Julian Lincoln Simon

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This article is about the economist Julian Simon. For the Spanish motorcycle racer, see Julián Simón.
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Julian Lincoln Simon (February 12, 1932 – February 8, 1998)[1] was a professor of business administration at the University of Maryland and a Senior Fellow at the Cato Institute. He wrote many books and articles, mostly on economic subjects. He is best known for his work on population, natural resources, and immigration. He was the primary proponent of the cornucopian belief in endless benefits from resources and unlimited population growth empowered by technological progress. His works are often cited by libertarians in support of their arguments.[citation needed] He died in Chevy Chase, Maryland.

Contents

[edit] Thought

His 1981 book The Ultimate Resource is a criticism of the conventional wisdom on population growth, raw-material scarcity and resource consumption. Simon argues that our notions of increasing resource-scarcity ignore the long-term declines in wage-adjusted raw material prices. Viewed economically, he argues, increasing wealth and technology make more resources available; although supplies may be limited physically they may be viewed as economically indefinite as old resources are recycled and new alternatives are developed by the market. Simon challenged the notion of a pending Malthusian catastrophe—that an increase in population has negative economic consequences; that population is a drain on natural resources; and that we stand at risk of running out of resources through over-consumption. Simon argues that population is the solution to resource scarcities and environmental problems, since people and markets innovate. His critique was praised by Nobel Laureate economists Friedrich Hayek & Milton Friedman, the latter in a 1998 foreword to The Ultimate Resource II, but has also attracted many critics, such as Paul R. Ehrlich and Albert Bartlett .

Simon examined different raw materials, especially metals and their prices in historical times. He assumed that besides temporary shortfalls, in the long run prices for raw materials remain at similar levels or even decrease. E.g. aluminium was never as expensive as before 1886 and steel used for medieval armor carried a much higher price tag in current dollars than any modern parallel.

Long-term oil prices, 1861-2007 (top line adjusted for inflation).

His 1984 book The Resourceful Earth (co-edited by Herman Kahn), is a similar criticism of the conventional wisdom on population growth and resource consumption and a direct response to the Global 2000 report. For example it predicted that "There is no compelling reason to believe that world oil prices will rise in the coming decades. In fact, prices may well fall below current levels".

With respect to oil, the (2008) price rose to $142, exceeding its previous record (inflation adjusted) in the late 1800s. The price dropped to below $40 by 2009.[citation needed] It fell after the 1970s oil shortages to comparably low levels in the late 1980s and 1990s (though not all the way to the 1970 prices, to say nothing of the record lows of the 1930s).[citation needed]

Simon was skeptical, in 1994, of claims that human activity caused global environmental damage, notably in relation to CFCs, ozone depletion and climate change, the latter primarily because of the perceived rapid switch from fears of global cooling and a new ice age (in the mid 1970s) to the later fears of global warming.[2] Simon also listed numerous claims about severe environmental damage and health dangers from pollution as "definitely disproved". These included claims about lead pollution & IQ, DDT, PCBs, malathion, Agent Orange, asbestos, and the chemical contamination at Love Canal.[3]

[edit] Influence

Simon was one of the founders of free-market environmentalism. An article entitled "The Doomslayer"[4] profiling Julian Simon in Wired magazine inspired Bjørn Lomborg to write the book The Skeptical Environmentalist.

Simon was also the first to suggest that airlines should provide rewards for travelers to give up their seats on overbooked flights, rather than arbitrarily taking random passengers off the plane (a practice known as "bumping"). Although the airline industry initially laughed at him, his plan was later implemented with resounding success, as recounted by Milton Friedman in the foreword to The Ultimate Resource II.

Although Simon's arguments about the beneficial nature of population growth were not generally accepted, they contributed to a shift in opinion in the literature on demographic economics from a strongly Malthusian negative view of population growth to a more neutral view. More recent theoretical developments, based on the ideas of the demographic dividend and demographic window have largely superseded the older debate in which Simon was a protagonist.

Simon wrote a memoir, A Life Against the Grain, which was published by his wife after his death.

[edit] Wagers with rivals

[edit] Paul R. Ehrlich - 1st wager

A wager between Julian Simon and Paul Ehrlich was made in 1980 over the price of metals a decade later; Simon had been challenging environmental scientists to the bet for some time. Ehrlich, John Harte and John Holdren selected a basket of five metals that they thought would rise in price with increasing scarcity and depletion.

