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The Most Important Check in Economics

Blog Post | Mineral Production

The Most Important Check in Economics

The Simon–Ehrlich wager and why predictions of resource scarcity keep getting it wrong.

Summary: A famous bet between Julian Simon and Paul Ehrlich illustrates two ways of thinking about resources and human ingenuity. Ehrlich thought of resources as a fixed pie, while Simon believed that human beings would find ways to make resources more abundant. As Simon predicted, thanks to markets and human ingenuity, the resource prices that Simon and Ehrlich bet on fell over a decade.


One of the most important checks ever written in economics was for $576.07.

It arrived in the mailbox of Julian Simon, the University of Maryland economist and Cato Institute senior fellow, on an October morning in 1990. The envelope was plain. There was no return address. Inside was a check from Paul Ehrlich. Ehrlich, who died last week, was the Stanford biologist and author of the bestselling 1968 book The Population Bomb.

That small check settled one of the great arguments of the modern age.

Ehrlich had spent years warning that population growth would outrun the Earth’s resources, bring rising scarcity, and push humanity toward disaster. Simon believed the opposite. He argued that more people did not simply mean more mouths to feed. It also meant more minds to think, invent, and solve problems.

The dispute became so bitter that Simon proposed a bet.

“Pick any raw material,” he told Ehrlich, “and choose any future date. I’ll bet the price will go down.”

Ehrlich accepted. He and two colleagues selected five metals: copper, chromium, nickel, tin, and tungsten. They priced a basket of those commodities on Sept. 29, 1980, and agreed to compare the inflation-adjusted price 10 years later. If the real price rose, Simon would pay Ehrlich. If it fell, Ehrlich would pay Simon.

Ehrlich was certain that population growth would make resources scarcer and therefore more expensive. Simon was certain that human beings would find ways to make resources more abundant.

By Sept. 29, 1990, the world’s population had increased by about 850 million people, a rise of 19 percent. If the doomsayers were right, that should have pushed prices sharply upward.

It did not.

Inflation over the decade was 57 percent. Yet the nominal price of the five-metal basket barely budged, rising from $1,000 to $1,004. In real terms, the basket’s price fell by about 36 percent. Ehrlich mailed Simon the difference: $576.07.

That check mattered because it exposed a mistake that still poisons public debate.

The mistake is to think that natural resources are fixed gifts of nature and that economic life is therefore a grim contest over a pile that can only shrink as population grows. That view sounds sober. It is, in fact, blind to the central truth of human progress.

Resources are not simply things lying in the ground. Resources are matter plus knowledge.

Oil was once a nuisance that seeped into farmland and polluted water. A barrel of oil in the Stone Age was worthless. A barrel of oil in an industrial civilization could heat homes, move trucks, power factories, and feed chemical industries.

Nature gives us atoms. Human beings give those atoms value.

That is why Simon understood something Ehrlich missed. The ultimate resource is not copper or farmland. It is the human mind. More precisely, it is the human mind set free to experiment, trade, specialize, and innovate.

Freedom matters here. People do not solve problems automatically. They solve them when they are allowed to respond to scarcity with invention and enterprise. High prices invite substitution. Competition rewards efficiency. Property rights encourage investment. Markets spread information no planner can gather. Free people learn to do more with less.

This is not a fairy tale in which every problem solves itself. Pollution is real. Bad policy is real. Governments can strangle innovation, distort prices, and lock societies into waste and stagnation. Progress, in other words, is not guaranteed.

But the lesson of the Simon-Ehrlich bet is that the burden of proof belongs to the prophets of permanent scarcity. Time and again, they have underestimated human creativity and overestimated the world’s physical limits.

That is as true today as it was in 1980.

We hear that energy is running out, that growth must stop, that the planet cannot support prosperity for billions, and that human wants must be cut down to fit a closed and exhausted world. This language changes with the decade, but the instinct behind it is old. It treats people as liabilities. It imagines the future as a rationing exercise.

