Freeman

BOOK REVIEW

The Ultimate Resource 2 by Julian Simon

A Powerful Antidote to Malthusian Gloom

APRIL 01, 1998 by E.C. PASOUR

Filed Under : Scarcity

Princeton University Press • 1996 • 734 pages • $35.00

E. C. Pasour is professor of agricultural and resource economics at North Carolina State University, Raleigh.

In this powerful and unrestrained challenge to environmental doomsayers, Julian Simon has updated and further substantiated the conclusions of his 1981 book The Ultimate Resource. The standard of living has tended to rise along with increases in the world’s population since the beginning of recorded time and he makes a persuasive argument that the trend toward a better life can continue indefinitely.

Simon’s optimism is rooted in the belief that human imagination is the ultimate resource and the fact that knowledge has increased with population. He gleefully takes on the so-often-wrong pessimists, many of them authority figures such as Garrett Hardin and Paul Ehrlich. In an epilogue, he responds to critics of the first edition, showing many of their attacks to be personal.

The 40 chapters of this detailed, heavily documented, yet highly readable work are divided into three parts. In the first part, Toward Our Beautiful Resource Future, Simon debunks the popular theory of raw-material scarcity. In this view, energy and other resources are finite and are increasingly being depleted. Thus, we must budget their use. In contrast, Simon argues that the more resources we use, the better off we become because increased scarcity leads to the development of substitutes and lower prices. Hence, resources are, in the most meaningful sense, created and not finite.

In a famous encounter, Simon bet environmentalist Paul Ehrlich in 1980 that real prices (adjusted for inflation) of copper, chrome, nickel, tin, and tungsten would be cheaper rather than more expensive in 1990. Simon won the bet. Simon continues to put his money where his mouth is. He will bet a week’s or a month’s pay that “just about any environmental and economic trend pertaining to human welfare” over time will improve rather than get worse. The offer covers food and energy prices and a host of other perceived threats to mankind, including pollution, the rate of species extinction, and possible ill effects of any ozone-layer depletion and greenhouse warming.

The second part of the book explores the effect of population growth on resources and living standards. Simon’s analysis, which considers population growth beneficial to human welfare, also is highly controversial. In the short term, a growing population can cause problems because at any given moment, resources are limited. Increased scarcity, however, creates opportunities for profit-seeking entrepreneurs, whose activities add to the stock of knowledge. As a result, social conditions are generally better than if the increased scarcity had not occurred. As evidence, Simon cites the increased abundance of goods and improvements in nutrition and health that have occurred over millennia as population has increased.

Simon challengingly asks: would we now have electric power, autos, penicillin, or our present life expectancy if the population had never grown beyond the four million of perhaps ten thousand years ago?

In the final part of Ultimate Resource 2, Simon argues, among other things, that increased immigration would be beneficial to the United States even under our present welfare programs. His data and argument put him in opposition not only to outright opponents of immigration but also to those who would curtail immigration only until the welfare state is dismantled.

Simon stresses the importance of economic and political freedom in providing an atmosphere in which the human mind can flourish. But while acknowledging that “ideas have consequences,” he denies that ideas are decisive in the inexorable long-run trend toward “human betterment.” In his view, the quality of ideas only influences the rate of progress in society. Bad ideas, such as those of Marxists and “anti-growthers,” may slow down progress for extended periods, but history shows that real material progress will triumph in the end. This may be true. However, it provides little comfort to successive generations of people who suffer under the yoke of despotic regimes.

Generally, the bulk of the evidence is on Simon’s side—although a rosy future is not guaranteed. The consumption of “irreplaceable resources,” as F. A. Hayek emphasized, ultimately rests on an act of faith. History gives us confidence, however, that something new will be discovered before a resource is exhausted, so that we will continue to be at least as well off as before. In short, the optimism of The Ultimate Resource 2 is a powerful antidote to the Malthusian gloom so typical today in the news media and among environmentalists.

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April 1998

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Unfortunately, educating people about phenomena that are counterintuitive, not-so-easy to remember, and suggest our individual lack of human control (for starters) can seem like an uphill battle in the war of ideas. So we sally forth into a kind of wilderness, an economic fairyland. We are myth busters in a world where people crave myths more than reality. Why do they so readily embrace untruth? Primarily because the immediate costs of doing so are so low and the psychic benefits are so high.
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