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Shellenberger: Why Environmental Alarmism Hurts Us All

Blog Post | Environment & Pollution

Shellenberger: Why Environmental Alarmism Hurts Us All

What are the long-reaching effects of apocalyptic rhetoric on environmental issues?

The following is transcribed text of a recent book forum for Michael Shellenberger’s “Apocalypse Never.” Video of the event can be found here.

My own history is that I’m a longtime environmental activist as well as a writer, journalist, and energy expert. I changed my mind about nuclear power about 10 years ago. I decided that it was good, not bad — mostly good, not bad — and that we needed more of it if we were going to solve environmental problems, including mitigating climate change. And I’ve been frustrated by the fact that many on the Left are still very anti-nuclear, including and especially those who are very alarmist about climate change. I couldn’t understand why this was, and I was working on a book about nuclear energy and the opposition to it. Last year, the rhetoric became even more crazy than it all already was, about billions of people dying, and adolescents were experiencing a lot of anxiety and depression. I have a 14-year-old daughter. She’s fine because I talk to her about the science, but her friends are worried that they’re not going to live long enough to have kids. I think that’s not okay. I think it’s wrong. I’ve also been long bothered by efforts to deprive poor countries of cheap reliable energy, whether hydroelectric dams or coal plants or nuclear plants, and that’s been increasingly occurring, including denial by the World Bank of funding traditional financing for baseload cheap energy in poor countries. 

Obviously, I still wanted to address the concerns that people have about nuclear energy and explain what I think nuclear energy is and why it’s so important at greater length than articles were able to do. I have a lot of different motivations to write the book. I think those are in the book, and you can see them. 

I’ll say something about climate change: my views actually didn’t change as much as I think people might have thought they did on climate. My view of climate change is that it is real. That it’s mostly, if not entirely, being caused by us, by our carbon emissions. That it does pose serious challenges, threats, you could say, risks, to a good future and a positive stewardship of the natural environment. But also, that it’s not the end of the world, and climate change is not even our most serious environmental problem, which I think continues to just be our use of landscapes and effect on habitats. 

So, you can think of the book in thirds. The first third is a debunking of the widespread myths. Climate change is not the end of the world. The Amazon is not the lungs of the Earth. And, more importantly, the solutions that people have pursued in places like Brazil have been counterproductive in that they have imposed fragmented agriculture in an effort to get “small is beautiful” agriculture. We’ve ended up fragmenting forests in many places, when what you want to do is concentrate agriculture to reduce its environmental impact. I talk about how plastic waste is not the most important problem in the world, but much of what people are doing on it is also counterproductive. That’s increasingly become clear, that we don’t recycle our plastics as much as people think they do. Often, the plastics are sent abroad, including to poor countries that don’t have waste management systems, and the plastic waste ends up in the ocean, actually contributing to the problem. It wouldn’t be as big of a concern of mine, and I point this out in the book, as overfishing, bycatch, and the outright killing of sea life. 

The middle part of the book is how humans save nature. The second-third of the book is a part of the book that I think many Cato supporters would enjoy. I make a defense of what you might call a Hayekian view of prices as offering information that no centralized authority could possibly manage. And I use the case study of whales, which were saved not once but twice through artificial substitutes. The first time was in the 19th century with kerosene from petroleum to substitute for whale oil, which was being used for lighting fluid in lights. And then again in the 20th century, when vegetable oils replaced whale oils for margarins and soaps in Europe. The continued over-whaling that occurred by the Soviet Union, and to some extent by some managed economies in Japan and Norway, happened where they interfered with the price signal that was being sent that the alternatives were cheaper. So, I make a defense of that.

At the same time, I think Apocalypse Never is also trying to say that there’s a physical reality here when you’re dealing with environmental resources that precedes the economy. We should pay attention to the physics of energy. The environmental impact of energy, food and agriculture production, which is overwhelmingly our major impacts on Earth, are a function of power density, of efficiency and economies of scale. I point out that maybe the first page of the Wealth of Nations by Adam Smith is about a physical process, about a pin factory that is gaining efficiency. That physical transformation results in what we call economic efficiencies, and those efficiencies are also important for what we call “sparing the natural environment,” using less natural resources to allow for more nature. 