Simon offered a better vision. Human beings are not just consumers of resources. They are producers of ideas. They are creators of substitutes, technologies, and entirely new forms of wealth. They do not merely divide a pie. They learn how to bake bigger pies from ingredients earlier generations did not know they had.

The real contest, then, is not between population and resources. It is between two ways of seeing humanity.

One view sees every additional person as another claimant on scarcity. The other sees every additional person as a possible problem-solver, inventor, entrepreneur, scientist, or worker whose efforts can make life better for everyone else.

The check for $576.07 settled the bet. But the larger wager remains open.

Don’t bet against human beings, especially when they are free.

Blog Post | Environment & Pollution

What Climate Science Really Says | Podcast Highlights

Marian Tupy interviews Roger Pielke Jr. about the latest climate research and how to think clearly about climate change.

Listen to the podcast or read the full transcript here.

Today I’m joined by Dr. Roger Pielke Jr., a Professor Emeritus at the University of Colorado Boulder, Senior Fellow at the American Enterprise Institute, and author of influential books like The Honest Broker and The Climate Fix. He’s a leading voice on the politicization of science and climate policy, and his scholarship is known for being rigorous, data-driven, and impartial.

I want to spend most of our time talking about climate change and global warming, but let’s start by looking at the extremes in the climate change debate.

People who are critical of the dominant view that climate change is a crisis or even a problem will say things like CO2 concentrations in Earth’s atmosphere are much lower than they were in the distant past, or that CO2 is vital for life, it is plant food, so there is nothing to worry about. What is wrong with that point of view?

Science supports global greening and the fact that CO2 levels were higher in the past. Where that goes away from scientific understanding is the “nothing to worry about” part.

The late Steve Schneider, who was a famous climate scientist and climate activist, once said that the fundamental challenge of climate change is that outcomes could be very benign, or they could be very serious, and we won’t know the difference during the time that we need to prepare. So, both extremes—the apocalyptics and the “don’t worry, be happy” folks—are guilty of selectively interpreting evidence. The reality is that both outcomes are in the spectrum of possibilities, but smart decision-making has to consider that entire spectrum, not just one tail of the distribution.

Is there such a thing as an optimal amount of CO2 in the atmosphere?

The simple answer is, as a risk management problem, the emission of carbon dioxide through the burning of fossil fuels has risks associated with change. And those risks could be profound. So, limiting the rate of change is much more important than whether 425 parts per million is better than 350 or 575.

There is also the question of trade-offs. For example, by emitting more CO2 into the atmosphere, we are making the world much richer. So, even if we do emit a lot more CO2, society in the future will be much richer and much more technologically advanced than we are, and they’ll be able to take care of any problems.

Humans are a fantastically inventive species. And it’s absolutely true that fossil fuels, which have the side effect of emitting carbon dioxide, have been central to human progress. One data point, a trend that I don’t think many people are aware of, is that the carbon dioxide intensity of economic activity—carbon dioxide per unit of GDP—has been dropping for decades. So, as we’ve become wealthier, we’ve also become much less carbon-intensive. As a species, we really like getting more output for less input, and we like cleaner-burning fuels. So, if that trend were to continue, we do at some point go over the hump of increasing carbon dioxide emissions, and they start going down.

In fact, right now, over the last decade, emissions have plateaued. There are small increases, but they’re within the margin of error measurement. So, there is a background force of decarbonization that has nothing to do with climate policy. I know it’s not as fast as some would like, and it could be faster, but decarbonization is just a fundamental reality of human civilization.

Now let’s address the other side of the extreme: people who believe that climate change is an existential crisis, and to avert it, we need to shrink the global economy. What’s wrong with that picture?

The big problem with that view is that the vast majority of people on this planet have no interest in degrowth. There are not very many politicians able to win an election by campaigning on making people poorer. The reality is that any successful path to decarbonizing the economy has to be accompanied by greater growth and wealth for most people. There are 5 or 6 billion people who do not enjoy anything close to the energy consumption that people who are watching this podcast get to enjoy every day. So, the world’s going to consume more energy no matter what degrowthers say.

