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Julian Time

Here’s a letter to the Wall Street Journal:

Everyone on the planet who worries that free markets generate “unsustainable” economic growth should read Matt Ridley’s superb essay “The World’s Resources Aren’t Running Out” (April 26).  An insight implied in Mr. Ridley’s refutation of environmental doomsayers is the late Julian Simon’s understanding that the ultimate resource is the human mind.

Most environmentalists think that resources are “natural.”  But they’re not.  No substance on earth – not iron ore, not petroleum, not even land – is a resource unless and until human beings creatively figure out how to use that substance to produce outputs cost-effectively.  And innovative, free markets are by far the most powerful engine ever stumbled upon to power such human creativity.  As the economic historians Gavin Wright and Jesse Czelusta put it, “the abundance of … mineral resources should not be seen as merely a fortunate natural endowment.  It is more appropriately understood as a form of collective learning, a return on large-scale investments in exploration, transportation, geological knowledge, and the technologies of mineral extraction, refining, and utilization.”*

So the great irony is that the chief source of “natural resources” is the very economic institution – entrepreneurial capitalism – that environmentalists accuse of destroying natural resources.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

* Gavin Wright and Jesse Czelusta, “The Myth of the Resource Curse,” Challenge, March/April 2004.