Let me say something about what I think some of the implications of it are. Because I know Cato is a Washington D.C.-based think tank, and you guys think a lot about policy. My view of energy policy is that we should be supporting transitions from energy-dilute to energy-dense fuel. So, if you say: Michael, are you in favor of natural gas? I say, I support natural gas when it’s replacing coal, but I don’t support natural gas when it’s replacing nuclear energy. Nuclear energy is zero pollution, zero air or water pollution, zero carbon emissions, a tiny footprint, a smaller mining footprint than oil and gas even — which is smaller than coal — and so that gets to questions of nuclear energy. Nuclear energy, I point out, is a very special and very different technology from any of the fossil fuel technologies or other technologies in that it has always been a dual-use technology, and it’s always been involved in questions of national security. So, for me, at a policy level, what really matters is supporting that transition towards energy-dense fuels and paying special attention to nuclear energy’s role as a dual-use technology and one that the United States has long had an interest in being heavily involved in, both at home and abroad because of the special powers that it gives us. 

Blog Post | Energy Prices

Are Gas Prices Really the Highest in History?

The time price is the true price. It's gallons per hour that count.

USA Today recently reported that gas prices are the most expensive that they’ve been in U.S. history, breaking the record from 2008. The U.S. Energy Information Administration notes that the average price of a gallon of gasoline reached $4.22 in April 2022, the highest nominal price ever and 16 cents higher than the previous record of $4.06 in July 2008.

But does the nominal money price really reveal the true price? Since we buy things with money, but we pay for them with our time, there are actually two prices: money prices and time prices. Money prices are expressed in dollars and cents, while time prices are expressed in hours and minutes. Converting a money price to a time price is simple. Divide the money price of a product or service by hourly income. As long as hourly income increases faster than the money price, the time price will decrease.

To calculate the time price of a gallon of gasoline we divided the nominal money price by nominal blue-collar hourly compensation (wages and benefits) as reported by the economic data website measuringworth.com. When we look at the time price of a gallon of gasoline, we see a much different story.

In 1929 it took about 24 minutes to earn the money to buy one gallon of gasoline. Today the time price is closer to 6 minutes. The time price of gasoline has dropped by 75 percent. For the time it took to earn the money to buy one gallon in 1929, you can buy four gallons today. Gasoline abundance has increased by 300 percent. This occurred while the global population increased 290 percent, from 2 billion to 7.8 billion. The greater the population, the more abundant gasoline has become.

Another interesting way to think about the time price of a resource is to consider how many gallons of gasoline one hour of time would buy. Call this gallons per hour or GPH. This ratio reveals how much abundance is changing over time.

In 1929 one hour of time would get you around 2.5 gallons. By 1973, gasoline abundance had increased 410 percent, to 12.75 gallons per hour. Then the Organization of the Petroleum Exporting Countries (OPEC) cartel raised prices dramatically, so that by 1981 one hour would only get you 7.63 gallons of gasoline. Once OPEC lost its control of oil the trend reversed. By 1998 the number of gallons per hour was up to 17.15, the highest rate on record. World events reversed the trend again, and by 2012 it was back down to 7.46 gallons per hour, lower than what it had been in 1981. We then climbed out of this trough and were back up to 14.66 GPH in 2020. The COVID-19 policies have knocked us off course over the last two years, but the underlying fundamentals of economics suggest that we will recover and move back to around 12 gallons per hour, which is the average over the last 50 years.

Blog Post | Energy & Natural Resources

In Defense of Cornucopianism

The counterintuitive truth: non-renewable resources, like oil or copper, will never run out.

Summary: This article defends cornucopianism, the idea that human ingenuity and free markets can overcome environmental challenges and provide material abundance for humanity. It argues that cornucopianism is not a naive optimism but a realistic perspective based on historical evidence and logical reasoning.

Dr. Pangloss, a character in Voltaire’s satirical novel Candide, has the famous delusion that we live in the best of all possible worlds. If you have a pessimistic slant, you might consider “Panglossian” an apt descriptor for those of us who endlessly chant about progress. To avoid Panglossianism, any good herald of progress keeps two thoughts in their head at once: the world has plenty of problems, but it is also getting better.

We die, but later than we used to. A smaller and smaller share of the world’s population is illiterate, undernourished, or extremely poor. People in almost every country are less likely to die from tuberculosis, diarrhea, and other maladies that ravaged humanity for millennia. Even war deaths and homicides seem to be on a long-term decline (with a handful of countries like El Salvador, Honduras, and Venezuela bucking that trend).