What do you think about the very out-there techno-optimist view, which is that we should aim to have the technological sophistication and wealth necessary to completely control the climate? That’s a kind of sci-fi scenario that I sometimes hear.

I think we should get as wealthy as possible and be able to make our way through a volatile environment as safely as possible. The idea that there’s going to be a control panel where we can perfect climate conditions is science fiction. I have no expectation we’ll ever be doing that. The track record of humans trying to influence ecosystems is horrible.

We hear about this with proposals to “geoengineer” the climate. And full disclosure, I signed onto a geoengineering non-use letter, because it’s the height of arrogance for us to think that we can control the climate system. It’s like gain-of-function research on viruses. Yeah, maybe you’ll learn something, but maybe you’ll kill 20 million people. So, I’m not a big fan of the “control panel” approach to climate.

I want to now turn to specific concerns that people have when it comes to climate change. Let’s start with the rising global temperatures and extreme heat. What does the latest research say about this problem?

What I normally do—and I think this is a good practice in any area where science and politics meet—is I start with assessments that have been put together by authoritative bodies.

In this case, that’s the Intergovernmental Panel on Climate Change, which is a sprawling, massive thing. It’s got three working groups and many dozens of chapters and hundreds of authors. But it’s a touchpoint for assessing the science. The IPCC gets some things right and some things wrong. But in general, Working Group 1, with its focus on extreme events, has pretty much called things straight over the past 30 years.

When it comes to extreme heat, the IPCC says that there has been an increase in heat waves around the world. It’s been detected, to use their language, and they attribute that increase of heat waves to human causes, including increasing greenhouse gas concentrations in the atmosphere.

The World Health Organization has argued that with effective adaptation, the number of people who should die from excessive heat is zero. We have air conditioning, we have weather forecasts and good warnings. The challenge is that those adaptations to heat are not well implemented everywhere around the world. If places that are adapted to one level of temperature start seeing a greater frequency of heat waves, they will need to adapt.

The other factor is that ecosystems are far less adaptable than humans are. If it’s 110 outside, I can come inside in the air conditioning. Ecosystems can’t do that. So, material changes in the physical environment can have profound consequences for ecosystems.

Okay, now onto changes in precipitation patterns.

The extreme weather phenomenon the IPCC has the second-highest confidence in is an increase in heavy downpours, which they call “extreme precipitation.”

People have to be careful with that. And the IPCC, to its credit, is very careful. Extreme precipitation is not the same thing as flooding. Here in Boulder, Colorado, if we got 2 centimeters of rain today, that would be extreme precipitation, but it wouldn’t cause a flood. I wish we would get 2 centimeters of rain.

There has been a documented increase in the activity of the hydrological cycle around the world due to increasing temperatures. It hasn’t been detected everywhere, and the numbers are not super large in the context of natural variability, but they’ve been detected and attributed. However, the IPCC has low confidence that flooding has increased globally. Flooding is very difficult to document because we manage so many river basins. We change runoff patterns through urbanization and agricultural irrigation. So, flooding is much more confounded than precipitation itself.

Extreme weather events, especially hurricanes, cyclones, wildfires, and droughts.

We need to take these one by one.

I’ve studied tropical cyclones for 30 years, which includes hurricanes, and the IPCC gets this one right: there is no convincing evidence that there are more hurricanes or more intense hurricanes over the period of record. The IPCC is clear on that, and the National Oceanic and Atmospheric Administration in the US is very clear on that.

Hurricanes have become a kind of poster child of climate change. They’re very photogenic. Al Gore had one coming out of a smokestack in his famous movie. However, hurricanes are probably one of the worst places to look for any signals of climate change. There are only 60 to 80 hurricanes on planet Earth in any given year. That’s a small number of events when you compare it to the millions and millions of temperature measurements we take every year.