Simon won the bet, with all five metals dropping in price. Supporters of Ehrlich's position suggest that much of this price drop came because of an oil spike driving prices up in 1980 and a recession driving prices down in 1990, pointing out that the price of the basket of metals actually rose from 1950 to 1975. They also suggest that Ehrlich did not consider the prices of these metals to be critical indicators, and that Ehrlich took the bet with great reluctance. On the other hand, Ehrlich selected the metals to be used himself, and at the time of the bet called it an "astonishing offer" that he was accepting "before other greedy people jump in," hardly suggesting reluctance.

The total supply in none of these metals increased during this time, but prices declined for a variety of reasons:

  • The price of tin went down because of an increased use of aluminium, a much more abundant, useful and inexpensive material.
  • Better mining technologies allowed for the discovery of vast nickel lodes, which ended the near monopoly that was enjoyed on the market.
  • Tungsten fell due to the rise of the use of ceramics in cookware.
  • The price of chromium fell due to better smelting techniques.
  • The price of copper began to fall due to the invention of fiber optic cable (which is derived from sand), which serves a number of the functions once reserved only for copper wire.

In all of these cases, better technology allowed for either more efficient use of existing resources, or substitution with a more abundant and less expensive resource, as Simon predicted.

[edit] Paul R. Ehrlich - proposed 2nd wager

In 1995, Simon issued a challenge for a second bet. Ehrlich declined, and proposed instead that they bet on a metric for human welfare. Ehrlich offered Simon a set of 15 metrics over 10 years, victor to be determined by scientists chosen by the president of the National Academy of Sciences in 2005. There was no meeting of minds, because Simon felt that too many of the metrics measured attributes of the world not directly related to human welfare, e.g. the amount of nitrous oxide in the atmosphere.[5] For such indirect, supposedly bad indicators to be considered "bad", they would ultimately have to have some measurable detrimental effect on actual human welfare. Ehrlich refused to leave out measures considered by Simon to be trivial.

Simon summarized the bet with the following analogy:

"Let me characterize their [Ehrlich and Schneider's] offer as follows. I predict, and this is for real, that the average performances in the next Olympics will be better than those in the last Olympics. On average, the performances have gotten better, Olympics to Olympics, for a variety of reasons. What Ehrlich and others says is that they don't want to bet on athletic performances, they want to bet on the conditions of the track, or the weather, or the officials, or any other such indirect measure."[6]

[edit] David South

The same year as his second challenge to Ehrlich, Simon also began a wager with David South, professor of the Auburn University School of Forestry. The Simon / South wager[7] concerned timber prices. Consistent with his cornucopian analysis of this issue in The Ultimate Resource, Simon wagered that at the end of a five-year term the consumer price of pine timber would have decreased; South wagered that it would increase. Before five years had elapsed, Simon saw that market and extra-market forces were driving up the price of timber, and he paid Professor South $1,000.[citation needed] Simon died before the agreed-upon date of the end of the bet, by which time timber prices had risen further.

Simon's reasoning for his early exit out of the bet was due to "the far-reaching quantity and price effects of logging restrictions in the Pacific-northwest."[8] He believed this counted as interference from the Canadian government, which rendered the bet worthless according to his economic principles. Simon's bet only considered the possibility of prices being driven up by South Carolina's government; he did not believe anything worthwhile was shown when Canadian import restrictions drove the prices up.

[edit] Main Statements and Criticism

Jared Diamond in his book Collapse, Albert Bartlett and Garrett Hardin describe Simon as being too optimistic and some of his assumptions being not in line with natural limitations.

"We now have in our hands—really, in our libraries—the technology to feed, clothe, and supply energy to an ever-growing population for the next seven billion years." (Simon along The State of Humanity: Steadily Improving 1995[9])

Diamond claims that a continued stable growth rate of earths population would result in extreme over-population long before the suggested time limit. Regarding the attributed population predictions Simon did not specify that he was assuming a fixed growth rate as Diamond, Bartlett and Hardin have done. Simon argued that people do not become poorer as the population expands; increasing numbers produce what they needed to support themselves, and have and will prosper while food prices sink.

