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Discussion: (19 comments)

  1. Grantham should be asked to answer to this.

  2. SeattleSam

    Doesn’t this chart simply reflect the fact that population and science/technology advancement are both a positive function of elapsed time?

    1. Yes, but since population growth often acts to bid prices up, the relative growth rates are what is being charted here, ie the growth in material abundance provided by science divided by the growth in population that demands more resources. I suppose you could argue that most of the population growth was in poor countries like China and India that still have little access to these resources, so the demand didn’t spike as much as 3.5 times. You’d have to look at the raw output to figure that out, as it’s also possible that we started using much more per capita in the rich world. In any case, the fact that both have been “positive functions” is not the determinative issue, it’s what their relative growth rates have been.

      1. Steven Hales

        But the trendline is supported far into the future by the simple fact that in developed countries per capita use of over 30 different commodities has declined over the past 40 years and per capita energy use has remained constant since about 1965. While energy use has remained constant per capita for an extended period we have shifted for what we use energy, think air conditioning as one shift. If the developing world follows the same path Julian Simon will still be correct at the end of this century. At some point scrap input into China’s metal industries will increase and their demand for ores will lessen.

  3. Citizen B.

    Mr. Ehrich should have bet Mr. Simon on Iowa farm acreage prices instead. Iowa farmland prices have gone from $1488 per acre in 1950 to $8296 in 2012, adjusted for inflation in 2005 $.

    Those that wanted to buy farmland cheaply could have bought in 1986 at $787, when acres were a commodity in Iowa.

    1. Steven Hales

      The value of farmland has increased as yield per acre has increased. Remember that 1986 was the tail end bursting of the farmland speculation bubble. And that was at the end of an inflationary period that saw interest rates in the double digits and made refinancing for small farmers difficult. Throw in the years from 1970 to 1980 which saw energy input costs soar for farmers and you have a perfect storm for cheap farmland. But over an extended period the value of farmland will increase as yields per acre increase.

      1. Citizen B.

        Steven, yep. Thanks and that reinforces the viewpoint of Mark Perry and Julian Simon.

        1. Steven Hales

          Jesse Ausubel has a paper on peak farmland. It is basically because yields have been increasing so rapidly. Though other factors also have explanatory value.

  4. noiselull

    This graph adjusted for population increase might be an even more effective display of Simon’s insight.

  5. Benjamin Cole

    Commodities and manufactured goods (except military hardware in the United States) will become cheaper over time…the private sector does more for less every year….

    the picture is even better than indexes allow. Why? While the price of some commodities in an index may go up, consumers will use less of that commodity…..

    A guy might buy gasoline at $4.50 a gallon…and drive a car that gets 45 mpg…..instead of 12….

  6. Benjamin Cole

    Ford is now producing a car that gets 100 mpg. For profit.

    But your USDA and Department of defsne are still steaming up to take your tax dollars to produce get fuel at about $100 a gallon….

    “Ford Fusion Energi plug-in hybrid sedan EPA-rated at 108 MPGe city, 92 MPGe highway and 100 MPGe combined; Ford projects best hybrid sales quarter ever
    29 December 2012
    The US Environmental Protection Agency has rated the new Fusion Energi plug-in hybrid (earlier post) at up to 108 MPGe city, 92 MPGe highway and 100 MPGe combined (2.2, 2.6 and 2.4 l/100km-equivalent, respectively).

  7. As of January 2013, the inflation-adjusted commodity index is at about exactly the same level as January 2003, reflecting a flat price trend over the last decade.

    Maybe for that index. But not for other indices, for instance, the IMF Indices of Primary Commodity Prices, 2002-2012, which is up 82% in nominal and 58% in real terms.

    1. Ooops, my bad; computational error.

      Since 2002, the IMF index is up 180% in nominal and 135% in real terms.

      The original computation was 2005-2012.

  8. MacDaddyWatch

    Last I heard, Ehrlich can still be seen walking around the Stanford campus. Simon didn’t live long enough to collect on his bet; Ehrlich paid-up and Simon’s widow collected.

    The broad and deep application of technology and massive productivity enhancements was totally missed by Ehrlich. Thomas Malthus beat Ehrlich by a few hundred years with the very same dire predictions and he too was wrong. Today, the USA feeds the world with 2% working on our farms, not 50% as was the case a little over 100-years ago.

    Unfortunately, Stanford has replaced the Coming Ice Age and mass global starvation due to a population explosion with the latest trendy hoax from the loonie left–Global Warming.

    Bottom Line: The only thing that has been successfully recycled over the past few hundred years is bullshlt.

  9. Thomas Sullivan

    Simon’s point was that the Malthusians and the greenies are simply wrong, reflexively pessimistic. The truth is that the ultimate resource (people) continuously create a better world. The proof is all around us.

    “This is my long-run forecast in brief. 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.” – Julian Lincoln Simon

  10. Mark – How does Ehrlich’s prediction stand wrt zinc, given that today the Treasury earning negative signiorage on nickels and pennies due to rising zinc prices and is preparing to issue those coins with different metals?

  11. Ohio Libertarian

    Interesting – we can plausibly attribute the spike in the 1950′s to post-WW2 economic recovery & rebuilding of Europe; as supply expands, costs steadily decline. Then, we see the disatrous inflationary effects of Nixon’s closing of the gold window, followed by Volker’s monetary tightening in the early 1980′s; then the 1980-1990′s great mderation and supply expansion. The next two upticks – the easy money 1990′s ( bubble) followed by the equally easy-money 2000′s (housing bubble) followed by Helicopter Ben’s money printing efforts…

  12. The only way commodity prices can be seen as declining is to not factor in their consumption causing CO2 to increase with untold loss of habitat for all species. If the environmental costs from the consumption of these commodities was factored in we would see huge price increases for all commodities.

  13. jennifer tomany

    Mr. Perry,

    Where can I find the link to the data used to make this chart? Thanks.

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