Flooding, as I said, has no detection or attribution. Drought, for most metrics of drought, again, no detection or attribution. The one distinction that the IPCC makes is soil moisture deficits, basically dry land, which is associated with warming more than it is with precipitation. Winter storms, again, no detection or attribution there.

You have to be careful with wildfires because the wildfire record is very confounded by human land management. While we might be able to tease out trends in wildfires, attributing causality is much more difficult. There are some published studies out there that say that warming, particularly in, say, the western United States, has led to an increase in fire-prone conditions. There is also good research that says before the human settlement of North America, the intensity and scale of wildfires were much, much greater than anything we’ve seen, so we actually have a fire deficit.

Moving swiftly onto ocean warming and acidification.

I’m glad you brought those up. Despite all the arguments that have been made over the decades about the surface air temperature and the location of thermometers and things like that, it turns out that the best place to look for a signal of warming is the oceans. Over the last several decades, there have been very good temperature measurements showing that most of the energy imbalance caused by our emission of greenhouse gases is actually going into the oceans.

Onto acidification. So about half of the carbon dioxide we emit is taken up by the oceans, and that changes the chemistry of the oceans. On the one hand, it’s a good thing that the oceans are absorbing carbon dioxide because then there’s less of a radiative effect in the atmosphere. But on the other hand, it means we’re changing the chemistry of the ocean, and that will have impacts on sea life. If you go through all that math, this is one place that takes you to net zero. To stop changing the chemistry of the ocean, we couldn’t just reduce emissions to the amount that the oceans are taking up; we would have to reduce emissions to zero.

My next concern, melting ice and glaciers, is also tied to the rising sea levels and so forth. So maybe you can talk about that.

Runoff from glacial melt and also melt from Greenland, and to some degree from Antarctica, is contributing to sea level rise. That’s tightly associated with warming and has been attributed to human causes. There are also other factors beyond warming. Something I was fascinated to learn about from one of my colleagues at the University of Colorado was that when we put particulates in the atmosphere, and it precipitates out in snow, it changes the albedo—basically, the snow is a little darker because it has soot in it—and the snow melts faster.

Understood. Let’s talk a little bit about the different climate change scenarios. How much warming have we experienced? What are the worst and the best-case scenarios? And what does the most likely scenario mean for the planet?

That’s a great question.

Using a preindustrial baseline of 1850 to 1900, the world has already warmed about 1.5 degrees Celsius.

The projections are, as you say, scenarios. They’re a function of what we think the global population will be, how big the economy will be, where we’re going to get our energy from, and how we apply that energy in the economy. Last December, the UN Framework Convention on Climate Change said that the world is headed to 2.2 to 2.5 degrees Celsius by 2100. It just so happens that it aligns very nicely with a paper I did with Justin Ritchie and Matt Burgess.

I call this one of the best-kept secrets in all of climate science.

It wasn’t so long ago that those same types of projections were looking at 4, 5, 6 degrees Celsius by 2100. They’ve come down dramatically, not because of anything to do with the physical science of climate, but because our expectation for future emissions has come down dramatically. There was an assumption that coal, the most carbon-intensive fuel, was going to fuel everything around the world. And it turns out we’re not going in that direction.

Another big factor, and one that really hasn’t made its way into climate projections yet, is the changing projections of the global population. The leading climate scenarios still have 12 or 13 billion people on the planet in 2100. And demographers are now seriously talking about the global population peaking under 10 billion and then going down to maybe 7 billion in 2100. Once that gets factored in, projected temperature ranges are going to drop further.

Climate change has morphed from something that was plausibly extreme—I don’t think existential threat was ever the right language, but possibly extreme—to something that looks a lot more manageable. It’s a troublesome condition that will require a lot of action, but it’s not going to be the end of the world.

So, you actually had a paper some time ago where you nailed the trajectory of global warming with great precision. And that fantastic performance didn’t protect you in American academia. Meanwhile, people who wheel out the RCP 8.5 scenario, where everything is run on coal, get columns in major newspapers.

What on Earth is going on?

