The Ultimate Resource 2

The Ultimate Resource 2

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. Socialism and other enemies of the free market have been able to decrease health, increase pollution, and cause many other maladies. Unfortunately, it is government that most turn to to try to remedy these problems. Simon describes this as the most dangerous course of action because, for example, “modern famines will take place only in a society that abolishes individual farmers and puts farms under government ownership and the control of bureaucrats.”

The real solution is capital, which means technological improvements and the accumulation of wealth. Simon details how this causes resources to become more abundant. For example, the early copper miners depleted the most accessible copper deposits and, as population grew, demand for copper grew as well. Both of these factors made copper more expensive in the short term. However, that price change motivated technological improvements that made it easier to mine and recycle copper. Even though population was growing and prime copper deposits were being depleted, technological improvements outpaced them both. Copper ultimately became cheaper, and continues to do so.

The same trends occur for all things that people want. Simon focuses on resource depletion, pollution, and over population. He also covers global cooling, global warming, fears about nuclear power, deforestation, and other false alarms. In every case, short term problems lead to higher standards of living in the long run. This is evident because the price of each resource decreases, which means it is more available for consumption.

There is one exception, however. Even as the prices of iron, farm land, and other natural resources go down, the price of human labor continues to rise. This should come as a surprise to those who wish to curb population growth because it means that even though the number of people in the world has been climbing steadily, demand for people continues to rise even faster.

Economic signals aside, the more people alive, the more music, inventions, books and other things will be available for everyone. Simon describes the human mind as the creative force behind progress.

“It is your mind that matters economically, as much as or more than your mouth or hands. The most important economic effect of population size and growth is the contribution of additional people to our stock of useful knowledge. And this contribution is great enough in the long run to overcome all the costs of population growth.”

Ceteris paribus, more people means better living conditions. Simon explains that it is bad to grow population faster than wealth, but the market does a good job regulating population growth. Spurts of population growth occur after technological and economic improvements make it possible to support more people. Thus the greatest changes occurred after the adoption of agriculture and the industrial revolution. Large population growth then led to rapid improvement in the standard of living around the world.

Therefore, Simon urges us to “increase wealth and increase population now, both of which lead to a greater rate of scientific discoveries.” This leads to capital accumulation, new technology, and ultimately a world that is easier to live in. Simon notes that “as wealth increases, one of the goods that people are prepared to buy is a cleaner environment.” Rich societies spend more on the environment and, as the world has gotten wealthier, important metrics for pollution are going down including horse dung, human waste, diseases, and death rates. To give some context, Simon reminds the reader that “pollution used to mean such phenomena as human excrement floating in rivers everywhere, as it still does in India and Thailand…”

Many people enjoy seeing technological progress, but ancaps can really savor and appreciate it as part of a larger process. Individuals are freeing themselves and those around them from the constraints of nature not only by developing new technology, but by accumulating the wealth that allows that technology to be available for more and more people. If only such steady gains were being made in the fight to free people from the constraints of government.

Still, Simon shows that part of the anarcho-capitalist dream is already coming true. Wherever the free market is allowed to work, technology is produced and capital is accumulated to make life better. This bodes well not only for anarcho-capitalist theory, but also the future of humanity. Despite everything that government and its apologists have done to prevent the free market from improving lives around the world, great progress has been made. All resources are becoming less scarce. This makes life easier for individuals and reduces the incentives for war and other calamities. Instead of fearing population growth, we should welcome our new neighbors as the greatest hope for the future.

“Humanity now enjoys extraordinary advances in communication, transportation, nutrition, health and freedom from pain, and the general standard of living. Can it be doubted that this is a miracle age of liberation from the bonds in which nature has kept us shackled throughout all o f our history? The increased size of the human population is a fundamental cause of these gains.”

A joyful exposition of environmental and human progress via the free market. Five Murrays.

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