "proper definition of economics itself".
"The best example is perhaps Walras' definition of social wealth, i.e., economic goods. 'By social wealth', says Walras, 'I mean all things, material or immaterial, that are scarce, that is to say, on the one hand, useful to us and, on the other hand, only available to us in limited quantity'."
Natural resource economics deals with the supply, demand, and allocation of the Earth's natural resources. One main objective of natural resource economics is to better understand the role of natural resources in the economy in order to develop more sustainable methods of managing those resources to ensure their availability for future generations. Resource economists study interactions between economic and natural systems, with the goal of developing a sustainable and efficient economy.
Hoarding in economics refers to the concept of purchasing and storing a large amount of product belonging to a particular market, creating scarcity of that product, and ultimately driving the price of that product up. Commonly hoarded products include assets such as money, gold and public securities, as well as vital goods such as fuel and medicine. Consumers are primarily hoarding resources so that they can maintain their current consumption rate in the event of a shortage. Hoarding resources can prevent or slow products or commodities from traveling through the economy. Subsequently, this may cause the product or commodity to become scarce, causing the value of the resource to rise.
Peak minerals marks the point in time when the largest production of a mineral will occur in an area, with production declining in subsequent years. While most mineral resources will not be exhausted in the near future, global extraction and production has become more challenging. Miners have found ways over time to extract deeper and lower grade ores with lower production costs. More than anything else, declining average ore grades are indicative of ongoing technological shifts that have enabled inclusion of more 'complex' processing – in social and environmental terms as well as economic – and structural changes in the minerals exploration industry and these have been accompanied by significant increases in identified Mineral Reserves.
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