"There is no reason to believe that at any given moment in the future the available quantity of any natural resource or service at present prices will be much smaller than it is now, or non-existent." (Simon in The Ultimate Resource, 1981)

Diamond believes, and finds absurd, Simon implies it would be possible to produce metals, e.g. copper, from other elements[10]. For Simon, human resource needs are comparably small compared to the wealth of nature. He therefor argued physical limitations play a minor role and shortages of raw materials tend to be local and temporary. The main scarcity pointed out by Simon is the amount of human brain power (i.e. "The Ultimate Resource") which allows for the perpetuation of human activities for practically unlimited time. For example, before copper ore became scarce and prices soared due to global increasing demand for copper wires and cablings, the global data and telecommunication networks have switched to glass fiber backbone networks.

"This is my long-run forecast in brief," says Simon. "The material conditions of life will continue to get better for most people, in most countries, most of the time, indefinitely. Within a century or two, all nations and most of humanity will be at or above today's Western living standards. I also speculate, however, that many people will continue to think and say that the conditions of life are getting worse."[4])

This and other quotations in Wired are supposed to be the reason for Bjørn Lomborgs The Skeptical Environmentalist. Lomborg has stated that he began his research as an attempt to counter what he saw as Simons anti-ecological arguments but changed his mind after starting to analyze the data.

[edit] Education

[edit] Books

[edit] References

  1. ^ Gilpin, Kenneth N. (1998-02-12). "Julian Simon, 65, Optimistic Economist, Dies". B11. The New York Times. Archived from the original on 2008-05-18. http://www.webcitation.org/5XundBtyT. Retrieved on 2008-05-18. "...died at his home in Chevy Chase, Md., on Sunday." 
  2. ^ Simon, Julian L.. "Scarcity or Abundance? A Debate on the Environment – Chapter 5 – Atmospheric Issues". juliansimon.com. Archived from the original on 2008-05-18. http://www.webcitation.org/5XuOha9HO. Retrieved on 2008-05-18. 
  3. ^ The Ultimate Resource 2, pp260-265
  4. ^ a b Regis, Ed (February 1997). "The Doomslayer". Wired (Issue 5.02). Archived from the original on 2008-05-18. http://www.webcitation.org/5Xu64dbNz. Retrieved on 2008-05-18. 
  5. ^ "THE POPULATION EXPLOSION by Paul and Anne Ehrlich". DIE OFF. Archived from the original on 2008-05-18. http://www.webcitation.org/5XulOxykS. Retrieved on 2008-05-18. 
  6. ^ "Julian Simon's Bet With Paul Ehrlich". Overpopulation.com. Archived from the original on 2007-07-11. http://web.archive.org/web/20070701180631/http://www.overpopulation.com/faq/People/julian_simon.html. Retrieved on 2008-05-13. "Which cites: Miele, Frank. "Living without limits: an interview with Julian Simon." Skeptic, vol. 5, no. 1, 1997, p.57." 
  7. ^ "THE SIMON- SOUTH BET ON PINE SAWTIMBER". School of Forestry and Wildlife Sciences. Auburn University. Archived from the original on 2008-05-18. http://www.webcitation.org/5Xuoqlqvo. Retrieved on 2008-05-18. 
  8. ^ "A letter" (pdf). School of Forestry and Wildlife Sciences. Auburn University. Archived from the original on 2008-05-18. http://www.webcitation.org/5XupH4fIK. Retrieved on 2008-05-18. 
  9. ^ Simon, Julian L. (September/October 1995). "The State of Humanity: Steadily Improving". Cato Policy Report. Cato Institute. Archived from the original on 2008-05-18. http://www.webcitation.org/5Xu6Vhwdo. Retrieved on 2008-05-18. 
  10. ^ Diamond bases his criticism upon the fact that the transmutation of elements on a large scale is not currently possible. In theory, transmutation could allow humans to one day produce copper from other elements, but this would require significant breakthroughs in knowledge and technology in order to overcome the enormous barriers currently preventing this (i.e. the extremely large amounts of energy required to generate extremely small quantities)

[edit] Books critical of Julian Simon

  • Ehrlich, Paul R. Betrayal of Science and Reason: How Anti-Environmental Rhetoric Threatens Our Future, 1996. (ISBN 1-55963-483-9)
  • Grant, Lindsey. Elephants in the Volkswagen, 1992. (ISBN 0-7167-2268-2)
  • Hardin, Garrett. The Ostrich Factor: Our Population Myopia, 1998. (ISBN 0-19-512274-7)

[edit] External links

[edit] Critiques

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