The late Hans Rosling’s term, “possibilist,” is a more accurate description for those who recognize that we live in an imperfect but improving world. A possibilist, wrote Rosling, is “someone who neither hopes without reason, nor fears without reason, someone who constantly resists the overdramatic worldview.” Still, even this type of optimism annoys detractors.

One recent accusation of Panglossianism comes from two eminent evolutionary biologists, Heather Heying and Bret Weinstein. In the newly released A Hunter-Gatherer’s Guide to the 21st Century, they attack “Cornucopianism,”  the economistic belief that infinite growth is possible and that resources aren’t finite. “The vast majority of Earth’s resources are finite,” they argue. “From rubber to wood to oil, from copper to lithium to sapphires, all are limited.”

This idea is unfortunately common. In Human Race: 10 Centuries of Change on Earth, a book that I reviewed this summer, the prolific British historian Ian Mortimer argues that it is a certainty that oil will run out. Because we’re exploiting the black gold so ruthlessly, he writes, “it will run out at some point in this current millennium, there is no doubt about that; it is just a matter of when.” (Emphasis added). Both these notions are wrong – or at least seriously overstated.

Mortimer’s oil

According to the latest BP Statistical Review of World Energy, the world’s proven reserves of oil totaled 1,732.4 billion barrels last year. During 2019, the most recent pre-pandemic year, the world consumed about 31 billion barrels, meaning that we have just shy of 56 years of proven oil stocks left – a little less if oil consumption were to keep rising with its historical trend. By that logic, Mortimer is being conservative; oil will run out this century.

Not quite. In 2000, we used 25.2 billion barrels of oil out of proven reserves of 1300.9 billion (52 years of supply left). Today we have 56 years of supply left, even though we now use about 25 percent more oil than we did in 2000. Over the last twenty years, then, humanity has used a lot of oil, but oil has become more plentiful. How can that be?

While the total amount of oil in the ground doesn’t change very much from one year to another, three more important things do:

  1. How much oil we know about.
  2. How much of that oil we can technically extract.
  3. How much of that oil it is economical to extract.

Those three things change over time, and that makes a great deal of difference. We find oil in places we didn’t know it existed, and new technologies unlock previously inaccessible reserves. And, if oil does become scarcer, its price increases, thus incentivizing lower consumption and increased production. As long as prices are free to reflect economic reality, the “cornucopian” conclusion follows: oil will not run out before it becomes obsolete.

A late-nineteenth-century whaler could have made the same argument as Mortimer. Whales are finite resources. They reproduce slowly. Given humanity’s greed, want for light, and ever-faster whaling ships, Moby Dick doesn’t stand a chance. His kind will perish sometime next millennium.

Except, of course, reality played out very differently. Today, almost all species of baleen whales on the IUCN’s Red List are several rungs above Critically Endangered (most are on the LC – Least Concern – rung), and all but two species of Right Whales are increasing. Humpbacks, those majestic creatures that astonish tourists in every ocean, may have surpassed their pre-industrial numbers, according to research reported on in Time Magazine.

What happened was that new inventions outcompeted whale oil for fuel and lighting, and consumer demands – and wealth – changed, so much so that almost every country has banned the hunting of whales.

The Cornucopia of raw materials

Raw materials like copper, silver, tin, or wood are finite. Thus, the pessimists worry, they must one day run out. But this conclusion is wrong. Raw materials are physically limited, but resources are economically infinite. That’s because economic value isn’t intrinsic to the physical item. Instead, value is subjective, existing only in the minds of consumers and in the ends that consumers choose. In other words, we can get an infinite amount of value from a given quantity of material.

Andrew McAfee from MIT showed that we can get more from less. The number of atoms may be fixed, but those atoms can be combined and recombined in an infinite variety of ways, allowing us to satisfy our needs and desires in ways that are better, faster, cheaper, and less wasteful. Furthermore, there is no limit to how much we can specialize or restructure our labor, production, and consumption.

Materials can also be re-used. Almost all the copper that humanity has ever extracted from the Earth (some three trillion tons or so) is still with us – in the buildings that shelter us, the wiring that moves our electricity, the equipment that entertains us, and the servers that power and store our digital lives.

We have hundreds of years of uranium reserves left and even more of coal. The known deposits of bauxite, the ore from which we extract aluminum, will last for hundreds of years at current use. Or perhaps even longer than that. When raw materials become too “scarce” and, therefore, too expensive, we will switch to using something else to power our civilization. While there is some final quantity of oil and other raw materials in the ground, market prices and technological improvements will ensure that we will never use them all. They will last forever.

