A nuanced column by Paul Sabin in the New York Times, who draws some lessons from the famous Simon-Erlich bet of 1980. You might have heard of it, since it’s still being referenced, particularly by the ‘Don’t worry; markets and ingenuity solve all’ school.
Mr. Simon and Mr. Ehrlich, joined by two scientific colleagues, had made a wager on the future prices of five metals: chromium, copper, nickel, tin and tungsten. The bet — in which the loser would pay the change in price of a $1,000 bundle of the five metals — was a test of their competing theories of coming prosperity or doom.
For years Mr. Ehrlich, the author of the landmark 1968 book “The Population Bomb,” had warned that rising populations would cause resource scarcity, even famine, with apocalyptic consequences for humanity. Mr. Simon, who died in 1998, optimistically countered that human welfare would flourish thanks to flexible markets and our collective ingenuity.
Mr. Ehrlich believed the metal prices would rise over the decade; Mr. Simon thought the prices would stay stable or even drop. Mr. Simon won: the prices of the five metals in 1990 hovered at around 50 percent of their 1980 levels, even as the world population grew by 800 million.
Conservatives have celebrated Mr. Simon’s victory ever since, using it to denounce environmentalists for alarmism and to criticize environmental regulation. … Environmentalists, in contrast, have tended to deny the significance of the Ehrlich-Simon bet, arguing that commodity prices illustrate little about real environmental threats. Also, they say, Mr. Simon just got lucky: indeed, when economists later ran simulations for every 10-year period between 1900 and 2008, they found that Mr. Ehrlich would have won the bet 63 percent of the time. These sweeping declarations of triumph and insignificance miss the point — and the true lessons of the bet for each side.
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The lesson for environmentalists:
Environmentalists need to better understand the ways in which markets for natural resources function. There is rarely a simple linear path from abundance to scarcity. … Exaggerated fears of resource scarcity can lead to stifling price controls, panicked efforts to limit production or consumption, and public investment strategies predicated on high prices that turn out to be ephemeral.
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For conservatives:
… conservatives, in turn, should better understand the limited nature of Mr. Simon’s victory. …
Mr. Simon liked to argue that new problems prompt solutions that ultimately leave people better off than before. But we cannot surmount our challenges if we simply deny that they exist.
Instead of using science as a resource for human betterment, conservatives who reject the evidence of human-caused global warming prevent the very creative problem-solving that Mr. Simon advocated. And if environmentalists like Mr. Ehrlich hadn’t urged action back in the 1970s, would all that creativity have been channeled into the cleaner air and water that we enjoy today?
