Here’s a letter to DiscoveryNews.com:
You report that “A growing, more affluent population competing for ever scarcer resources could make for an ‘unrecognizable’ world by 2050, researchers warned at a major US science conference Sunday” (“Planet could be ‘unrecognizable’ by 2050, experts say,” Feb. 21).
These scientists need a course in basic economics. Some of what they’ll learn is that
- the supply of resources (as with human wealth) is not fixed; it increases over time in response to market forces as the quest for profits sparks innovations in resource exploration and recycling, as well as in finding less costly substitutes for resources currently in use;
- if the supply of some resource does fall, the price of that resource rises, causing people to use it more frugally as they switch to using resources whose supplies are more plentiful;
- if these scientists’ prediction of consistently decreasing resource supplies over the next 40 years does come true, world incomes over the next 40 years will fall rather than (as these scientists worry) rise. Fewer resources mean less production, and less production means lower real per-capita income, not “more affluence.” Lower income, in turn, means that people over the next 40 years will reduce, not increase, their per-capita demands for goods and services.
Because any substance’s status as a “resource” inherently reflects that substance’s use and valuation in the economy, questions about resources’ future supplies are not exclusively – or even mainly – ones of physics, mineralogy, or other physical sciences. They are, instead, chiefly questions of economics.
Sincerely,
Donald J. Boudreaux
(HT to Mark Steckbeck for alerting me to this article.)
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Dear Don
While the comment that affluence will decrease if resources truly become scarce is fair, your contention that the supply of resources is not fixed, based on economic theory is invalid. Unless you are defining resources as something other than natural resources (which is what I suspect the scientists are talking about) such as capital. If economic theory means what you say it means, namely that scarcity sparks innovation, it is merely a repetition of the idea of that what has happened in the past will continue to happen in the future and there is no basis for this assertion. At some point innovation will likely fail as the energy bank of fossil fuels is used up and minerals are dispersed around landfill, away from ore bodies, and are therefore more costly to retrieve both in dollars and energy. As the raw materials of the economy become more scarce, perhaps exponentially, innovation (meaning the more frugal/efficient use of those resources will need to keep pace and there is no evidence to suggest that this will be possible – it is unknown). What you are doing is making a bet on cold fusion or something similar, which does not exist now and may be impossible to ever achieve.