Heying and Weinstein’s “Cornucopianism” charge may be countered by another word, a more empirically sound and researched one: Marian Tupy and Gale Pooley call it “Superabundance” – “a condition where abundance is increasing at a faster rate than the population is growing.” They show that 50 common raw materials have become less scarce over the last forty years when we adjust for inflation and increases in income.

Contrary to claims of scarcity, it seems that more people and more economic growth tend to benefit, not impoverish, humanity. Although the planet houses many more people who are competing for the same materials, we have more access to more raw materials than we had twenty or forty years ago. This is a feature, not a blip or an accidental bug.

When we properly consider the power of market prices to ration resources, our ability to uncover substitutes, and the history of technological change, a very counterintuitive conclusion emerges: non-renewable resources, like oil or copper, never run out.

That may not be the best of all possible worlds, but it’s a lot better than most people think.

Blog Post | Natural Resource Prices

Revisiting the Simon-Ehrlich Wager 40 Years On

Every hungry mouth comes a pair of hands and a brain capable of thought, planning, and innovation.

It is 1980, and you are getting married. Your parents decide to celebrate your nuptials by inviting 100 guests to a wedding reception. The reception cost them $100 per person or $10,000 in total. Fast forward to 2018. Now it is you who is throwing a wedding reception for your child. The guest list has increased by 72 percent (some of the old folk are no longer around, but the cousins have exploded in number). That means that you are now catering to 172 people. The price per guest remained the same (suspend your disbelief and ignore inflation for now), and you expect to get a bill for $17,200. Instead, the bill comes to $4,816, which is less than half of what your parents paid for you. How is that possible, you ask the caterer? The caterer responds that for every one percent increase in attendance, the bill fell by one percent. And so, while the number of guests rose by 72 percent, your bill declined by 72 percent. Surely, things like that don’t happen in real life, or do they?

In fact, that’s exactly what has happened to the affordability of 50 basic commodities between 1980 and 2018. Over those 38 years, the world’s population rose from 4.458 billion to 7.631 billion or 71.2 percent. Over the same time period, basic commodities, including energy, food, materials, and metals became 71.6 percent more affordable on average. For every one percent increase in population, in other words, resources became slightly more than one percent more abundant. Put differently, the time it took to earn enough money to buy one unit in that basket of 50 commodities in 1980 bought 3.62 units in 2018. The compounded growth rate of abundance came to 3.44 percent per annum. That means that the affordability of our basket of commodities doubled every 20.49 years. This relationship between population growth and resource abundance is deeply counterintuitive, yet it is no less true. The facts surprised us, and they will surprise you too.

Generations of people throughout the world have been taught to believe that there is an inverse relationship between population growth and availability of resources, which is to say that as population grows, resources become more “scarce.” That was, historically speaking, true. In the animal world, a sudden increase in the availability of resources, such as grass after unusually plentiful rain, leads to an animal population explosion. The population explosion then leads to the exhaustion of resources. Finally, the exhaustion of resources leads to population collapse. If you take the Theory of Evolution seriously—and we do—you’ll appreciate that human beings evolved from much humbler beginnings and were, as such, much more exposed to vicissitudes of fortune.

Over time, however, humans have developed sophisticated forms of cooperation that increase their wealth and chances of survival. Consider, for example, trade and exchange. As the British writer Matt Ridley observed in his 2010 book The Rational Optimist: How Prosperity Evolves, “There is strikingly little use of barter in any other animal species. There is sharing within families, and there is food‐for‐sex exchange in many animals including insects and apes, but there are no cases in which one animal gives an unrelated animal one thing in exchange for a different thing.” Trade is particularly important during famines. A country struck by drought, for example, can purchase food from abroad. This is not an option available to other animals.

But the most important difference between people and nonhuman animals is our superior intelligence and the use of that intelligence to invent and to innovate. “In a way, everything is technology,” noted one of the world’s greatest economic historians Fernand Braudel (1902–1985) in his book Civilization and Capitalism. “Not only man’s most strenuous endeavors but also his patient and monotonous efforts to make a mark on the external world; not only the rapid changes… but also the slow improvements in processes and tools, and those innumerable actions which may have no immediate innovative significance but which are the fruit of accumulated knowledge.”

