The Ultimate Resource 2

Many works on economics are depressing. This is because economic analysis properly starts with the ideal economy: a free market of individuals producing all the wonders one can imagine. It then analyzes the ways in which government prevents these good things from happening in the real world. The reader is then left to contemplate his own dismal existence in comparison to what might have been. Notable exceptions include I, Pencil and Julian Simon’s book The Ultimate Resource 2.

Simon’s book is uplifting because instead of comparing reality to an anarcho-capitalist society, it compares the real world to popular, but imaginary, dystopias. He dismantles the alarm around overpopulation, resource depletion, and other doomsday scenarios with solid economic analysis and historical evidence. Furthermore, he explains how all of these supposed problems are solved efficiently and elegantly by the free market.

This book is ultimately a happy tale of human progress. Despite the seemingly limited supply of natural resources and the counter-productive efforts of government, people continue to have more access to food, water, clean air, and other things that make their lives better. Every resource that people desire has been on a trend towards greater abundance. This is not in spite of population growth, but because of it. As Simon says:

“More people, and increased income, cause resources to become more scarce in the short run. Heightened scarcity causes prices to rise. The higher prices present opportunity and prompt inventors and entrepreneurs to search for solutions. Many fail in this search, at cost to themselves. But in a free society, solutions are eventually found. And in the long run the new developments leave us better off than if the problems had not arisen. That is, prices eventually become lower than before the increased scarcity occurred.”

Simon cautions that although this trend is prominent in historical surveys, it is not inevitable. Continue reading →