The Ultimate Resource 2

"Julian Simon is really the god of this subject in many ways. He died terribly young in his 50s or 60s about ten or 15 years ago and he produced a series of books that were just riddled with numbers. He was a fanatic for digging up trends. So, for example, he traced the wheat price back to the Middle Ages, and he’d drawn a graph of it and shown that, except in the odd bad year, wheat prices have basically been falling since the Middle Ages. Wheat has been getting cheaper for people in terms of wages since then. Likewise a lot of pollution issues, etc, etc. He was amazing at digging out numbers and trends. Well, in many ways it is. The amount of sewage you encounter in your water supply, for example. Simon’s big thing was the population explosion and how it wasn’t necessarily a bad thing and nor was it any longer exponential and in fact it was slowing down. It was basically the conflict between population and resources that became an obsession in the early 1970s, with the publication of the Club of Rome’s report in 1970 which said that humankind is going to run out of metals, oil, gas and all these kinds of things. He said, no, what a resource is is human ingenuity turning something else into something useful. And if you look at the way we use resources we get better at finding them. We get better at finding things we hadn’t used before and we get better at refining them. So we produce more oil from the same oil field or we find new ways of getting metals out of ores. He said, look, the prices of metals have been falling for hundreds of years. Almost any metal you choose is getting cheaper, despite the fact that there are more people. Eventually, he was offered a bet by somebody called Paul Erlich, a famous doomster, who said: ‘I bet you that metals are going to get more expensive in the next year.’ Julian Simon took him up and said, OK, you name the metals and we will buy a basket of these metals in 1980, and in 1990 we will see who’s right. If they’ve got cheaper you pay me the difference, if they’ve got more expensive I pay you the difference. It was $1,000 on the table and Erlich chose the metals and, as he said, he wanted to grab the offer before somebody else picked up this incredibly easy win. Of course, Simon won by a mile: commodity prices fell during the 1980s. Well, we’ve been doing that for a long time too. We’re doing it less. Yup. The Potosí silver mine in Bolivia was run by the Spanish in the 1500s and had the biggest slave population of anywhere in the world, but they now use five big diggers. Show me a metal mine in the world run by slaves rather than diggers. Doesn’t exist. Anyway, the point was that Erlich reacted very badly to losing this bet and said: ‘The only thing the world is not running out of is imbecility.’ But Simon is a great hero. He took these people on and said there was something wrong with their model. Human beings are solution machines as well as problems; the ingenuity of human beings is what drives the world. “Human beings are solution machines as well as problems; the ingenuity of human beings is what drives the world” For example, uranium ore. It is not a resource until someone invents nuclear fission. The idea of resources as sort of fixed things that you run out of is just wrong. It’s a negotiation between human ingenuity and what’s available in the world. So, for example, phosphorous. People say it’s going to run out, but what they mean is the really rich phosphorous ores will probably run out quite quickly. It’s a fertiliser. It’s a huge, huge fertiliser. Of course, it doesn’t disappear. Pig shit is ten per cent phosphorous and it runs into rivers and into the sea and ends up in mud, so we can always use the mud as an ore. Eventually. See what I mean? A beautiful example recently is shale gas, which is the new and exciting form of energy that is going to save the world big time in the 21st century. We’ve always known that there is a lot of methane in shale but it has always been assumed that you can’t get it out. About ten years ago a Texan worked out how you can get it out and the result is that America has turned from being an importer of natural gas to an exporter and reckons that now, instead of having 20 years of natural gas supplies, it has probably several hundred years. China is about to do the same, and Poland, South Africa. The shale gas revolution is incredible. It’s a resource we knew was there but it wasn’t a resource if you couldn’t get it out."

"It was taken very seriously by a lot of people at the time. But then several things happened, and this brings me to the next book I would like to talk about: The Ultimate Resource 2 by Julian Simon. When Simon wrote his book there was a trend starting for free market economics and a belief in the development of technology. People thought that technology was going to solve all these problems and in some ways it helped. Simon was part of a group of people called the Cornucopia economists. The Cornucopia idea is that earth will provide infinite resources and it’s simply a question of supply and demand and pricing, human ingenuity and technology. Well, we now know because of all the things that have happened, that Cornucopia economics has no connection whatsoever with reality or serious modern science. We need technology to help solve the problems we have, but to place faith in technology to the exclusion of other methods is crazy. I think the ascendancy of free market economics and excessive faith in technology has had a detrimental effect, because these knowledge systems have taken precedence over physics and the environmental sciences – such as geology and the history of what has happened to our climate in the past millennia."