Extreme results are a lot more attractive to journals. And if you use an extreme climate scenario, you’re going to get extreme results. Journals like to put out press releases, and so the more shocking the headline, the more likely it is that it’s going to get picked up. At the same time, climate advocacy for decades now has focused on the notion of an existential threat, and extreme studies feed that notion.

Another factor is that the climate community updates its scenarios only every 10 to 20 years. Imagine doing economic policy with data from 2006 in 2026. It’s crazy. The energy system modelers update their energy scenarios every year. That’s one reason why it’s easy, I would say, to come up with better projections than you find in the IPCC, because they’re still using scenarios from two decades ago. If you use a more updated scenario, as we did, for energy consumption, population, and GDP, you’ll be much more accurate than one that was based on 2005 data.

It seems to me that the extreme environmentalist viewpoint has begun to come to an end. The break really came in 2022 with the Russian invasion of Ukraine and the resulting spike in energy prices.

Do you agree with that?

Yeah, I think that’s right. The price shock in Europe following Russia’s invasion of Ukraine was an eye-opener. People really do want action on the environment and on climate, but they don’t want to do it at the expense of their monthly utility bill.

I don’t think that the extreme environmental movement is going to completely disappear. The concern about overpopulation never really ended; it kind of faded away. I think that’s the best model for extreme environmentalism focused on climate. There will continue to be a segment of people, particularly in the scientific community, who emphasize apocalyptic scenarios and existential threats, but policymakers around the world have become much more focused on the security of energy, the price of energy, and energy access. For a long time, energy policy was discussed as if it were a subset of climate policy, and climate policy was the dominant framing. I think that has now reversed. Climate policy is now rightly viewed as a subset of energy policy. But don’t make any mistake: the radical wings on either side are going to remain with us.

The Human Progress Podcast | Ep. 78

Roger Pielke: What Climate Science Really Says

Roger Pielke Jr. joins Marian Tupy to discuss the latest climate research and how to think clearly about climate change.

Cambridge University Press | Conservation & Biodiversity

Khulan Return to Former Mongolian Range After Long Absence

“The Asiatic wild ass, or khulan, Equus hemionus, is native to the arid landscapes of Central and East Asia. Although the Mongolian Gobi supports the largest population, the species remains threatened by habitat fragmentation, competition with livestock, illegal hunting and climate change. Historically, the khulan ranged widely across Mongolia, including the Eastern Steppe. However, the construction of the fenced Trans-Mongolian Railway in the mid 20th century created a near-continuous barrier to movement, leading to the species’ local extinction east of the railway. In 2019, a pilot conservation initiative removed sections of the fence and documented the first confirmed crossing of the Trans-Mongolian Railway by a khulan in over 6 decades. To assess the current status of khulan east of the railway, we combined GPS data from 29 collared individuals in the South Gobi with distance sampling and opportunistic field surveys. We recorded two confirmed crossings near the Zamiin–Uud border during the winters of 2023 and 2024. Additionally, during field surveys in 2024 we observed 384 khulan in four groups east of the railway. These findings provide the first confirmed evidence of khulan recolonization within their historical range and establish a baseline for future conservation efforts.”

From Cambridge University Press.

The Guardian | Conservation & Biodiversity

Melbourne Zoo Hopes to Safeguard Victorian Grassland Earless Dragon

“The dragons’ lair looks deceptively ordinary: a pair of pale green portables, tucked behind the reptile enclosure at Melbourne zoo.

But the plain exterior belies its hidden treasures. Inside, dozens of Victorian grassland earless dragons, blissfully unaware of their status as Australia’s most imperilled reptile, are basking on rocks, gobbling up crickets or lapping up ‘dew’, expertly misted by their keeper Zac Harkin.

For 50 years these critically endangered creatures were thought extinct. But following their rediscovery in 2023, Zoos Victoria is not taking any chances.

The new dragon conservation centre at Melbourne zoo has room to accommodate hundreds, housed as singles or pairs in open-air glass condos, each one furnished with living plants and artificial burrows made of PVC piping.”

From The Guardian.