Among the thinkers who inspired Ronald Reagan, according to David Brooks, is Julian Simon. Bravo for Reagan. I have long believed two things about Julian Simon. The first is that he is the most under-appreciated economist of the past century; the second is that his identification of human creativity as the ultimate resource is the most-ignored vitally important idea of the past century.
Coming to understand the power of human creativity, as understood by Simon, is intellectually transforming. The market is seen more and more as an institution that both unleashes human creativity (to create and to achieve) and leashes it (to ensure that no one person’s or group’s ideas arbitrarily crowd out or stamp out the ideas of others).
One of the many consequences of my reading Simon’s work is the fact that I seldom use the term “natural resource.” With the possible exception of water, no resource is natural. Usefulness is not an objective and timeless feature ordained by nature for those scarce things that we regard as resources. That is, all things that are resources become resources only after individual human beings creatively figure out how these things can be used in worthwhile ways for human betterment.
Consider, for example, crude oil. A natural resource? Not at all. I suspect that to the pre-Columbian peoples who lived in what is now Pennsylvania, the inky, smelly, black matter that oozed into creeks and streams was a nuisance. To them, oil certainly was no resource.
Petroleum’s usefulness to humans – hence, its value to humans – is built upon a series of countless creative human insights about how oil can be used and how it can be cost-effectively extracted from the earth. Without this human creativity, oil would objectively exist but it would be either useless or a nuisance.
The same is true for land. Homo sapiens have been around for about 50,000 years. Agriculture is about 10,000 years old. This fact means that for the first 80% of the time that our species has (so far) existed, the human creativity that eventually transformed land into the incredibly valuable resource that it became during recorded history had yet to occur.
The ultimate resource is indeed the human mind. And the mind of Julian Simon was unusually resourceful.