And so, over many millennia of trial and error, we have accumulated a store of knowledge that has allowed us to reach escape velocity—from scarcity to abundance—somewhere toward the end of the 18th century. The Four Horsemen of the Apocalypse (war, famine, pestilence, and death) have not completely disappeared—that would be a miracle, not progress. But the world is incomparably richer than it was just two centuries ago. If you don’t believe us, ponder for a moment the 768 types of breakfast cereal that you can buy at Walmart for just a few minutes of labor on a minimum wage.

We measure abundance in Time Prices. A Time Price is the length of time that a person is required to work in order to earn enough money to buy something. It is the money price divided by hourly income. Money prices are expressed in dollars and cents, while Time Prices are expressed in hours and minutes. For example, if a barrel of oil costs $75 and you earn $15 an hour, the Time Price will come to five hours. If oil falls to $60 a barrel and your income increases to $20 an hour, the Time Price will decrease to three hours. The money price falls by 20 percent, but because your hourly income rose by 33 percent, the Time Price will fall by 40 percent.

Time Prices make much more sense than money prices for at least three reasons. First, Time Prices avoid the contention and subjectivity of commonly-used inflation adjustments. Second, since innovation shows up in both lower prices and higher incomes (more productive people are better-paid people), Time Prices more fully capture the effects of innovation. Third, Time Prices are independent of currency fluctuations. Instead of gauging the standards of living in India and the United States by comparing the purchasing power parity adjusted prices of a gallon of milk in Indian rupees and American dollars, Time Prices provide a universal and standardized way (hours and minutes) to measure changes in well-being.

Our research into Time Prices and resource abundance began when we looked at updating the famous wager between the late University of Maryland economist Julian Simon and the Stanford University biologist Paul Ehrlich. The wager was based on the inflation-adjusted prices of five metals: chromium, copper, nickel, tin, and tungsten, and lasted from October 1980 to October 1990. Ehrlich predicted that because of population growth, metals would become more expensive. Simon argued that because of population growth, metals would become cheaper.

Ehrlich thought like a biologist, who did not seem particularly interested in economics. “Since natural resources are finite, increasing consumption obviously must ‘inevitably lead to depletion and scarcity,’” he wrote. He continued:

Currently there are very large supplies of many mineral resources, including iron and coal. But when they become “depleted” or “scarce” will depend not simply on how much is in the ground but also on the rate at which they can be produced and the amount societies can afford to pay, in standard economic or environmental terms, for their extraction and use. For most resources, economic and environmental constraints will limit consumption while substantial quantities remain… For others, however, global “depletion”—that is, decline to a point where worldwide demand can no longer be met economically—is already on the horizon. Petroleum is a textbook example of such a resource.

Simon, on the other hand, thought like an economist who understood the powers of incentives and the price mechanism to overcome resource shortages. Instead of the quantity of resources, he looked at the prices of resources. He saw resource scarcity as a temporary challenge that can be solved through greater efficiency, increased supply, development of substitutes, and so on. The relationship between prices and innovation, he insisted, is dynamic. Relative scarcity leads to higher prices, higher prices create incentives for innovations, and innovations lead to abundance. Scarcity gets converted to abundance through the price system. The price system functions as long as the economy is based on property rights, the rule of law, and free exchange. In relatively free economies, therefore, resources do not get depleted in the way that Ehrlich feared they would. In fact, resources tend to become more abundant.

Simon, as is well known, won his bet with Ehrlich when the real (which is to say inflation-adjusted) price of the five metals fell by 36 percent between October 1980 and October 1990. Simon’s victory would have been even more impressive had he used, as we do, Time Prices. Those fell by 55 percent between 1980 and 1990. In fact, when we extended the Simon-Ehrlich wager over many decades and greatly expanded the number of commodities analyzed, we found a consistent trend toward greater availability of resources relative to the cost of human labor. It is, consequently, heartening that, in recent years, scholars have started to write about the age of abundance, a state of affairs in which “technology has the potential to significantly raise the basic standards of living for every man, woman, and child on the planet.”

Unfortunately, it will take much more than a single wager between two scholars—or, for that matter, this article—to rid the world of the old and very pernicious idea that population growth and resource depletion go hand in hand. But, we have to start somewhere. And so, as you listen to the purveyors of doom on the television and the radio, and read apocalyptic predictions of humanity’s future on Twitter and in the newspapers, bear in mind that with every hungry mouth comes a pair of hands and a brain capable of thought, planning, and innovation.

This first appeared in Quillette.